Alphabet just spun out out its quantum tech group, launching it as an independent company

Quantum tech may be having its moment at long last.

Consider that earlier this month, one of the few “pure play” quantum tech companies in the world, Rigetti Computing, went public by merging with a special purpose acquisition company or SPAC. It only narrowly missed becoming the first publicly traded company to expressly focus on commercializing quantum tech when another outfit, IonQ, went public through a SPAC merger in October. Meanwhile, another rival in the space, D-Wave, says it is also now planning to go public via SPAC.

While movement toward the public markets is one indicator that quantum tech is progressing beyond the realm of the theoretical, an even stronger signal that it’s getting ready for its close-up ties to Alphabet, which said this morning that it’s spinning out its six-year-old quantum tech group, Sandbox AQ, into a standalone company.

Jack Hidary, who was formerly the director of AI and quantum at Sandbox and is a longtime X Prize board member, will continue to lead the 55-person, Mountain View, California, outfit, which describes itself as an enterprise SaaS company that’s developing commercial products for telecom, financial services, healthcare, government, computer security and other sectors.

Sandbox has also assembled an enviable cast of advisers, including former Alphabet Chairman and CEO Eric Schmidt; Blythe Masters, the former JPMorgan Chase exec who helped create credit default swaps; and John Seely Brown, the former chief scientist of Xerox PARC.

Notably, too, Sandbox is rolling out with an undisclosed amount of “nine-figure” funding. Among its new outside investors is Breyer Capital, whose founder, Jim Breyer, has also joined Sandbox’s board of advisers. Section 32, Guggenheim Investments, TIME Investments and accounts advised by T. Rowe Price Associates are also in the investor mix.

Seemingly, burgeoning market demand partly explains Alphabet’s decision to spin out Sandbox. According to Gartner, by next year, 20% of global organizations are expected to budget for quantum-computing projects, up from less than 1% in 2018.

Among the customers already paying Sandbox for its computing power are Vodafone Business, SoftBank Mobile and the Mount Sinai Health System.

But judging by a recent chat with Breyer, perhaps an even bigger driver of growing interest in quantum tech is the realization is that, while true, fault-tolerant quantum computing — meaning the ability to harness quantum physics to zip through numerous possibilities and determine a probable outcome — could be five or more years away, other related tech, like so-called quantum-sensing technologies — is fast becoming a reality.

Indeed, rather than work on quantum computers, Sandbox is instead focused on how quantum tech intersects with AI, developing applications to strengthen cybersecurity platforms, among other things. In the company’s own words, “[T]here are many aspects of quantum physics and technology that can be commercialized in the near term with no need for quantum computers … using today’s high-performance computers.” The resulting “quantum simulations can address real-world business and scientific challenges across a broad spectrum of industries, from financial services and healthcare to aerospace and manufacturing to communications and materials science.” 

The statements echo comments made by Breyer when we spoke a couple of weeks ago, when he told us that there are “tremendous national security opportunities for the quantum companies … But what I’m really excited about today from an investment standpoint is not necessarily the big super capital intensive quantum computers … but areas like quantum sensing.”

Think of a very high-powered 1,000x light microscope that can be applied to medicine, Breyer had offered by way of explanation. “There are quantum sensing technologies today that are being piloted at some of our great hospitals in the United States that I think will revolutionize areas such as cardiology [and] drug discovery.”

Indeed, suggested Breyer, while quantum computing platforms will eventually play a role in helping catch diseases faster, improve security systems and to protect all kinds of data — they might also be used to attack some of those systems, which is partly why larger organizations, including governments and corporations, are no longer waiting for those massive quantum computers to arrive — or shouldn’t be, in any case. “We need to get our arms around it,” he’d said.

“There are quantum technologies now where — they’re not at the breakout point of where quantum computing will be in four or five years —  but are making a very big difference,” he said. The team at Sandbox, he suggested at the time, is among those leading the charge.