China in the Lead for 'Quantum Supremacy'

and the investment opportunities as a result. Richard C. Wald is founder and managing partner of Evolution Equity Partners. It's an international VC investor focusing on cybersecurity and enterprise software companies. Has over seven fifty million in assets under management. He joins us on the phone from Zurich, Sitzerland, fingers crossed that it's a clean connection. Richard. Nice to have you here with us. Hi, Carol, thank you very much, pleasure

to be here. Here. You loud and clear, So I think we're ready to go, and uh, you know, I think you raise some important points there, and you know we're going to talk about those in greater details. So uh, you know, let's let's kick it off back at It is a clean line and let's get going, as you say, So, first of all, there is so much going on. I talked with um uh Mr Turdoff, the former Homeland Security Secretary, at a Bloomberg event, and you know, he says, the

big one is yet to come. Despite what we've seen with the Colonial pipeline and GBS meat and you know, we continue to see the frequency in the severity of cyber attacks picking up. How do you see it? I mean, I would tend to agree, and I think a good way of looking at what the future holds is actually going back a few years and understanding how we got

to where we are today. So if you look at the last twenty years of the development of the cybersecurity space as a market and the nature of the threat, there's been a six significant and consistent trajectory UH of a more as you mentioned, a more sophisticated, frequent and UH pointed attack to UH infrastructure, enterprises and government around

the world. So when you turn back the clock twenty years EVE around the post nine eleven era, Interestingly, the security market is a cottage industry three billion of spand relatively small because of the the numbers that you've indicated just before. Over that first decade, the market grows exponentially from three billions fifty billions, and so does the nature of the attack, driven in part because of the increasing connectivity.

But as we move from two thousand ten to two thousand twenty, the nature of the attack in the two thousand eight financial crisis also begins to become more UH significant and more threatnment infrastructure and enterprises globally. UM, we start to see some of the same UH issue is a rise postline eleven, post two thousand eight, and then again in the COVID nineteen era. So some of the

consistent factors they're in post crisis era. Cyber attacks and FROUD tend to increase quite significantly, and you start to see next generation attacks emerge, and those next generation attacks layered on UH later on the factor of work from home, migration to the cloud, accelerated digitalization positions the current market particularly vulnerable for those types of next generation attacks. And you know, I'll pause there for any questions on that

to talk about where we go from that. Alright, hold on a second, I do have to bring a headline to our listeners and viewers on YouTube the United States to black some solar goods made in China's Jang region that province very important to China's history, a silk road gateway to the West. UH, and we know that there is a lot in terms of manufacturing going on that.

But again, this is just another example of some of the tensions that still exist between the United States and China, specifically when it comes to goods trade and other UM. This is kind of a good setup, Richard. We've got about a minute. We've got to do some news and then we'll come back. But China. You are watching China and their quest for quantum supremacy. Quantum supremacy is not something we talk about a lot here on Bloomberg, but

we probably should. Absolutely. I think when you look out three to five to seven years, the likelihood that a quantum computer is in place that can cause UH and and unravel some of the encryption algorithms that protect day to day communication, UH, corporate secrets, government secrets start to become vulnerable. UM. You know, we've actually invested in a quantum cyber company that defends and protects against that vulnerability.

But certainly UH quantiments the elephants in the room. UH companies are already body software to protect against that potential vulnerability at fundam UH go live. Now there's there's a lot of areas that relates to the current environment. I want to get back to our guest, Robert's excuse me. Richard c Wald found her imaging partner of Evolution Equity Partners.

It's an international venture capital firm. They are focusing on cybersecurity companies, also enterprise software firms, and they have over seven fifty million in assets under management. Richard still with us on the phone from Zurich, Switzerland, and forgive me, Richard, I had to cut you off. But um, we were talking about quantum supremacy and China and their mission to lead when it comes to that world. I mean this

is important. We're talking about, you know, kind of computer advantages and performance over kind of existing computers, and we're talking about you know, crazy calculations right at crazy speeds. But it's able to give the person who has that

possesses that, uh certainly an advantage. Absolutely, And I think when when you think about the the risk around quantum computing, actually there's present day risk quantum computers, at least the types of quantum computers that would pose threats to encryption algorithms that protect databases and secrets of governments and enterprises

today are probably not prone today. However, our adversaries are collecting data that's readily available, storing that data, and are positioning themselves to be able to decrypt that data once a quantum computer comes into play and is live. So the threat actually exists today, and companies are already arming themselves and protecting against that scraping of data and secretion of data that happens through cyber breaches and other methodologies.

So we are already in the era of UH, you know, quantum computers and the fact that prompt quantum computers have impact on the way enterprises protect their UH intellectual property and secrets. So tell us about the crop of companies that you are investing that you think will be the ones that will be protecting others going forward. Absolutely, So I'll talk about two or three that UH respond directly to some of the threats and and hacks that you've

seen over the last six months. And when you think about solar winds, one of the things to understand about the solar winds hack has been that the attack surface around UH companies and software developers has expanded exponentially over the last couple of years. And what that means is while UH software developers are are building software, they're prone to hackers who inject malware into that software development phase, and then the supply chain of software and is prone

to those security hacks. So that's what happened in Solar Winds. We invested in the company called Group Blue Bracket, leading a series a round earlier this year. Blue Bracket addresses that risk head on, providing UH security tools to death and set up UH engineers to protect against that increasing correct UH for developers in terms of developing technology. So it's one of the things that the Presidential Executive Order addressed UH cyber security and the software supply chain. Group

at Bracket addresses that head on. Second company that we've invested in a number of years company called Security Scorecard. Security Scorecard is the Moodies of cyber security. They rate

up twenty million companies worldwide on their cyber posture. It allows for chief security officers to UH translate cyber risks to boards of directors and essential I would say chasm that has been broken down with the technology that security software provides and that's important because board members need to understand UH cyber risk in order to deploy investment into UH the the cyber infrastructure that's required to defend against

these advanced threats. I mentioned Quantum, a company there that we've invested market UH defending against that that potential of a Quantum hacked. The company in fact announces fact murder and UH will be a public company on NASDAC over the next UH the next couple of months, and they're actually helped me out there. My understanding is they're involved with launching some satellites right to protect against growing hacking threats.

Absolutely so UH. One of the ways to UH protect against the quant of hack is to be able to effectively distribute keys such that the key infrastructure, UH cryptographical key infrastructure becomes more defensible. And they're able to do that with novel technology that they developed H and providing that that type of key distribution through satellites, which can be distributed around the world UH safely protecting devices, computers, and other endpoint caught ups that are out there right.

So essentially a backbone of of encryption keys or secure keys, if you will, UM within data centers around the world. It's really fascinating how this is evolving. How do you see it ultimately, Richard playing at some point, is there an aggregator, uh, you know, a salesforce of the cybersecurity world or will continue in your view to be these kind of young startups that are kind of trying to stay ahead of the curve when it comes to the

cybersecurity world. And just got about uh forty seconds left here just quickly. Sure, great question. So I think you're seeing an increase in the number of cybersecurity companies that are growing public. With that, you're going to see continued consolidation stuff that these platforms of positions to upsell and clause cell products into their uh uh installed base. Uh. You're going to see a else force dot com type of cybersecurity company that's an aggregator that has end to

end uh product capability. And I think you're already starting to see that in some of the public holistic platforms out there. See more of that as time goes on. Listen, this was a great conversation. I hope we can get you back because it's certainly an evolving, uh and developing world that's certainly a very crucial world. As we have

seen Richard. Thanks Richard c Wald, founder imaging partner, Evolution Equity Partners on a very clear line from Zurich, Switzerland, so it was so good to get his thoughts