Some startups are using the label 'AI agent' to raise prices, says Andreessen Horowitz partner: 'There's a marketing angle to agents'
"AI agent" may be the buzziest term in tech, but some startups are using the label to raise prices, said a partner at Andreessen Horowitz, one of Silicon Valley's most prominent venture capital firms.
"There's a marketing angle to agents," said Guido Appenzeller, a partner at a16z, on a company podcast released May 2. "A couple of startups are basically saying, 'Hey, we can price this software that we're building much, much higher because this is an agent.'"
Appenzeller said that a "continuum" of startups is cashing in on the hype by branding simple tools as AI agents.
"The simplest thing that I've heard being called an agent is basically just a clever prompt on top of some kind of knowledge base," he said. A user asks about a technical problem, and the "agent" looks at the knowledge base and comes back with a "canned response."
An agent for some of these startups "could just be a large language model with a chat interface," he added.
Appenzeller and partners Matt Bornstein and Yoko Li were discussing how to define AI agents — systems that are supposed to act autonomously to complete tasks.
Andreessen Horowitz is a backer of Sam Altman's OpenAI and Elon Musk's xAI. It is seeking to raise a $20 billion fund to invest more heavily in AI, sources told Reuters last month. The company did not respond to Reuters' requests for comment.
"I don't think anything we have are actually agents," said Bornstein. The term itself "may be poorly defined and kind of overloaded," he added.
Companies have been using AI agents to automate elaborate, multi-step tasks. For instance, Regie AI uses "auto-pilot sales agents" to automatically find leads, draft personalized emails, and follow up with buyers. Big Four professional services firm PwC unveiled " agent OS," a platform that makes it easier for agents to communicate with one another to execute tasks.
But the more steps an agent takes to complete a task, the more likely it is to make errors, Business Insider reported last month.
Despite the ambiguity, AI companies are betting big on agents to drive returns.
The Information reported in March that OpenAI plans to sell Ph.D.-level agents starting at $20,000 a month and eventually expects 20% to 25% of its revenue to come from agents.
"If 2024 was the year of LLMs, we believe 2025 will be the year of agentic AI," Praveen Akkiraju, a managing director at Insight Partners, previously told BI.
Bornstein, however, cautioned against letting hype lead strategy.
"Let's look at the actual technology underlying what we're calling agents," he said. "Where are they being deployed, and why?"
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