If you’re looking for AI talent, look West.

The Bay Area and Seattle are home to a majority of the country’s AI engineers, according to a report from San Francisco venture capital firm SignalFire.

Silicon Valley has 35% of all AI engineers in the U.S., according to the report.

Seattle is second, with 23%.

New York (10%), Boston (5%), and Los Angeles (4%) follow.

The Valley, of course, has deep AI roots, with longtime tech leaders such as Nvidia, Apple, Alphabet, Meta, Netflix, and so many others. It’s where about half of all Big Tech engineers across the country are based, according to the report.

Seattle is second, with a little more than 10% of Big Tech engineers.

The Seattle region is home to Microsoft and Amazon, which power much of the cloud computing infrastructure that supports AI development.

Meta, Google, and Apple maintain large engineering centers in the Seattle area, employing thousands of top AI researchers and engineers.

But the Bay Area is dominant on startup funding, with nearly 40% of early stage rounds for AI and machine learning startups outside of China coming from the region, the report said.

More broadly beyond just AI, startups based in the Bay raised 26% of all early stage rounds — more than NYC, Boston, and London combined.

Seattle slips when it comes to early stage funding, ranking No. 6, behind Los Angeles, London, Boston, and NYC.

In response to a GeekWire inquiry, SignalFire said Seattle’s strength in AI talent could help it draw more venture capital firms:

“This data shows an opportunity for Seattle to attract more venture capital firms who often look to NYC when opening a second office after SF. It could also work to retain more of its successful founders and big tech execs who could become angel investors, and support local accelerators and co-working spaces to lure in early-stage startups. This could help Seattle round-out the startup ecosystem flywheel to complement its high-quality engineering and AI talent, and tech giants that serve as acquirers as well as management training hubs that spin out founders.”

Seattle often gets criticized for not having enough homegrown money to help fuel the next great tech startups, especially relative to the density of talent.

Most Seattle startups raise investment from firms based outside Washington state.

Some investors don’t see that has a big deal. “Being a net importer of dollars is something we should be proud of,” Leslie Feinzaig, founder and general partner of Seattle-based firm Graham & Walker, said at an event in June.

But more investment firms planting a flag in Seattle certainly wouldn’t hurt the city’s reputation as an elite hub for startup and technology industry leaders. More local venture capital could also help attract outside entrepreneurs — and keep founders from leaving town.

SignalFile’s report used data from its in-house AI platform “Beacon,” which helps find investments and support portfolio companies, along with other third-party data sources on funding and talent metrics.

The presentation was anchored by Andrea Rene, a producer, podcaster, and on-camera host who’s known Spencer for over a decade. The theme of the presentation was “The Games That Shaped My Journey”: several video games that had had a major impact on Spencer, professionally and/or personally.

“[Gaming]’s been part of my life since I was a young kid,” Spencer said. “As a kid who wasn’t a jock at school, who was kind of an introvert, I found my own space in the worlds of video games. Then, as the community grew, as I found other people who played through school, it has been a formative part of my life.”

Spencer’s list consisted of 1982’s Robotron 2084, 1983’s One-on-One: Dr. J vs. Larry Bird, 1997’s Ultima Online, 2006’s Gears of War, and 2014’s Destiny.

That carried the conversation through Spencer’s early years, when he was a regular at his local arcades in southern California, to his time working under Ed Fries at Microsoft, to his current position as the head of the Xbox division.

Spencer describes Robotron 2084 as “the greatest game of all time,” and “the beginning of my love for what games could be.” When he was a college student at the University of Washington, Spencer would frequently spend his nights at a 7-11 near campus playing its Robotron machine. In a real sense, the ’80s arcade scene was Spencer’s first experience with a community built around video games.

“When I think about where video games started for me, it was going into arcades, playing games, talking to the players there, and the anticipation of what new cabinet was going to come in,” Spencer said.

At home, Spencer regularly played the Commodore 64 basketball game One-on-One, picking Julius Erving to go up against his father’s Larry Bird. While Spencer himself wasn’t much of an NBA fan or basketball player at the time, it was his first time seeing a person from the real world reflected in a video game, as well as his first experience with gaming with a family member.

“It showed me that games weren’t just about my friends, but also something that we could do as a family,” Spencer said. “I do think watching children make choices in video games is a great learning experience. …It’s a safe way for kids to see what choices mean. My daughters are much older now, but we still play Sea of Thieves together.”

Spencer also played Dungeons & Dragons, which led him to the D&D-influenced PC RPGs of the ‘80s and ‘90s. That, in turn, got him to check out the beta test for Richard Garriott’s groundbreaking MMORPG Ultima Online in 1997, which was Spencer’s first exposure to the concept of massively multiplayer online games.

That led Spencer to participate in a different sort of community than his arcade days. While he never joined a guild or made any real-world connections with his fellow Ultima Online players, the knowledge that other players existed in the game’s world, and could change it, had a significant impact on Spencer.

A few years later, Spencer was on a team at Microsoft working on the Xbox 360 video game console. Around 2002, he first heard of a game that was under development at Epic under the codename “Warfare.” That project eventually became Gears of War, a “killer app” for the 360 that started one of the Xbox’s tentpole franchises.

“Gears is actually the first game that my team signed,” Spencer said. “I had inherited a lot of games coming in, like Fable, that I was in charge of seeing through, but Gears was really the first big decision.”

It wasn’t an easy call, however. Gears of War had a high budget for a video game production at that point in time, so signing it was seen as a significant risk. However, Epic’s Unreal Engine 3 software was rapidly gaining popularity with game developers, which made it crucial that games made with Unreal were seen to be successful on the Xbox platform.

That led to Microsoft collaborating directly with Epic on the 2005 Xbox exclusive Unreal Championship 2, which Spencer considered a stepping stone along the way to getting Gears of War.

“The thing is, when we actually got to the point of signing Gears, I remember going into Ed [Fries’] office,” Spencer said. “There were two games that we could sign, and I couldn’t afford to sign both of them. Ed just turned to me and said I should make a call.”

Spencer ended up going with Gears of War, due to its focus on cooperative play and the “passion” of its lead designer, Cliff Bleszinski. Due to its high-end graphics and its status as a system exclusive for the Xbox 360, that led Spencer to argue in favor of redesigning the console.

Spencer and Rene reminisce over a photo from back when they met, at the height of the Xbox 360’s popularity. (Photo courtesy of Dabe Alan / Penny Arcade)

“This was actually a game that drove our memory decision for 360,” Spencer said. “The choice was going to be to have a smaller RAM footprint. We all got together – J. Allard, Ed, Peter [Moore], all of us in a room – and we brought in Gears to show what we could do with the extra RAM we could put in the 360.”

Spencer continued: “The cost was really significant. The bet was that you’re going to go sell tens of millions of these things, and every incremental dollar that this extra RAM [cost] better pay off. I think it did.”

Gears of War led to an ongoing collaboration between Microsoft and Epic that created three more games in the series. Subsequently, Microsoft bought the rights to Gears from Epic, which was moving its focus to the project that would become Fortnite, and turned Gears over to the studio that would become known as the Coalition.

The discussion of his history with Gears led into a story about another opportunity that Spencer had had. This time, however, he’d passed it up, and in the process, potentially changed the history of the American games industry.

Bungie, headquartered in Bellevue, Wash., had been acquired by Microsoft in 2001 before the launch of the original Xbox. It subsequently redefined the first-person shooter with Halo: Combat Evolved, and the Halo series became the cornerstone of the Xbox console.

After producing four games in the Halo series, Bungie subsequently bought itself back from Microsoft and became independent in 2010. A few years later, it went looking for a publishing partner for the launch of the original Destiny.

“There’s just so many mixed emotions for me around Destiny,” Spencer said. “Obviously, Bungie was part of Microsoft when I started at Xbox. I shared a floor with Alex Seropian and Jason Jones in the building we were in in Redmond. I learned a ton from just being around Bungie, about how to build games.”

The pitch for Destiny did come across Spencer’s desk, but he passed on it, noting that the combat in Destiny didn’t click with him right away. Bungie would subsequently partner with Activision to release Destiny in 2014, before moving to self-publishing the series in 2019.

Along a similar vein, Spencer got an early pitch from the Boston-based studio Harmonix, but rejected it, citing cynicism in the idea of a game that required special controllers. Harmonix would go on to create the popular cross-platform Guitar Hero and Rock Band franchises.

Either of those series being Xbox exclusives could’ve been potentially seismic for the 7th generation of gaming consoles. Guitar Hero was a legitimate sensation despite requiring its own specialized controller, and its first installment in 2005 was a PlayStation 2 exclusive. Destiny and its sequel were both famously platform-agnostic, to the point where both games initially had exclusive content based upon what the user was playing them on.

While Xbox currently doesn’t subscribe to the system-exclusives model that’s defined the console market up to this date, it’s possible that exclusive versions of Destiny and Guitar Hero/Rock Band might’ve changed that. It might also have limited either franchise’s overall success. Either way, it could’ve changed the direction of the Xbox project over the course of the last decade.

At the close of the presentation, Rene asked Spencer to comment on his hopes for the next generation of video games.

“When I started playing video games like Robotron, I had no idea there was an industry I could work in. Now it’s an industry that employs hundreds of thousands of people and has huge conventions like PAX. You can actually build a livelihood,” Spencer said.

He continued: “As kids, you start to ask, ‘What does it take? What do I need to do?’ I get asked that all the time. The cool thing is now you can be a writer. You can be an artist, you can be a programmer … there are so many things to do. Games today are true forms of art with so many different disciplines that come together to make something special.”

Shares of Smartsheet rose nearly 10% following the report, before declining slightly to end the day up more than 4% in advance of the release of its its second quarter earnings after the market closed.

Smartsheet CEO Mark Mader declined to comment Thursday afternoon during the company’s earnings conference call when analysts asked about the report of the acquisition talks.

Reuters reported in June that Smartsheet hired investment bankers after receiving buyout interest from private equity firms.

Smartsheet stock is up 20% over the past six months, and its market capitalization is around $7 billion.

In the earnings report Thursday afternoon, revenue increased 17% to $276.4 million for Smartsheet’s fiscal second quarter, ended July 31. The company’s operating loss was $8.5 million, vs. a loss of $36.1 million in the same period a year ago.

There was no mention of the company exploring M&A or other strategic alternatives in the earnings report.

Smartsheet makes cloud-based enterprise work management technologies for managing and tracking projects, collaborating, storing data, and automating and assigning tasks, among other capabilities. It serves 85% of the Fortune 500 as customers. The company competes with Asana, Monday.com, Microsoft, and others. 

Smartsheet, which launched in 2005 and went public in 2018, has more than 3,300 employees.

Smartsheet revenue rose 20% year-over-year to $263 million during its first fiscal quarter, topping analyst estimates. It also trimmed net losses from $29.9 million in the year-ago quarter to $8.9 million.

Vista Equity Partners, an Austin, Texas-based firm with more than $100 billion in assets, previously acquired other publicly traded Seattle-area tech companies including Apptio in 2019 Avalara in 2022. Vista currently holds a 4.7% stake in Smartsheet.

M&A activity has slowed in the past few years, creating “pent-up demand (and supply), particularly in the private equity universe,” according to a recent report from PwC.

The cybersecurity breach over Memorial Day weekend affected access to staff and public computers, online catalog and loaning systems, e-books and e-audiobooks, in-building Wi-Fi, the library website, and more.

Over the course of its recovery, SPL gave incremental updates on what services it had restored and what work remained to be completed. Cybersecurity experts also previously weighed in on why the library was a target and what such organizations could do to shore up defenses.

The library said in a statement Tuesday that it is working to conduct an assessment of its response to the attack and will issue a public report later this year. But SPL did reveal to GeekWire some of the steps it has taken to prevent future attacks.

“The work to strengthen our systems began prior to the attack, but remaining items in IT’s work plan were expedited after the attack,” said Laura Gentry, head of communications for the library. “Since Memorial Day weekend, the library expedited migration to SharePoint Online, as well as implementation of multi-factor authentication on staff systems — which took place over the course of three days, rather than the weeks-long process we had planned.”

Gentry said SPL also expanded its use of cloud-based Microsoft tools that it had recently implemented for file management and communication needs. The IT staff also leveraged cloud-based infrastructure capabilities and retired some legacy on-premises services to “build back better” post-attack.

The library also re-imaged approximately 1,000 computers (serving both staff and public), forced password updates systemwide, and strengthened password requirements, according to Gentry.

Jim Alkove, CEO of Seattle-based cybersecurity startup Oleria, commended the library for implementing multi-factor authentication and migrating to cloud-based services, calling both essential moves to restore operations and fortify library systems for the future.

While MFA significantly enhances security, Alkove said it’s most effective when it’s deployed comprehensively and uses strong, phishing-resistant methods like FIDO2 keys and passkeys.

“The other critical aspect of ransomware prevention is patching,” Alkove said. “By transitioning to SaaS and cloud environments, SPL has effectively offloaded the responsibility for patch management of critical server assets to vendors that are typically better resourced to maintain patch compliance.” He added that it reduced the attack surface of legacy on-premises systems, which can be a common target for attackers.

Sunil Gottumukkala, co-founder and CEO of Seattle-based cybersecurity startup Averlon, also lauded the move to MFA for staff. It was something he hoped the library would institute when he spoke to GeekWire shortly after the attack in May.

“In terms of moving to cloud services from Microsoft to ‘build back better’ … while that’s good in general, it may not be relevant in terms of defending against future ransomware attacks,” Gottumukkala said Thursday via email. “They should put in a ‘recover and rebuild’ plan that is periodically tested, which they haven’t mentioned.”

He said lack of preparedness could explain why it took the library so long to recover from the attack, but he cautioned that all the details about where SPL spent its time in the recovery process are not yet known.

Alkove agreed that it’s essential that the library’s security protocols are regularly tested, monitored and maintained. Part of that involves solving persistent challenges around “over-provisioning” — meaning providing just the access and permissions users need and nothing more. Alkove said most organizations grapple with a significant over-provisioned user access — creating “a large attack surface for a bad actor” — and Microsoft reports that 95% of access goes unused.

Alkove said recovery timelines can vary widely between organizations, but true resilience goes beyond just getting systems back online.

“The SPL incident, like the recent Crowdstrike incident, highlights the need for every organization to focus on cyber resilience,” Alkove said. “This is why business continuity planning is so crucial. Organizations must continuously update and test their recovery plans to ensure they can respond swiftly and effectively the next time an attack happens.”

Golden Record 2.0, a project created by students, teachers and researchers affiliated with Avenues: The World School, is also getting an assist from artist Jon Lomberg, who was the design director for Golden Record 1.0.

The original Golden Record project involved preserving imagery and sounds from around the world on gold-plated phonograph records. Copies of the record were placed on NASA’s Voyager 1 and 2 probes and launched into space in 1977. The idea was that if space travelers came across the records in the distant future, they could decipher the recorded archive and learn what our world was like in the 20th century.

Golden Record 2.0’s organizers are going after the same idea, even though they’re still looking into how their archive would be packaged and launched.

Project Silica could play a role in the packaging. Richard Black, a manager at Microsoft Research’s Cambridge lab in Britain, has been leading an effort to store data inside thin platters of fused silica glass.

“It does that using ultrashort laser pulses that make a permanent, detectable and yet transparent modification to the glass crystal, so the data ends up as durable as the piece of glass itself,” Black explained in a Microsoft podcast called Collaborators.

Each coaster-sized platter could store several terabytes of data for many millennia, according to Microsoft. The data can be read out using a microscope, and decoded using machine-learning algorithms.

Black and his colleagues encoded a couple of test platters for Golden Record 2.0. They also created a glass-based instruction guide that could help anyone who came across the platters — either aliens or humans from the far future — figure out how to read them. “Obviously, humanity isn’t going to give up on microscopes, but if we can explain to extraterrestrials how they would go about reading a Silica platter, then it should be pretty obvious that we can explain to our human descendants how to do so,” Black said.

Meanwhile, the Golden Record 2.0 team is following the model used by Lomberg and the other creators of the original Golden Record, who digitized images as well as natural sounds, music and spoken words for their archive of humanity.

Back then, the internet was still in its infancy. Today, the 2.0 team is taking advantage of online tools to solicit multimedia contributions and get feedback on the media contributed by others.

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“I like to think of it as sort of a time capsule of humanity that was designed to represent us — who we are as a species, what we love, why we love it, what we do, and our diversity, why we’re all different, why we do different things — to possible extraterrestrials,” said team member Dexter Greene, who’s beginning his freshman year as an engineering student at the University of Michigan.

Lomberg helped Greene and his teammates select and organize the content for the archive. He also filled them in on the story behind the original Golden Record, and the history and fundamentals of interstellar communication.

“People always ask me how I would do the Golden Record differently today,” Lomberg told GeekWire in an email. “I began this project at Avenues as a way of answering that question. Created by high schoolers and the most modern technology, this is a next-generation message to the stars.”

Over the decades, several other projects have styled themselves as successors to the Golden Record project. Lomberg himself was in charge of one of those efforts, which was called the OneEarth Message. More recently, the Arch Mission Foundation has had micro-miniaturized archives sent into space with the aid of partners ranging from SpaceX, Astrobotic and Intuitive Machines to Microsoft and the University of Washington.

The Golden Record 2.0 team hasn’t yet secured a ride to space. However, Greene said he and his teammates have been “talking a bit” with the team behind a similar effort called Humanity’s Message to the Stars (a.k.a. Message in a Bottle). That project is led by Jonathan Jiang, a researcher at NASA’s Jet Propulsion Laboratory.

Greene said commercial space ventures, including SpaceX, could provide additional options. “We’ve thought about all of that, and we’ve been reaching out to other space agencies,” he said.

Black said the effort is worth taking on even if Golden Record 2.0 never gets to the stars. “I think encouraging humanity to reflect on itself — where we are, the challenges ahead for us as a species here on planet Earth — you know, this is a good time to think those thoughts,” he said.

Greene agreed. “We’ve given a lot of thought to that,” he said. “Even if the record doesn’t reach extraterrestrials, is it worth it? … It’s so worth it, just for us to reflect on where we are, and how we can improve what we’ve done in the past, and what we can do in the future.”