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Emil Michael Talks $340 Million D-Wave SPAC Merger on Bloomberg Technology

Bloomberg Technology anchor Emily Chang recently had Emil Michael, the DPCM Capital CEO, on the show to talk about his company’s recent $340 million D-Wave Systems SPAC deal. “What I liked about D-Wave is that they actually have products in the market today,” he explained to Chang. “So this is not a ‘Hey, we will have a product five years from now.’ This is not a research and development company. It actually serves clients right now.”

So what exactly is D-Wave Systems? It’s a Canadian quantum computer maker that was founded in 1999. The company currently employs more than 180 people. It uses quantum annealing, or the process of using quantum fluctuations as an optimization process for finding the global minimum of a given objective function over a set of candidate solutions. Simpler: a super smart computer finding the most efficient process in a given situation.

As Emil Michael mentioned, the clients it currently serves include the Canadian grocery store chain Save-On-Foods and Volkswagen, the German motor vehicle manufacturer. By merging Emil Michael’s blank-check firm with D-Wave, the combined company has an implied market value of up to $1.6 billion. “It has 12 big Fortune 1000 clients. Quantum computing is here today for D-Wave,” said Michael.

Chang followed that up by pointing out that D-Wave is “considered a bit of an underdog” in the field of quantum computing, especially when compared to Google. She asked Emil Michael to explain D-Wave’s “special sauce” regarding its technological approach, which makes him consider it a good investment. According to Michael, there are a few reasons why he believes D-Wave to be a good bet for his DPCM Capital business.

Emil Michael: Reasons for the D-Wave Deal

“Number one, because D-Wave has been around for a while, their intellectual property portfolio is enormous. It is patents. And what they have built so far is a huge treasure trove and value-creating set of IP,” Michael explained during his appearance on Bloomberg Technology. “Second, D-Wave’s approach is the only approach that works for optimization problems, like employee scheduling. Imagine how a complex business schedules employees with their days off and hours working. They can solve real-world optimization problems today, given their approach. And they are going to build a new approach too, for Google as well.”

A recent study done in collaboration with Google resulted in D-Wave scientists demonstrating a computational performance advantage to over 2 million times the corresponding classical methods. D-Wave breaks it down in even simpler terms: “The work was accomplished on a practical application with real-world implications for the development of exotic materials, simulating the topological phenomena behind the 2016 Nobel Prize in physics,” according to their website.

How Can D-Wave Compete in the Quantum Field?

D-Wave is focused on annealing quantum computing technology, which Michael believes can boost it over the competition that, in addition to Google, includes Azure Quantum, Rigetti Computing, IonQ, and IBM. “I believe in the annealing approach. We believe it is the technology that can solve a certain set of problems that we don’t think the other approaches can solve,” Michael explained. “It does not mean that annealing can solve every problem that quantum might solve. But it can solve about $100 billion worth of total adjustable market problems, and no one else has that approach. So that is what makes it unique.”

During the appearance on Bloomberg, Michael credited the D-Wave leadership team as being another asset to the company. “Alan Baratz is an incredible leader — very commercial and technically deep,” noted Michael of D-Wave’s president and CEO. “So it has got a fresh look at the world, it has got real big customers today and it has got an approach that it has a unique lock on at the moment.”

Emil Michael Addresses the Future of Ride-Sharing

While she had him on Bloomberg Technology to talk about the D-Wave merger, anchor Chang asked the one-time chief business officer at Uber to weigh in on the future of the ride-hailing industry. “You will see revenue from both Uber and Lyft on the ride side exceed pre-pandemic levels in Q4. I think Lyft just proved that from a revenue standpoint, not a rider standpoint. That’s because prices went up. I think you’ll both see prices moderate in 2022, and riders will come back. So the business will grow again,” Michael shared.

“No one who lives in a city can live without one of these services anymore,” noted Emil Michael. “So it is just that people have been home and not going to work. So as that moderates back, I think you will see recovery in the rides business of both companies.”

Michael is still a shareholder in Uber but has expressed disappointment and displeasure with how the stock has languished. “Frankly, I think they need to have a management change or a leadership wake-up call. The stock now is where it was in 2015; that’s seven years ago. So the business has been growing, but Wall Street has not been rewarding them for that,” he told Chang.

He cited a few reasons for that and noted that Wall Street “lacks confidence that this management team will innovate and find cost savings to make it more profitable sooner. And they have done a bunch of bad acquisitions that haven’t helped.”

When Chang questioned if he meant Uber needed to replace CEO Dara Khosrowshahi, Emil Michael explained, “Dara’s first five years are up this summer, and I think it will be a point for the board or shareholders to look up and say, ‘Well, the company went public at $45 a share. Where is it today? What are the goals, and have we hit them? And whether it’s him, or is this team collectively the right team to take it forward and regain momentum? Seven years is a long time to wait to get back to even.”