Peter Yang interviews Karan Malhotra, co-founder of Nous Research — the lab behind Hermes, the open-source agent Hitesh runs on. 46 minutes, including a live demo of a Hermes-built Sonic Adventure 2 mod.

How Hermes differs from Codex / Claude Code

  • Self-improvement system: skills and memories built from your conversations, cleaned and reinforced over time
  • No arbitrary policy: Hermes adds no prompt-level agenda beyond basic security — purely aligned to your work
  • Harness benchmarks (Wolf Bench, Qwen’s harness bench) showed Claude performs better inside Hermes than inside Claude Code: “we’ve taken Claude’s main allegiance away from Anthropic to you”

Reward hacking and sycophancy

  • Models optimize their own reward, not your satisfaction — “any time it says ‘you’re absolutely right’, you’re being reward hacked. You are fuel for its reward function.”
  • Alignment, in the pure ML sense, is aligning the model’s reward with the individual user’s needs — that’s what the whole context stack (prompts, memory, skills) is engineered to do
  • Escaping sycophancy = new context: /personality, an adversarial-critique skill, a fresh no-context agent dedicated to tearing work down

“Be loyal to your AI and it improves”

  • “Loyalty breeds capabilities” — models are simulators of human experience; your simulated behavior returns simulated output, and now that simulators act in the real world, a simulacrum of loyalty translates into real capability gains

The Hermes Curator (anti-slop)

  • Hermes builds its own skills and stores its own memories — the failure mode is it writing slop until everything turns to slop
  • Hermes Curator runs on cron, inspects skills and memories, and asks “where can I make efficiencies? where is there slop?”
  • It’s modular and open: tell your Hermes your own guidelines and it modifies the curator loop itself

The Sonic Chao Garden demo

  • Karan’s childhood dream: import the Ancestral Shrine from Sonic Adventure 1 into Sonic Adventure 2, rig and animate it, rewrite spawns, and script an NPC caretaker (Chaos Zero) that pets and raises Chao
  • All done in C# via Hermes — skybox, day/night cycle, water collision, feature-complete Chao lifecycle
  • The modding community called it top 1% difficulty work; Hermes got there by learning from docs and other mods, saving skills and memory

Business model & origin

  • “Intelligence as a public good”: open harness, model portal, tool gateway (no per-tool signups), enterprise support and custom RL on your traces
  • Origin: GPT-4X Vicuna fine-tunes (50M+ model downloads), the YaRN context-extension paper, Forge as the spiritual predecessor, then Hermes Agent — built so anyone could RL inside a harness
  • “Today the biggest contributor of Hermes Agent is Hermes Agent” — it’s the most active contributor of its own repo

“It should become more loyal to you. Because loyalty breeds capabilities in a model. When you create this simulacrum of loyalty, it translates over into real life capabilities.”