Canada Pins Fresh Tech Hopes on Quantum Computing

Photographer: Aaron Harris/Bloomberg

Along with BlackBerry smartphone inventor Mike Lazaridis, who has poured nearly half a billion dollars into quantum science in Waterloo, Ontario, D-Wave is creating a second act for a Canadian technology sector known more recently for Nortel Networks Corp.’s bankruptcy and BlackBerry’s struggles. Close

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Photographer: Aaron Harris/Bloomberg

Along with BlackBerry smartphone inventor Mike Lazaridis, who has poured nearly half a billion dollars into quantum science in Waterloo, Ontario, D-Wave is creating a second act for a Canadian technology sector known more recently for Nortel Networks Corp.’s bankruptcy and BlackBerry’s struggles.

When a recruiter called former Goldman Sachs Group Inc. executive Vern Brownell in 2009 about heading up D-Wave Systems Inc., a Canadian startup in the nascent field of quantum computing, he almost hung up the phone.

Brownell, who had spent 11 years at Goldman Sachs (GS) as the New York bank’s chief technology officer, had grown cynical from startups pitching for a sliver of the billion dollars a year Goldman spends on technology. A quantum computer, which uses the building blocks of matter itself to drive calculations, sounded like science fiction. Yet D-Wave was about to build one.

“Once I came out here and saw what they were doing, I said ‘I’ve got to do this,’” Brownell said in a recent telephone interview. “I had never seen anything that had the potential to disrupt the computing industry the way this had.”

Four years later, Brownell is D-Wave’s chief executive officer, the firm has secured more than C$100 million ($95 million) in investment from backers including Goldman (GS) and Amazon.com Inc (AMZN). founder Jeff Bezos and counts Lockheed Martin Co. (LMT), and a lab run by Google Inc (GOOG). and NASA as its customers. Along with BlackBerry smartphone inventor Mike Lazaridis, who has poured nearly half a billion dollars into quantum science in Waterloo, Ontario, D-Wave is creating a second act for a Canadian technology sector known more recently for Nortel Networks Corp (NRTLQ).’s bankruptcy and BlackBerry’s struggles.

Photographer: Jonathan Fickies/Bloomberg

The firm has secured more than $100 million in investment from backers including Goldman and Amazon.com Inc. founder Jeff Bezos. Close

The firm has secured more than $100 million in investment from backers including... Read More

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Photographer: Jonathan Fickies/Bloomberg

The firm has secured more than $100 million in investment from backers including Goldman and Amazon.com Inc. founder Jeff Bezos.

Quantum computing and nanotechnology are sometimes referred to as the science of the small, for their focus on the tiniest parts of matter such as atoms, electrons and photons. Whereas conventional computers interpret bits of data as either ``ones'' or ``zeros,'' in quantum computing the data can exist in ``superposition'' or two or more states simultaneously. Combined, they generate an exponential increase in processing power far beyond current computers.

Goldman, Amazon

“It’s amazing what’s been done here,” Brownell, 54, a native of Massachusetts, says of Canada. “There’s a real opportunity to take a leadership position in what is really going to emerge as the next exciting field in computer science.”

The twin fields could, say its advocates, yield breakthroughs in satellites, cryptography, non-invasive medical testing and geological surveying.

Brampton, Ontario-based Nortel, once North America’s largest maker of telecommunications equipment, filed for bankruptcy in 2009 and was sold off in chunks to U.S. and European buyers. BlackBerry, which developed the first smartphone over a decade ago from its base in nearby Waterloo, was overtaken by nimbler competitors led by Apple Inc. While BlackBerry attempts a comeback with new software and phone designs, its market value is more than 90 percent below its 2008 peak after plunging the most in 13 years last month.

Technology Pioneer

Lazaridis, 52, resigned from the board of BlackBerry in March, cutting his last ties to the company and leaving him free to plough his time -- and money -- into pursuing his passion. The child of immigrants from Turkey also says it’s Canada’s last shot at remaining a technology pioneer.

The country “effectively missed the first quantum revolution, which was the silicon revolution,” he said in a May interview. “We just cannot afford to sit this one out.”

What specifically lured Brownell to a Vancouver suburb on Canada’s West Coast was the commercial ambitions of D-Wave founder and theoretical physicist Geordie Rose.

“His vision was to get to market with a quantum computer that could do useful things as fast as possible,” Brownell said. “Nobody else in the world has been able to do what D-Wave has done.”

Flight Control

D-Wave’s main product is a supercooled quantum computer called the 512-qubit D-Wave Two, housed in a 10-square-meter black cube. Lockheed, the world’s biggest defense company, earlier this year upgraded to the D-Wave Two to verify software algorithms used for jet flight control and other complex systems.

D-Wave then won a contract in May to install the computer at the Palo Alto, California-based Quantum Artificial Intelligence Lab, run by Google (GOOG), NASA and a consortium of U.S. universities. Once operational, the D-Wave Two will help researchers on knotty computer problems ranging from speech recognition to the search for exoplanets.

“We sell these to large government and commercial customers who have significant problems that are addressed by this kind of architecture,” said Brownell. “There are literally thousands of potential customers that are targets.” D-Wave now has a handful of customers and each system costs in the “double-digit millions,” he said, declining to be more specific.

D-Wave has no current plans for an initial public offering, though ``that is certainly our goal,'' Brownell said.

Bezos, Tesla

D-Wave’s other investors include Draper Fisher Jurvetson, a backer of Tesla Motors Inc. (TSLA), Jeff Bezos’s Bezos Expeditions, and In-Q-Tel, the investment arm of the Central Intelligence Agency. Having secured C$36 million in funding late last year, D-Wave has all the capital it needs for the moment, Brownell says.

Skeptics say D-Wave’s machine may not yet amount to a quantum computer.

“They may well have built a device which can do some very specialized tasks that use quantum principles,” said Anthony Leggett, Nobel prize-winning professor of quantum computing at the University of Illinois at Urbana-Champaign and summer teacher at Waterloo’s Institute for Quantum Computing. “One of the standard tasks which one would like a quantum computer to do is to factorize large numbers; as far as I know D-Wave are no closer than anyone else to doing that.”

Factorizing numbers hundreds of digits long, or splitting them into their constituent parts, is key for encryption used to protect digital data including secure transfers of government data, medical records or banking transactions.

Quantum-Nano Centre

Still, University of Southern California scientists last week published a paper demonstrating the role quantum mechanics play in D-Wave’s computer.

In Waterloo, the Quantum-Nano Centre, a glass building encased in hexagonal steel latticework financed with $100 million from Lazaridis, opened in September. The building, which features labs with specially sprung floors to insulate against ground vibrations, is the new home of the University of Waterloo’s Institute for Quantum Computing.

Lazaridis also bankrolled the Perimeter Institute for Theoretical Physics with a $250 million donation over a decade before. The IQC’s backers include the U.S. Army Research Office, International Business Machines Corp., and the Pentagon’s Defense Advanced Research Projects Agency (Darpa), according to its website.

Limited Range

“The goal is to harness the impact of quantum computing for society,” said IQC director Raymond Laflamme, a protege of Stephen Hawking, at the University of Cambridge. Surrounded by stacks of papers and white boards covered with scribbled mathematical equations in his Waterloo office, Laflamme holds up a scaled-down model of a satellite his team is working on as he describes the IQC’s broader mandate.

While quantum cryptography holds the key to new security systems, it’s limited to a range of about 120 kilometers (75 miles) as the photons used to establish the secure connection are absorbed by the optical fibers or the atmosphere beyond that distance, Laflamme says.

The IQC’s 70-kilogram black-and-gold satellite, being developed with space hardware maker Com Dev International Ltd. (CDV) and the Canadian Space Agency, could make quantum communications global by linking the photons through satellites.

Lazaridis’s latest investment came in March: the creation of Quantum Valley Investments (PE00499), a C$100 million fund designed to commercialize the technologies emerging from the Waterloo cluster.

Lazaridis won’t say whether the satellite project has received funding from Quantum Valley Investments or name any other recipients, other than to say a couple have already received money.

“We have shown that Canadian companies can start from nothing and grow to become global powerhouses,” Lazaridis said. “I want to make sure we are investing in this new quantum revolution.”

To contact the reporter on this story: Hugo Miller in Toronto at hugomiller@bloomberg.net

To contact the editor responsible for this story: Nick Turner at nturner7@bloomberg.net

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