The AI Architect — Bret Taylor

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It’s exceedingly hard to introduce someone like Bret Taylor. We could recite his Wikipedia page, or his extensive work history through Silicon Valley’s greatest companies, but everyone else already does that.

As a podcast by AI engineers for AI engineers, we had the opportunity to do something a little different. We wanted to dig into what Bret sees from his vantage point at the top of our industry for the last 2 decades, and how that explains the rise of the AI Architect at Sierra, the leading conversational AI/CX platform.

“Across our customer base, we are seeing a new role emerge - the role of the AI architect. These leaders are responsible for helping define, manage and evolve their company's AI agent over time. They come from a variety of both technical and business backgrounds, and we think that every company will have one or many AI architects managing their AI agent and related experience.”

In our conversation, Bret Taylor confirms the Paul Buchheit legend that he rewrote Google Maps in a weekend, armed with only the help of a then-nascent Google Closure Compiler and no other modern tooling. But what we find remarkable is that he was the PM of Maps, not an engineer, though of course he still identifies as one. We find this theme recurring throughout Bret’s career and worldview. We think it is plain as day that AI leadership will have to be hands-on and technical, especially when the ground is shifting as quickly as it is today:

“There's a lot of power in combining product and engineering into as few people as possible… few great things have been created by committee.”

“If engineering is an order taking organization for product you can sometimes make meaningful things, but rarely will you create extremely well crafted breakthrough products. Those tend to be small teams who deeply understand the customer need that they're solving, who have a maniacal focus on outcomes.”

“And I think the reason why is if you look at like software as a service five years ago, maybe you can have a separation of product and engineering because most software as a service created five years ago. I wouldn't say there's like a lot of technological breakthroughs required for most business applications. And if you're making expense reporting software or whatever, it's useful… You kind of know how databases work, how to build auto scaling with your AWS cluster, whatever, you know, it's just, you're just applying best practices to yet another problem.

"When you have areas like the early days of mobile development or the early days of interactive web applications, which I think Google Maps and Gmail represent, or now AI agents, you're in this constant conversation with what the requirements of your customers and stakeholders are and all the different people interacting with it and the capabilities of the technology. And it's almost impossible to specify the requirements of a product when you're not sure of the limitations of the technology itself.”

This is the first time the difference between technical leadership for “normal” software and for “AI” software was articulated this clearly for us, and we’ll be thinking a lot about this going forward. We left a lot of nuggets in the conversation, so we hope you’ll just dive in with us (and thank Bret for joining the pod!)

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Timestamps

* 00:00:02 Introductions and Bret Taylor's background

* 00:01:23 Bret's experience at Stanford and the dot-com era

* 00:04:04 The story of rewriting Google Maps backend

* 00:11:06 Early days of interactive web applications at Google

* 00:15:26 Discussion on product management and engineering roles

* 00:21:00 AI and the future of software development

* 00:26:42 Bret's approach to identifying customer needs and building AI companies

* 00:32:09 The evolution of business models in the AI era

* 00:41:00 The future of programming languages and software development

* 00:49:38 Challenges in precisely communicating human intent to machines

* 00:56:44 Discussion on Artificial General Intelligence (AGI) and its impact

* 01:08:51 The future of agent-to-agent communication

* 01:14:03 Bret's involvement in the OpenAI leadership crisis

* 01:22:11 OpenAI's relationship with Microsoft

* 01:23:23 OpenAI's mission and priorities

* 01:27:40 Bret's guiding principles for career choices

* 01:29:12 Brief discussion on pasta-making

* 01:30:47 How Bret keeps up with AI developments

* 01:32:15 Exciting research directions in AI

* 01:35:19 Closing remarks and hiring at Sierra

Transcript

[00:02:05] Introduction and Guest Welcome

[00:02:05] Alessio: Hey everyone, welcome to the Latent Space Podcast. This is Alessio, partner and CTO at Decibel Partners, and I'm joined by my co host swyx, founder of smol.ai.

[00:02:17] swyx: Hey, and today we're super excited to have Bret Taylor join us. Welcome. Thanks for having me. It's a little unreal to have you in the studio.

[00:02:25] swyx: I've read about you so much over the years, like even before. Open AI effectively. I mean, I use Google Maps to get here. So like, thank you for everything that you've done. Like, like your story history, like, you know, I think people can find out what your greatest hits have been.

[00:02:40] Bret Taylor's Early Career and Education

[00:02:40] swyx: How do you usually like to introduce yourself when, you know, you talk about, you summarize your career, like, how do you look at yourself?

[00:02:47] Bret: Yeah, it's a great question. You know, we, before we went on the mics here, we're talking about the audience for this podcast being more engineering. And I do think depending on the audience, I'll introduce myself differently because I've had a lot of [00:03:00] corporate and board roles. I probably self identify as an engineer more than anything else though.

[00:03:04] Bret: So even when I was. Salesforce, I was coding on the weekends. So I think of myself as an engineer and then all the roles that I do in my career sort of start with that just because I do feel like engineering is sort of a mindset and how I approach most of my life. So I'm an engineer first and that's how I describe myself.

[00:03:24] Bret: You majored in computer

[00:03:25] swyx: science, like 1998. And, and I was high

[00:03:28] Bret: school, actually my, my college degree was Oh, two undergrad. Oh, three masters. Right. That old.

[00:03:33] swyx: Yeah. I mean, no, I was going, I was going like 1998 to 2003, but like engineering wasn't as, wasn't a thing back then. Like we didn't have the title of senior engineer, you know, kind of like, it was just.

[00:03:44] swyx: You were a programmer, you were a developer, maybe. What was it like in Stanford? Like, what was that feeling like? You know, was it, were you feeling like on the cusp of a great computer revolution? Or was it just like a niche, you know, interest at the time?

[00:03:57] Stanford and the Dot-Com Bubble

[00:03:57] Bret: Well, I was at Stanford, as you said, from 1998 to [00:04:00] 2002.

[00:04:02] Bret: 1998 was near the peak of the dot com bubble. So. This is back in the day where most people that they're coding in the computer lab, just because there was these sun microsystems, Unix boxes there that most of us had to do our assignments on. And every single day there was a. com like buying pizza for everybody.

[00:04:20] Bret: I didn't have to like, I got. Free food, like my first two years of university and then the dot com bubble burst in the middle of my college career. And so by the end there was like tumbleweed going to the job fair, you know, it was like, cause it was hard to describe unless you were there at the time, the like level of hype and being a computer science major at Stanford was like, A thousand opportunities.

[00:04:45] Bret: And then, and then when I left, it was like Microsoft, IBM.

[00:04:49] Joining Google and Early Projects

[00:04:49] Bret: And then the two startups that I applied to were VMware and Google. And I ended up going to Google in large part because a woman named Marissa Meyer, who had been a teaching [00:05:00] assistant when I was, what was called a section leader, which was like a junior teaching assistant kind of for one of the big interest.

[00:05:05] Bret: Yes. Classes. She had gone there. And she was recruiting me and I knew her and it was sort of felt safe, you know, like, I don't know. I thought about it much, but it turned out to be a real blessing. I realized like, you know, you always want to think you'd pick Google if given the option, but no one knew at the time.

[00:05:20] Bret: And I wonder if I'd graduated in like 1999 where I've been like, mom, I just got a job at pets. com. It's good. But you know, at the end I just didn't have any options. So I was like, do I want to go like make kernel software at VMware? Do I want to go build search at Google? And I chose Google. 50, 50 ball.

[00:05:36] Bret: I'm not really a 50, 50 ball. So I feel very fortunate in retrospect that the economy collapsed because in some ways it forced me into like one of the greatest companies of all time, but I kind of lucked into it, I think.

[00:05:47] The Google Maps Rewrite Story

[00:05:47] Alessio: So the famous story about Google is that you rewrote the Google maps back in, in one week after the map quest quest maps acquisition, what was the story there?

[00:05:57] Alessio: Is it. Actually true. Is it [00:06:00] being glorified? Like how, how did that come to be? And is there any detail that maybe Paul hasn't shared before?

[00:06:06] Bret: It's largely true, but I'll give the color commentary. So it was actually the front end, not the back end, but it turns out for Google maps, the front end was sort of the hard part just because Google maps was.

[00:06:17] Bret: Largely the first ish kind of really interactive web application, say first ish. I think Gmail certainly was though Gmail, probably a lot of people then who weren't engineers probably didn't appreciate its level of interactivity. It was just fast, but. Google maps, because you could drag the map and it was sort of graphical.

[00:06:38] Bret: My, it really in the mainstream, I think, was it a map

[00:06:41] swyx: quest back then that was, you had the arrows up and down, it

[00:06:44] Bret: was up and down arrows. Each map was a single image and you just click left and then wait for a few seconds to the new map to let it was really small too, because generating a big image was kind of expensive on computers that day.

[00:06:57] Bret: So Google maps was truly innovative in that [00:07:00] regard. The story on it. There was a small company called where two technologies started by two Danish brothers, Lars and Jens Rasmussen, who are two of my closest friends now. They had made a windows app called expedition, which had beautiful maps. Even in 2000.

[00:07:18] Bret: For whenever we acquired or sort of acquired their company, Windows software was not particularly fashionable, but they were really passionate about mapping and we had made a local search product that was kind of middling in terms of popularity, sort of like a yellow page of search product. So we wanted to really go into mapping.

[00:07:36] Bret: We'd started working on it. Their small team seemed passionate about it. So we're like, come join us. We can build this together.

[00:07:42] Technical Challenges and Innovations

[00:07:42] Bret: It turned out to be a great blessing that they had built a windows app because you're less technically constrained when you're doing native code than you are building a web browser, particularly back then when there weren't really interactive web apps and it ended up.

[00:07:56] Bret: Changing the level of quality that we [00:08:00] wanted to hit with the app because we were shooting for something that felt like a native windows application. So it was a really good fortune that we sort of, you know, their unusual technical choices turned out to be the greatest blessing. So we spent a lot of time basically saying, how can you make a interactive draggable map in a web browser?

[00:08:18] Bret: How do you progressively load, you know, new map tiles, you know, as you're dragging even things like down in the weeds of the browser at the time, most browsers like Internet Explorer, which was dominant at the time would only load two images at a time from the same domain. So we ended up making our map tile servers have like.

[00:08:37] Bret: Forty different subdomains so we could load maps and parallels like lots of hacks. I'm happy to go into as much as like

[00:08:44] swyx: HTTP connections and stuff.

[00:08:46] Bret: They just like, there was just maximum parallelism of two. And so if you had a map, set of map tiles, like eight of them, so So we just, we were down in the weeds of the browser anyway.

[00:08:56] Bret: So it was lots of plumbing. I can, I know a lot more about browsers than [00:09:00] most people, but then by the end of it, it was fairly, it was a lot of duct tape on that code. If you've ever done an engineering project where you're not really sure the path from point A to point B, it's almost like. Building a house by building one room at a time.

[00:09:14] Bret: The, there's not a lot of architectural cohesion at the end. And then we acquired a company called Keyhole, which became Google earth, which was like that three, it was a native windows app as well, separate app, great app, but with that, we got licenses to all this satellite imagery. And so in August of 2005, we added.

[00:09:33] Bret: Satellite imagery to Google Maps, which added even more complexity in the code base. And then we decided we wanted to support Safari. There was no mobile phones yet. So Safari was this like nascent browser on, on the Mac. And it turns out there's like a lot of decisions behind the scenes, sort of inspired by this windows app, like heavy use of XML and XSLT and all these like.

[00:09:54] Bret: Technologies that were like briefly fashionable in the early two thousands and everyone hates now for good [00:10:00] reason. And it turns out that all of the XML functionality and Internet Explorer wasn't supporting Safari. So people are like re implementing like XML parsers. And it was just like this like pile of s**t.

[00:10:11] Bret: And I had to say a s**t on your part. Yeah, of

[00:10:12] Alessio: course.

[00:10:13] Bret: So. It went from this like beautifully elegant application that everyone was proud of to something that probably had hundreds of K of JavaScript, which sounds like nothing. Now we're talking like people have modems, you know, not all modems, but it was a big deal.

[00:10:29] Bret: So it was like slow. It took a while to load and just, it wasn't like a great code base. Like everything was fragile. So I just got. Super frustrated by it. And then one weekend I did rewrite all of it. And at the time the word JSON hadn't been coined yet too, just to give you a sense. So it's all XML.

[00:10:47] swyx: Yeah.

[00:10:47] Bret: So we used what is now you would call JSON, but I just said like, let's use eval so that we can parse the data fast. And, and again, that's, it would literally as JSON, but at the time there was no name for it. So we [00:11:00] just said, let's. Pass on JavaScript from the server and eval it. And then somebody just refactored the whole thing.

[00:11:05] Bret: And, and it wasn't like I was some genius. It was just like, you know, if you knew everything you wished you had known at the beginning and I knew all the functionality, cause I was the primary, one of the primary authors of the JavaScript. And I just like, I just drank a lot of coffee and just stayed up all weekend.

[00:11:22] Bret: And then I, I guess I developed a bit of reputation and no one knew about this for a long time. And then Paul who created Gmail and I ended up starting a company with him too, after all of this told this on a podcast and now it's large, but it's largely true. I did rewrite it and it, my proudest thing.

[00:11:38] Bret: And I think JavaScript people appreciate this. Like the un G zipped bundle size for all of Google maps. When I rewrote, it was 20 K G zipped. It was like much smaller for the entire application. It went down by like 10 X. So. What happened on Google? Google is a pretty mainstream company. And so like our usage is shot up because it turns out like it's faster.

[00:11:57] Bret: Just being faster is worth a lot of [00:12:00] percentage points of growth at a scale of Google. So how

[00:12:03] swyx: much modern tooling did you have? Like test suites no compilers.

[00:12:07] Bret: Actually, that's not true. We did it one thing. So I actually think Google, I, you can. Download it. There's a, Google has a closure compiler, a closure compiler.

[00:12:15] Bret: I don't know if anyone still uses it. It's gone. Yeah. Yeah. It's sort of gone out of favor. Yeah. Well, even until recently it was better than most JavaScript minifiers because it was more like it did a lot more renaming of variables and things. Most people use ES build now just cause it's fast and closure compilers built on Java and super slow and stuff like that.

[00:12:37] Bret: But, so we did have that, that was it. Okay.

[00:12:39] The Evolution of Web Applications

[00:12:39] Bret: So and that was treated internally, you know, it was a really interesting time at Google at the time because there's a lot of teams working on fairly advanced JavaScript when no one was. So Google suggest, which Kevin Gibbs was the tech lead for, was the first kind of type ahead, autocomplete, I believe in a web browser, and now it's just pervasive in search boxes that you sort of [00:13:00] see a type ahead there.

[00:13:01] Bret: I mean, chat, dbt

[00:13:01] swyx: just added it. It's kind of like a round trip.

[00:13:03] Bret: Totally. No, it's now pervasive as a UI affordance, but that was like Kevin's 20 percent project. And then Gmail, Paul you know, he tells the story better than anyone, but he's like, you know, basically was scratching his own itch, but what was really neat about it is email, because it's such a productivity tool, just needed to be faster.

[00:13:21] Bret: So, you know, he was scratching his own itch of just making more stuff work on the client side. And then we, because of Lars and Yen sort of like setting the bar of this windows app or like we need our maps to be draggable. So we ended up. Not only innovate in terms of having a big sync, what would be called a single page application today, but also all the graphical stuff you know, we were crashing Firefox, like it was going out of style because, you know, when you make a document object model with the idea that it's a document and then you layer on some JavaScript and then we're essentially abusing all of this, it just was running into code paths that were not.

[00:13:56] Bret: Well, it's rotten, you know, at this time. And so it was [00:14:00] super fun. And, and, you know, in the building you had, so you had compilers, people helping minify JavaScript just practically, but there is a great engineering team. So they were like, that's why Closure Compiler is so good. It was like a. Person who actually knew about programming languages doing it, not just, you know, writing regular expressions.

[00:14:17] Bret: And then the team that is now the Chrome team believe, and I, I don't know this for a fact, but I'm pretty sure Google is the main contributor to Firefox for a long time in terms of code. And a lot of browser people were there. So every time we would crash Firefox, we'd like walk up two floors and say like, what the hell is going on here?

[00:14:35] Bret: And they would load their browser, like in a debugger. And we could like figure out exactly what was breaking. And you can't change the code, right? Cause it's the browser. It's like slow, right? I mean, slow to update. So, but we could figure out exactly where the bug was and then work around it in our JavaScript.

[00:14:52] Bret: So it was just like new territory. Like so super, super fun time, just like a lot of, a lot of great engineers figuring out [00:15:00] new things. And And now, you know, the word, this term is no longer in fashion, but the word Ajax, which was asynchronous JavaScript and XML cause I'm telling you XML, but see the word XML there, to be fair, the way you made HTTP requests from a client to server was this.

[00:15:18] Bret: Object called XML HTTP request because Microsoft and making Outlook web access back in the day made this and it turns out to have nothing to do with XML. It's just a way of making HTTP requests because XML was like the fashionable thing. It was like that was the way you, you know, you did it. But the JSON came out of that, you know, and then a lot of the best practices around building JavaScript applications is pre React.

[00:15:44] Bret: I think React was probably the big conceptual step forward that we needed. Even my first social network after Google, we used a lot of like HTML injection and. Making real time updates was still very hand coded and it's really neat when you [00:16:00] see conceptual breakthroughs like react because it's, I just love those things where it's like obvious once you see it, but it's so not obvious until you do.

[00:16:07] Bret: And actually, well, I'm sure we'll get into AI, but I, I sort of feel like we'll go through that evolution with AI agents as well that I feel like we're missing a lot of the core abstractions that I think in 10 years we'll be like, gosh, how'd you make agents? Before that, you know, but it was kind of that early days of web applications.

[00:16:22] swyx: There's a lot of contenders for the reactive jobs of of AI, but no clear winner yet. I would say one thing I was there for, I mean, there's so much we can go into there. You just covered so much.

[00:16:32] Product Management and Engineering Synergy

[00:16:32] swyx: One thing I just, I just observe is that I think the early Google days had this interesting mix of PM and engineer, which I think you are, you didn't, you didn't wait for PM to tell you these are my, this is my PRD.

[00:16:42] swyx: This is my requirements.

[00:16:44] mix: Oh,

[00:16:44] Bret: okay.

[00:16:45] swyx: I wasn't technically a software engineer. I mean,

[00:16:48] Bret: by title, obviously. Right, right, right.

[00:16:51] swyx: It's like a blend. And I feel like these days, product is its own discipline and its own lore and own industry and engineering is its own thing. And there's this process [00:17:00] that happens and they're kind of separated, but you don't produce as good of a product as if they were the same person.

[00:17:06] swyx: And I'm curious, you know, if, if that, if that sort of resonates in, in, in terms of like comparing early Google versus modern startups that you see out there,

[00:17:16] Bret: I certainly like wear a lot of hats. So, you know, sort of biased in this, but I really agree that there's a lot of power and combining product design engineering into as few people as possible because, you know few great things have been created by committee, you know, and so.

[00:17:33] Bret: If engineering is an order taking organization for product you can sometimes make meaningful things, but rarely will you create extremely well crafted breakthrough products. Those tend to be small teams who deeply understand the customer need that they're solving, who have a. Maniacal focus on outcomes.

[00:17:53] Bret: And I think the reason why it's, I think for some areas, if you look at like software as a service five years ago, maybe you can have a [00:18:00] separation of product and engineering because most software as a service created five years ago. I wouldn't say there's like a lot of like. Technological breakthroughs required for most, you know, business applications.

[00:18:11] Bret: And if you're making expense reporting software or whatever, it's useful. I don't mean to be dismissive of expense reporting software, but you probably just want to understand like, what are the requirements of the finance department? What are the requirements of an individual file expense report? Okay.

[00:18:25] Bret: Go implement that. And you kind of know how web applications are implemented. You kind of know how to. How databases work, how to build auto scaling with your AWS cluster, whatever, you know, it's just, you're just applying best practices to yet another problem when you have areas like the early days of mobile development or the early days of interactive web applications, which I think Google Maps and Gmail represent, or now AI agents, you're in this constant conversation with what the requirements of your customers and stakeholders are and all the different people interacting with it.

[00:18:58] Bret: And the capabilities of the [00:19:00] technology. And it's almost impossible to specify the requirements of a product when you're not sure of the limitations of the technology itself. And that's why I use the word conversation. It's not literal. That's sort of funny to use that word in the age of conversational AI.

[00:19:15] Bret: You're constantly sort of saying, like, ideally, you could sprinkle some magic AI pixie dust and solve all the world's problems, but it's not the way it works. And it turns out that actually, I'll just give an interesting example.

[00:19:26] AI Agents and Modern Tooling

[00:19:26] Bret: I think most people listening probably use co pilots to code like Cursor or Devon or Microsoft Copilot or whatever.

[00:19:34] Bret: Most of those tools are, they're remarkable. I'm, I couldn't, you know, imagine development without them now, but they're not autonomous yet. Like I wouldn't let it just write most code without my interactively inspecting it. We just are somewhere between it's an amazing co pilot and it's an autonomous software engineer.

[00:19:53] Bret: As a product manager, like your aspirations for what the product is are like kind of meaningful. But [00:20:00] if you're a product person, yeah, of course you'd say it should be autonomous. You should click a button and program should come out the other side. The requirements meaningless. Like what matters is like, what is based on the like very nuanced limitations of the technology.

[00:20:14] Bret: What is it capable of? And then how do you maximize the leverage? It gives a software engineering team, given those very nuanced trade offs. Coupled with the fact that those nuanced trade offs are changing more rapidly than any technology in my memory, meaning every few months you'll have new models with new capabilities.

[00:20:34] Bret: So how do you construct a product that can absorb those new capabilities as rapidly as possible as well? That requires such a combination of technical depth and understanding the customer that you really need more integration. Of product design and engineering. And so I think it's why with these big technology waves, I think startups have a bit of a leg up relative to incumbents because they [00:21:00] tend to be sort of more self actualized in terms of just like bringing those disciplines closer together.

[00:21:06] Bret: And in particular, I think entrepreneurs, the proverbial full stack engineers, you know, have a leg up as well because. I think most breakthroughs happen when you have someone who can understand those extremely nuanced technical trade offs, have a vision for a product. And then in the process of building it, have that, as I said, like metaphorical conversation with the technology, right?

[00:21:30] Bret: Gosh, I ran into a technical limit that I didn't expect. It's not just like changing that feature. You might need to refactor the whole product based on that. And I think that's, that it's particularly important right now. So I don't, you know, if you, if you're building a big ERP system, probably there's a great reason to have product and engineering.

[00:21:51] Bret: I think in general, the disciplines are there for a reason. I think when you're dealing with something as nuanced as the like technologies, like large language models today, there's a ton of [00:22:00] advantage of having. Individuals or organizations that integrate the disciplines more formally.

[00:22:05] Alessio: That makes a lot of sense.

[00:22:06] Alessio: I've run a lot of engineering teams in the past, and I think the product versus engineering tension has always been more about effort than like whether or not the feature is buildable. But I think, yeah, today you see a lot more of like. Models actually cannot do that. And I think the most interesting thing is on the startup side, people don't yet know where a lot of the AI value is going to accrue.

[00:22:26] Alessio: So you have this rush of people building frameworks, building infrastructure, layered things, but we don't really know the shape of the compute. I'm curious that Sierra, like how you thought about building an house, a lot of the tooling for evals or like just, you know, building the agents and all of that.

[00:22:41] Alessio: Versus how you see some of the startup opportunities that is maybe still out there.

[00:22:46] Bret: We build most of our tooling in house at Sierra, not all. It's, we don't, it's not like not invented here syndrome necessarily, though, maybe slightly guilty of that in some ways, but because we're trying to build a platform [00:23:00] that's in Dorian, you know, we really want to have control over our own destiny.

[00:23:03] Bret: And you had made a comment earlier that like. We're still trying to figure out who like the reactive agents are and the jury is still out. I would argue it hasn't been created yet. I don't think the jury is still out to go use that metaphor. We're sort of in the jQuery era of agents, not the react era.

[00:23:19] Bret: And, and that's like a throwback for people listening,

[00:23:22] swyx: we shouldn't rush it. You know?

[00:23:23] Bret: No, yeah, that's my point is. And so. Because we're trying to create an enduring company at Sierra that outlives us, you know, I'm not sure we want to like attach our cart to some like to a horse where it's not clear that like we've figured out and I actually want as a company, we're trying to enable just at a high level and I'll, I'll quickly go back to tech at Sierra, we help consumer brands build customer facing AI agents.

[00:23:48] Bret: So. Everyone from Sonos to ADT home security to Sirius XM, you know, if you call them on the phone and AI will pick up with you, you know, chat with them on the Sirius XM homepage. It's an AI agent called Harmony [00:24:00] that they've built on our platform. We're what are the contours of what it means for someone to build an end to end complete customer experience with AI with conversational AI.

[00:24:09] Bret: You know, we really want to dive into the deep end of, of all the trade offs to do it. You know, where do you use fine tuning? Where do you string models together? You know, where do you use reasoning? Where do you use generation? How do you use reasoning? How do you express the guardrails of an agentic process?

[00:24:25] Bret: How do you impose determinism on a fundamentally non deterministic technology? There's just a lot of really like as an important design space. And I could sit here and tell you, we have the best approach. Every entrepreneur will, you know. But I hope that in two years, we look back at our platform and laugh at how naive we were, because that's the pace of change broadly.

[00:24:45] Bret: If you talk about like the startup opportunities, I'm not wholly skeptical of tools companies, but I'm fairly skeptical. There's always an exception for every role, but I believe that certainly there's a big market for [00:25:00] frontier models, but largely for companies with huge CapEx budgets. So. Open AI and Microsoft's Anthropic and Amazon Web Services, Google Cloud XAI, which is very well capitalized now, but I think the, the idea that a company can make money sort of pre training a foundation model is probably not true.

[00:25:20] Bret: It's hard to, you're competing with just, you know, unreasonably large CapEx budgets. And I just like the cloud infrastructure market, I think will be largely there. I also really believe in the applications of AI. And I define that not as like building agents or things like that. I define it much more as like, you're actually solving a problem for a business.

[00:25:40] Bret: So it's what Harvey is doing in legal profession or what cursor is doing for software engineering or what we're doing for customer experience and customer service. The reason I believe in that is I do think that in the age of AI, what's really interesting about software is it can actually complete a task.

[00:25:56] Bret: It can actually do a job, which is very different than the value proposition of [00:26:00] software was to ancient history two years ago. And as a consequence, I think the way you build a solution and For a domain is very different than you would have before, which means that it's not obvious, like the incumbent incumbents have like a leg up, you know, necessarily, they certainly have some advantages, but there's just such a different form factor, you know, for providing a solution and it's just really valuable.

[00:26:23] Bret: You know, it's. Like just think of how much money cursor is saving software engineering teams or the alternative, how much revenue it can produce tool making is really challenging. If you look at the cloud market, just as a analog, there are a lot of like interesting tools, companies, you know, Confluent, Monetized Kafka, Snowflake, Hortonworks, you know, there's a, there's a bunch of them.

[00:26:48] Bret: A lot of them, you know, have that mix of sort of like like confluence or have the open source or open core or whatever you call it. I, I, I'm not an expert in this area. You know, I do think [00:27:00] that developers are fickle. I think that in the tool space, I probably like. Default towards open source being like the area that will win.

[00:27:09] Bret: It's hard to build a company around this and then you end up with companies sort of built around open source to that can work. Don't get me wrong, but I just think that it's nowadays the tools are changing so rapidly that I'm like, not totally skeptical of tool makers, but I just think that open source will broadly win, but I think that the CapEx required for building frontier models is such that it will go to a handful of big companies.

[00:27:33] Bret: And then I really believe in agents for specific domains which I think will, it's sort of the analog to software as a service in this new era. You know, it's like, if you just think of the cloud. You can lease a server. It's just a low level primitive, or you can buy an app like you know, Shopify or whatever.

[00:27:51] Bret: And most people building a storefront would prefer Shopify over hand rolling their e commerce storefront. I think the same thing will be true of AI. So [00:28:00] I've. I tend to like, if I have a, like an entrepreneur asked me for advice, I'm like, you know, move up the stack as far as you can towards a customer need.

[00:28:09] Bret: Broadly, but I, but it doesn't reduce my excitement about what is the reactive building agents kind of thing, just because it is, it is the right question to ask, but I think we'll probably play out probably an open source space more than anything else.

[00:28:21] swyx: Yeah, and it's not a priority for you. There's a lot in there.

[00:28:24] swyx: I'm kind of curious about your idea maze towards, there are many customer needs. You happen to identify customer experience as yours, but it could equally have been coding assistance or whatever. I think for some, I'm just kind of curious at the top down, how do you look at the world in terms of the potential problem space?

[00:28:44] swyx: Because there are many people out there who are very smart and pick the wrong problem.

[00:28:47] Bret: Yeah, that's a great question.

[00:28:48] Future of Software Development

[00:28:48] Bret: By the way, I would love to talk about the future of software, too, because despite the fact it didn't pick coding, I have a lot of that, but I can talk to I can answer your question, though, you know I think when a technology is as [00:29:00] cool as large language models.

[00:29:02] Bret: You just see a lot of people starting from the technology and searching for a problem to solve. And I think it's why you see a lot of tools companies, because as a software engineer, you start building an app or a demo and you, you encounter some pain points. You're like,

[00:29:17] swyx: a lot of

[00:29:17] Bret: people are experiencing the same pain point.

[00:29:19] Bret: What if I make it? That it's just very incremental. And you know, I always like to use the metaphor, like you can sell coffee beans, roasted coffee beans. You can add some value. You took coffee beans and you roasted them and roasted coffee beans largely, you know, are priced relative to the cost of the beans.

[00:29:39] Bret: Or you can sell a latte and a latte. Is rarely priced directly like as a percentage of coffee bean prices. In fact, if you buy a latte at the airport, it's a captive audience. So it's a really expensive latte. And there's just a lot that goes into like. How much does a latte cost? And I bring it up because there's a supply chain from growing [00:30:00] coffee beans to roasting coffee beans to like, you know, you could make one at home or you could be in the airport and buy one and the margins of the company selling lattes in the airport is a lot higher than the, you know, people roasting the coffee beans and it's because you've actually solved a much more acute human problem in the airport.

[00:30:19] Bret: And, and it's just worth a lot more to that person in that moment. It's kind of the way I think about technology too. It sounds funny to liken it to coffee beans, but you're selling tools on top of a large language model yet in some ways your market is big, but you're probably going to like be price compressed just because you're sort of a piece of infrastructure and then you have open source and all these other things competing with you naturally.

[00:30:43] Bret: If you go and solve a really big business problem for somebody, that's actually like a meaningful business problem that AI facilitates, they will value it according to the value of that business problem. And so I actually feel like people should just stop. You're like, no, that's, that's [00:31:00] unfair. If you're searching for an idea of people, I, I love people trying things, even if, I mean, most of the, a lot of the greatest ideas have been things no one believed in.

[00:31:07] Bret: So I like, if you're passionate about something, go do it. Like who am I to say, yeah, a hundred percent. Or Gmail, like Paul as far, I mean I, some of it's Laura at this point, but like Gmail is Paul's own email for a long time. , and then I amusingly and Paul can't correct me, I'm pretty sure he sent her in a link and like the first comment was like, this is really neat.

[00:31:26] Bret: It would be great. It was not your email, but my own . I don't know if it's a true story. I'm pretty sure it's, yeah, I've read that before. So scratch your own niche. Fine. Like it depends on what your goal is. If you wanna do like a venture backed company, if its a. Passion project, f*****g passion, do it like don't listen to anybody.

[00:31:41] Bret: In fact, but if you're trying to start, you know an enduring company, solve an important business problem. And I, and I do think that in the world of agents, the software industries has shifted where you're not just helping people more. People be more productive, but you're actually accomplishing tasks autonomously.

[00:31:58] Bret: And as a consequence, I think the [00:32:00] addressable market has just greatly expanded just because software can actually do things now and actually accomplish tasks and how much is coding autocomplete worth. A fair amount. How much is the eventual, I'm certain we'll have it, the software agent that actually writes the code and delivers it to you, that's worth a lot.

[00:32:20] Bret: And so, you know, I would just maybe look up from the large language models and start thinking about the economy and, you know, think from first principles. I don't wanna get too far afield, but just think about which parts of the economy. We'll benefit most from this intelligence and which parts can absorb it most easily.

[00:32:38] Bret: And what would an agent in this space look like? Who's the customer of it is the technology feasible. And I would just start with these business problems more. And I think, you know, the best companies tend to have great engineers who happen to have great insight into a market. And it's that last part that I think some people.

[00:32:56] Bret: Whether or not they have, it's like people start so much in the technology, they [00:33:00] lose the forest for the trees a little bit.

[00:33:02] Alessio: How do you think about the model of still selling some sort of software versus selling more package labor? I feel like when people are selling the package labor, it's almost more stateless, you know, like it's easier to swap out if you're just putting an input and getting an output.

[00:33:16] Alessio: If you think about coding, if there's no ID, you're just putting a prompt and getting back an app. It doesn't really matter. Who generates the app, you know, you have less of a buy in versus the platform you're building, I'm sure on the backend customers have to like put on their documentation and they have, you know, different workflows that they can tie in what's kind of like the line to draw there versus like going full where you're managed customer support team as a service outsource versus.

[00:33:40] Alessio: This is the Sierra platform that you can build on. What was that decision? I'll sort of

[00:33:44] Bret: like decouple the question in some ways, which is when you have something that's an agent, who is the person using it and what do they want to do with it? So let's just take your coding agent for a second. I will talk about Sierra as well.

[00:33:59] Bret: Who's the [00:34:00] customer of a, an agent that actually produces software? Is it a software engineering manager? Is it a software engineer? And it's there, you know, intern so to speak. I don't know. I mean, we'll figure this out over the next few years. Like what is that? And is it generating code that you then review?

[00:34:16] Bret: Is it generating code with a set of unit tests that pass, what is the actual. For lack of a better word contract, like, how do you know that it did what you wanted it to do? And then I would say like the product and the pricing, the packaging model sort of emerged from that. And I don't think the world's figured out.

[00:34:33] Bret: I think it'll be different for every agent. You know, in our customer base, we do what's called outcome based pricing. So essentially every time the AI agent. Solves the problem or saves a customer or whatever it might be. There's a pre negotiated rate for that. We do that. Cause it's, we think that that's sort of the correct way agents, you know, should be packaged.

[00:34:53] Bret: I look back at the history of like cloud software and notably the introduction of the browser, which led to [00:35:00] software being delivered in a browser, like Salesforce to. Famously invented sort of software as a service, which is both a technical delivery model through the browser, but also a business model, which is you subscribe to it rather than pay for a perpetual license.

[00:35:13] Bret: Those two things are somewhat orthogonal, but not really. If you think about the idea of software running in a browser, that's hosted. Data center that you don't own, you sort of needed to change the business model because you don't, you can't really buy a perpetual license or something otherwise like, how do you afford making changes to it?

[00:35:31] Bret: So it only worked when you were buying like a new version every year or whatever. So to some degree, but then the business model shift actually changed business as we know it, because now like. Things like Adobe Photoshop. Now you subscribe to rather than purchase. So it ended up where you had a technical shift and a business model shift that were very logically intertwined that actually the business model shift was turned out to be as significant as the technical as the shift.

[00:35:59] Bret: And I think with [00:36:00] agents, because they actually accomplish a job, I do think that it doesn't make sense to me that you'd pay for the privilege of like. Using the software like that coding agent, like if it writes really bad code, like fire it, you know, I don't know what the right metaphor is like you should pay for