In this episode, IST Chief Strategy Officer Megan Stifel sits down with Markus Pflitsch, founder and CEO of Terra Quantum, a leading quantum technology company that offers Quantum as a Service in the areas of quantum algorithms, quantum computing, and quantum security. The two unpack the disruptive nature of quantum, contrast approaches to R&D and commercialization in the U.S. and Europe, and discuss what’s next for the industry. 

“I think it would be fantastic for the quantum tech industry to have that ‘ChatGPT moment,’” Markus said. 

Why is NIST’s standardization of post-quantum cryptography such a big deal? How do Chinese technological approaches to quantum differ from that of Europe and the West? And what does Markus think about the UN’s declaration of 2025 as the Year of Quantum? Join us for this and more on this episode of TechnologIST Talks. See the transcript

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Transcript

Welcome to TechnologIST Talks. I’m Megan Stifel, your host. Today, I am delighted to be joined by Markus Pflitsch. He is CEO and founder of Terra Quantum, a company specializing in commercial applications of quantum tech. 

“So I studied physics and mathematics and then worked as a quantum physicist at CERN, the European Center for Particle Physics in Geneva.

And after that I left the space actually for more than 20 years to pursue a corporate finance banking career, but five years ago I wanted to come back to the passion of my life, quantum physics, and use my corporate finance background to actually commercialize it because now it has come to a phase where you can actually commercialize quantum tech, quantum computing.”

We talk about his unique vantage point coming from both a quantum physics and financial services background.

“There is the R&D aspect, so it’s really a lot driven by research and development, and that you have to convert into products which create a value add. And then you have the commercialization aspect, right? And, you have to really have an eye on both aspects and you have to drive both dimensions.”

And as a Europe-based deep tech company, Markus offers a unique perspective on the contrast between the funding environment in Europe and the U.S.

“And if you look at the further evolution of the company, and I think I speak here for a lot of other deep tech companies: Europe, I think also has a great startup ecosystem, but when those companies mature, and you need larger amounts of capital, you still have that, you know, institutional funding gap between Europe and the U.S. And that, in addition, makes the U.S. so much more attractive, right.” 

Why is NIST’s standardization of post-quantum cryptography such a big deal? How do Chinese technological approaches to quantum differ from that of Europe and the West? And what does Markus think about the UN’s declaration of 2025 as the Year of Quantum? Join me for this and more. 

Markus, thanks again for joining us. I wanted to begin with some background about you and, and the organization Terra Quantum. So to get our listeners familiar, how did you begin your career in quantum?

Markus: Yeah, Megan, thank you very much for having me. I’m looking forward for our conversation. Indeed, I’m a quantum physicist by education, so I was actually intrigued by quantum physics since my teenager days. So, uh, I studied then physics and mathematics and then worked as a quantum physicist at CERN, the European Center for Particle Physics in Geneva.

And after that I left the space, actually for more than 20 years, to pursue a corporate finance banking career. But five years ago, I wanted to come back to the passion of my life, quantum physics, and use my corporate finance background to actually commercialize it because now it has come to a phase where you can actually, you know, commercialize quantum tech quantum computing.

Yeah, and we founded Terra Quantum, which is today one of the largest global quantum tech companies.

Megan: Wonderful. So it’s, as we talked before the podcast, it’s, um, so exciting to talk to someone with your combined background, uh, and. I’m interested to hear and talk more about it this afternoon, today. So in terms of Terra Quantum, you said it was founded five years ago. Um, can you tell us a bit more about what it does and its unique focus in the field of quantum tech?

Markus: Yes, so quantum computing in general opens up two dimensions of impact, and the impact is driven by the exponential speed up of quantum computers. So with the growing number of – we don’t talk bits in zero, one like in classical compute anymore, but qubits – and with the growing number of qubits, the compute power of a quantum computer grows exponentially.

And that drives a performance improvement, a substantial performance improvement, because everything which has to do with complex big data analytics, optimization, simulation, machine learning stuff will be enhanced by quantum AI, or AI on a quantum machine. So that’s the performance impact. 

And the other dimension is the security threat. I’m sure we’ll talk about that in more detail later. And that drives quantum secure communication solutions and those two dimensions, the performance opportunity, better big data analytics and protecting communication in the quantum age, these are the two major legs of Terra Quantum in what we do and what we offer our clients.

And that is kind of the positioning of Terra Quantum. So very much on the application layer, creating the application and the software solutions for our customers to migrate into the quantum space.

Megan: And I imagine given your financial background, that the financial services sector is probably one of the key customers, so to speak, particularly as we think about the supply chain that services the financial services sector. Given that you spent a lot of time in the financial services space, together with your background as a quantum physicist, how have you found this background to be most useful in founding the organization and bringing it to market?

Markus: Yeah, I think, the background is in general… Before I double click on the usability of quantum tech within financial services, but the background having been a kind of a banker is quite useful because in such a deep tech discipline, you have two aspects which you have to manage.

There is the R&D aspect, so it’s really a lot driven by research and development, and that you have to convert into products which create a value add. And then you have the commercialization aspect, right? And, you have to really have an eye on both aspects and you have to drive both dimensions.

Otherwise, you’re ending up just being a R&D company without real commercial use cases or, on the other side, if you don’t have the background within quantum, it’s very hard to really drive commercialization if you don’t understand the product deeply. So actually that background being half of my life, a quantum physicist and the other half, a corporate finance person, that combination I think is quite powerful and useful for us.

In particular, yes, we have a lot of use cases within financial services and also a lot of financial services clients. As you know, most of the analytics part within banking is about optimization. Think about various portfolio optimizations or simulations. Think about all the risk simulations, for instance, the Monte Carlo simulations, and all of that are great use cases actually for quantum AI to bring that a step further. 

So what have been the quants within banking now with kind of same background physicists, now, we’ll expect a second quantum wave within financial services where we kind of upgrade those optimization and simulations to the quantum level.

Megan: So in thinking about, and you mentioned a couple of minutes ago, the two key areas where quantum Terra Quantum is focused, looking at performance and security. And thinking overall about quantum technologies, you mentioned the speed at which they’re able to undertake compute. And many people think about quantum in terms of its disruptive capacity, and certainly that’s the case. Which aspects of this great disruption are you most struck by or most interested in pursuing?

Markus: Well, it’s actually so many, because it disrupts almost every industry. Everything which has to do, again, with complex big data analytics, right, will be impacted. And the security side of things, of course, is imminent to all industries. You have to protect your digital data. 

So therefore, there’s so many, but, what I find most striking is, e.g. materials science, and that is something which can work a little later on that exponential curve. Because we are at the beginning of that quantum revolution, and we have to see which use cases we can actually tackle as we ride that exponential curve. 

Momentarily, given the current state of quantum hardware, we can, of course, not address all those use cases yet. We can do a lot, e.g. in banking and financial services, but there are very interesting use cases further down the line with more mature quantum chips. And that is what I just mentioned, e.g. materials science to develop completely new materials which have a lot of advantages potentially, on the chemical side being less toxic and a lot of other aspects.

And then, what is, I think, very important to a lot of people looking at the use cases is healthcare and personalized care, medicine. If you look today into cases, e.g. rare diseases, this is always a problem. As you know, it’s very costly to develop new drugs, but via quantum simulation, it will dramatically shorten the simulation time for the development of new medicine or vaccines.

And that really opens the door for very, very individualized personal medicine, also based on the capacity to build a perfect digital twin. And if we look into the more mid- and long-term future, I personally find that very fascinating. This will have a very material and positive impact, I think, on healthcare.

Megan: Certainly a tremendously important field for us as we consider all of the potential implications – both positive and negative – that will be emerging over the next decade, or several decades. Thinking about the applications, healthcare is one that we haven’t talked too much about in this series of the podcast around quantum. In other podcasts, we talked a little bit about the applications and thinking about precision navigation and climate sensing.

And then, of course, you just touched greatly on the biomedical applications, which is terrific. In thinking about all of these use cases, obviously they require significant amounts of capital. And one of the things that we research here at IST are the sources of funding for deep tech investment.

Can you talk a little bit about how Terra Quantum has scaled up and with whom it’s had successes – the U.S. government, with others, perhaps – or have you primarily relied on private funding?

Markus: Thank you. That’s actually a very good question in particular for Terra Quantum as a European-based deep tech company. The company is co-headquartered in Switzerland and Germany, so deeply rooted in Europe.

Also, our first investors are from Europe, like for instance, Lakestar, the deep tech VC company. And we are also driven, that we as Europeans provide leading tech from Europe also for the world. I think we have a particular history in Europe that we have a great research landscape, great academic research hubs.

But, when it comes to commercialization, we are somewhat slow, and we see it if we look at how the hyperscalers have evolved, the cloud business has evolved, and also how classical AI solutions have developed. I think Europe is – in particular vis-á-vis the U.S. – too slow and not rigid enough to transfer R&D into commercial products.

So we are driven to make a difference here, and actually do that, and we are leading in the quantum space. But what I do see, for instance, is that America here has a very rigid strategy, and that you have a great orchestration between the private sector, between large corporates and the startup ecosystem, as well as from the government level.

In Europe, I think it’s more complex. We lack those large corporate players who invest a lot into these early stage technologies and I think the subsidy or the grant side of things coming from governments is quite heterogeneous. So I think Europe has quite a challenging background and setup here to compete on a global scale.

So as a consequence, Terra Quantum is mainly focusing on the private sector. So really delivering products which have a use case and provide value to our clients instead of being too dependent on grants or subsidies. 

I think the orchestration of all those dimensions is very well managed in the U.S., whereas we do have some challenges in Europe.

Megan: So thinking about that combination, or the orchestration – I love that word – I know that in September of this year, Terra announced a SBIR with the U.S. Air Force to study the feasibility of long range, quantum-resistant networks. Comparing that to working with the large corporates, how has the experience of partnering with the U.S government been for you?

Markus: I think that is an excellent example, also, where really innovative frontier tech solutions are being deployed also on the government level, yeah. So we are particularly proud that we are allowed to work for the U.S. Air Force. And it’s a great example of how the U.S., I think, is actually implementing frontier tech solutions and, you know, driving this forward. 

For us, so far, the cooperation is really very positive. There were clear deliverables and deadlines given. So it was absolutely clear what was expected. It’s a very efficient and fast communication, which makes it very easy to interact and also again, compared to some European-level comparisons, this isvery process efficient and solution oriented. So we like it very much. Very positive experience so far.

Megan: It’s certainly good to hear that the U.S. government is not moving at very slow speeds when it comes to this, which is not often what we hear. We often think about working with the U.S. government, particularly on procurement, as being often likened to the valley of death, so it’s wonderful to hear a positive use case and a positive collaboration.

I think, – I could be wrong on this – but I think, notwithstanding the activities that you have going in Europe, that you are in the process of – or already have – relocated to the United States for a kind of corporate, I think you said co-located, co-headquartered, in the U.S. and Europe. I’m wondering if you can say a bit more about that when you were looking at kind of where to physically locate the organization.

Markus: We have several offices across Europe, also have a legal entity in the U.S. and also an office location in San Francisco. So our team is really global. 

But, if you go into technology, I think also having in mind what I said before, these are global products. The North American market, in particular the U.S., is most important if you want to be a globally successful company. Therefore, for us, regardless of where our headquarters is based, we have to be successful in the U.S., and we want to make deeper inroads into the U.S. Again, the power of innovation, the size of the budgets on the corporate side, as well as on the government side is, so big that that also as a, you know, European-rooted company, you have to be active in the U.S. 

So that’s where we are at the moment. And if you look at the further evolution of the company, and I think I speak here for a lot of other deep tech companies: Europe I think also has a great startup ecosystem, but when those companies mature, and you need larger amounts of capital, you still have that institutional funding gap between Europe and the U.S.

And that, in addition, makes the U.S. so much attractive, right? That’s, I think, the trend, that you see a lot of those European companies, when they mature, that they have a bigger focus on the U.S. Yeah, that’s where we are at the moment. So I’d be happy personally, if we continue to be really a global company, deeply rooted in Europe and being successful in the U.S.

But what I see currently, there is such a drive in the technology sector in the U.S. that is a great competitive advantage actually of the U.S. on a global comparison. 

Megan: So speaking of global comparisons, and getting a bit deeper into the technical aspects of and approaches to quantum computing – though not quite not too deep, as you know, I’m not a quantum physicist, I’m barely a lawyer anymore! We can talk a little bit about QKD versus PQC. And thinking about China is approaching quantum development. As we talked about ,this podcast is one of a series of podcasts that we’re doing under our broader project looking at strategic balancing vis-á-vis China. How do you see the Chinese approach differing from Eastern and Western strategies?

Markus: That’s quite a complicated question. So roughly speaking the answers towards the quantum threat, so the answer towards the threat of quantum computers breaking classical encryption has various answers. There is actually a whole product suite, which you have to ultimately implement to be really quantum secure and turn that threat into something which you can really call the “endgame” into cyber security. And that is ranging from providing real random keys via QRNGs, quantum random number generators, and then, it’s a two step approach. 

There is one step, which is called PQC, post-quantum cryptography. It’s more an algorithmic approach towards security. So you do more complex algorithms, which prevents QPUs, or quantum chips, to break classical encryption as we go. Ultimately, you really need a physical solution to be ultimately quantum safe, and that is so called QKD, quantum key distribution, which uses quantum phenomena like entanglement or coherence. 

And if you look into the U.S., it is focusing on, in the last few years, very much on PQC. So bringing up that security level through better, more complex algorithms to cope with the growing power of those maturing quantum chips. And not so much focusing yet on the ultimate step, which is QKD, quantum key distribution, because that still has some challenges on the physical level to actually create the perfect QKD solution.

By the way, that’s a USP [unique selling proposition] of Terra Quantum. We’re very happy to talk about it. And if we look globally, we see that the West, very generally speaking, is following that approach of the U.S. So focusing a lot on PQC to do the necessary steps immediately to stay safe. That’s also supported by NIST, which currently, just a few weeks ago, announced its first standards on so-called PQC.

And if you look into the East, particularly if you look at what China is doing, you see that they are focusing more on QKD solutions, so neglecting a little bit the PQC challenge, but investing a lot into solutions which use those quantum phenomena and which would then ultimately lead to a perfect QKD solution.

Megan: So in terms of thinking about government investments in these two different solutions, how do you see, from the U.S. government and the broader deep tech ecosystem, how do you see them thinking about the most effective ways to fund quantum research and development and how both the government and private sector investments in various technology readiness levels (TRLs) are impacting the ecosystem?

Markus: Ideally, it is actually a value chain where, at those earlier TRL levels, where the technology is not yet that advanced, government is stepping in to be the contractor or the one who requests early solutions. 

And then if those products mature, then you have the corporates, which step in because you can already provide real significant value to your clients.

And if I look into the U.S., I see that this is quite nicely handled and managed. So there are government contracts to really drive the innovation and step in until those products are really mature and also fund early experiments with it. And then I think you have the innovation power of the corporate level, which steps in and that is kind of a very nice approach. If I look into Europe, I think it’s not that well-orchestrated between the government and the corporate level. Probably also because of the heterogeneous background of Europe, right? We have all these countries, and then we have the EU level, and I think the orchestration is not always perfect.

So, therefore, I see it in Europe quite complex to orchestrate, e.g. a consortia, a mix of startups and incumbents on the corporate level to apply for specific projects, subsidized projects on the government level, on EU level, to drive this forward or also already at the early stage. Whereas, I do see that the cooperation between the corporate level and the government level, at least from my perspective, is a little bit better orchestrated in the U.S. So therefore, our experience is, again, that we can drive product development at these early stages in a very nice way in the U.S.

Megan: So I wanted to touch a little bit about, you mentioned a few minutes ago, the NIST standardization process and thinking a bit about the mix of standards and potential regulations in this space. Do you think this divergent approach, so to speak, between the U.S. and Europe around the orchestration will be impacted or how those different approaches will impact the standards and regulatory space and whether that will lead to a greater room for collaboration between the two ecosystems or will it frustrate the ability for the U.S. and Europe to collaborate potentially to counter alternative approaches? 

Markus: Yeah, I really do see that we have to use standardization and regulation really to drive the business, not to make it more difficult. If I look at what NIST recently did, I think it’s a great move. They published standards for PQC, giving guidance on how PQC solutions should look like so that also they can be implemented at the corporate level. 

That helps to drive the business. So Terra Quantum is very happy to have a fully NIST-compliant PQC library. So that gives us a great positioning in the U.S. market, and that will drive business. And therefore I would wish that these standards are really orchestrated on a global level so that we come to early standards as an orientation.

If standardization lags behind–and we see it in some regions–then it’s very hard for companies like us to build the products because every large corporate, if they want to build it into their system and into the architecture, will tell you, well, we need certain certification and standardization to be allowed to build it in. And that’s what we wait for. So therefore that NIST approach is very helpful to drive business. 

On the contrary, if you look at certain AI regulations, you can also focus too much–and that’s my personal opinion–at a too early stage on getting it right, so to say, on regulating it, that this might prevent a real lift off of the technology.

And if I look at Europe’s AI regulation, that might be a little bit too rigid right at the beginning to put borders around the technology that this actually limits innovation or makes it harder to early commercialize. In quantum, I think it is a particularly challenging field. We have to think about how we regulate this technology.

If I think about what it will do, how it will enhance AI solutions with technology which are backed by quantum physics, which is not really deterministic, so it brings a completely new challenge to AI solutions being much more human, so to say. That is a technology where we have to think about regulation, but I think we have to see that we don’t over-regulate right at the beginning, because this makes it more challenging.

So, therefore, the approach which NIST has chosen: to drive quantum security solutions, I think is the right way to go.

Megan: So we’re in the waning days of the Biden administration. And I think there’s generally this kind of expectation that the regulatory approaches will be less leveraged in the incoming administration. In thinking about how this incoming administration in the United States will approach quantum policy, are you anticipating many shifts in the policy? And are those opportunities or challenges?

Markus: Yeah, of course, we observe and see how it evolves. But I think first of all, the technology is so important that I would foresee that there is quite some continuity in the approach, e.g. also how NIST approaches the way towards quantum security. Therefore, I think it’s, in a way, beyond political kind of differentiation. So I expect continuity. 

But there are of course certain aspects or angles which might differ. The regulatory part probably might be a little bit more in favor of the tech players potentially. So I see that, it’s probably a very good outlook on the technology development in the U.S., so we are expecting an acceleration of that. 

But there are other aspects which might become political. And I would like to give you an example, where quantum tech could be a key holder technology. And that is in two aspects. First, messenger services. There is always a challenge how to control communication at one hand, and on the other hand, how to guarantee personal confidentiality. 

In the quantum age, we’ll have messengers which you cannot control in a way. You can’t hack them, but you also cannot control them. So there will be the discussion about how can you regulate or control that technology if it challenges how you control communication.

And then the other side is digital currencies. So we’ll move away from fiat money towards digital currencies because of ease of use, but also here, you really will need quantum secure cryptocurrencies, based on the blockchain, regardless of whether that is central bank’s money or coming from decentralized ledgers, various cryptocurrencies. And quantum tech can use its technology and IP to build the perfect, let’s say, quantum dollar or the very quantum-safe cryptocurrency. 

So which technology do we support? Is it more centralized authorities or do we go towards decentralized ledgers? And that is, I think, also a more and more political debate in how you see that. And again, quantum tech could actually be a kind of a keyhole of technology in that space because we provide that technological disruption which makes those currencies really safe and those messengers really also safe in a way that it also raises issues about how do we control certain communication. 

Megan: So thinking about the role of digital currencies and the shift in messenger services, obviously, all of quantum impacts the so-called global world order. And we often think about the U.N. as the central place where most of those conversations are taking place. And I understand that next year is the U.N. Year of Quantum. In thinking about this recognition from the UN, how does industry perceive or experience that recognition? And how do you see it influencing innovation and collaboration across various sectors?

Markus: I think for the quantum tech ecosystem, it’s a great sign that the United Nations have actually declared 2025 as the Year of Quantum, because this will drive global awareness. It also underpins that quantum tech has become a technology which you can use today, which provides value today. 

So that will help the industry to flourish because if we look at what has really driven AI, it was a chat GPT moment, right? So that really kind of kicked it off and boosted GenAI. And I think it would be fantastic for the quantum tech industry to have that “chat GPT moment” as well. You still have kind of an upskilling level if you commercialize quantum tech, because such a new technology that you have to explain what it can do, how it differs from classical AI, how it can enhance it.

And I think that UN declaration makes it much easier to have that level of awareness also on the C-level to drive quantum commercialization. So I see it as a very positive sign.

Megan: 2025 is promising to give us many moments to watch. So it would be, interesting and hopefully a positive overall as you perceive and predict for this conversation to take place next year and in the United Nations. Thank you, Markus, for this conversation. I have learned a lot, and I’m excited for the future of Terra Quantum and the applications of quantum that you and I had a chance to talk about today.

I wanted to give you a moment for any closing last thoughts.

Markus: Well, no, thank you very much for having me and for bringing this very important topic to a broader audience. I really think, and that’s why I’m really an ambassador of that new technology that we have to be aware of the disruptive nature, right?

This is one of the very, very few technologies which really provide an exponential disruption due to the exponential growth of compute power by a quantum computer. So therefore, it is of such high impact that everybody should take care about it and look at what it means for its own business. And via these hybrid techniques, where we mix the classical compute architecture, simulation power to drive also the deployment of quantum software already today. It is already here and it has already an impact and that’s why I love this opportunity to talk about it. Thank you.Megan: You’re a terrific ambassador. So thank you for sharing some time with us today. And hopefully we can talk with you in the future, perhaps about how the year of quantum is going in the United Nations and what it means for future exponential growth, as we know quantum will continue to bring to us.