2025, The State of AI Agents, and Engagement as the Ultimate Business Metric

Engagement > Growth

Good morning

Welcome back after the holiday break, and let’s start the first 2025 newsletter edition with a video:

In today's edition, among other things:

• Books That Shaped My 2024

• AI Agents: What's Actually Working

• Engagement - The Key To Building An Enduring, Billion-Dollar Business

• Startup Valuation Ranges

• The Founder GTM Handbook

• Understanding Startup Board Control

• How AI Will Change Software Engineering

Onwards!

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Books That Shaped My 2024

I didn’t have much time to read books in 2024, but I managed to read some over weekends. Here’s the list:

• Artificial Intelligence: A Guide for Thinking Humans by Melanie Mitchell

  • The same AI systems that can beat grandmasters at chess still struggle with tasks any 5-year-old can do effortlessly, like understanding why a person can't use an umbrella that's been carried away by the wind.

• A Brief History of Intelligence by Max Bennett

  • A fascinating dive into how octopuses evolved a different form of intelligence than vertebrates, suggesting there might be multiple paths to developing consciousness.

• The Weirdest People in the World by Joseph Henrich

  • The Catholic Church's ban on cousin marriage in medieval Europe accidentally triggered a cascade of psychological changes that helped create modern individualistic societies.

• The Science of Can and Can't by Chiara Marletto

  • Shows how focusing on what's impossible (like perpetual motion machines) has led to some of physics' greatest breakthroughs.

• Reentry: SpaceX, Elon Musk, and the Reusable Rockets

  • The first successful landing of a rocket booster was compared to "trying to balance a rubber broomstick on your hand in the middle of a wind storm".

• The Science of Rapid Skill Acquisition

  • The "85% rule" - practicing at a level where you're successful about 85% of the time leads to optimal learning.

• The Human Use of Human Beings by Norbert Wiener

  • Written in 1950, predicted with eerie accuracy our modern challenges with automation and information overload.

• Never Play It Safe by Chase Jarvis

  • The most successful creatives often have unconventional backgrounds - one of the world's top food photographers started by photographing skateboarders.

• The Vital Question by Nick Lane

  • Makes a compelling case that life began in deep-sea hydrothermal vents, where conditions today are remarkably similar to those billions of years ago.

• The Structure of Scientific Revolutions by Thomas S. Kuhn

  • Scientists initially rejected the idea of continental drift not because of poor evidence, but because they couldn't imagine how continents could possibly move.

• Consolations and Consolations II by David Whyte

  • Explores how the word "alone" comes from "all-one," suggesting a completeness rather than loneliness.

• Don't Believe Everything You Think

  • Most people spend 46.9% of their waking hours thinking about something other than what they're actually doing.

If you want to pick one from the list, pick Consolations or Consolations II.

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AI Agents: What's Actually Working

The term "AI Agent" has become increasingly both popular (new startups) and murky (as vendors rush to rebrand existing tools - please see the mem at the end). But, as I wrote multiple times in the past two years - it’s one of the most important shifts in tech for years to come. Here’s Insights Partners:

Often a fun conversation starter, the academic definition — software that can reason on a task and take action independently — captures the high-level aspiration of AI Agents. We think of Agents as a new architecture combining core application logic and associated workflow automation in a unified flow, embedding LLMs to interweave planning and execution of complex tasks.

Agents could be as simple as a single-task Agent, which combines an LLM with a specific tool or function. Multi-agent platforms address complex workflow by breaking down the task into distinct Agents and modules, which are orchestrated to deliver the required output.

At its core, an Agent is software that can:

1. Take in a task description

2. Break it down into steps

3. Execute those steps using available tools

4. Adapt its approach based on feedback

The key distinction from traditional automation: Agents handle variance and uncertainty by replanning rather than failing when their happy path breaks.

Four Main Categories:

1. Task-Specific Agents

These focus on one well-defined job and do it reliably:

• Rasa's Customer Service Agent

  • Handles support tickets end-to-end

  • Integrated with knowledge bases and ticketing systems

  • Clear ROI: 40-60% reduction in human agent time

• Harvey (Legal)

  • Reviews contracts and flags issues

  • Cites relevant case law and regulations

  • Used by Allen & Overy for due diligence

The pattern: Take a repetitive knowledge-worker task, embed domain expertise, achieve reliability through constraint.

2. Workflow Agents

These coordinate multiple steps across tools:

• Bardeen

  • Automates multi-step processes across SaaS tools

  • Example: Lead enrichment → CRM update → Email sequence

  • Key insight: Most knowledge work is chains of small tasks

• GitHub Copilot

  • Suggests code completions

  • Generates tests

  • Explains code changes

The pattern: Replace manual context-switching and tool juggling with orchestrated sequences.

3. Platform Agents

These extend existing software platforms:

• Salesforce Einstein GPT

  • Summarizes customer interactions

  • Drafts responses

  • Updates records automatically

• Microsoft Copilot

  • Embedded in Office apps

  • Handles document creation/editing

  • Meeting summarization

The pattern: Add AI capabilities to where users already work rather than creating new destinations.

4. Specialized Interface Agents

These focus on specific interaction modes:

• ElevenLabs Voice Agents

  • Natural voice interaction

  • Multiple languages

  • Used in customer service and education

• Midjourney

  • Image generation and editing

  • Visual design assistance

  • Growing use in creative workflows

The pattern: Make complex technical capabilities accessible through natural interfaces.

AI Agents market map:

What's Working and What Isn't

Working:

1. Bounded tasks with clear success metrics

2. Integration with existing workflows

3. Clear handoffs between human and Agent

4. Strong guardrails and safety checks

Not Working:

1. General-purpose "AI assistants"

2. Agents that require perfect data

3. Complex multi-step tasks without human oversight

4. Replacing entire job functions

Also this, via CNBC:

Salesforce will hire 2,000 people to sell artificial intelligence software to clients, CEO Marc Benioff said on Tuesday, double the number the company indicated it was planning to add a month ago.

The cloud software company, which targets sales reps, marketers and customer service agents, is among the many technology companies hoping to boost revenue with generative AI features.

“We’re adding another couple of thousand salespeople to help sell these products,” Benioff said at a company event in San Francisco. “We already had 9,000 referrals for the 2,000 positions that we’ve opened up. It’s amazing.”

Three emerging pricing models:

1. Per-Task Pricing

   • Example: $X per contract reviewed

   • Works well for clear, measurable outputs

   • Harvey and other legal Agents use this

2. Capacity-Based

   • Example: $Y per Agent instance per month

   • Similar to hiring an employee

   • Common in customer service applications

3. Outcome-Based

   • Example: % of cost savings or revenue generated

   • Hardest to implement but most aligned

   • Emerging in sales and procurement Agents

Some considerations:

Enterprises

• Start with bounded, measurable use cases

• Invest in data quality and API infrastructure

• Build expertise in Agent oversight and management

Builders

• Focus on specific workflows vs. general intelligence

• Build strong monitoring and safety features

• Develop clear ROI measurement tools

Investors

• Look for clear usage metrics and ROI stories

• Prefer focused solutions over platforms

• Watch for emerging middleware and infrastructure plays

And for everyone:

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Engagement - The Key To Building An Enduring, Billion-Dollar Business