To avoid AI hallucinations, Square's AI tools translate merchant queries into deterministic actions. For example, a query about sales on rainy days prompts the AI to write and execute real SQL code against a data warehouse, ensuring grounded, accurate results.

Claude Skills aren't limited to natural language instructions; they can reference and execute Python scripts. This enables developers to enforce consistency for technical tasks like data cleaning or validation, preventing the variability that occurs when the LLM generates code on its own.

While Claude's built-in 'create skill' tool is clunky, its output reveals a highly structured template for effective prompts. It includes decision trees, clarifying questions for the user, and keywords for invocation, serving as an invaluable guide for building robust skills without starting from scratch.

The paradigm is shifting from using AI as a general chatbot to building a team of 'digital employees.' Claude Skills allow users to encapsulate a specific, repeatable workflow—like drafting a newsletter from tweets—into a tool that can be executed on demand, creating a specialized agent for that job.

Users get frustrated when AI doesn't meet expectations. The correct mental model is to treat AI as a junior teammate requiring explicit instructions, defined tools, and context provided incrementally. This approach, which Claude Skills facilitate, prevents overwhelm and leads to better outcomes.

The process of building AI tools is becoming automated. Claude features a 'Skill Creator,' a skill that builds other skills from natural language prompts. This meta-capability allows users to generate custom AI workflows without writing code, essentially asking the AI to build the exact tool they need for a task.

Overloading LLMs with excessive context degrades performance, a phenomenon known as 'context rot'. Claude Skills address this by loading context only when relevant to a specific task. This laser-focused approach improves accuracy and avoids the performance degradation seen in broader project-level contexts.

Instead of using Claude's slow and error-prone web UI to generate skills, a more effective workflow is to use an AI-native code editor like Cursor. By providing Cursor with the official documentation link, it can rapidly and reliably generate the entire skill folder structure, including markdown and validation scripts.

You don't need a special command like 'invoke skill' to activate a Claude Skill. The AI agent automatically detects when a skill is relevant based on the context of the conversation. For example, simply pasting a changelog can trigger a 'changelog-to-newsletter' skill without any other instruction.