AI Agents: Hype vs. Reality in 2025

While 2025 is touted as the year of AI agents, a seasoned builder of production AI systems argues otherwise. Based on a year of building over a dozen production agent systems, he highlights three key realities often overlooked: exponentially compounding error rates in multi-step workflows; quadratic cost scaling from context windows; and the crucial challenge of designing effective tools and feedback systems for agents. He contends that successful AI agent systems aren't fully autonomous but rather integrate AI with human oversight and traditional software engineering, operating within defined boundaries with verifiable operations and rollback mechanisms. The future, he predicts, favors teams building constrained, domain-specific tools leveraging AI for complex tasks while maintaining human control. The focus should shift from 'autonomous everything' to 'extremely capable assistants with clear boundaries'.