Inside the Quantum Infrastructure Revolution with Carmen Palacios-Berraquero, Founder & CEO @ Nu Quantum

0:00Carmen Palacios-Berraquero:Hello and welcome to another episode of Riding Unicorns. Today we have Carmen Palacios-Berraquero, founder and CEO of New Quantum on the show. So Carmen, thank you so much for joining us and welcome to Riding Unicorns. Maybe you could just start by introducing New Quantum, what you guys do, and then we can kind of go from that. Absolutely. Thank you so much for having me. Excited to be here. New Quantum is a quantum networking company, and we're working to develop the networking layer that will allow us to connect many small quantum processors together so that we can build large, better, more efficient, more powerful quantum computers.

0:43So we're sort of replicating what has enabled trillion dollar classical computing industries that we know of, cloud data centers, AI data centers. These exist because there's networking technology that allows us to interconnect many CPUs or GPUs together to create machines that are orders of magnitude more powerful. The companies that have enabled that for those industries have been very successful. And I can talk about that. And New Quantum is really the category creator and the leading company to enable scale out, which is what that's usually referred to as networking for quantum processing units or QPUs.

1:30Carmen Palacios-Berraquero:So Carmen, maybe you could explain what quantum computing is. okay so in classical computing we have bits right which can be in a zero or a one state in quantum computing we have quantum bits which have two properties the first one is that we can be in a superposition of zero and one so imagine in the classical situation you can only point north or south in the quantum situation you can spin around the globe so you can already imagine and how that's much more possibility of information. And then the other property is entanglement. What it means that in the classical case, each bit is completely independent.

2:15They don't feel each other. So if you want to run a computation, and there's a few options, so you have four bits, and you want to explore all the combinations, you need to do it sequentially, one by one, right? In the quantum bit, all the qubits are entangled. This means that they are really strongly correlated, and whatever happens to one affects the other. So if the quantum bits are in a superposition of states, so they're rotating around the planet, and they're also entangled together, this leads to a massive superposition of states, which means that those combinations of states can kind of all be explored at once.

3:11So when you have n bits or qubits, you have 2 to the n possibilities. In the classical sense, you would have to go one by one. If n is 4, then you would have to go 16 times. if in the quantum case, you would be able to run one computation, which is entangled in the right way, and sort of explore all of those solutions at once. And 2 to the n grows exponentially, right? So if n is 80, then 2 to the n is a number larger than the number of atoms in the observable universe. so that's why we can explore those problems that require a huge amount of kind of

4:05Carmen Palacios-Berraquero:simultaneously changing information awesome and it came initially from academia i think so maybe you could take us back to the moment you realized that this idea was more than just a research project and could actually be a big business Yes. So I founded New Quantum in 2018 and spun out some of the research that I'd done at the University of Cambridge prior to that. Actually, at the beginning, New Quantum was developing component level devices to generate quantum signals. So something called single quantum sources. This is the technology that I spun out at the university because at that time, around 2018, is when the quantum industry really started to form.

4:56So those years are when a lot of technology started to come out of the academic labs and form into companies. And the technology that we developed had quite a broad application with broad application across communications, sensing, secure communications or computing. And then it was a couple of years into actually being with a new quantum that we realized really how we could apply the technology with the biggest impact. And we uncovered this sort of gap in the market in quantum computing. we realized that the only way that quantum computing could become the you know the commercial success that we hope it will be is if we develop the technology to network processors together but at that time there were no quantum networking companies whatsoever quantum networking was very early stage technology but talking to quantum computing companies it was clear it was so clear that it was a gap.

6:05And so we understood two things, that this could be a huge commercial opportunity and that we had identified a new part of the stack that we could then aim to dominate. And we realized that the technology that we had could be applied to solve one of the key problems that you need to solve if you want to network quantum processors together. So we did a pretty big strategic pivot at that point. And I know sometimes founders don't like to talk about moments of pivoting because it feels like, oh, maybe, you know, you were mistaken in what you said before. But I'm really proud of this pivot because I think that in an ever-changing, not even market, but industry like quantum is, the way to really identify the valuable problems is to be agile and apply the technology in the most impactful possible way, which is exactly what we did.

7:07And it's really paid off. I mean, we are truly today the leading company globally in this segment of the quantum computing industry and have a really significant business potential and really the potential to dominate this part of the stack. And Carmen, you made the comparison to cloud networking. Could you talk a little bit more about that? I mean, are we speaking the same language when talking about quantum versus cloud? Are you still trying to increase throughput, lower latency? Is it fiber cables? You know, what's the sort of 101 on quantum networking? I'm really glad you asked this because it's kind of interesting.

7:52I mean, at a high level, there's a lot of similarities. You're trying to create essentially a bigger computer out of smaller computers. and you're trying to do that using usually light so yeah fiber optic cables and in order to to create this networking stack the sort of the parts of the network conceptually sound quite similar so there's three roughly three parts to the network the first one is the interface between the computer and the network. So you will have heard of NICS, Network Interface Cards. That's the first part. In a quantum network, there's an equivalent, which is the qubit photon interface.

8:39Again, it's the interface that takes the information from the processor, which is static, and into the network, into photons, which can move. The second part is what you might call in classical networking a router, which has photonic switching and a control and orchestration layer that controls which processors are being connected to which. And this is what we call a quantum networking unit. Again, switching and orchestration. And then the third part is the sort of distributed compute services. So making everything work together like a computer that is elastic, that is efficient, that can be accessed by the higher-up application layers.

9:23And this could be like a CUDA. And this also has an equivalent in quantum, which is kind of quantum logic or quantum error correction, turning hardware into logic. So there's a lot of parallels. And, you know, the hardware, if you look from outside, it will look the same. It will be racks interconnected with fiber optic cables. But what it does is entirely different. So what we're trying to achieve here with quantum networking is creating quantum entanglement between processors that are physically distant. Quantum entanglement is this property of quantum that allows quantum computers to be so powerful.

10:07So, I mean, we can get into that if you guys want, but essentially inside a quantum processor, there's quantum bits or qubits. These are entangled together, and that entanglement allows this sort of massive superposition of states that allows the computer to be very powerful. Okay, so entanglement is really like what powers the computer. Now, if you want to create a bigger computer out of smaller ones, you need to recreate that same entanglement that exists inside the processor to entanglement between processors, between qubits and different processors. So that if you zoom out, it just looks like what we call an entanglement fabric.

10:51And that is now the new computer. So really, the quantum network is the quantum computer. by creating these entanglement links. Within that, where do the key technical challenges lie? Is it in the materials, in the fiber optic, or is it in the interface? Is this a software problem, a hardware problem, an algorithms problem? All of the above, basically. Up until two or three years ago, up until we really started to look into this problem, there had only been academic demonstrations of it, which demonstrate the concept of linking up to three qubits, linking three qubits is the record, with quite low performance.

11:35So first of all, it's a hardware problem where we have innovated in every part of the hardware, the interface, the switching, the detection, the control, to bring up that performance, to a performance that can enable computing and to a robustness that, again, is beyond that of a lab experiment. That involves, I mean, innumerable innovations from the specific protocols that allow entanglement between a qubit and a photon to the materials that form the interface to the high-precision manufacturing, RF electronics, high-performance photonic engineering, high performance control electronics i mean at every single part of the system we are either designing an entirely new thing or we are engineering it innovatively engineering it so that it's much more performance and robust that's at the hardware level at the sort of architectural level.

12:41Before we really started to look into this, it wasn't even known whether you can build a data center scale quantum computer. We didn't know if quantum scale out was possible architecturally. The reason being that quantum processors rely on qubits having as few errors as possible, or we're trying to reduce the errors in a computer. But we know that networking there's going to be more errors and it's going to be slower because you're changing the information between qubits and photons and back to qubits. So with some kind of theory work, architectural work, we've now demonstrated that there is a way essentially that you can design the entanglement fabric with a connectivity that makes for an efficient computer if that makes sense so yes it's really a multi multi-dimensional challenge yeah and common there's this very interesting thing for a vc to observe that's like quantum computers are not yet here in the way that we hope they will be and yet there's this whole infrastructure being built around them whether it's encryption networking and the algorithms that are going to make them work more efficiently do any of these businesses have business models before the computers themselves are ready?

14:04Or is it getting the infrastructure ready for when the computers are ready, then there's going to be a business model? There are companies that already have a good amount of product revenue. And those are usually the sort of, what you would call picks and shovels companies, control, fridges, cryogenics, detectors, coax cables. You know, like the things that vacuum chambers, lasers, the things that the industry needs to do the R &D to develop these computers. A lot of us, most of the lead and quantum computing companies, we have revenues. We have revenues sometimes in the tens of millions. But a lot of these revenues come from governments, R &D contracts, and less so from traditional product sales, because everyone in the industry is still, we're still doing R &D, even though we can sell prototype machines.

15:10and those prototype machines actually have an average selling price that is quite high that is in the tens of millions sometimes but they are still the first generations of what will we will continue to to do r &d on to get to the more mature products so it's a really it's an it's an interesting industry because there is money there is revenue there is money flowing through from governments from industry and within different parts of the industry even when we haven't yet reached the commercial era for quantum computing yeah and i mean it makes sense right it's like with any market you need to you need to be there before the opportunity is is obvious otherwise uh everyone crowds in and so it will be it will be you folks who are there already who are there to sweep up what could be an enormous opportunity if if the opportunity does prove out to be as big as we're sort of led to believe so i mean the early days of any deep tech startup are always really challenging and you've already mentioned sort of your your slight pivot can you talk about any of the most hair-raising moments that you know around technical challenges that you guys had to overcome um in those early days i mean there's still there are still hairy challenges just uh to be clear sure i mean i think there's been all sorts of challenges that have have come our way and i'm sure that's the case for other companies too from like people challenges i mean And sometimes when you're trying to start a company in an industry that is nascent, where what the technology is going to be and what the specifications are of a potential product for a customer that is not quite there yet.

16:54When it's so ambiguous and ever-changing, it means that you need a particular breed of people to form the leadership of these companies. So that's a challenge, not only their leadership, but also inside the team as well. I think one of the things that we've learned a lot about is, so you need the physicists that understand quantum and you need the engineers that know how to make it into a robust product. and actually there's a huge cultural difference between um these two types of people so getting them getting them to communicate in a way that is you know effective and leads to the right outcomes those are some of the like people challenges yeah just another question on that so um a lot of these groups of researchers find it a huge shock to the system to work to start working for a company that has you know commercial ambitions and it's a very different way of working and a different way of organizing a group of people compared to in a in a research lab or in a university have you have you experienced that and how have you sought to lead an organization that can be effective both as a commercial organization but also as a research organization yeah I think it's it's sort of it's exactly that I mean first of all I think people that are transitioning from academia to industry usually won't know how industry works in terms of processes but usually they will be really keen to learn that's the reason that they've made the transition because actually they found that academia is uh you know it's it's it's not so certain it's more there's not so much teamwork there's not a a clear goal that is tangible etc So people want to learn and that makes it easier.

18:48And then it's bringing in the expertise from industry that has that, that can interface, that wants to teach and learn. So I think it's creating the right culture, a culture that can embrace and make people from very diverse backgrounds communicate and thrive and learn from each other. I think we've done that. We continue to do that as we grow. And it's really, I mean, it's something that we're very conscious of.

19:16Carmen Palacios-Berraquero:Yeah. And Jensen Huang said that he thought we were about 15 years or was kind of on the early side for when we might have useful quantum computers. And it kind of put a bit of a shock into some of the quantum stocks that were listed. What's your reaction to that sort of statement? I think he's actually since said something really positive about quantum. But what's your reaction to that initial statement? And how was he wrong? Like, where are we in terms of how soon this industry could kind of have its, I don't know, AI moment? Yeah, I mean, I think quantum markets can be, well, like many other markets can be volatile.

19:54There's also been several other things that have happened this year that have made stocks surge, including some other comments by Jensen Hung like a recent one saying that we've turned a corner we've reached an inflection point in quantum and I think after the 15 to 30 year comment he apologized actually and then he organized an event with most of the quantum companies invited we have now in 2024 and kind of continuing in 2025 entered, I agree with the latest comment, entered a new era for quantum, what I would call the logical era, where for the first time we have qubits that are demonstrating the performance that we will need in order to run longer circuits.

20:51That's a huge turning point. And now a lot of the challenge is, of course, continuing to improve that performance. So I'll give you an example. at the moment we can reach something like 10 to the minus three uh error error rates the next milestone for the industry would be 10 to the minus six 10 to the minus six and then 10 to the minus nine and 12 so that's the reduction in errors that we that we need to go through but we've we have already entered that time where we know how to do that and then the big challenge is going to be about scaling. So now we have really good quality qubits, but we have only tens of them and we need to get to hundreds, thousands.

21:35And that's where companies like New Quantum come in. My own personal take is that in less than three years, we will see what people call narrow quantum advantage, narrow commercial quantum advantage. So quantum computers that are able to solve a problem that is useful that cannot be solved with a classical computer. It will be a program that is useful, but that is not very valuable still. That maybe is more in the realm of science and academia. I think that'll be 2027, 2028. I think by 2033 or so, we'll be able to build a machine that can break RSA 2048. You know, that's basically the encryption that runs in pretty much every machine in the world.

22:24So, you know, that's 2033 is not so far away, right? That's, I think, the sort of progress that we'll see. And, you know, the value unlocked that is usually talked about by some of the analysts, which, you know, some people like, some people don't, is beyond a trillion dollar unlocked by 2035. 2035 is now less than 10 years away. and you know valuable like commercially valuable machines that are close to breaking our entire encryption are about five years away so it's really you know we're in that in in the horizon where a big shift is going to happen for for quantum and when when you talk about and we hear this with lots of deep tech startups not just in quantum but when you talk about knowing how to reach one of these major milestones what what is the difference between knowing how to and actually doing it is it the theoretical science is known but building it into hardware is the issue or like where is that gap when i say we like knowing how to do that versus not it means that it becomes a problem of refining the engineering but we understand that a given solution will reach a particular performance or a particular scale, but it requires, say, multiple iterations of the same architecture, let's say, the same material, the same, like just refining the engineering, better engineering, understanding the system better and better, but we know that it will reach it.

23:58That's what I would call an engineering roadmap, you know, in the same way as like classical industry companies, they have a roadmap where their products will reach better and better performance in the next two, three, five years. And it's time and money, but the confidence is high. Something different is where you don't know what the solution to a problem is. Like we know right now, imagine we will be able to build a quantum computing chip with 100 really good qubits. And that will take two, three years. but the system that we're working on right now will get there how do you do that how do you build now not a hundred but ten thousand you probably need a different architecture there's a range of problems a range of unknown unknowns that we don't know we sometimes we don't know the problems and we definitely might not know the solution it may require some scientific breakthrough or a new insight and just to like bring it back back full circle that used to be the case for quantum for getting to very large numbers of qubits that like you know requiring new noble noble prices to get from 100 to 10 000 and that is exactly what we are trying to break because we're saying don't develop a new architecture so that you can build a huge quantum computer in a single go do stamp and repeat of what we know how to build well and connect it together.

25:34So that now brings what was a scientific roadmap back to an engineering roadmap, which requires time and money, but no scientific pretters. Will the same problems exist as existing cloud where, you know, for certain use cases, networked computers work, but for others, you need to be, you need the computers to be in the same location.

25:57Carmen Palacios-Berraquero:Will that exist here as well? Or will there be, are you talking about building the sort of internet of the quantum internet, you know, globally distributed with kind of a CDN type delivery network? I think what we're talking about here mostly is building large quantum computers that are in one building, you know, in one data center. So the sort of intranet of the data center. So just building the one larger computer. We think that that's where the most value is for networking right now and where the most urgency is. There is also a market outside the data center for quantum networking. And, you know, we will be able to use a lot of the same know-how IP and products to address that market outside the data center.

26:50but we think that might be a later market and certainly whoever wins inside the data center has a big chance of winning outside too.

26:59Carmen Palacios-Berraquero:And you mentioned Quantum's potential to break encryption. Is that anything the normal person, you know, the layman should be worried about? It sounds like it could potentially have lots of different ramifications. And then as an add-on to that, what are the real world applications that Quantum will unlock that will help the average person so in terms of encryption i think it's not something people should really panic about like ordinary people i think it's good to be aware of the fact that our encryption is is something that continues to be worked on and that relies on people trying to break it and relies on a huge industry protecting it.

27:42I think awareness is good. I think governments and industry that relies on encryption should take it extremely seriously. And they are. I mean, so there's been many, many years of people coming up with new encryption codes that are not susceptible to quantum computers. And there was a sort of competition run by NIST. so the National Institute of Standards and Technology in the US. And NIST has now sort of selected encryption codes that are being recommended. Europe is also recommending the use of these new codes. So there's going to be a transition in which industry takes on these new post-quantum codes.

28:30And that should be taken extremely seriously. If that doesn't happen, then yes, the public should worry. but I think the signals are that it will happen. I mean, it may already be too late for some information that has a longer lifespan. So for example, if there's information that needs to stay secret for more than 10 years, which is often the case with certain kinds of information, then for some of that, it's already too late. but for what the public a lot of what the public cares about which is more immediate information i'm hoping will be okay and common from your perspective it's operating in the market in a deep tech market one that's you know so so nascent so uncertain um requires like almost a different set of traits in a founder than a software company or an ai company that has immediate use cases revenue potential within weeks or months of launch what what do you think are the traits that vcs should be looking for in in the founders of these more uncertain companies that may be researching for years and years and years before then transitioning to a sort of scaling a an organization i don't know that no one's anyone's asked me that before it's interesting i think clarity of vision and being able to communicate that vision and inspire people with it when that vision is you know further away or has has interim milestones that are not about commercial success necessarily or they're not about you know expanding to reaching many many many customers there about achieving milestones, things that maybe no one has ever done before and long-term to have a world-changing impact.

30:31Having that clarity and being able to communicate and inspire people with it is so important because a company is only as good as its people and the founder is one of them, but you need to recruit a team that understands that understand that journey that will be continue to be passionate and can and committed throughout it's actually very interesting because you have to be somewhat unreliant on the external validation that comes through revenue which is a sort of globally universally recognized measure of success in the business world and instead you have to set your own somewhat arbitrary milestones around which to celebrate as a team and motivate yourselves and so it does I guess require people who are really driven by the process and not driven by these kind of glitzy end results and revenue milestones and funding rounds yeah absolutely and it's bad that's back to communication and storytelling I mean we need to be able to trace back what a particular engineering is solving which is how to align two mirrors to picometer accuracy to what that means for the system and so what that means for the larger system and hence what that means for the applications and then what that means for the world so being able to trace back the impact of people to you know future positive outcomes I think it's it's really important and really kind of I think there's some kind of humility and respect in that of of really trying to empathize with the value of what everyone is doing without relying on and taking the time to really you know make people feel that rather than relying on something that should be understood by everyone.

32:36And so in regards to that, what was the last milestone that you guys celebrated? Do you have to be very deliberate in these celebrations? I mean, well, quantum is some way towards commercialization and towards tangible first generations of products. So our last big milestone was actually in June when we launched our Gen 1 quantum networking unit. So this is the equivalent of the classical networking router, and it's a market-first product. No one has ever industrialized this sort of technology before. This will be the backbone of the quantum network, and it has photonic switching, entanglement generation, and the first real-time network orchestrator.

33:29So this has been a huge milestone that we've been working on for a while. Again, we're market first with this system. And we've been receiving more inbounds, more commercial inbounds than even we thought. So it's been really nice.

33:49Carmen Palacios-Berraquero:That's great. Congratulations. That's very exciting. And you've been going six or seven years, is that right? So what has been your biggest learning as a founder? I'm sure the kind of teams changed, the missions kind of evolved. products, obviously, a launch, things like that. So along that way, what have you learned from being in the hot seat? I mean, my job changes every month. So I learn new things pretty much all the time. But I think for me, it's really, it's about the team. Like it's not about one person being a hero or being exceptional. it's about a team being able to work together and can contribute to the highest level with trust and respect and excitement and fun i mean that when things go wrong is when that team dynamic when a team is dysfunctional and where you can basically do anything that you set your mind to and you actually set your mind to the right things is when the team is functional and I can work together so I think I think that's the biggest learning for me this is um kind of along the same lines but if you could go back to the very start of um to the very beginning of new quantum and give yourself one piece of advice based on everything that you've learned along the way in life and in work what would that be what would you say to yourself it would be to trust your intuition especially when it comes to to people why is that because maybe sometimes at the beginning you know especially if you're a first-time founder yeah you can maybe in the interest of progressing things and getting things done and under stress you can overlook that little feeling in your gut that is telling you that something's not right and just learning to listen to that as a key indicator is um you know like after many many mistakes yeah i think i would say that and do you feel like you are now better at doing that are there few examples where you overlook that niggling feeling and you and you're able to override the sort of wishful thinking and the benefit of the doubt in these certain situations yeah definitely absolutely I mean it still happens right that but it's it doesn't happen in a way that is um it happens in a kind of controlled way I would say and do you think the instinct gets better as well so not only do you recognize the instinct but you think the instinct actually gets stronger as you understand what you look for yeah probably awesome well Carmen it's been really fascinating because I think a lot of our listeners may have heard of quantum but they might not necessarily have done loads of research into it or understand it or understand the timelines or implications the outputs and everything so it's been really fascinating to get someone like you on to kind of take us through some of the innovation that's happening and it is really really exciting what you're doing with NuQuantum.

37:06Carmen Palacios-Berraquero:And it's great that you're building such a important company here in the UK as well. We have two questions that we like to wrap up our episodes with. The first one is where you get to kind of shine a light on another company. So if there was a business that you thought could be a future unicorn that isn't NuQuantum, which of course will be, then which business would that be? There's a company that is still very small. it's just starting out it's called the good mood company and it's about holistic health so understanding with medical insights that come from traditional medicine but other also other kinds of medicine ai and basically integrating this multiple disciplines to try and understand how our body is wired and personalize educate give some agency and more understanding back to each individual and I think that if things if things go well it could be that it really impacts how we view medicine as individuals and how how we relate to our bodies so this is something like you know wildly outside my my own you know field of expertise but it's something that I think you know if like everything if a set of circumstances uh happen and things are delivered right then I think it could be it could be a huge opportunity why did you pick that one out of interest do you know the founders or you came across it I know the founder yeah but I also like genuinely like i feel like it's one of those things where i mean you'd be surprised what i just said you'd you'd think that that exists but it but it doesn't there's barely any companies in the world doing this like kind of understanding the body body in a very holistic way uh that is then also personalized yeah so yeah yeah awesome well we love it when someone actually picks an early stage company so that's that's great thank you and there's so much interesting stuff happening in the health space but it looks like a good mood co are doing some really really cool things there um and then Carmen our final question is our dinner party guest game so if you could have dinner with any three people who would they be yeah one of the reasons that I'm motivated to build quantum computers is to help tackle some of the big challenges that we have in climate space I think a lot of the energy and climate challenges that we have that we're trying to address boil down to a material science or a chemistry problem and that is exactly what quantum computers are really good at and what classical computers are really, really bad at or they can't do it all.

40:20And so if I had to, you know, if I had to pick guests, I would pick people that are fighting some of these problems, but more at the sort of on the ground at the community level from different parts of the world and understanding what they care about. and if there's any way to connect those dots.

40:45Carmen Palacios-Berraquero:So would that be someone like Greta Thunberg? Sure. Why not? I'm now picturing you going to remote parts of Africa and just sitting down with villagers to discuss what their requirements are. Yeah, something like that. Yeah. Okay, we love that. So very on the ground, just you want to hear people's real problems and concerns and and see how people that are actually tending to these ecosystems awesome i quite like that because it's sort of like these unknown people but we could sort of probably all picture who they are so that's a good answer thank you great well carmen thank you so much again for coming on and telling us your writing unicorn story as i said earlier you know quantum is probably a relatively unknown piece of the tech landscape for a lot of our listeners so it's been really really great to hear new content and also your own journey as a founder going from sort of academic background into what is now you know commercially viable product in a in a very frontier space which is very exciting so thanks again thank you both it's fantastic to be here thank you that's it for this week thanks very much for listening to stay up to date with the latest episodes please follow or subscribe on your favorite podcast platform we also have a newsletter called reading unicorns which is another great way to get every episode direct to your inbox please tell your friends about it and engage with us on social media and we'll see you on the next episode