Jevons Paradox

Satya Nadella thinks Jevons Paradox has struck again with DeepSeek AI's release. Let's explore what's Jevons Paradox.

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DeepSeek: AI’s “Sputnik Moment”

Earlier this week, Chinese start-up DeepSeek released their powerful, cost-effective and efficient open source AI model that sent disruptive waves on the shores of established players like OpenAI, Meta and Google.

Here’s why it is disruptive:

• DeepSeek is opensource and more powerful

• It is built on technology that reduces memory needs by upto 75%

• Massive improvements in memory management

• Specialist AI system that breaks down the problem, using only what’s needed

• Parallel processing that increases processing speed by 2x

• Created in less than 5% of the budget used by giants to build their proprietary models

• It can run on a normal gaming computer instead of a data center, requiring lesser computing resources

Many experts view DeepSeek’s AI release as “Sputnik Moment” referring to the Soviet Union’s launch of Sputnik in 1957, which ignited the race to space.

Satya Nadella Pitches In

Satya’s tweet introduces us to Jevon’s Paradox.

Jevons Paradox and AI

William Jevons, in 1865, observed that England’s coal consumption soared after improvement in efficiency of coal-fired steam engines. While the amount of coal required in any particular application (e.g. steam engine) fell, the overall consumption of coal increased because of widespread industrial adoption of steam engines.

This phenomenon, mostly observed in technological innovations, was named Jevons Paradox.

Satya Nadella’s observation is well timed - efficiency improvements in AI requiring lesser resources (e.g. chips) will lead to more consumption of the very same resources due to increased demand.

Here’s a visual summary of Jevons Paradox in form of a sketchnote:

From My Journal

Ego derails success. Overthinking makes failure worse.

Being able to control these is a key ingredient of a good life.

In 100 Words: The Art of Seeing Possibilities

Benjamin Zander’s book “The Art of Possibility” starts with this story:

A shoe factory sends two marketing scouts to a region of Africa to study the prospects for expanding business.

One sends back a telegram saying, SITUATION HOPELESS. STOP. NO ONE WEARS SHOES.

The other writes back triumphantly, GLORIOUS BUSINESS OPPORTUNITY. STOP. THEY HAVE NO SHOES.

How often does fear win over our hopes and dreams? We constantly keep thinking about our frustrations but not about the potential that we still have in us. Don’t let your failures so far interfere with what is still possible for you to do.

That’s it for this edition. Thank you for subscribing and reading.