# Cheaper software could increase demand for engineering

Markdown copy of https://realalpha.app/s/cheaper-software-could-increase-demand-for-engineering/ on Real Alpha, the best minutes from long interviews with the people building AI. Cite and link the page, not this copy.

- Speaker: [Andrej Karpathy](https://realalpha.app/builders/andrej-karpathy/) · Andrej Karpathy is an AI researcher and engineer. · Joined Anthropic's pretraining team; founded Eureka Labs, an AI-native school, after leading Tesla's Autopilot AI.
- Host: [Sarah Guo](https://realalpha.app/people/sarah-guo/) · Founder, Conviction · Ex-Greylock partner; early investor in Cognition, Harvey and Mistral.
- Show: No Priors
- Episode: [Skill Issue: Andrej Karpathy on Code Agents, AutoResearch, and the Loopy Era of AI](https://realalpha.app/v/kwSVtQ7dziU/), Mar 20, 2026
- Moment: 37:47 to 43:46 of the episode (6 min), playing on https://realalpha.app/s/cheaper-software-could-increase-demand-for-engineering/; the episode from there: https://realalpha.app/v/kwSVtQ7dziU/?t=2267

## Quote

> “But what happened is they made the **cost of operation** of a bank branch much cheaper, as there were more bank branches, so there were more tellers”
> — [Andrej Karpathy](https://realalpha.app/builders/andrej-karpathy/) at [42:35](https://realalpha.app/v/kwSVtQ7dziU/?t=2555) · No Priors

## Takeaways

1. Digital work is likely to change faster than physical work.
2. Jobs are bundles of tasks, and AI can speed up some of them.
3. Cheaper software may unlock new demand, as with bank ATMs.

## About this segment

Andrej Karpathy separates digital work, where AI can rapidly lower costs, from physical work, which he expects to change more slowly. He argues that cheaper software may unlock demand rather than simply eliminate jobs.

From “Skill Issue: Andrej Karpathy on Code Agents, AutoResearch, and the Loopy Era of AI”, Mar 20, 2026. [Watch the full episode](https://realalpha.app/v/kwSVtQ7dziU/)

## Transcript

Transcribed by machine (Whisper) from the episode’s audio, so a word may be off here and there.

[37:53](https://realalpha.app/v/kwSVtQ7dziU/?t=2273) the last thing you released was like a little bit of jobs data analysis is that right what um and might touch a nerve even though you're just like visualizing some public data uh what was you know what were you curious about yeah i guess i was curious too um i mean everyone is like it's everyone's really thinking about the impacts of ai on the job market and what's going to look like so i was just interested to take a look like what does the job market look like where are the different roles um and how many people are in different professions and i was like really just interested to like look through uh the individual cases and try to think myself about like you know with these ais and how they're likely to evolve like are these going to be tools that people are using are these going to be displacing tools for these uh professions and like what are the

[38:37](https://realalpha.app/v/kwSVtQ7dziU/?t=2317) current professions and how are they going to change are they going to grow or uh adjust to a large extent or like what could be new professions so it's really just like a way to fuel my own chain of thought about the industry i suppose um and so uh yeah the jobs data basically is just the Bureau of Labor Statistics, they actually have a percent outlook for each profession about how much it's expected to grow over the next, I think, almost decade.

[39:00](https://realalpha.app/v/kwSVtQ7dziU/?t=2340) Yeah, I think it's a decade, but it was made in 2024. We need a lot of healthcare workers. Yeah. So they've already made those projections and I'm not sure actually 100% what the methodology was that they put into the projections. I guess I was interested to color things by, like if people think that what's primarily being developed now is this kind of like more digital AI, that is kind of like almost like these ghosts or spirit entities that can like interact in the digital world and manipulate a lot of like digital information.

[39:27](https://realalpha.app/v/kwSVtQ7dziU/?t=2367) And they currently don't really have a physical embodiment or presence. And the physical stuff is probably gonna go slightly slower because you're manipulating atoms. So flipping bits and the ability to copy paste digital information is like makes everything a million times faster than accelerating matter, you know? So energetically, I just think we're gonna see a huge amount of activity in digital space, huge amount of rewriting, huge amount of activity boiling soup and i think the we're going to see something that in the digital space goes at the speed of light compared to i think what's going to happen in the physical world to some extent it would be the extrapolation and so I think like there's currently kind of like, I think overhang where there can be like a lot of unhobbling almost potentially of like a lot of digital information

[40:09](https://realalpha.app/v/kwSVtQ7dziU/?t=2409) processing that used to be done by computers and people. And now with AI as like a third kind of manipulator of digital information, there's gonna be a lot of refactoring in those disciplines. But the physical world is actually gonna be like, I think behind that by some amount of time. And so I think what's really fascinating to me is like, so that's why I was highlighting the professions that fundamentally manipulate digital information.

[40:31](https://realalpha.app/v/kwSVtQ7dziU/?t=2431) This is work you could do from your home, et cetera. Because I feel like those will be, like things will change. And it doesn't mean that there's going to be less of those jobs or more of those jobs because that has to do with like demand elasticity and many other factors. But things will change in these professions because of these new tools and because of this upgrade to the nervous system of the human superorganism, if you want to think about it that way.

[40:51](https://realalpha.app/v/kwSVtQ7dziU/?t=2451) Given the look you had at the data, do you have either any observations or guidance for people facing the job market or thinking about what to study now or what skills to develop. I mean, we can all go get like, I'm very thankful that I have to like meet people for my job right now. Yeah. More physical, yeah. Could you do your work from home though? I could. I think there are relationship parts of it that are hard, but most of it I could.

[41:16](https://realalpha.app/v/kwSVtQ7dziU/?t=2476) Yeah. I think it's really hard to tell because again, like the job market is extremely diverse and I think the answers will probably vary, but to a large extent, like these tools are extremely new, extremely powerful. And so just being, you know, just trying to keep up with it is like the first thing. And yeah, because I think a lot of people kind of like dismiss it or... Or they're afraid of it. Or they're afraid of it, et cetera, which is totally understandable, of course.

[41:38](https://realalpha.app/v/kwSVtQ7dziU/?t=2498) Yeah, I think like it's fundamentally an empowering tool at the moment. And these jobs are bundles of tasks and some of these tasks can go a lot faster. And so people should think of it as primarily a tool that it is right now. And I think the long-term future of that is uncertain. Yeah, it's kind of really hard to forecast, to be honest. And like, I'm not professionally like doing that really. And I think the job of like economists to do properly.

[41:59](https://realalpha.app/v/kwSVtQ7dziU/?t=2519) You are an engineer though. And like one thing I thought was interesting is that like the demand for engineering jobs is continuing to increase. I can't tell if that's like a temporary phenomenon. I'm not sure how I feel about it yet. Do you know? Yeah, that's like the demand elasticity almost. Like software was scarce, right? And so the reason we don't have more demand for software is just scarcity and it's too expensive.

[42:21](https://realalpha.app/v/kwSVtQ7dziU/?t=2541) It's too expensive, yeah. So if the barrier comes down, then actually you have the jevons paradox which is like you know you actually the demand for software actually goes up it's cheaper and there's more more powerful yeah The classical example of this always is the ATMs and the bank tellers, because there was a lot of fear that ATMs and computers, basically, would displace tellers. But what happened is they made the cost of operation of a bank branch much cheaper, as there were more bank branches, so there were more tellers, is the canonical example people cite.

[42:50](https://realalpha.app/v/kwSVtQ7dziU/?t=2570) But basically, it's just Jevons paradox. Something becomes cheaper, so there's a lot of unlocked demand for it. So I do think that that's probably, I do have like cautiously optimistic view of this in software engineering, where it does seem to me like the demand for software will be extremely large and it's just become a lot cheaper. And so I do think that for quite some time, it's very hard to forecast, but it does seem to me like right now, at least locally, there's gonna be more demand for software because software is amazing.

[43:22](https://realalpha.app/v/kwSVtQ7dziU/?t=2602) It's like, you know, digital information processing. You're not forced to use like arbitrary tools that were given to you. there are imperfects in various ways. You're not forced to subscribe to what exists. Code is now ephemeral and it can change and it can be modified. And so I think there's going to be a lot of activity in the digital space to like rewire everything in a certain sense. And I think it's going to create a lot of demand for this kind of stuff.