What does it take to invent a foundational AI paradigm — and then build a company to bring it to the enterprise? In this episode of Founded & Funded, Madrona Partner Jon Turow sits down with Douwe Kiela, co-founder and CEO of Contextual AI and the co-inventor of RAG (Retrieval Augmented Generation). They dive into the origins of RAG, its misunderstood role in the enterprise, and how Contextual is redefining what production-grade AI systems can do. Douwe shares what most companies get wrong about RAG, why chunking shouldn't matter, how to think about hallucinations, and what founders need to know in the era of RAG agents. Transcript: https://madrona.com/rag-inventor-talks-agents-grounded-ai-and-enterprise-impact Chapters:

Introduction

The Origin of RAG

Challenges and Innovations in RAG

Enterprise Adoption and Use Cases

Scaling and Innovations at Contextual AI

The Future of RAG Agents

Challenges in Enterprise Data

Building a Research-Driven Company

The Intersection of Research and Product

Advice for Founders and AI Companies

Understanding and Addressing Hallucinations

Company Building is Harder Than You'd Think

The Importance of Evaluation in AI