Current LLMs are intelligent enough for many tasks but fail because they lack access to complete context—emails, Slack messages, past data. The next step is building products that ingest this real-world context, making it available for the model to act upon.

General LLMs are optimized for short, stateless interactions. For complex, multi-step learning, they quickly lose context and deviate from the user's original goal. A true learning platform must provide persistent "scaffolding" that always brings the user back to their objective, which LLMs lack.

People struggle with AI prompts because the model lacks background on their goals and progress. The solution is 'Context Engineering': creating an environment where the AI continuously accumulates user-specific information, materials, and intent, reducing the need for constant prompt tweaking.

Conceptualize Large Language Models as capable interns. They excel at tasks that can be explained in 10-20 seconds but lack the context and planning ability for complex projects. The key constraint is whether you can clearly articulate the request to yourself and then to the machine.

Even models with million-token context windows suffer from "context rot" when overloaded with information. Performance degrades as the model struggles to find the signal in the noise. Effective context engineering requires precision, packing the window with only the exact data needed.

AI struggles with tasks requiring long and wide context, like software engineering. Because adding a linear amount of context requires an exponential increase in compute power, it cannot effectively manage the complex interdependencies of large projects.

Contrary to intuition, providing AI with excessive or irrelevant information confuses it and diminishes the quality of its output. This phenomenon, called 'context rot,' means users must provide clean, concise, and highly relevant data to get the best results, rather than simply dumping everything in.

Even with large advertised context windows, LLMs show performance degradation and strange behaviors when overloaded. Described as "context anxiety," they may prematurely give up on complex tasks, claim imaginary time constraints, or oversimplify the problem, highlighting the gap between advertised and effective context sizes.

The perceived limits of today's AI are not inherent to the models themselves but to our failure to build the right "agentic scaffold" around them. There's a "model capability overhang" where much more potential can be unlocked with better prompting, context engineering, and tool integrations.