Tech Ties to Russia. Silicon Valley Weighs Risks, Opportunities
A generation ago, American and Russian high-tech talents were building Cold War weaponry and pointing it each other's major cities. But times have changed...
Feb 08, 2006
A generation ago, American and Russian high-tech talents were building Cold War weaponry and pointing it each other's major cities. But times have changed. Today, the United States and Russia are looking for ways to tap equity capital, troll for creative brainpower and build new consumer markets.
In line with this, dozens of senior scientists, government officials, venture capitalists and corporate executives plan to convene near the Stanford University campus Thursday and Friday to ponder how this hopeful rapprochement can be deepened, especially in the commercial sphere.
The U.S.-Russia Technology Symposium will bring former Secretary of State George Shultz, former Defense Secretary William Perry and former Sen. Gary Hart together with Russia's minister of education and science, Andrey Fursenko, as well as executives from Intel Corp., Microsoft Corp., IBM and other companies and notable Bay Area venture capitalists such as Bill Draper of Draper Richards and Floyd Kvamme, a partner at Kleiner Perkins Caulfield & Byers.
Vinton Cerf, one of the U.S. scientists credited with inventing the Internet, and now chief Internet evangelist at Google Inc., will deliver a keynote speech. Cerf, who has never been to Russia, said he has no expertise in Russian affairs but thinks the growing technological links and business relationship between the United States and Russia can only be good.
"I'm intrigued by the skill base in Russia, though it hasn't yet built an ecosystem that supports it very well. I think of all these (software) programmers. I have a great deal of respect for them and think of them as very smart people," he said.
Cerf credits fax machines and the Internet with having played a key role in disseminating crucial information to the populace in Russia and Eastern Europe and speeding the fall of communism. Something like that could happen again in the post-communist world, Cerf thinks -- not withstanding the efforts of officials in China, and to a lesser extent, Russia -- to censor the Internet and bring tech companies like Google to heel.
"It's much better to have that capacity there and allow it to mature and be used to the extent it is permitted," he said. "Over time, it has the same level of erosive power that water has in carving the Grand Canyon. It takes a little time. Truth is the ultimate solvent."
Many companies in Silicon Valley and elsewhere around this country aren't waiting for eons to pass. They're in Russia already, investing, opening research centers and trying to build a shared business culture in a still-developing nation that sometimes shows ambivalence toward free markets and the West.
The government of Vladimir Putin has, for example, jailed the former chief executive of Yukos Oil on income-tax charges that many in the West think are trumped up, while restricting the activities of nongovernmental organizations that play important lobbying roles in Western democracies.
Even so, Washington is supporting Moscow's application to join the World Trade Organization, which could help streamline business between the two former foes, and major U.S. corporations say there is a big potential upside to doing business in Russia, despite its volatility.
"We believe, in general, that having strong economic ties leads to having positive things happen," said Stacy Smith, chief information officer at Santa Clara's Intel.
Smith acknowledged the risks for multinational corporations in the Russian market. But "because our investments are pretty well diversified around the world, if there's any one place that may have a risk over a period of time, we have a pretty good handle on the risk," he said.
Smith, who managed Intel operations in Europe, the Middle East and Africa before becoming CIO in 2004, has visited Russia, and likes the growth potential there, as well as the country's depth of scientific and mathematical talent.
"Notebook (computer) sales were less than 300,000 in 2003," Smith said. "In 2006, we expect to sell 1.5 million notebooks in Russia."
Intel also has high regard for the creativity of techies in Russia, where the company has 1,200 employees, he said. "We do a lot of R&D now in Russia, in Moscow, St. Petersburg and elsewhere," Smith said. "There are strong math and science skills and a long history of advanced science."
Intel is also an investor in Russia. According to Smith, Intel Capital, the firm's investment arm, has put an undisclosed amount of money into innovative Russian tech companies such as ru-Net, an information technology company, and Electro-Com, a private telecom firm.
IBM, too, is encouraged by the Russian market, according to Mark Hanny, vice president of IBM Software Group.
"What we're seeing about Russia that's attractive is the market is growing," Hanny said. "They're the third-largest (software) developer community in the world. They're so strong in science and technology. They have a very well-trained technical workforce."
IBM, based in Armonk, N.Y., last week said it will provide free software in Russia to allow developers to download open-source versions of IBM codes, tutorials, software and blogs on which IBM experts provide technical advice.
All told, Hanny said, IBM is spending some $1 billion a year on such outreach and educational programs in such developing markets as India, China, Brazil and Russia.
Hanny said the company wants to help businesses in Russia attain what he calls "ease of use and customization" of IBM programs. "Many businesses there are smaller, especially when you get beyond Moscow and St. Petersburg. We want to make the product work, have it be simple right out of the box."
So far, it seems to be working, Hanny said. "Demand is six to eight times the rate we see in the U.S. and Western Europe. We saw double-digit growth in our revenue last year in Russia," he said, without disclosing dollar amounts.
This is the third year the mid-winter conference has been held. Organized chiefly by Russia-born Bay Area venture capitalist Alexandra Johnson, it is open to the public and carries a registration fee. See (http://www.usrts.org/stanford/live/) for more information.
In line with this, dozens of senior scientists, government officials, venture capitalists and corporate executives plan to convene near the Stanford University campus Thursday and Friday to ponder how this hopeful rapprochement can be deepened, especially in the commercial sphere.
The U.S.-Russia Technology Symposium will bring former Secretary of State George Shultz, former Defense Secretary William Perry and former Sen. Gary Hart together with Russia's minister of education and science, Andrey Fursenko, as well as executives from Intel Corp., Microsoft Corp., IBM and other companies and notable Bay Area venture capitalists such as Bill Draper of Draper Richards and Floyd Kvamme, a partner at Kleiner Perkins Caulfield & Byers.
Vinton Cerf, one of the U.S. scientists credited with inventing the Internet, and now chief Internet evangelist at Google Inc., will deliver a keynote speech. Cerf, who has never been to Russia, said he has no expertise in Russian affairs but thinks the growing technological links and business relationship between the United States and Russia can only be good.
"I'm intrigued by the skill base in Russia, though it hasn't yet built an ecosystem that supports it very well. I think of all these (software) programmers. I have a great deal of respect for them and think of them as very smart people," he said.
Cerf credits fax machines and the Internet with having played a key role in disseminating crucial information to the populace in Russia and Eastern Europe and speeding the fall of communism. Something like that could happen again in the post-communist world, Cerf thinks -- not withstanding the efforts of officials in China, and to a lesser extent, Russia -- to censor the Internet and bring tech companies like Google to heel.
"It's much better to have that capacity there and allow it to mature and be used to the extent it is permitted," he said. "Over time, it has the same level of erosive power that water has in carving the Grand Canyon. It takes a little time. Truth is the ultimate solvent."
Many companies in Silicon Valley and elsewhere around this country aren't waiting for eons to pass. They're in Russia already, investing, opening research centers and trying to build a shared business culture in a still-developing nation that sometimes shows ambivalence toward free markets and the West.
The government of Vladimir Putin has, for example, jailed the former chief executive of Yukos Oil on income-tax charges that many in the West think are trumped up, while restricting the activities of nongovernmental organizations that play important lobbying roles in Western democracies.
Even so, Washington is supporting Moscow's application to join the World Trade Organization, which could help streamline business between the two former foes, and major U.S. corporations say there is a big potential upside to doing business in Russia, despite its volatility.
"We believe, in general, that having strong economic ties leads to having positive things happen," said Stacy Smith, chief information officer at Santa Clara's Intel.
Smith acknowledged the risks for multinational corporations in the Russian market. But "because our investments are pretty well diversified around the world, if there's any one place that may have a risk over a period of time, we have a pretty good handle on the risk," he said.
Smith, who managed Intel operations in Europe, the Middle East and Africa before becoming CIO in 2004, has visited Russia, and likes the growth potential there, as well as the country's depth of scientific and mathematical talent.
"Notebook (computer) sales were less than 300,000 in 2003," Smith said. "In 2006, we expect to sell 1.5 million notebooks in Russia."
Intel also has high regard for the creativity of techies in Russia, where the company has 1,200 employees, he said. "We do a lot of R&D now in Russia, in Moscow, St. Petersburg and elsewhere," Smith said. "There are strong math and science skills and a long history of advanced science."
Intel is also an investor in Russia. According to Smith, Intel Capital, the firm's investment arm, has put an undisclosed amount of money into innovative Russian tech companies such as ru-Net, an information technology company, and Electro-Com, a private telecom firm.
IBM, too, is encouraged by the Russian market, according to Mark Hanny, vice president of IBM Software Group.
"What we're seeing about Russia that's attractive is the market is growing," Hanny said. "They're the third-largest (software) developer community in the world. They're so strong in science and technology. They have a very well-trained technical workforce."
IBM, based in Armonk, N.Y., last week said it will provide free software in Russia to allow developers to download open-source versions of IBM codes, tutorials, software and blogs on which IBM experts provide technical advice.
All told, Hanny said, IBM is spending some $1 billion a year on such outreach and educational programs in such developing markets as India, China, Brazil and Russia.
Hanny said the company wants to help businesses in Russia attain what he calls "ease of use and customization" of IBM programs. "Many businesses there are smaller, especially when you get beyond Moscow and St. Petersburg. We want to make the product work, have it be simple right out of the box."
So far, it seems to be working, Hanny said. "Demand is six to eight times the rate we see in the U.S. and Western Europe. We saw double-digit growth in our revenue last year in Russia," he said, without disclosing dollar amounts.
This is the third year the mid-winter conference has been held. Organized chiefly by Russia-born Bay Area venture capitalist Alexandra Johnson, it is open to the public and carries a registration fee. See (http://www.usrts.org/stanford/live/) for more information.