D-Wave on Monday completed a planned merger with DPCM Capital (the latter of which was already listed on the New York Stock Exchange), making the Canada-based company the third quantum player to SPAC– that is, a special purpose acquisition company – in the past year. (The other companies? Rigetti and IonQ.)
It’s an interesting trend, but perhaps unsurprising: According to Alan Baratz, the CEO of D-Wave, the previously unknown financial quirk is giving his company — a company that’s in a still nascent industry — faster access to capital.
“In a way, SPACs are ideal for a company that has huge potential, but takes some time to mature,” he says. londonbusinessblog.com. “With a SPAC, you can leverage the funding sources in the public markets to accelerate your growth and do so based on future potential.”
A traditional IPO, on the other hand, is “all about today,” he adds.
SPACs Can Also Save Businesses Money (Although This Point Is) subject of some discussion). “I don’t think all SPACs should be discounted,” said Patrick Moorhead of Moor Insights & Strategy, a consulting firm. “It’s a much cheaper way to go public and takes less time and effort.”
So far, D-Wave’s post-SPAC stock is holding up. It opened at $9.98 on Monday and closed at $11.86 on Thursday. But Rigetti and IonQ have not fared so well. Rigetti has seen its shares fall in value by about half since its listing on the NASDAQ in March. IonQ shares have lost approximately 40% of their value since listing in October 2021.
How companies use quantum services
In the fledgling field of quantum computing, D-Wave has emerged as an important character. In 2011, the company was the first to actually sell a quantum computer; it now counts NASA, Google, and Lockheed Martin as customers.
Building and operating a quantum computer is an extraordinary achievement of science and engineering. Instead of the bits used in traditional computers (which can be set to zero or one), quantum computers use subatomic particles called qubitswhich can represent many values between zero and one, as well as zero and one at the same time (a “superposition”). Qubits can also intertwine to represent values in extremely complex problems. To take advantage of these properties, the computer must monitor the state of the qubits, whose erratic behavior is determined by quantum physics, not regular physics. This is very difficult and usually involves supercooling the qubits to slow down their constant spin, then using lasers or electricity to control their state.
D-Wave was able to hit the market with a quantum computer because it took a unique approach to working with the qubits – one that requires a lot less of them. “What it’s looking for is the minimum energy level within a qubit, and by finding the minimum energy level, they can find the most optimized solution to a problem,” said Heather West, research manager at research firm IDC. “And that’s why D-Wave can say they have 5,000 to 7,000 qubits in their system versus an IBM, which is still around 127.”
Although that approach, called “quantum annealing”, does not try to exert much control over the states of the qubits, it is still very useful for solving optimization problems, that is, problems where the goal is to find the best solution among a large number of possible solutions. An optimization problem can be finding the optimal routes and payloads for a large fleet of vans, or finding the optimal number of employees to schedule on a given day. It’s a common type of business puzzle and annealers are especially good at solving it.
“Some of these industries really moved to D-Wave because of those optimization issues, and it was very attractive to bring in all kinds of data to find these optimized solutions and solve problems faster,” West says.
That application is a good example of how companies today use quantum services such as D-Wave. They are looking for problem types where classical computers struggle and quantum computers excel.
“She [D-Wave] are really more of an accelerator,” said Ashish Nadkarni, Group VP and General Manager at IDC. “We are not yet at the point where you can run all kinds of jobs entirely on a quantum computer.”
But the D-Wave annealer can ultimately be seen as a precursor to a more robust kind of quantum computing, the so-called “gate model”, in which the quantum computer takes full advantage of the quantum properties of the qubits – their many possible states, their capacity for “superposition” and the computing power made possible by multiple qubits entwined together.
Mastering and exploiting these properties opens up the possibility of solving problems far beyond the reach of classical supercomputers (and annealers). These are big “probabilistic” problems where the qubits are asked to model huge and complex data sets. It could be modeling all the receptors in the brain to investigate how they will respond to a drug, or a vast array of stock market conditions to predict their effect on the price of a particular good.
D-Wave realized that much of the benefits and excitement surrounding quantum computing stems from the ability to solve such problems, and last year announced that it had begun building gate-model quantum computers more similar to Google’s. , IBM and IonQ. D-Wave will take years to develop its gate-model quantum, but Baratz believes offering both annealers and gate-model quantum computing will ultimately give his company an advantage.
“By doing both and being the only company to do both, we will be the only company in the world that will be able to address the entire quantum market and the full range of use cases,” he says. D-Wave’s customers typically access these computing services through a dedicated cloud service.
“We are really commercial”
Because quantum is considered an emerging technology, many potential customers (such as financial services and pharmaceutical companies) are experimenting with running certain types of algorithms on quantum systems to seek some advantage over classical computing. But they are not necessarily paying customers.
Baratz says it’s the gate-model quantum services that are “nascent” technology, not D-Wave’s annealers, that he says are ready to deliver real value today. He believes the gate model quantum computers are still seven years away from being able to run common business applications in a way that beats classic computers.
Baratz believes D-Wave now faces the challenge of ensuring customers differentiate between gate-model computing — which he says can be as much as seven years away from running real business applications — and the quantum annealing service of D-Wave, which is mature and ready to deliver value Today. While its gate-model competitors tell customers it’s okay to “dip their toes in the water” and experiment, D-Wave needs to counter that narrative in the marketplace with the message that customers can now do real optimization work using quantum annealing. .
“We’re really commercial, so when our competitors talk about revenue, they talk about government research grants as revenue, and they talk about national labs and academic institutions as customers,” says Baratz. “When we talk about our customers, we’re talking about our recently announced deal with MasterCardor Deloitte or Johnson & Johnson or Volkswagen.”
Baratz says more than 65% of D-Wave’s quantum cloud revenue last year came from more than 50 commercial customers, including more than two dozen members of the Forbes Worldwide 2000.
Baratz says D-Wave is now entering a phase where it can use its annealers to start customer relationships.
“We have a significant head start, but we think now is the time to really make the investment to grow that loyal customer base and capture market share,” said Baratz. “And then, as we bring new generations of anneals to market, it’s just an upsell to more complex applications because we gate [model] To the market.”