Build it and they will come. NOT.
Quantum requires a commercial Go to Market strategy, skills and expertise
Quantum Tech for executives and investors
I have the privilege of speaking to Quantum scientists, academics, entrepreneurs, vendors and regulators on a daily basis (we also get over 35K+ impressions a month), and, through my lense shaped by 25 years in business & investing, I am often surprised by the lack of commercial skills, expertise and priorities that I encounter to this day. My long take this week explores if this is a real problem or just a normal consequence of the current maturity curve. The short take looks at recent news and funding. The fan favorite SciFi corner introduces the concept of “Quantum politics”.
The longest microwave quantum link to date, recently introduced at ETH Zurich, an essential component to scaling quantum network systems
The long take
Recently, I spoke to the CEO of a well reputed, scientifically respected quantum startup. During our conversation I asked him what his sales pitch is to customers. His response to me was “what's a sales pitch?”.
A couple weeks earlier I attended a talk to a non-expert layman audience by the lead scientist of a very large Quantum company. His talk and delivery was good but it lacked a commercial message and confused the audience with spooky terms that there was no time to even begin to explain.
One of the largest Quantum hardware vendors introduced me to their consulting team in charge of sales. All of them were scientists with PhDs, supremely smart and dedicated but few of them had ever spent a single day inside a commercial operation.
Scientific success in recent years, announcements of supremacy, ecosystems with dozens of participants, MVP’s to optimize driving routes and battery efficiency, and funding that, to date, was abundant lulls all of the above into a deadly believe of achievement.
Reality is that funding is increasingly hard to come by, valuations are under pressure, commercial MVPs are stalling and almost none of the players in the Quantum space have any paying customers except some niche vendors or consulting projects.
Let’s be honest: Quantum is fragile, and I am not talking about qubits. Without commercial traction, funding other than DoD/DoE is at risk of drying out, ecosystems of developers might turn to other new technologies and corporate appetite, over bloated already by blockchain, digitization and A.I., will quickly turn to innovation constipation.
This is a problem for quantum startups who are vying not only for crucial financial funding but also for scientific talent in a market that is years away from commercial success. All too often these companies are headed by single-minded PhDs who believe that because they have seen a qubit with their own eyes they will be able to figure out a little bit of sales and marketing. How difficult can this be after all.
It is a problem for the market since the large vendors might not have the same funding or talent war issues, but will increasingly notice the pressures of quarterly revenue goals and Wall Street expectations when it comes to their innovation projects.
Which creates a problem for investors who are struggling to find viable deals. Small startups often do not have the commercial prospects to make a good investment. Larger quantum teams are seeing the pressure of down rounds since too much of their revenue stream is tied to quantum simulation and consulting projects. And most of the true risk capital bets seem to have been placed a while ago already. Additional down rounds, or, worst case, a dry out of the funding pipe, would set the quantum market back by years if not more.
Thus, it is a problem for the science because, as you figured by now, building it is not enough. They will not come.
If we want to advance the basic science as well the commercial applications of quantum, we, as an ecosystem need to take go to market and commercial application more seriously. The current state is certainly the consequence of a typical technology maturity curve. Yet, enterprise sales, especially when it comes to new tech and software, is a beast that many have tried to master for decades. Just being smarter than the rest of us will not crack that nut. We need to educate these once in a generation quantum geniuses on what it takes to sell at scale into the enterprise or we will fail - this is as much science and art, as Quantum in itself.
For executives this means they should focus their resources less on technical MVPs that might drive PR and marketing success but other than that have little commercial value in the near term, and instead focus on educational programs, internal skills building and community outreach.
For investors this means that there are two opportunities. First, identify the jockeys that will be able to sustain this race and potentially win it. Second, identify the horses that with sufficient operational, strategic and business training might gain commercial traction in a niche market within a reasonable time frame (see here for quantum deal flow). Operationally focused investors with deep Quantum + business understanding have a leg up in this race.
For Quantum Executives
Some very large upcoming Quantum Conferences have been cancelled due to Coronavirus, a new online initiative aims to share the findings and presentations meant to be introduced at these events online instead.
It had to be expected that the Honeywell announced would face some public backlash and it is interesting to note who this came from and who refrained from public scolding…. times are changing. One very popular post on this topic by no other than Scott Aaronson criticises the focus on Quantum Volume as imperfect and misleading. He makes a strong case for this, however, in my opinion, it’s nothing but a theoretical exercise. Quantum Volume might be imperfect but it is a lot better of a measure than anything else that we have and we need a measure, that the public can understand, to compare results. What you cannot measure does not exist, with that I applaud Quantum Volume and hope that some of the improvements suggested (hardware measurements, clear statement of challenges, etc) will be adopted.
An increasing number of Quantum solutions are coming to the cloud, Google is adding its Quantum Machine Learning libraries on Tensorflow to that effort.
For Quantum Investors
“Rigetti took a $71M downround because Quantum is hard”, this headline in Techcrunch 5 days ago really does not need much more comment. We spoke with an equally large and reputed Quantum company a few days ago and they themselves say “our burn is just too high” and we need to keep raising and raising. Welcome to the valley of death my friends - I’ve been there and it’s a (furnace) blast.
The European Union officially announced its Quantum Flagship initiative expected to be funded with EUR1B.
Additionally, Germany announced several EUR100M in grants for quantum research projects.
The SciFi corner
An author and thinker that I sympathize with is Thomas L. Friedman, who coined the phrase “the speed of acceleration of technology is too fast” that first got me thinking about the main hypothesis underpinning my company Interference Advisors.
In a recent article by BCG he talks about another interesting term: “Quantum politics”.
The idea that the world is no longer divided into left or right, blue or red, conservative or liberal, but, instead, now revolves around “ecosystem politics” where one can have seemingly exclusive believes at the same time. This does not entail the breaking up of large parties and creating many small ones, rather a coalition of forces that adapt to changes in the system as a cohesive ecosystem. Three main implications of quantum politics are that (1) there are many local leaders without authority who (2) need to come together as a group to reach decisions (3) without politics as driver but only the goal of delivering things that work.
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