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#112 — A formula for building effective AI agents

August 26, 20257 min read

#112 — A formula for building effective AI agents

Two years ago, every new startup demo seemed powered by “magic” LLMs. Founders bragged about AI agents that could do anything. Then reality hit: ballooning bills, mysterious bugs, confused users, and hard lessons learned. If you’re building today’s startups, you’ve probably wondered:

Is an AI agent actually the best choice—or are there simpler, cheaper, safer ways to scale?

The Three Unbreakable Rules

After hundreds of founder interviews and agent launches, three principles emerged for winning in this new AI era:

  1. Don’t build agents for everything
  2. Keep it simple
  3. Think from the agent’s perspective

Keep these rules in mind as you read—and revisit them whenever you feel tempted by shiny tech.

Choosing Your Path: Workflow, Agent, or Hybrid?

The Ultimate Decision Matrix

Stuck at the crossroads? This battle-tested matrix breaks down when to choose agents, stick to workflows, or blend both. Real-world examples ground every abstract idea.

Decision FactorGo with WorkflowGo with AgentHybrid ApproachExample (Real World)
Task ComplexitySimple, predictable, defined decision treeAmbiguous, open-ended, requires judgment or adaptationCore is workflow, edge/complex handled by agentE-commerce returns processing—most cases automated workflow, exceptions handled by agent
Value per TaskLow-value, high-volume; budget per task is tightHigh-value, lower volume, or mission-critical; budget can be flexibleUse agent for high-value long-tail or upsellsCustomer service FAQ vs. custom enterprise issue escalation (agent)
Error ToleranceErrors are catastrophic, need tight control; easy to review/fixErrors are recoverable or minor; downstream verification or sampling availableHuman-in-the-loop for agent escalationsFintech daily payments (workflow), fraud investigation by agent with human review
Cost PredictabilityCost must be highly predictable/lowWilling to accept variable or higher per-task costs for flexibilityCapped by workflow, uncapped for select agent casesInsurance quote generation—workflow for simple, agent for complex/legacy plans
Iteration SpeedMinimal changes needed after shippingNeed rapid iteration, experimentation, or frequent context updatesWorkflow for core, run agent off to one side for experimentsWorkflow launches, agent suggests optimizations or new features
Verification & AuditabilityEasy to log, review, and explain decision path to stakeholdersDecision process can be opaque; interpretability is secondaryAgents log reasoning, workflow logs pathHealthcare: workflow for compliance, agent for nuanced triage with audit logs
User Experience NeedsConsistent, fast, reliable outcomesPersonalized, adaptive, exploratory, or hands-on experiencesWorkflow for onboarding, agent for custom onboarding pathsSaaS onboarding workflow + agent for custom migration
Tool UsageUses static, well-defined APIs or UIRequires using variable, exploratory, or rapidly evolving toolsExpose limited tools to workflow, agent uses advanced tools where neededCRM update—workflow posts data, agent organizes notes or context
Scaling ConsiderationsScales linearly with volume; ideal for mass market useMore flexible scaling across domains, but costly for high-volume, simple tasksWorkflow covers 80/20; agents scale specialized or new casesTicketing system: workflow resolves most, agent handles regulatory/edge tickets
Monitoring & Feedback LoopsSimple monitoring, catch errors automaticallyRequires richer observability, error analysis, interventionWorkflow with agent audit, feedback mechanismsInternal tool—workflow for reports, agent for adhoc analytics
Best PracticeChoose for the bulk of standardized operationsChoose for strategic differentiation and edge problemsBuild with workflow backbone, add agents for competitive advantageHR scheduling: workflow for standard slots, agent handles custom/cross-timezone scheduling

How to use this table:

  • Pinpoint your use case in each row.
  • Lean heavily toward workflows unless “agent” keeps coming up.
  • When split, go hybrid: automate what you can, let agents handle complexity and nuance.

From Hype to Reality: The Agent Evolution

2019-2023: We marveled at LLMs summarizing documents and categorizing emails—a revolution that soon faded into the new normal.

2024: Chaining models in controlled workflows became the secret sauce behind scalable products. But with every new feature came higher latency, rising costs, and more technical debt.

Today: Agentic systems—smarter, more autonomous, capable of making real decisions—are graduating from labs to production. Yet, as our tools get sharper, even tiny mistakes cut deeper.

The horizon: The next leap is multi-agent collaboration. Imagine fleets of specialists, each with a clear role, working together to tackle problems that used to stall even superhuman solo agents.

The Agent Litmus Test: Should You Even Build One?

Success here isn’t about what’s possible, but about what’s worth the effort. Founders who win at agents ruthlessly interrogate each new idea:

  • Is the task ambiguous or complex, with no easy decision tree? If you can map out the logic, use a workflow.
  • Does each task justify the exploration cost? If you’re watching pennies per transaction, agents often aren’t the answer.
  • Can you de-risk the hard parts? Don’t unleash agents unless you know they can nail core actions—and recover from edge-case errors.
  • Are error consequences clear and manageable? If discovery is tough or stakes are sky-high, start conservatively.

Real world: Coding agents thrive because writing great code is ambiguous, extremely valuable, and mistakes are quickly caught with tests and CI.

The Minimalist’s Secret: The Three-Part Agent

Every successful agent—no matter how dazzling—relies on just three building blocks:

  1. Environment: Where the agent operates (APIs, interfaces, or data).
  2. Toolset: What actions are allowed (well-scoped, real user-like behaviors).
  3. System Prompt: The rules, guardrails, and context keeping it focused.

Here’s the trick: If your agent isn’t producing value with these basics, no extra prompt engineering or obscure feature will save it.

Complexity Kills—Why Most Agent Projects Stall

Picture this: a founder adds feature after feature “just in case,” and ends up with slow, buggy, unmaintainable chaos.

The antidote: Stay ruthless. Ship the core loop, validate with real users, and only then layer in guardrails or enrich the experience.

Think Like an Agent: Founders’ Empathy Training

Ever stare at your agent’s output and wonder, “Why did it do that?” It’s not ‘stupid’—it’s working with limited vision. All it knows is what fits into 10–20k tokens: the open tabs, prompt, and the last few actions.

Founder’s drill:

  • Try executing a workflow with only a screenshot and basic tools. Where do you get stuck? That’s your agent’s daily experience.
  • Feed your system prompt, tool list, and sample tasks to Claude or your favorite LLM, and ask what’s confusing. The answers will surprise you—and often lead to quick fixes.

Pushing the Frontier: Where Smart Founders Are Experimenting in 2025

Want to play at the edge? Three frontiers matter most:

  1. Budget-aware agents: Systems that refuse to break the bank, cap their own spending, or self-throttle when limits loom.
  2. Self-evolving tools: Agents that propose—then adopt—better tool instructions as their operating environment changes.
  3. Multi-agent orchestration: Specialized sub-agents dividing work and communicating efficiently, faster and with fewer errors than even the smartest solo generalist.

The Action Plan: Building for Today, Iterating for Tomorrow

  • Apply the litmus test before starting.
  • Always launch with just the basics—system, toolset, prompt.
  • Step into your agent’s shoes at every iteration; test from its perspective, not yours.
  • Obsess over cost and error rates early.
  • Embrace fast learning: Early mistakes are golden; polish comes later.

Hard-Won Wisdom for Modern Founders

  • Agents multiply impact only when paired with disciplined prompts, sharp tools, and a clear sense of user need.
  • Trust is earned through transparency: always show what the agent is doing and make it easy for users to override.
  • Automation isn’t enough—actionable context and clarity win every time.

In short:

  • Don’t build agents for everything.
  • Keep your stack as simple as you can get away with.
  • Never stop learning from your agent’s unique point of view.

Ship, learn, and scale—one decision at a time.

Frequently asked questions

When should I use workflows instead of AI agents in my startup?

Workflows are ideal for structured, predictable tasks where the decision tree is clear and the cost of error needs to be tightly managed. For example, an e-commerce startup automated 75% of customer service queries by mapping explicit FAQ decision trees, saving $7,200/month in LLM costs. Only their complex, ambiguous cases were handled by agents.

What are the biggest risks of deploying AI agents in production?

Key risks include unpredictable cost overruns, latency spikes, and high-stakes errors that are hard to discover. For instance, a fintech firm’s agent once initiated incorrect fund transfers due to a poorly scoped prompt—in production, that meant an urgent rollback and tighter human-in-the-loop safeguards. Always assess error impact and cost-management strategies before giving agents autonomy.

How do I calculate the real cost of running AI agents at scale?

Track every token, tool call, and latency in your agent’s workflow. Let’s say your SaaS agent workflow averages 45,000 tokens per task at $0.003 per 1,000 tokens: that’s $0.135 a task. Handling 10,000 tasks daily? You’re spending $1,350 a day. Many startups cut costs by first prototyping with agents, then hard-coding common paths as workflows to serve the 80/20 of use cases.

Can you give a case study of agents vs. workflows in real product launches?

A healthtech app used agents to triage complex medical questions but switched to workflows for most common symptom checks. The result: agent cost dropped by 73% while coverage of standard queries improved, and clinicians still got value from the agent’s nuanced reasoning only where it was truly needed.

What are the best strategies for debugging AI agents in production?

Think like your agent—test tasks using only the context window and available tools. Many founders use observability platforms to pipe agent prompts and tool calls back to a dashboard. For example, a productivity app founder caught a bug where the agent misunderstood calendar invite formats by simulating the process with only the data the agent had. Logging every step made the fix fast and repeatable.

How do I ensure my AI agent respects budget constraints?

Set task-level budgets for tokens and execution time, then enforce fail-safes. For example, an insurance startup set a 20,000-token cap per agent task; exceeding that triggered an alert and routed to fallback workflow automation. Open source tools like LangSmith or custom dashboards can monitor budget compliance in real time.

What is an example of agents collaborating in production?

A logistics SaaS company ran multiple specialized agents (pricing optimizer, route planner, and compliance checker) that shared results through a simple message broker. This parallelization slashed customer quote response times by 65% compared to a monolithic agent and isolated context, avoiding cross-agent confusion—a model that’s gaining traction in vertical SaaS.

How do I know if my prompt and tool instructions are clear for agents?

Inject your actual prompts and tool descriptions into your LLM (‘Claude’ or equivalent) and ask explicitly: 'What is ambiguous? What would make this easier to execute?' One founder realized their tool description for 'email draft' was missing allowed formats. Updating the prompt improved agent output quality by 30% in internal QA.

What are the first three things to monitor after deploying an AI agent?

  1. Token and tool usage per task (cost control)
  2. Error rates and failure cases (especially silent fails)
  3. User trust indicators (NPS, manual overrides, or ignored agent actions)
A B2B fintech platform saw cost and error-rate dashboards surface critical issues in the first week, letting them pivot agent design before scaling up usage.

How will the future of multi-agent collaboration impact startups?

Asynchronous, specialized agent collaboration is set to unlock major workflow gains. For example, a travel marketplace deploying 'trip planner', 'flight finder', and 'deal optimizer' agents found faster custom trip results and fewer bottlenecks than their previous single-agent systems. Expect new SaaS models and best practices to emerge as agent-to-agent protocols mature in 2025.

How do AI agents differ from traditional automation and workflows?

Traditional automation and workflows follow set rules and predictable decision trees, ideal for repetitive tasks with clear inputs and outputs. AI agents, on the other hand, operate with greater autonomy, react to ambiguous contexts, and adapt strategies based on real-time feedback. For instance, a marketing SaaS workflow can automatically send drip emails, while an AI agent can analyze engagement patterns and craft personalized follow-ups in unexpected scenarios.

What factors should founders consider before adding AI agents to their startup?

Founders need to weigh task complexity, cost/benefit analysis, error stakes, and verification ease. Only deploy agents for ambiguous, high-value tasks where workflows aren’t practical. For high-volume, predictable processes, stick to classic automation to save costs and reduce risks. Example: A fintech startup used agents only for fraud detection edge cases, but relied on workflows for daily payment processing.

How do you transition from agent prototypes to robust production systems?

Start with agents for rapid prototyping of new features, collect data on usage and performance, and then convert frequently used paths into rock-solid workflows. This hybrid approach helps manage costs and reliability. A real-world case: An HR platform prototyped interview scheduling with an agent, then automated 90% of cases with workflows, keeping the agent for unique, high-touch scenarios.

What are recommended tools and platforms for agent development and monitoring?

Leverage frameworks like LangChain, CrewAI, or open-source orchestration tools for agent development. Use observability platforms (e.g., LangSmith, Honeycomb, Amplitude) for real-time monitoring of token usage, routing logic, and error triage. Many founders use custom dashboards to visualize agent decisions and costs, enabling rapid iteration in production.

How do you maintain user trust when deploying autonomous agents?

Be transparent with progress indications, provide easy user overrides, and show the agent’s reasoning when possible. For example, a SaaS ticketing tool increased adoption by showing agent steps and confidence scores, letting users review and accept agent actions—building trust while minimizing disruption.

What are the top reasons AI agent projects fail in early-stage startups?

The most common reasons are excessive scope and complexity, unclear cost models, insufficient guardrails against critical errors, and lack of real user feedback loops. Focus on launching minimal, tightly scoped agents, monitoring performance closely, and iterating based on real-world data for lasting success.

How can founders mitigate the risk of runaway costs from LLM token usage?

Implement explicit per-task or per-user budget caps and real-time alerts for cost overruns. Use agent telemetry to review token consumption by feature, and rework prompts and logic to be as concise as possible. A proptech startup saved over $10,000/month by refactoring prompts and switching common cases to structured automations.

What is the ideal way to structure prompts and toolsets for enterprise-friendly agents?

Prompts should be clear, specific, and reviewable, avoiding ambiguity wherever possible. Toolsets should mirror user actions and expose only what’s necessary. In a logistics company, separating 'route optimization,' 'compliance check,' and 'client communication' as tools simplified agent logic and made human handoff seamless.

How do multi-agent systems enable startups to scale faster?

By delegating specialized roles (e.g., planner, executor, verifier) to different agents, startups can parallelize complex workflows, reduce context-window clutter, and insulate tasks from cross-contamination. A real estate SaaS split lead qualification, proposal drafting, and legal checks into agent subsystems, cutting onboarding times by 50%.

What are the best practices for integrating human-in-the-loop oversight in agent systems?

Include checkpoints for human review on high-stakes actions, provide clear explanations for agent decisions, and make manual overrides simple. For example, an insurance SaaS lets agents prefill claims which humans can verify with a single click, enhancing productivity without sacrificing trust or compliance.

How can I benchmark the ROI of switching workflows to agents in my startup?

Measure before/after on KPIs like cost per transaction, error rates, user satisfaction, and task latency. A B2B SaaS added agents for custom report generation, tracking a 40% reduction in manual labor costs and a 27% increase in upsell rates, while maintaining error rates below 0.5% through robust oversight.

What does the future of agent-to-agent communication and collaboration look like?

Emerging standards and message brokers will allow asynchronous, specialized agents to cooperate seamlessly. Early adopters in travel, ecommerce, and logistics spaces already report faster task completion and greater resilience, as agents delegate subtasks and resolve dependencies in parallel—hinting at an 'API for agent conversations' as the future backbone for many startups.

Where can I find real-world benchmarks on token costs and agent performance?

Open source communities and AI infrastructure providers (like Hugging Face, LangChain forums, and case studies on Substack/Medium) regularly publish cost breakdowns and performance benchmarks. Startups should share anonymized metrics internally and with peers to calibrate expectations and discover optimization strategies tailored to their own workloads.

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