GitLab Bets on Jevons Paradox to Drive Growth in the AI Era

GitLab, a key player in the developer tools space, is undergoing a major transformation to adapt to a future where artificial intelligence (AI) agents take on much of the coding work. The company, known for offering a unified platform covering source control, continuous integration and delivery (CI/CD), security scanning, collaboration, and deployment, is now betting that the Jevons paradox—a 19th-century economic theory—will fuel its success in the age of AI.

The Jevons Paradox and Software Demand

Bill Staples, who became GitLab’s CEO in 2024 after co-founder Sid Sijbrandij stepped down, outlined a bold vision in a recent open letter. He argues that AI will not shrink the software industry but expand it. The reasoning draws from the Jevons paradox: as the cost of producing software drops dramatically, demand for new software will surge, much like how more efficient steam engines in the 19th century led to increased coal consumption, not less.

“Software has been the force multiplier behind nearly every business transformation of the last two decades. The constraint was the cost and time of producing and managing it. That constraint is collapsing. As the cost of producing software collapses, demand for it will expand.”

This theory is central to GitLab’s strategy. The company is restructuring to position itself as a key orchestrator in an environment where AI agents generate code, and developers shift to overseeing, reviewing, and coordinating machine-made software.

Restructuring for the Agentic Era

In April 2025, Staples announced sweeping changes: layoffs, executive reshuffles, product consolidation, and a renewed emphasis on AI-driven development. These moves come as GitLab faces a difficult period. Its market capitalization has plunged roughly 66% over the past 15 months to around $3.7 billion, as investors question how AI will reshape software development and the tools that support it.

What the Agentic Era Means

GitLab calls the new paradigm the “agentic era” of software development. According to Staples, “Software will be built by machines, directed by people. Agents will plan, code, review, deploy, and repair.” This vision shifts the engineer’s role from writing every line of code to higher-level tasks: system design, architecture, governance, reasoning through failures, and coordinating fleets of AI systems across the software lifecycle.

The emphasis on orchestration is crucial. GitLab is betting that its platform can become the central hub for managing these AI agents—tracking what they produce, ensuring quality, and maintaining security—just as it currently manages human developers’ contributions.

The Evolving Role of Developers

Contrary to fears that AI might make developers obsolete, Staples argues that engineers will become more valuable. They will focus on strategic decisions, debugging machine logic, and ensuring that the software delivered meets business needs. This reframing is intended to address market skepticism about developer tooling in an AI-driven world.

Market Challenges and Leadership Changes

GitLab’s overhaul follows months of declining stock performance, reflecting broader uncertainty about AI’s impact on the software industry. Some investors worry that AI could reduce the need for traditional developer platforms. Staples’ response is to lean into AI rather than resist it, using the Jevons paradox to argue that the total addressable market for software will grow.

The product consolidation includes retiring or merging certain tools to focus on integration with AI workflows. The executive changes bring in leaders with experience in AI and large-scale platforms. The layoffs, while painful, are part of a strategic realignment toward the agentic future.

Conclusion: A High-Stakes Bet

GitLab’s bet is that the Jevons paradox will hold true for software: lower production costs will unlock vast new demand, and the company that best orchestrates AI and human collaboration will thrive. Whether this 19th-century theory applies to 21st-century developer tools remains to be seen, but Staples is betting his company’s future on it.

As GitLab navigates this transformation, all eyes will be on how well it can execute its “machine-scale” rebuild and convince developers and investors that the agentic era is an opportunity, not a threat.