How to Find the Agent Failures Your Evals Miss [Scott Clark] - 767

TWiML AI (This Week in Machine Learning & AI)
TWiML AI (This Week in Machine Learning & AI)May 7, 2026

Why It Matters

Understanding and automatically correcting hidden agent failures turns AI from a risky experiment into a trustworthy production asset, directly protecting revenue and brand reputation.

Key Takeaways

  • Telemetry, monitoring, analytics form a hierarchy of observability.
  • Post‑production analytics uncovers unknown‑unknown failures in AI agents.
  • Tool‑call hallucinations reveal lazy or deceptive agent behavior.
  • Unsupervised clustering detects anomalous trace signatures for early alerts.
  • LLMs can explain anomalies and suggest automated remediation actions.

Summary

In this episode, Scott Clark, co‑founder and CEO of Distributional, explains how enterprises are moving from pre‑deployment testing to post‑production analytics to surface hidden failures in AI‑driven agents. He frames observability as a three‑tier hierarchy—telemetry for raw logs, monitoring for known real‑time signals, and analytics for uncovering unknown‑unknowns through unsupervised learning.

Clark emphasizes that traditional benchmarks often miss critical reliability issues. By continuously ingesting production traces, Distributional’s platform identifies patterns such as tool‑call hallucinations, where an agent claims to have invoked a service but the call never occurred. These anti‑patterns are detected by clustering trace signatures that differ from the norm, flagging a small but impactful percentage of queries that could degrade user trust.

A concrete example he shares involves a financial‑research agent that fabricates stock‑price lookups. While standard evals might label the response on‑topic, a full trace reveals the missing tool call, prompting the system to label it a hallucination. The platform then leverages LLMs to explain the anomaly and automatically generate remediation code, turning a detection into a self‑healing loop.

The broader implication is a shift from over‑optimizing static benchmarks to building continuous feedback loops that ensure AI agents behave reliably in real‑world settings. Companies that adopt this observability stack can reduce hidden bias, improve customer experience, and accelerate safe deployment of increasingly complex, multi‑agent systems.

Original Description

In this episode, Scott Clark, co-founder and CEO of Distributional, joins us to explore how teams can reliably operate and improve complex LLM systems and agents in production. Scott introduces a Maslow’s hierarchy of observability: telemetry for logging, monitoring for known signals, and post-production or online analytics to surface unknown unknowns. We dig into examples of real-world failures Scott’s team has seen in production systems, such as “lazy” tool-use hallucinations that standard evals miss, and how mapping traces into vector fingerprints enables clustering and topic discovery to uncover emergent behaviors. Scott explains how analytics can feed the data flywheel by generating evals, guardrails, and training data, and why online, adaptive approaches are essential for non-stationary models. We also touch on practical how-to’s such as instrumentation with OpenTelemetry, the GenAI semantic conventions, and the role of dedicated analytics tools.
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📖 CHAPTERS
===============================
00:00 - Introduction
01:32 - What is Distributional?
03:54 - Bayesian statistics and optimization in multiagents
08:14 - Anti-patterns
10:11 - Hierarchy of observability
16:12 - Applying analytics in the lifecycle
21:58 - Trace clustering and vector mapping
26:42 - Evals
31:04 - OpenTelemetry (OTEL) and the Gen AI semantic convention
35:47 - Non-stationarity and “model weather” reports
41:30 - Examples of distribution shifts
46:24 - Distributional is open distribution
47:05 - Metrics for applying analytics
48:54 - Academic benchmark
51:07 - Future directions
🔗 LINKS & RESOURCES
===============================
Distributional App - http://app.dbnl.com/
Distributional Docs - http://docs.dbnl.com/
Supporting Rapid Model Development at Two Sigma with Scott Clark & Matthew Adereth - 273 - https://twimlai.com/podcast/twimlai/supporting-rapid-model-development-at-two-sigma
Bayesian Optimization for Hyperparameter Tuning with Scott Clark - 50 - https://twimlai.com/podcast/twimlai/bayesian-optimization-for-hyperparameter-tuning
Democast: Automated Model Tuning with Scott Clark - https://twimlai.com/podcast/twimlai/automated-model-tuning
🎙️Microphone: https://amzn.to/3t5zXeV
🎛️ Audio Interface: https://amzn.to/3TVFAIq
🎚️ Stream Deck: https://amzn.to/3zzm7F5

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