Now or Never: Interviews with Canadian Quantum Computing Leadership

Securing Canada's quantum computing future requires immediate public sector follow-through on recent commitments

While at QUANTUM NOW | ICI QUANTIQUE, I had the opportunity to interview senior representatives of three leading quantum computing companies, including Rafal Janik of Xanadu, Paul Terry of Photonic Inc, and Allison Schwartz of D-Wave about the future of Canada’s quantum computing ecosystem, and the implications of DARPA’s Quantum Benchmarking Initiative (QBI) program.

My goals with this article are three-fold. First, I aim to set the scene and highlight the urgency with which Canada must take action if we are to remain relevant in quantum computing. Second, I try to turn these conversations into actionable recommendations for policy initiatives intended to ensure that Canadian quantum computing companies are able to stay Canadian as they cross the finish line. Finally, I hope to make clear the value of actually following through.

While Photonic and Xanadu are both currently Canadian quantum computing companies, D-Wave is no longer. Founded in 1999 in Vancouver, D-Wave operated as a Canadian company for 23 years before going public on the NYSE in 2022, while maintaining an active presence in Canada. In my view, their move represents a failure by Canadian policy makers to act sufficiently quickly and signals the beginnings of a trend that must be proactively halted if Canada is to realize the benefit of its decades-long investment in quantum.

Since this article draws on multiple interviews, I am going to switch up the format a bit and present the key takeaways first, relying more heavily than usual on pull quotes. The full interview transcripts for Photonic and D-Wave are presented in separate sections below, while Xanadu requested that I limit publication only to pull quotes. As with all my interview-based posts, it is too long for email and will likely be truncated by your email client. For the full effect, you will need to read it online.

Many thanks to all of the interviewees for their generosity with their time and for sharing their insights.

Interviewer’s note: All interviewees reviewed and edited the the interviews and quotes posted below, with the option to rephrase and expand on the ideas discussed without changing or removing any intended meaning. The key takeaways are my own commentary, were not reviewed or edited by interviewees, and do not necessarily represent the views of any of the interviewees or their respective companies.

Key Takeaways

The DARPA Quantum Benchmarking Initiative

DARPA QBI intends to deliver a “utility-scale” quantum computer in 8 years, or prove that it can’t be done. This particular DARPA initiative is odd in that it is focused on delivery of a commercial technology for civilian use, in contrast to previous DARPA programs that were defense-focused and in some cases actively discouraged or forbade commercial translation. This is consistent with recent trends toward a reversal in the order of operations with respect to emerging technology development, with a recent NATO report highlighting that, in contrast with the historical approach that has characterized military technology development since World War II, emerging technology development is increasingly occurring in the commercial private sector first.

DARPA is focused on gate-model systems, which excluded D-Wave from consideration, as its commercial offering currently is a quantum annealer. As Allison describes:

“[…] quantum computing is not monolithic. There are different modalities or different qubit architectures. Each of these are advancing on a different timeline, and each of these have different strengths and weaknesses and capabilities. Annealers are best for optimization problems, which are ubiquitous across industry. That's what's commercially available [via D-Wave] to now […]”

Among the 18 companies globally that were selected to participate, four are Canadian (Xanadu, Photonic, Nord Quantique, and 1QBit). The program is divided into three phases (A, B, and C). Stage A is a 6-month process in which the companies present a large amount of information relating to the details underlying their delivery plan and the technology on which it is based. Stage B lasts 12 months and involves technical due diligence, with the DARPA team going through the underlying research and the proposed execution plan with a fine-toothed comb. Stage C involves execution of the subset of plans deemed worth funding, and, eventually, actual delivery of a utility-scale quantum computer.

The DARPA Dilemma

Regardless of the success of the program and acceptance into Stage C, participation is a risk for the companies themselves. Paul explains the dilemma:

“For the people that don't go through, is that a statement that their technology doesn't work? Is that a statement that, politically, they are people that are not meeting the US requirements? Those requirements could be wide-ranging. So for example, those requirements could have IP constraints and restrictions. They could have US domestic considerations. They could require you to move to the US. […]

It could be that the technology is not why they do or do not get into DARPA. If you speak to Rafal or Julian, they’ll tell you the exact same thing: that we worry about the signal of getting in, or not, to DARPA-C. Politically, you could take the view that people going to DARPA are pandering to the American stuff, or you could take the view that the technology wasn't worthy. It's a “Sophie's choice” from our perspective, we can't actually make the right decision.”

In the end, the decision comes down to the value of third-party validation and the opportunity to learn in turn from DARPA, and use what Paul refers to as a “forcing function” on the technology, using the questions posed by the DARPA technical team to learn and advance in turn.

What came through clearly, both in panel discussions at the conference and in the interviews, is the depth of due diligence being conducted by DARPA, with weekly half-day meetings between dedicated DARPA technical teams and senior company leadership, hundreds of DARPA analysts, and reams of technical documents changing hands. The program's depth of inquiry suggests that the Americans are benefitting already. As Paul puts it:

“They're learning a lot, actually. I can say from personal experience, things that they took to be true, they're learning are not necessarily true. It’s actually accelerating, not decelerating, the perception that quantum is going to be here sooner rather than later.”

While the information changing hands in stages A and B does not constitute details of the IP required to make current systems work and related IP terms were uniformly viewed as low risk, to my mind the main risk to Canada lies in DARPA Stage C. Performance requirements under Stage C have yet to be defined, but Paul’s comment above indicated that requirements to be physically located in the US are not out of the question. This is supported by indications that testing of the results delivered under the QBI will be conducted at least in part in facilities in construction in Maryland, and the investment of up to $300 million per successful company through DARPA—on par with Canada’s entire National Quantum Strategy Budget—combined with the possibility of anchor customers and third-party validation, will exert a strong pull.

Building a Quantum Sandbox

In 2022, Allison addressed Canadian Parliament with a proposal to build a “Quantum sandbox,” a set of infrastructure, hardware, and tools on which to base quantum and hybrid computing education, application development, and value demonstration. As Allison describes it:

“I testified before Parliament almost four years ago. I pitched the idea of a quantum sandbox and everybody thought it was a great idea. It was actually a recommendation from Parliament to the administration and we're still waiting for it to be implemented.”

The testimony became a recommendation in the resulting report, and subsequently went nowhere. In the meantime, the Americans are on it.

This is unfortunate for many obvious reasons, and a few less obvious ones. One of the highlights of the interview set was a comment by both Allison and Paul about the importance of the application layer and the value of everything that is enabled by quantum computing hardware, as opposed to the hardware in and of itself:

Allison:

“Where Canada can grow is on the application layer of seeing where these actually can do useful things. We need both. We need both the investments in the hardware advancements as well as the software, and we need investments in all the different modalities that are out there.”

Paul:

“We have an opportunity here to create what happened in Silicon Valley 30 years ago in Canada. I'm actually more excited about the surround, the quantum companies in the application space, around the quantum computers that we have here, more than that than the quantum computers themselves. Quantum computers themselves are, to a large extent, a solved problem..”

Their observation is critical: quantum computing could catalyze Canada’s Silicon Valley moment. If you have read any of my previous articles on ecosystem building, or Dan Breznitz’s book on innovation, you will find a lot of discussion of the magnetic pull of established innovation ecosystems that draw value away from smaller ones. The existence and gravity created by Silicon Valley is one of many reasons it is difficult to build something similar in Canada. Where innovation ecosystems are concerned, first mover advantage is everything, with a caveat: to some degree, the effect is sector-specific. With quantum technologies, Silicon Valley has limited gravity. It has no critical mass of quantum computing talent nor an established base of research, which represents Canada’s best, if not only, chance at creating that gravity here. We may not be able to compete on a pure cash basis, but we can use our current critical mass of expertise to balance some of the difference.

The value creation of Silicon Valley is much less about the anchor companies themselves as it is what was built around them. The software boom that has been the core of VC for the last few decades was built up on infrastructure. A quantum sandbox, built on Canadian quantum computing hardware, would have wide ranging knock-on effects, starting with the infrastructure required for a generation of hackers to develop quantum algorithms and create value by enabling practical applications.

For those of us still hung up on job numbers, Paul makes clear that this is where the vast majority of job creation potential lies, as well:

“I often get politicians saying that, ‘in Photonic you're creating 300 jobs. 300 jobs isn't interesting.’ Well, it's interesting to me because these are super PhDs. These are the best in the world, people. They create five jobs for every job I put in here, but more importantly, the application surround around this is going to create thousands of jobs and change the GDP of a nation, which is not necessarily a function of the number of jobs that you have.”

Execution will require large, public procurement projects aimed at Canadian quantum computing hardware companies, thereby providing them with anchor customers and signaling robust commitment from the Canadian public sector. Procurement need not be limited to the actual hardware. The federal government could also commission a Canadian quantum company to develop a dedicated quantum-optimized logistics solution for a major crown corporation, secure quantum network for a defense department facility, or optimize logistics for allied military operations. These projects are already well within the capabilities of present-day, commercially available quantum computers.

No matter the details, it has to be led by the public sector, a theme that comes up in many of my articles. As elaborated later in this post, this is not a request for grants, but for anchor customers, customers that are still overwhelmingly in the public sector globally. As Rafal points out, quantum computing is heavily subsidized everywhere:

"You'll see that this is not a free market. This is very heavily subsidized, everyone has a thumb on the scale. Historically Canada has said it's not going to pick winners, ‘there's going to be a free market on this, so we're not going to do it’ It just means that Canadian companies are fundamentally at a disadvantage."

Given the dual use nature of quantum computing, all or almost all of these expenditures could fall under the recently announced increased defense spending under BOREALIS, Canada's strategy for critical minerals and Arctic sovereignty, which directly relates to advanced technology infrastructure, including quantum.

Security Considerations

There are economic security arguments for doing this as well.

While there are real IP risks associated with the DARPA QBI program, they are not the only risks. Globalized supply chains, in particular where chips are concerned, represent key points of vulnerability. As long as critical components are being manufactured abroad, there is a risk of IP theft.

Lisa Lambert of Quantum Industry Canada recently wrote an op-ed in the Globe and Mail calling for industrialization of quantum technologies in Canada and “fabrication, integration, secure supply chains and deployment at scale.” Having Canada as the NATO epicenter of quantum technologies allows us to begin the onerous and expensive but increasingly necessary process of deglobalizing supply chains while making ourselves invaluable to the alliance.

Paul also highlighted a key issue relating to export controls. Quantum technologies are an export control nightmare, and the country that hosts related services will be in a powerful position to dictate how regulatory development unfolds:

“The growth of Quantum and the understanding of what Quantum is going to do to nations has created quite an export control problem for everybody. […] That's if you're selling hardware, lasers, semiconductors and stuff between countries. What if you're not selling that and you're selling Quantum services? […] I imagine that the Canadians or governments will have something to say about releasing Quantum services of this power to anybody in the world,”

We have been here before: in 2017, Canada was a world thought leader in AI, and the Montreal Accords were recognized at the time as being a valuable contribution to the regulatory debate of global value. Today, I doubt many people outside of Canada even remembers them. With quantum technologies, and quantum computing in particular, it is not too late to replicate for this sector what we tried and failed to achieve with AI, and from across a much deeper moat. Establishing Canada as the centre of quantum computing hardware, application development, and the manufacturing supply chain needed to make utility-scale quantum computing a reality will also allow us to lead the global debate on regulation with respect to export controls, quantum service provision regulation, and standards development, all of which are critical elements of economic security.

Now or Never

Time is limited. Paul points out that a consolidation of the market is coming:

“There will be a consolidation at some point in the next four years, I would think, of Quantum companies in the world.[…] There's two hundred and something Quantum companies in the world. In three years there may be four.”

This is supported by a recent raise by D-Wave of $400M in preparation for acquisitions. Between impending consolidation and the 18-month timeline for DARPA Phase C to kick off, Canada has about 12 months to get its act together. To do this, the federal and provincial governments need to buy quantum computing hardware from Canadian quantum computing companies, and keep buying more as it improves. Use it to build the sandbox we should have built five years ago, and enable Canadian startups, researchers, and hackers to start building the application layer on hardware that is ready to use today, building the application while at the same time training new talent, providing a reason for existing talent to stay, and for talent abroad to immigrate. Establish Canada as the centre of quantum gravity for NATO, and use all of that as impetus to industrialize as Lisa Lambert suggests. Be the anchor customer that keeps the ecosystem here.

Either we act before DARPA Phase C commitments are made, or we can assume that quantum will go the way of Canadian AI, yet another Canadian technological gift to the world, still debated long after we lost the thread. Rafal and Paul have effectively the same message to share:

Rafal:

“Canada needs to decide, ‘do we want sovereign quantum computer capacity’? If the answer is yes, it needs to get very serious about what level of investment is required to actually deliver that.”

Paul:

“The irony of all of this is there are only four thousand people in the world or so who are Quantum experts. So those four thousand people are going to appear or reappear in the one, two, or three Quantum companies that are going to win this. Canada has a chance of having one, two, or three of those companies based in Canada, from a hardware perspective.”

[Interviewer’s note: Paul’s 4000 number apparently refers to people in “Canada's commercial and academic quantum talent pool” from this report, which as far as I can tell is an accounting of Canadians with PhDs in quantum physics. The global quantum workforce beyond PhDs is far larger, as he confirms in the interview.]

If we want to capitalize on 25 years of investment in quantum and a world-leading position on a technology that has been established in Canada, we need to get it done before DARPA Stage C.

As to what comes next, it is clear from all three interviews that the ball is firmly in the court of Canadian policymakers. As Paul puts it:

“Those companies, by the way, are fiercely Canadian. So this view that we are in it to sell to the highest bidder couldn't be further from the truth. We are companies, we do have cap tables, we do have investors, we are subject to capital flows. But speaking for Photonic, Photonic is two thirds owned by Canadians, and it's fiercely Canadian. We’re banging the table going, ‘I want to stay Canadian. Give me a chance to stay Canadian.’”

The will and the money are there, what remains is action. It is up to Canada to make a choice, and it is a very simple choice: Now, or never.

Interview with Paul Terry of Photonic

KB: Let's start with a bit of context. Give me a short intro to Photonic, what you're attempting to build, and what it's taken to get where you are today.

PT: Photonic was founded in 2016 by Stef Simmons, who's a physicist at SFU, a professor there. She had the idea of using colour centres that are photonically interconnected. I I mentored her in 2016-2019 as we calculated the technology necessary to actually sort of win this. So it took three or four years to do the research and to find the attributes of the foundational technology that's necessary to actually make a computer. So in 2019, we were looking for a CEO. Hard to find a CEO that has the experience of a startup physics degree and engineering degree etc. So I stepped in to be the CEO. We actually raised our first round in 2021.

That's where we are now. We're 150 people based in Vancouver, BC, in Coquitlam and we are building the company in Canada. About 30% of the company doesn’t work in the head office and they work wherever they are - across Canada and around the world. That's allowed us to hire the greatest and the best in the world just wherever they live and of course, if anybody wants to come to Canada, when immigration allows it, we bring them into Coquitlam.

KB: Canada has a leadership position in quantum tech currently. What is it about the Canadian ecosystem that made it possible for Canada to be a place where you can build this kind of company?

PT: Canada has long had a culture of funding research. It does not have a culture of funding commercialisation. I've been here for 40 years. This is my seventh company in Canada. I've had five acquisitions and one public company in the last 40 years, and I've been on almost every Prime Minister's committee over the years, on various technologies. I've also had the experience of spending 20 years on the Board of Michael Smith Foundation, plus Genome BC, plus Life Sciences in BC, plus a hospital in Vancouver.

So I spent a long time on the research side and a long time on the commercialisation side. Canada Funds Research Well. Researchers will say it's not enough. and that’s probably true, but then all researchers around the world will say it's not enough and that's probably true too.

But 20 years ago Canada funded quantum. Stef Simmons, the founder of this company, was one of the first graduates of a quantum programme at the University of Waterloo. So she is a direct product of Canada's investment in quantum.

Quantum is a complex subject. To actually work in it, you need a PhD. I think we have 70 PhDs in our company right now. And Canada has them. The UK has them. The US does not have them. So there are various peoples around the world, various countries that have bits of them, because they did not spend 20 years spending billions of dollars on the research. So Canada actually should be credited for doing it, because now you planted the seeds 20 years ago and now the trees are growing. We actually have the best quantum people in the world in Canada. There is really no argument about that at all. So we benefit from that, as evidenced by the fact that we could prove it.

KB: Careful not to let Lisa Lambert hear you say you need a PhD to work in quantum.

PT: Let me just qualify that. You need a PhD to do quantum science and engineering. Having said that, a quantum company is actually quite wide. You need some very strong engineers, you need some good marketing people. In our company we have people with degrees in English, all the way to PhDs in computing. We often have something like a thousand applications for every position in the company, give or take. It's a very competitive place to get into. You don't need a PhD to get in. It depends what job you're going to do.

KB: Photonic is one of four Canadian companies that are part of this DARPA QBI challenge, intending to deliver an enterprise-scale quantum computer by 2033. Tell me a little bit about the challenge that's been put before you and Photonic's part in it.

PT: Let's go back to DARPA. Previously to this I was a CTO of Cray Supercomputing. I've done many DARPA programs in the past. This is not a normal DARPA program. It's the first thing to know. DARPA normally is a defense type thing. They do things to aid the defense of the realm, as it were. This isn't that, which is odd, because DARPA, in this particular case, is solely focused on the commercialization of quantum. Not necessarily the defense aspects of quantum.

You may know that DARPA, of course, funded all the IP networking stuff back in the day. They did a lot of compiler design, a lot of supercomputing design, a lot of things going into space and so forth. These tend to be closed contracts, defense-oriented, with terms and conditions that almost prevent you from commercializing. This program is not like that. This program says, unless you can commercialize, we are not interested in talking to you. That's a very important and subtle difference, and a very big one.

DARPA had a trial run of this program two years ago. Two years ago it said, “before we announce this program, let's work out what the program is and do the trial run with Microsoft PsiQuantum and Atom Computing”. They limited the trial run to only American companies and they took them through the process as a pro-forma for the process they're in now.

DARPA is in three stages, A, B and C. Stage A was a million dollars. Stage B is up to $15 million. And Stage C, there's a promise, not a guarantee, subject to Congress, the Senate and many other political machinations of up to $300 million per company in matching funding for the production of, let's say, a prototype or something that looks like a prototype.

Two of those three original companies are in DARPA Stage C. They have now attracted, 18 additional companies into DARPA Stage A, which is almost a due diligence program before you get to DARPA Stage B.

Notice that DARPA is not funding an end-user computer. It's really about putting a stamp on Quantum, about creating a pivot point for Quantum. Quantum is happening now, so let's fund these companies and advise these companies.

If you're a company in DARPA that does this very well, but doesn't do that very well, DARPA is also interested in doing whatever it takes to make what they call a utility-lifter-scale computer. So as an example, if you had a supply chain issue, if you needed to build a fabrication facility or whatever, they could act as a matchmaker to make that happen. Their sole goal is to make the environment to make a utility-scale computer a reality in a world where people can't easily diligence quantum computing. So it's very much a reality-driven commercial arrow.

To do that, there's a core DARPA group based in Washington, DC, and then there's a Surround group, which is what they call their test and evaluation team. For that team, I think they've hired several hundred people across all the institutions, across institutions like National Labs and so forth, to be the testing evaluation team. Those testing evaluation teams are only for particular companies. T&E teams are not shared across companies. The DARPA main team can go across companies, but they are very, very, very sensitive to confidentiality. A lot of things that we share with them, things they share with us, they keep confidential, even between T&E teams.

They're interested in finding out the integral details, but not sharing it, and in fact, when we send them documents and so forth, those are all marked up with what's confidential, what's not, what they can share, and what they can't. The T&E teams meet with us anyway every week. If you've ever done a PhD and you have an external examiner going through every sentence, that's kind of what it's like. They are very detail-oriented, very keen to learn, and very keen to understand.

One of the things that is a misnomer, is that people think the DARPA team are quantum experts and they know all the answers and they don't. In my experience they are learning, they're absorbing, they're very smart people, very fast, and so there's an educational part to this, to explain to them why this is, why this matters, how this matters, what the ups and downs are. What they're not expecting is for teams to have everything dotted and crossed, what they are expecting is to have a plan, a strategy, a view, a risk profile, and a plan of action to obviate that particular issue.

As an example, if you had a supply chain issue for a bent piece of metal that you need for your quantum computer, then they would say, “okay, so that's good. I recognize you don't have it today. What's your plan to have it, when will you have it, how important is it, what's the second source of it, what's the third source of it?” From a diligence perspective, it's probably the highest level of diligence I've ever seen in my 40 years of doing technology in the world. So welcome to my world.

We have teams of people, normally senior people, who are anticipating the meetings, providing information before the meetings, so that people going into the meeting have the information ready to go, so it's not a presentation every week. It's not a marketing thing, it's a deep technical thing. The best way I could describe it, if you’ve done a PhD, it's like a PhD supervisor going through and trying to uncover all of the details, and they're doing that with all of the 20 companies in DARPA, with different T&E teams.

They're learning a lot, actually. I can say from personal experience, things that they took to be true, they're learning are not necessarily true. It’s actually accelerating, not decelerating, the perception that quantum is going to be here sooner rather than later. Which actually is very good, because no number of marketing materials can beat showing you how QRE actually works, what resourcing means, what a qubit actually does, and then understanding that at a deep technical level. They understand it, even if you haven't done it yet, they understand it, and that actually sets a path for the full thing. The third-party aspect is especially important, because the marketing materials are coming from the quantum companies, and it's powerful having third-party validation.

The other side of that, of course, is that DARPA is a US government object, and you're subject to US government oversight, and nobody knows what they're going to do next, in a whole range of things, to state the obvious, and whether or not DARPA-C is actually real. Someone will say it is, because there are two companies, PsiQuantum and Microsoft, already in DARPA-C, so there are already participants in DARPA-C. So there's an argument to say DARPA-C is already in place, but how many companies will make it to DARPA-C is a question.

Governments are notorious at stating a budget and then cutting it. So will that actually limit the number of people going through? For the people that don't go through, is that a statement that their technology doesn't work? Is that a statement that, politically, they are people that are not meeting the US requirements? Those requirements could be wide-ranging. So for example, those requirements could have IP constraints and restrictions. They could have US domestic considerations. They could require you to move to the US. So this is basically, this is also a threat for all the DARPA-C companies, because once you're in it, you'll do your best, and believe all the Canadian companies will do very well technically, being among the strongest in the world technically. So two questions then to the Canadians: What do you do with Canadian companies that get into DARPA-C? And question two, what do you do with Canadian companies that don't get into DARPA-C?

It could be that the technology is not why they do or do not get into DARPA. If you speak to Rafal or Julian, they’ll tell you the exact same thing: that we worry about the signal of getting in, or not, to DARPA-C. Politically, you could take the view that people going to DARPA are pandering to the American stuff, or you could take the view that the technology wasn't worthy. It's a “Sophie's choice” from our perspective, we can't actually make the right decision. What we do is we make the decision that best showcases the technology that we have and take advantage of the fact that this actually is a two-way street. DARPA also talks to us and goes, “well, we'd like to see this better, or that better, et cetera.”

So it's a forcing function on the technology. Even with the best way in the world, you can't see what you can't see, and so having a third party independent say “you should do that, or think about this, or have a good statement for that” is a very healthy situation. So at the end of the day, the decision that I made, that we made, is that, it's better to be in it and have that forcing function than not be in it. The Canadians need to understand what the future looks like here. And frankly, the British and the Europeans as well, because this has had quite the geopolitical effect on all countries as the US is moving to close. And the US is very good at that, moving to close. It's not, “let's just keep this going and then make a decision in three years.” This thing [DARPA] will all be over in 18 months.

KB: As I understand it, the first two stages of this DARPA program will not be heavily IP-generating and that most of the breakthroughs, should they happen, will be in Stage C. Does that align with your understanding? Has there been a lot of IP transfer in the necessary part of this diligence process? What is the timeline that you expect before the IP-generating breakthroughs need to be delivered assuming that stage C continues and Photonic is part of it?

PT: The IP considerations for phase one and possibly phase two, I haven’t seen the phase two ones yet, are actually very friendly. So they're not at all problematic. We have had experiences in the past with the a government where the IP terms were so outrageous that we just turned them down despite a very significant revenue opportunity. So I agree that stage one and two IP terms look good. DARPA is very keen, and they were very receptive, by the way, to changing IP terms, which we did. On behalf of everybody, nobody signs the same IP term to my knowledge. I don't know if anybody has different IP terms.

The decision to go to DARPA C is a two-way decision. They can offer it and we can decline it. And so if there is only one, two, or three companies that go to stage C, then that will be a negotiated IP thing compared to stage one and two, which was a more general IP thing.

Now, the breakthroughs happened before DARPA started. So the IP terms for matching funding are going to be interesting. I don't really anticipate, and knowing that companies have gone to stage three, that their IP terms have been necessarily problematic. But those are American companies, not Canadian companies.

So we have choices. We do have choices. Stage one and two, good. Stage three, we have choices. And whilst it's up to 300 million per company, it's not 300 million per company you can choose. It's matching funding, so you have to have enough investment in the company to match. Why would a government give you monies without IP terms?

Now, there is a conversation that says that DARPA C wouldn't actually be funding R&D. It would be funding pre-sales, and I don't think DARPA knows yet, frankly, what form it will take. I don't think they have a good view on it. They recognise that they can do it in different forms. They also recognise that it's going to get their money from Congress. So there's a political battle to be had. I don't actually know that anybody knows what the answer is.

KB: Has the current geopolitical chaos substantively changed Photonic’s IP strategy in general?

PT: The growth of Quantum and the understanding of what Quantum is going to do to nations has created quite an export control problem for everybody. There are several agreements. The Wassenaar agreement, there's NATO, AUKUS, Five Eyes, national agreements, trade agreements, all of which have a bearing on what you can do and when you can do it. Can you move a Quantum computer from Canada to England? There are at least two or three agreements that will dictate what you have to do and how you have to do it. So, the government of Canada really has to kind of figure out what it’s going to do with that.

That's if you're selling hardware, lasers, semiconductors and stuff between countries. What if you're not selling that and you're selling Quantum services? You host a computer in a country, could be Canada, and then people access that via the Internet, which is probably the form it will take. The regulations for that today are only privacy type regulations. So, we have GDPR and stuff like that as a regulatory body. That one is going to be interesting. What are the regulations about you using a database piece of software on Amazon Cloud that's hosted in Germany?

I imagine that the Canadians or governments will have something to say about releasing Quantum services of this power to anybody in the world, because people could use those Quantum services to decrypt things, to break passwords, to do stuff. That regulation has not started yet because we don't have Quantum services yet. So there's a problem with hardware today. It's a mess, but that problem will get dwarfed by the provision of Quantum services and whether you have to host a piece of hardware in a country to offer services in that country. That kind of happens today in Microsoft or Amazon, which will actually have different data centres in different countries specifically to stay on the side of the regulatory bodies in those countries. That may happen. So, that's a brave new world. Welcome to my world. That's going to be an interesting one.

KB: It sounds like there is an 18 month timeline for most of the key elements to resolve with respect to the DARPA QBI. What policies or changes does the Canadian government need to make within that timeframe in order to capitalise on the lead that Canada has right now?

PT: The first one is recognition, of course. I would say that having kind of banged on the door of the Canadian government for the last four years, nothing has happened until this change of government and then as we saw this morning they have a Minister for AI and Quantum now. So, this is good. The recognition is good. This event is good. Having the G7 state that Quantum is here and real is good. We met the Prime Minister of the UK on the weekend. The leaders and the political motivations are good. I think we are having the leaders recognise what this is. There are only now three or four companies in Canada that are world leaders in Quantum. I recognise my colleagues in other companies here. There will be a consolidation at some point in the next four years, I would think, of Quantum companies in the world. Recognising that lots of Quantum companies will fail, lots of small, four, ten, twenty person Quantum companies that are late to the game will fail. There's two hundred and something Quantum companies in the world. In three years there may be four. Every industry goes through this, every industry goes through a consolidation stage. The irony of all of this is there are only four thousand people in the world or so who are Quantum experts. So those four thousand people are going to appear or reappear in the one, two, or three Quantum companies that are going to win this. Canada has a chance of having one, two, or three of those companies based in Canada, from a hardware perspective. The Canadian government should take an opportunity here to say, ‘this is a pivotal point in the history of computer science. This is a once in a lifetime change in computer science. This will basically set the state for the next hundred years of computer science” This really isn't in any debate at all.

We shouldn't allow the foreign country to take it away from us. We have it here, as we have with lots of other things. We should double down on supporting those companies. Even if those companies eventually become two companies or one company, it doesn't really matter. It's a fact that people live here and like to work here and so forth. That's important.

The second thing that I think they don't fully understand is that a quantum computer is not useful unless it has quantum applications running on it. Quantum applications are typically written by Master’s, PhD type people. Ten people can write an application to do some quantum chemistry that could change the nature of climate change, for example.

Small numbers of people with this amount of power can change the whole world. We have an opportunity here to create what happened in Silicon Valley 30 years ago in Canada. I'm actually more excited about the surround, the quantum companies in the application space, around the quantum computers that we have here, more than that than the quantum computers themselves. Quantum computers themselves are, to a large extent, a solved problem. We will solve that problem. It is going fast. You need these applications people to change medicine, material science and so forth. We kind of ignore that knock-on effect. For example, I often get politicians saying that, “in Photonic you're creating 300 jobs. 300 jobs isn't interesting.” Well, it's interesting to me because these are super PhDs. These are the best in the world, people. They create five jobs for every job I put in here, but more importantly, the application surround around this is going to create thousands of jobs and change the GDP of a nation, which is not necessarily a function of the number of jobs that you have.

Especially with AI, people are understanding that actually fewer jobs can lead to higher GDP growth. So if your focus is on GDP growth, it's a false logic to believe that actually equals jobs. It did in the 18th century, but it's not going to do it in the 21st century. Let's get a grip here, people.

KB: Is there anything that I should have asked you that I didn't ask you?

PT: Canada is historically risk averse and has a history of losing commercialization south of the border.

To some extent, we've made that easier for them because there are three hardware companies, and this is not 300 now, four if you include Anyon, and so the winners have kind of picked themselves. They've fought in the trenches here to get to this, and the Americans see it. So fund them.If you want to, pick any two out of four, three out of four, one out of four, and then fund it. So as far as I'm concerned, as a Canadian, you're going to have to fund it. And the benefit is huge to Canada.

Those companies, by the way, are fiercely Canadian. So this view that we are in it to sell to the highest bidder couldn't be further from the truth. We are companies, we do have cap tables, we do have investors, we are subject to capital flows. But speaking for Photonic, Photonic is two thirds owned by Canadians, and it's fiercely Canadian. We’re banging the table going, “I want to stay Canadian. Give me a chance to stay Canadian.”

It's not a given that you form a company and just sell it. That is not a given at all. If you can form a company and have sufficient revenues, and have revenues with high gross margins, like Johnson & Johnson, which is a private company, you don't want 1) to sell it or 2) go public. There's no need to raise capital once you get past this kind of stage that you're in. To be a great company operating is actually a value thing that people do not understand. Often companies run into cash issues, so they are forced to take capital from other places. And of course the capital the Americans can bring to bear is high. The irony of all of this is the capital for quantum is a fraction of the capital for AI. A fraction. If you're an AI company and my PhD was in AI, so I can speak with a certain amount of knowledge, your cost base to run your LLMs is enormous. Absolutely enormous. So in quantum, the cost base is actually small. So it is a very strong high gross margin business, which is good. So you want high gross margin businesses that are actually creating opportunities for other businesses, which will also be high gross margin businesses to enter GDP. That's basically what you want to do as a society.

Interview with Allison Schwartz of D-Wave

KB: Tell me a little bit about yourself, about D-Wave, and about what you're trying to achieve.

AS: I’m Allison Schwartz, I'm the head of global government relations and public affairs at D-Wave. I've been with the company now for almost five years. D-Wave is a full-stack quantum computing company, which means we have the computer, hardware, real-time cloud access, support services, professional services, and all. We have right now a quantum annealer, which is in the cloud today, solving real-world problems. We are also building a gate model system, and we are using it through superconducting chip fabrication.

I mentioned the two different systems, not to get into the science behind them, but to highlight the fact that quantum computing is not monolithic. There are different modalities or different qubit architectures. Each of these are advancing on a different timeline, and each of these have different strengths and weaknesses and capabilities.

Annealers are best for optimization problems, which are ubiquitous across industry. That's what's commercially available to now, and we're in our R&D phase for the gate model systems.

KB: Is a quantum annealer a hybrid system, or is it fully quantum-based?

AS: It's 100% quantum. We do have hybrid solvers that you can submit your problem in, and you can ask it to go to the QPU only and have the quantum annealer take care of all of it. But a lot of the problems actually don't need quantum to solve all of it. A hybrid solver might actually be a better solution. If there is the part of the problem that HPC is really good for: a hybrid solver will break the problem down, and the end user doesn't need to do anything. They submit it into the problem, and then our hybrid solver will break the problem down, send part of it to an HPC, send part of it to a QPU, and then give you back the answer, and most often sub-second response times.

KB: It's pretty clear that Canada is a leader in quantum and that we have an incumbent advantage in the space. What is Canada doing well, and where are the gaps?

AS: Canada had a “leader” position in the academic space, especially on the hardware side. D-Wave came out of UBC, and so a lot of our technology came out from there. A lot of our employees are from Canadian academic institutions, and we still have our research center of excellence out of the Vancouver area in Burnaby.

What Canada is doing right is investing in the hardware and seeing the value of quantum. Where Canada can grow is on the application layer of seeing where these actually can do useful things. We need both. We need both the investments in the hardware advancements as well as the software, and we need investments in all the different modalities that are out there. You're seeing investments in, let's say, the EU and the UK that don't have as much of the homegrown technology. So they are investing in Canadian companies, coming over and building those applications. It's about the end use for the technology. How do I solve my problem, whether it be transportation or personalized medicine or emergency response. Where Canada is also doing really well, and I know it's going to surprise people: immigration. It's actually easier, if we have a talent that we need to bring into our Canadian entity, to bring them there versus our US entity. In the US it’s harder because of the immigration laws to bring somebody in there who isn't already a US citizen.

KB: With respect to quantum strategies and comparing Canada, the US, and the UK, how are others doing it differently?

AS: The first difference between the UK and the US is in taking an explicitly inclusive approach on quantum, including quantum annealers as well as gate model systems. This was actually the UK approach to their SPARQ program. They talked about having to train on annealers as well as gate model systems. That inclusivity has also moved into the EU quantum programs. It's also in the Canadian quantum strategy. It's not in the US one that was first passed, but it is in the legislation since to reauthorize the national quantum strategy. That inclusivity language has been folded into it. The problem and the gaps happen in the implementation side. So you have these national quantum strategies, but you have quantum programs that are implementing them, and there's a gap between what the strategy says and what these programs implement. There is not a good oversight or course correction when those gaps occur.

The UK actually has instituted programs to be inclusive of all technologies. The EU just did a call for air traffic management that looked at quantum sensing and quantum computing and explicitly included quantum annealing technology as high yield, low risk, short term technology. The Canadian programs, unfortunately, if you look at the last two or three that relate to compute are for gate model systems only.

D-Wave is the third largest quantum patent owner in the world behind Google and IBM, the largest in Canada, and we are explicitly excluded from their calls. So that is a concern. So, how are we going to course correct that given that you have a program implementation that doesn't actually align with the roadmap that just came out of ISED or the national quantum strategy that's come out of ISED?

KB: D-Wave was explicitly excluded from the DARPA QBI program as a result of the focus on gate model systems, and you mentioned being the third largest owner of patents in the world after IBM and Google, which is of obvious relevance to the ongoing policy debate around IP ownership and sovereignty. Tell me a little bit about the process of trying to actually get the funding you need to build this company, balancing that against IP strategy and retention.

AS: Let’s start with the QBI program and then I can get into the investment side of things. Originally, the DARPA program was called Utility Scale. It was just about getting a quantum computer to Utility Scale and D-Wave did submit an application. They had identified four companies that they were interested in, all of them gate model only, and two of them made it onto phase two: PsiQuantum and Microsoft. Then they came in with the Quantum Benchmarking Initiative, the QBI, which was an even smaller subset and that one they actually designated it for gate model only.

While we are building both annlears and gate-model systems, we did not submit our gate model program and the reason is the Quantum Benchmarking initiative had a six-year timeline and we believed that our gate model program would get to Utility Scale, but we weren't sure if we could get it in the six-year time frame. We knew we could get there with our annealer, even though it was technically out of scope. Under the Utility Scale the annealer should have been in scope, but DARPA had determined they only wanted gate models, so when they shortened it, they focused it there. There are 18 or 19 companies that got through the QBI program Phase I. DARPA is assuming a majority of them won’t make it to the next phase. So they do have a bit of weeding out and people who have great ideas but can't implement them in the timeline they need or have problems scaling.

As for the investment piece, because D-Wave has most of our commercial success is in the annealer and we are building the gate model system, but it is in the R&D phase. We're not building a NISQ-era system. We're going for fully fault tolerant from the beginning. We know that there's a longer runway for that. We are not beholden to government dollars. We actually have more commercial customers, so our commercial success is because we have real-world applications in production today. We're optimizing the telecommunications network in Japan with NTT DOCOMO. We're optimizing automobile manufacturing of Ford Otasan in Turkey. We're optimizing some operations in Canada for Pattison food groups, the Save On Foods in Western Canada. They're looking at a few different grocery optimizations including e-commerce delivery staff scheduling and others. So we have real-world successes pinging our systems in real time. We went public in SPAC in 2022. You're right, a lot of the investment did come from VC investors, but we did have PSP as one of our major investors in Canada. They have since sold their shares, which was announced publicly, but they were bought in fully into supporting D-Wave and our technology advancements and moving forward. But when we went public, we went public through our SPAC. Our parent company is a US entity, although we still have the Quantum Center of Excellence in Canada in Burnaby where a majority of our employees are. And that's where our products and services are being developed.

KB: Recently we have seen the G7 and the PMO mention Quantum. This conference and recent NATO recognition of quantum as a key emerging defense technology all show intention to push on quantum tech. What concrete steps need to happen now that the intention has been expressed?

AS: There are a few concrete steps. One is course-correcting the implementation of current programs, making sure they're inclusive of all the technologies, and that really has to be done almost immediately. There's been a second call now that has come out that has not been inclusive and there aren't that many calls. If you don't course correct quickly, you're just going to widen that gap.

There's been a conversation for many years now about creating a quantum sandbox. It's specifically focused on near term applications, identifying a need, identifying applications, whether they're quantum or quantum hybrid, and solving a problem. Supply chain, for example. Can we optimize ports? Can we optimize railways? Can we optimize airports? How do we move things faster? How do we move things better? There was an application in Tokyo which optimized waste collection and it reduced the amount of CO2 emissions by 60% because they could collect waste better using fewer trucks on the road.

The government and Prime Minister Carney have mentioned housing being a critical priority. Well, part of that is a manufacturing problem. How do you manufacture things? Optimization of manufacturing is right in the wheelhouse of D-Wave. We’re already optimizing manufacturing in a variety of different industries. We could do it for the housing industry too.

Supplies have to come to the ports. I mentioned port logistics, that's another area. So there's ways in which you can identify those policy initiatives, put it into a quantum sandbox and build those applications. The UK has done this and they put a timeline on those of 18 months or less. You can do that here in Canada. We can make utilizing today's technology an actual priority, and not just studying it and thinking about what it could be one day in the future. That is a concrete step that could be done through Innovation Solutions Canada through partnerships with digital or the quantum algorithms institute. We're actually working with Staque and Verge through a digital funded project on autonomy for farming equipment in Canada. That autonomy is not just for farms. There is a national defense area. There is a variety of transport that's looking at it, too. So utilizing current programs or current funding structures and creating a quantum sandbox program that is dedicated to near term applications.

KB: It sounds like this is something that you've pitched before. What's the response when you get into this with the government in particular?

AS: “Wonderful idea. We'll get to it.” I think it's time. I've been with the company now for almost five years. I think it's time we got to it.

I testified before Parliament almost four years ago. I pitched the idea of a quantum sandbox and everybody thought it was a great idea. It was actually a recommendation from Parliament to the administration and we're still waiting for it to be implemented.

What it does is actually from an investment perspective is that by building these applications and building the demos, it actually de-risks the technology, which brings more investment in. The quantum sandbox program, it's not just about solving a problem. It's also de-risking the investment in this emerging technology and demonstrating that it actually can do something useful. Through that, we can know a company is one we can invest in, or that a startup is one that we want to navigate with. These technologies can work with companies that are coming out of Creative Destruction Lab as well as the hardware and software that come in. Which Canada has a lot of. Right.

KB: We’re in the midst of geopolitical chaos currently, which is part of the impetus behind a lot of the conversation around technological sovereignty. Has that shift in policy impacted D-Wave’s IP strategy?

AS: It has not. The way we look at this is the IP we need is what we need to advance and scale our systems. We just released our sixth generation system. It has 4400+ qubits. It's more performant than our fifth generation system, which had 5000 qubits. It's not about the number of qubits. It's actually about how well they work together. What is the IP we need to continue to make that move forward? That's what we're looking at. Where is the talent that we need in order to help advance that? We're already looking and identifying ways to build Advantage 3, which is going to be yet another exponential growth in our hardware, but also the software side. So it's not an IP strategy. It's more about talent. It's what we need from building it. We're going to need the right people, and if those people are in Canada, fantastic, but if those people happen to be in the UK, in the US and other places, we're going to have to go where the talent is.

KB: Can you give me a sense of scale for the optimization problems that you're looking at? Can you compare what it would take to solve that using a classical method to what you're able to do with your annealing systems?

AS: So it's hard to answer it from that perspective because there are some optimization problem sets that actually still are better on classical. We worked with the Australian army on autonomous vehicles for emergency response. When you looked at five trucks going from two depots to seven places, a classical computer could solve that. The minute it got to scale of an actual problem, you had seven depots, 300 trucks, etc., by the time you got the solution from a classical solver, it was too late for an emergency response, or it never got to that answer. Our hybrid solver could get there.

It's time to find the solution that you're looking at. If you are trying to optimize wildfire remediation and response, ERDC, which is an army research lab down in Biloxi, Mississippi, identified an optimized fuel break line. How do you actually do the fuel breaks to prevent those cascading wildfires?

It's not that you couldn't do fuel breaks before, it's not that classical can't do it, but we were able to optimize it so that they could tear down 60% less trees. They're also looking at cascading grid failures, which was important with Spain and Portugal recently. As you're looking at the wildfire response in BC that happens every year, it's not like we have an application that we can plug and play. You can't call us during next year’s fire season. The problem is that we have to build those applications now, so we can test it out next year. So it's less about the scale of what a classical do versus a quantum, it’s more about time to solution, and we do a lot of benchmarking in the beginning to identify whether or not we even need quantum for the solution that you're looking at..

KB: What should I have asked you but didn't?

AS: I guess the question you should ask is why people aren't inclusive, why the government programs are not inclusive of all the different technologies. A lot of that is that because quantum is scary, because quantum is so niche, they have a lot of folks that have 40 years worth of academic background that is forcing them to one viewpoint and they're not asking, “what are we not thinking about?” They kind of have that preconceived bias that's going in. There are some governments around the globe that have what's called a 13th man perspective. If 12 people agree in a room, the 13th man has to play devil's advocate. Unfortunately in the quantum programs, whether it's in the US, Canada or others, they don't ask “what if we're wrong.” China, on the other hand, has an all-inclusive approach of just going after everything. When I continue to talk to governments around the globe about what they need to engage and where they can look, when I say, “but what if you're wrong?”, they don't understand the question. So they really have to have a “what if we're wrong” mentality and do GAP analysis. If these are all the technologies that are out there and we've implemented programs, where are the gaps for talent? Where do we need to invest in talent in those areas? Is it applications? Is it annealing? Is it hardware? Is it sensing? Is it networking? There's a variety of these different niches, but we're not doing gap analysis and implementing programs from that.