This episode explores the challenges in building AI agents, countering the notion that it's merely a buzzword. The speaker, Chip Huyen, defines an agent as anything that perceives and acts upon its environment, illustrating this with examples like chess-playing agents and coding agents interacting with computer systems. More significantly, Huyen highlights three major hurdles: the "curse of complexity," where task failure rates increase exponentially with the number of steps; the difficulty of translating natural language instructions into precise API calls, exacerbated by ambiguous language and poorly documented APIs; and the limitations imposed by context, where the vast amount of information needed for complex tasks exceeds the model's processing capacity. For instance, she discusses how models struggle with tasks requiring more than five steps and how ambiguous user requests require clarification or specialized action models. To address these issues, Huyen suggests breaking down complex tasks, employing test-time compute scaling, and using better documentation and memory systems to manage information flow. Ultimately, overcoming these challenges will unlock many new and practical applications for AI agents, pushing the boundaries of what's currently possible.