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Embedded AI: The Questions Every CEO is Asking

As AI continues to revolutionize industries, CEOs are discussing how to integrate this new superpower. On the a16z Podcast, we talk with Hex, Sourcegraph, and Cresta - three companies at the forefront of integrating AI into their existing products. From navigating data privacy concerns to optimizing accuracy and managing costs, these companies are navigating the complexities of this new superpower. Topics Covered: 00:00 - Introduction 01:29 - How AI can enhance customer service 07:50 - Using AI to shape data and analytics 08:56 - Solving the challenges on contextual understanding 11:27 - Giving AI the right information and context 13:31 - Tools that help build language Models (LLMs) 16:25 - Constructing prompts 19:08 - How do you differentiate? 21:09 - The value of proprietary datasets 22:22 - Customization as a moat 23:44 - Increasing compilation rates 26:49 - Where is the moat? 29:49 - Privacy challenges 34:01- Cost and pricing of models 39:35 - What does the contact center look like in 2028? Resources: * Find Zayd Enam on Twitter: https://twitter.com/zaydenam * Find Barry McCardel on Twitter https://twitter.com/barrald * Find Beyang Liu on Twitter: https://twitter.com/beyang * Learn more about Cresta: https://cresta.com * Learn more about Hex: https://hex.tech * Learn more about Sourcegraph: https://sourcegraph.com/ Stay Updated: Find a16z on Twitter: https://twitter.com/a16z Find a16z on LinkedIn: https://www.linkedin.com/company/a16z Subscribe on your favorite podcast app: https://a16z.simplecast.com/ Follow our host: https://twitter.com/stephsmithio Please note that the content here is for informational purposes only; should NOT be taken as legal, business, tax, or investment advice or be used to evaluate any investment or security; and is not directed at any investors or potential investors in any a16z fund. For more details please see a16z.com/disclosures.

Steph SmithhostZayd EnamguestBarry McCardelguest
Jun 2, 202344mWatch on YouTube β†—

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At a glance

WHAT IT’S REALLY ABOUT

Founders Reveal How to Embed AI, Differentiate, and Protect Data

  1. Cresta's Zayd Enam argues for a 'creative' approach to AI that reimagines work, such as turning high-attrition contact center jobs into relationship-building roles and mining customer conversations for business insight, rather than just automating existing processes.
  2. Hex's Barry McCardel and a Sourcegraph speaker both stress that the context and prompts fed into a model determine output quality, and that the hard work of AI products happens before the API call.
  3. On differentiation, the guests say model access is a commodity and UIs get copied, so advantages come from proprietary or personalized data, polished user experiences, and workflows that deliver business outcomes.
  4. Privacy, security, and cost shape architecture choices, with Sourcegraph offering self-hosting and a pluggable, bring-your-own-model design, while Hex avoids training models on customer code.
  5. The episode closes with Cresta's vision of a 2028 contact center where machines handle data entry and routine requests so humans can focus on strategic relationship building.

IDEAS WORTH REMEMBERING

5 ideas

Creative AI beats lazy automation

Zayd Enam contrasts automating an existing process end to end with using AI as a new building block to reimagine the business, including mining customer conversations for product, pricing, and market insight.

Context is king

The Sourcegraph speaker says the context given to a model dictates output quality, and that most of Cody's quality issues come from failing to fetch the right context into the context window.

More context is not always better

Barry McCardel says Hex was tempted to stuff in as much context as possible but found that too much can confuse a model, so it iterated to find the right level.

The real work happens before the API call

McCardel notes anyone can get an OpenAI API key, but building context, tuning prompts, chaining models, and giving users feedback is the hard part of embedding AI.

Models are commodities; moats come from elsewhere

McCardel says sending a request to a model is already a commodity and UI elements get copied, so he points to data-driven personalization, strong user experience, and being first to adapt to changed assumptions.

WORDS WORTH SAVING

5 quotes

the lazy approach is to basically go say, "Hey, this is an existing process. Let me just go automate it end to end." But then the creative way to look at it is that, hey, no, my job or my role as a business is to deliver the best possible customer experience or the best possible product experience.

β€” Zayd Enam

internally, we've started saying, uh, this phrase, essentially like context is king.

β€” Unattributed

I think the models themselves and being able to send a request to one of them is, is already a commodity.

β€” Barry McCardel

Like we will generate the code, we will show it to you, but we wanna keep the human in the loop.

β€” Barry McCardel

It is not true that language models make search engines unnecessary. If anything, they make the search engines more valuable because now all that data that you can search becomes like 10X more powerful

β€” Unattributed

Contact center attrition and AILazy versus creative AIContext and prompt constructionDifferentiation and moatsProprietary data and customizationPrivacy and model flexibilityModel and data costs

High quality AI-generated summary created from speaker-labeled transcript.

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