What RAG (Retrieval-Augmented Generation) is and why data prep matters

Chip Huyen is a core developer on Nvidia’s Nemo platform, a former AI researcher at Netflix, and taught machine learning at Stanford. She’s a two-time founder and the author of two widely read books on AI, including AI Engineering, which has been the most-read book on the O’Reilly platform since its launch. Unlike many AI commentators, Chip has built multiple successful AI products and platforms and works directly with enterprises on their AI strategies, giving her unique visibility into what’s actually happening inside companies building AI products.

We discuss:

1. What people think makes AI apps better vs. what actually makes AI apps better

2. What pre-training vs. post-training is, and why fine-tuning should be your last resort

3. How RLHF (reinforcement learning from human feedback) actually works

4. Why data quality matters more than which vector database you choose

5. Why high performers are seeing the most gains from AI coding tools

6. Why most AI problems are actually UX issues

—

Brought to you by:

Dscout—The UX platform to capture insights at every stage: from ideation to production: https://www.dscout.com/

Justworks—The all-in-one HR solution for managing your small business with confidence: https://ad.doubleclick.net/ddm/trackclk/N9515.5688857LENNYSPODCAST/B33689522.423713855;dc_trk_aid=616485030;dc_trk_cid=237010502;dc_lat=;dc_rdid=;tag_for_child_directed_treatment=;tfua=;gdpr=$

Persona—A global leader in digital identity verification: https://withpersona.com/lenny

—

Where to find Chip Huyen:

• X: https://x.com/chipro

• LinkedIn: https://www.linkedin.com/in/chiphuyen/

• Website: https://huyenchip.com/

• Substack: https://substack.com/@chiphuyen

—

Where to find Lenny:

• Newsletter: https://www.lennysnewsletter.com

• X: https://twitter.com/lennysan

• LinkedIn: https://www.linkedin.com/in/lennyrachitsky/

—

In this episode, we cover:

(00:00) Introduction to Chip Huyen

(04:28) Chip’s viral LinkedIn post

(07:05) Understanding AI training: pre-training vs. post-training

(08:50) Language modeling explained

(13:55) The importance of post-training

(15:20) Reinforcement learning and human feedback

(22:23) The importance of evals in AI development

(31:55) Retrieval augmented generation (RAG) explained

(38:50) Challenges in AI tool adoption

(43:19) Challenges in measuring productivity

(45:20) The three-bucket test

(49:10) The future of engineering roles

(55:31) ML Engineers vs. AI engineers

(57:12) Looking forward: the impact of AI

(01:05:48) Model capabilities vs. perceived performance

(01:08:23) Lightning round and final thoughts

—

Referenced:

• Chip’s LinkedIn post on what actually improves AI apps: https://www.linkedin.com/posts/chiphuyen_aiapplications-aiengineering-activity-7358971409227792384-y0mf/

• Prediction and Entropy of Printed English: https://www.princeton.edu/~wbialek/rome/refs/shannon_51.pdf

• Why experts writing AI evals is creating the fastest-growing companies in history | Brendan Foody (CEO of Mercor): https://www.lennysnewsletter.com/p/experts-writing-ai-evals-brendan-foody

•Inside the expert network training every frontier AI model | Garrett Lord (Handshake CEO): https://www.lennysnewsletter.com/p/inside-handshake-garrett-lord

• First interview with Scale AI’s CEO: $14B Meta deal, what’s working in enterprise AI, and what frontier labs are building next | Jason Droege: https://www.lennysnewsletter.com/p/first-interview-with-scale-ais-ceo-jason-droege

• Anthropic’s CPO on what comes next | Mike Krieger (co-founder of Instagram): https://www.lennysnewsletter.com/p/anthropics-cpo-heres-what-comes-next

• Why AI evals are the hottest new skill for product builders | Hamel Husain & Shreya Shankar (creators of the #1 eval course): https://www.lennysnewsletter.com/p/why-ai-evals-are-the-hottest-new-skill

• The rise of Cursor: The $300M ARR AI tool that engineers can’t stop using | Michael Truell (co-founder and CEO): https://www.lennysnewsletter.com/p/the-rise-of-cursor-michael-truell

• Stanford webinar—How AI Is Changing Coding and Education, Andrew Ng & Mehran Sahami: https://www.youtube.com/watch?v=J91_npj0Nfw

• He saved OpenAI, invented the “Like” button, and built Google Maps: Bret Taylor on the future of careers, coding, agents, and more: https://www.lennysnewsletter.com/p/he-saved-openai-bret-taylor

• Anthropic co-founder on quitting OpenAI, AGI predictions, $100M talent wars, 20% unemployment, and the nightmare scenarios keeping him up at night | Ben Mann: https://www.lennysnewsletter.com/p/anthropic-co-founder-benjamin-mann

• Lenny’s vibe-coded app made on Lovable: https://gdoc-images-grab.lovable.app/

• Story of Yanxi Palace: https://www.imdb.com/title/tt8865016/

• Steve Jobs’s quote: https://www.goodreads.com/quotes/427317-remembering-that-i-ll-be-dead-soon-is-the-most-important

—

Recommended books:

• The Complete Sherlock Holmes: https://www.amazon.com/Complete-Sherlock-Holmes-Volumes/dp/0553328255

• AI Engineering: Building Applications with Foundation Models: https://www.amazon.com/AI-Engineering-Building-Applications-Foundation/dp/1098166302

• The Selfish Gene: https://www.amazon.com/Selfish-Gene-Anniversary-Introduction/dp/0199291152

• From Third World to First: The Singapore Story: 1965-2000: https://www.amazon.com/Third-World-First-Singapore-1965-2000/dp/0060197765

—

Production and marketing by https://penname.co/. For inquiries about sponsoring the podcast, email podcast@lennyrachitsky.com.

Lenny may be an investor in the companies discussed.