Building AI Agents (Clearly Explained)

**Greg Isenberg** (0:00)
Ras Mic, welcome back to The Pod. By the end of this episode, what are people gonna learn?

**Ras Mic** (0:04)
I hope I'm gonna share some wisdom on how you can use the agents better. There's a lot of information going on right now. I disagree with most of it, and that's what we're gonna talk about. So at the end, whether you're building something, using an agent for some sort of work, you have the best output possible.

**Greg Isenberg** (0:20)
And is this gonna be a technical dive, or non-technical person can?

**Ras Mic** (0:25)
Anyone can watch this. There's gonna be a lot of diagrams, that's all.

**Greg Isenberg** (0:29)
You're gonna make it clear to understand the concepts, right?

**Ras Mic** (0:31)
Easy.

**Greg Isenberg** (0:32)
Okay.

**Ras Mic** (0:32)
Basics.

**Greg Isenberg** (0:33)
Let's go. So...

**Ras Mic** (0:42)
The first thing that I want to announce, previous episodes, we probably disagree with this point, but now, what's true is the models are good. The models are exceptionally good. Opus 4.6 is amazing, GPT 5.4 is amazing. I know there's like two sets of camp where, especially when it comes to programming, people are like, oh, Opus is the better UI designer, GPT 5.4 is a better backend. Generally speaking, we've reached a point, we're not at AGI yet, where we reached a point where the models are good, but context still matters.
And you have the power to steer the models in a direction where you can get quality or you can get slop. And that's what I really want to talk about. But before we get into all that, and feel free to cut me off because this topic excites me, we need to learn how context works. And context is the model assembling information that it needs to execute an action. And the way the context is assembled, let's say in the coding agent, but really in any sort of agent, is there's this general system prompt, usually by the model provider. So for example, Claude Code leaked recently, and one of the cool things that, especially as a developer, I got to do is I got to read the system prompt. So they have this general system prompt that guides the model on how to act, what to do, what not to do. The system prompt is very important. And then you have a lot of people have agent.md files or Claude.md files. Now I'm just gonna say off rip, 95% of people don't need this. The reason being is, again, you have to assume that the models are already good. Now imagine I told you, Greg, every time we're about to shoot a podcast, Greg, you need a microphone. You know you need a microphone. You've done this plenty of times. So if I'm building, like let's say a website with Claude Code and I'm telling Claude Code, this code base uses React. I don't need to because it has the code base in context. It can check the code. So there is this disparity where a lot of people are putting a lot of onus on the harness and the context building. And I'm low key starting to strip things off. Like I'm going super, super minimal because again, not to sound like an anthropic or open AI shill. Unfortunately, I have not been acquired. None of them are paying me. But the models are really, really good.

**Greg Isenberg** (2:57)
Wait, so 95% of the time, I don't even need to bother with an agent MD file.

**Ras Mic** (3:02)
You don't, unless this is some sort of proprietary information.

**Greg Isenberg** (3:05)
Yeah, what is the 5% of time I should care about it?

**Ras Mic** (3:08)
Proprietary information that maybe is specific to your company or some methodology that is specific to you that has to be referenced in every single conversation. Because the annoying part with an agent MD file is every time you go back and forth with the agent, it's added in the context. The cool thing about skills, and I'm going to talk about skills in a second, the way skills are designed, the skills are used in a way that's called progressive disclosure. Meaning, when you have a skill file, the entire thing isn't added to context. It's just the title and the description. So the agent has the title and description in the context. And when you, let's say you have a notion report skill, right, and you tell your agent, hey, I want you to create a notion report. It's then going to check its context and be like, oh, I have this skill. Let me check out the entire document. So it's not in the context. What's in the context is the name and the description, but that's enough for the agent to be like, oh, this is a skill I need. Let me go use it, which is fantastic. I'm a skills maxi. And I'm going to show later in the episode, like how you craft the perfect skills. But with agent.md and Claude.md files, it's context being added at every turn, right? So let's say you have like a thousand line file, Claude.md, and let's say that's like 7,000 tokens. You're spending 7,000 tokens on every run. Now, do you need to? Most likely not. It probably should be a skill. But if you have some sort of company proprietary information or like there's something specific that you do that the model needs to know at every single turn, then you use it. The thing is 95% of people don't have that, right? So I'm not a fan unless that's the case. So, and the reason being is we're wasting tokens, right? It's in every single turn. But this is where the beauty of skills come. I'll show my screen here. The your skill again, this is not like word for word how it looks, but a skill basically looks like this. There is a name, there is a description, and then underneath is a bunch of information. I'm going to put a bunch of info. What when you create a skill dot MD file, what gets added into the context is actually just a name in the description.