As AI workloads drive soaring cloud bills, more companies are weighing whether to move computing out of public clouds and into their own data centers. But building and operating AI infrastructure is far more complicated than simply buying servers — networking has become one of the biggest technical hurdles.

That’s the opportunity Seattle startup Hedgehog is chasing.

Founded in 2022 by CEO Marc Austin, a Cisco networking veteran, Hedgehog develops open-source software designed to make private AI data centers operate more like hyperscale clouds. It has raised $11 million in seed funding, with plans to raise a series A financing round.

We caught up with Austin for the return of GeekWire’s Startup Spotlight to learn more about the 20-person company, the AI networking boom and what surprised him most about building a startup in one of tech’s fastest-moving markets.

In 50 words or less, give us your elevator pitch?

Hedgehog is open-source software that makes AI networking simple. AI clouds and enterprises use it to run GPU networks the way hyperscalers do — deployed in hours instead of months, operated by DevOps teams instead of armies of network engineers, on open hardware with no vendor lock-in.

What problem are you obsessed with solving?

Time to GPU value. A GPU cluster is the most expensive asset most companies will ever buy, and every day it sits idle waiting on the network is money burning. That wait is rarely the hardware — it’s the fabric: weeks or months of scarce network engineers hand-designing, cabling, tuning, and validating it across proprietary CLIs and locked-in vendor gear.

Meanwhile the people told to “own the network” usually aren’t network engineers at all — they’re platform and DevOps teams. We’re obsessed with collapsing that timeline: declare your network like intent in Kubernetes and go from racked GPUs to inference in hours instead of months — on open hardware, no lock-in, no room full of specialists. Cloud-grade networking without hyperscaler headcount.

What surprised you after talking to customers?

How rarely the buyer is a network engineer. It’s platform and DevOps teams, often at AI clouds who just took delivery of thousands of GPUs who are told “you own the network now.” They don’t want to learn BGP; they want a network that behaves like the rest of their cloud-native stack. The other surprise: they don’t just want to run the network, they want to sell it by carving up capacity for their own customers, like a cloud provider does.

How has AI changed the way you build your company?

Twice over.

Our product exists because AI broke traditional networking. Training and inference traffic melts networks designed for web apps.

And AI changed how we build: we use it heavily across engineering, testing, and go-to-market, which lets a small team continuously test every supported device and configuration in our lab and ship with hyperscaler-grade rigor. AI raised the bar for what a startup-sized team can deliver.

What’s one thing people misunderstand about your startup?

That “open source” means hobbyist. The opposite is true: openness is the enterprise feature. Our customers can audit every line of code that runs their fabric, extend it, and never get locked in. Nearly every competitor markets “open networking” while shipping a proprietary controller. Hedgehog is the only one that actually publishes the repo.

What’s the toughest decision you’ve made in the past year?

Betting entirely on Ethernet. We decided open, standards-based Ethernet would win AI networking and put everything behind it. Watching the industry’s largest AI operators now standardize on that same approach makes us feel good about the call — but saying no was hard.

What’s the one piece of advice you give to other entrepreneurs?

Pick the wave, not just the surfboard.

Product decisions are recoverable; betting against a structural industry shift isn’t. Find the standard, the architecture, or the buyer behavior that’s inevitable, align everything to it early, and be patient while the market catches up to your bet.

We’ll know our company has made it when…

Networking is boring again. When a platform engineer stands up a multi-tenant GPU cloud and the network is just a few lines of declared intent that nobody thinks twice about. When “network like a hyperscaler” describes every AI cloud, not just the giants running on Hedgehog, then we will have made it!

Xbox CEO Asha Sharma laid out a wide-ranging plan to overhaul Microsoft’s gaming division Monday, calling it the most significant restructuring in Xbox history and disclosing that the business has been losing 64 cents on every dollar invested in its game studios.

As detailed in a memo to employees, the changes include roughly 3,200 job cuts through the fiscal year — about 20% of the Xbox workforce — the spinoff of four game studios, a new COO, and a plan to flatten management from as many as 14 layers to no more than five.

“We will return to growth in 2027,” Sharma wrote. “History is full of companies that mistake longevity for inevitability. We will not be one of them.” 

Sharma, a startup veteran and former Microsoft AI leader, was named Xbox CEO in February. 

“I know this is painful,” she wrote. “These changes will directly affect people who have poured their creativity into building XBOX. Many joined us through acquisitions, while others were recruited here, or sought us out because they loved this industry and loved XBOX. Today’s decisions do not reflect their talent or dedication.”

But she also reiterated what she said in a memo last month: Xbox’s business is not healthy, operating at margins 3-10x lower than industry peers after years of heavy spending that failed to produce the expected growth. 

About 1,600 of the Xbox job cuts take effect Monday as part of a broader round of 4,800 layoffs across Microsoft. The remaining Xbox reductions will come in the months ahead. Sharma acknowledged that a year-long restructuring “creates additional challenges” but said “it is not possible to make all the necessary changes in a single day.” 

Sharma said the cuts reach across Activision, Bethesda/ZeniMax, Blizzard, King, Mojang, and Xbox Game Studios, though no publicly announced games are being cancelled.

Several game studios will be spun out as standalone ventures, removing the costs from Microsoft’s books while giving the studios a chance to survive on their own.

• Compulsion Games (South of Midnight) and Double Fine Productions (Psychonauts) will return to their management teams as independent studios, keeping their intellectual property and current projects. 
• Ninja Theory (Hellblade) and Undead Labs (State of Decay) will shift to new owners with funding to complete their current games. 
• In France, Arkane (Dishonored, Deathloop) is beginning a legally required consultation with its employee works council to determine its future. 

Sharma will also take on direct oversight of game studios Mojang (Minecraft) and King (Candy Crush), Xbox’s two largest studios by monthly active players. 

In addition, she is establishing a new chief operating officer role with end-to-end financial responsibility across content, hardware, platform, and services. Helen Chiang, a nearly two-decade Xbox veteran who led Mojang and the Minecraft franchise, has been promoted to the role. Dave McCarthy, a 17-year Xbox veteran who helped build the platform, is retiring. 

Across the division, Sharma wrote in the memo, Xbox will cut vendor spending by 50% and reduce management layers from as many as 14 to no more than five.

The overhaul follows a 25-year period in which Microsoft largely subsidized Xbox as a strategic bet on the living room. Microsoft CEO Satya Nadella has said that era is over, noting that YouTube creators make more money from Xbox games than Microsoft does.