California's Counting on Us
There are about 30-50,000 Russian specialists with university degrees working in Silicone Valley.
Sep 04, 2003
Russkies in Cali
There are about 30-50,000 Russian specialists with university degrees working in Silicone Valley. Most of those with work permits used to be Indians and Chinese, who later went home after the crisis. I couldn't find a single Russian, however, who returned. "The thing is," explained Alexei Andreyev, an analyst at Draper Fisher Jurvetson, an IT venture capital fund, "Russians are usually among mission-critical employees. They are crucial. Asians are interchangeable and thus the first to take off, while companies keep hold of Russians until the bitter end because they are capable of coming up with a solution at the very last minute that will save both the project and the company."
The majority of Russians here are engineers and academics. According to Alexei Kudrashov, one of the directors of the StarOffice project at Sun Microsystems, you will not find many marketing or business development specialists among Silicone Valley Russians. There are more Russian lawyers, but they rarely specialize in patent or corporate law. There are only a handful of successful Russian entrepreneurs. Greg Shenkman and Alec Miloslavsky, founders of call center manufacturer Genesys, and Maxim Levchin, developer of the leading online payment system PayPal, are a few of the better-known names. Sergei Brinn, who left the USSR at age 5 and later founded Google, can also be considered a famous Russian in America.
Though ex-pats are cautious in their comments on the potential future of Russia's tech business, they have no intention of cutting their ties with Russia. Quite on the contrary: almost every Russian entrepreneur told me about their various Russian business contacts and their plans to develop a range of programs and initiatives targeting Russia. They are already working with Russian tech companies like IBS, Aptiva, and A4Vision, as well as with Russian subsidiaries of venture funds like Intel Capital and Mint Capital.
A few years ago, before I knew how things really were, I called the Russian tech ex-pats in the US the "fifth division" of the Russian technology business. Today, this seems a bit of an exaggeration. There are very few influential Russians, barely enough for a guerilla band, let alone an entire division. But not for long: the ex-pats are without a doubt open to working with Russia as a result of their integration into the culture of California. As one interviewee noted, one of the most important things you pick up from working in the US is to be open to mutually beneficial collaboration. Now, Russian ex-pats want to work with the folks back home and share what they can.
Go East
At Stamford University, I took part in the first AlwaysOn Summit, a conference organized by the founders of one of the most influential magazines on the technology business, Red Herring. The magazine's friends and partners, many of the leading names in technology and venture capital, also came to the conference, which, judging by the number of industry superstars in attendance, promises to become the Davos of the venture world.
I came to the conference with the same question: what does Silicone Valley think of Russia today? There are no words to describe the shock I got when the very first delegate I spoke to, the Indian president of Linux, found out I was from Russia. He exclaimed enthusiastically, "Oh! I have a research lab in Moscow! With ten, no wait, already twelve people!" I would have been less surprised if he had been Russian or a native Californian. But here was a technology global citizen, with an IT lab in Moscow. I just couldn't fathom it.
Almost all the technology entrepreneurs I spoke to in Silicone Valley can be divided into three groups. First are those who already have labs in Russia (Moscow, St. Petersburg, Nizhny Novogorod and Novosibirsk were all mentioned). The second group plans to set up a lab in Russia. Though the third group never had and doesn't plan to have a lab, they know people who do. When I went to the States, I came convinced that I know every Russian R&D organization connected to Silicone Valley, all three or four of them. In just a few days, my perspective broadened to include several dozens more.
A McKinsey report issued this summer and Sand Hill Group's Enterprise 2003 unexpectedly named Eastern Europe, including Russia, as the second most popular region for American corporations to offshore (13% of American companies plan to work in the region). Tony Nash, an influential technology analyst and former leading commentator for Red Herring, dedicated an entire lengthy article to Russian labs, calling them "skunkworks." This term is used in the tech business for a small "breakthrough" team, working with few time constraints in order to find innovative solutions to challenging problems. US companies' Russian labs, according to Nash, specialize in early-stage, high-tech programming. Basic technology gets developed in Moscow but polished into a finished product elsewhere. Sometimes these Moscow labs can evolve into something bigger. The founder of Quantum Art, Eduard Shenderovich, said that while the Moscow office was first created as a production center, it soon became an important source of sales.
When they found out where I was from, venture capitalists began to ask me detailed questions about everything that had to do with Russia, such as how many venture funds there were in Russia, what companies were interesting, if I knew any good companies to invest in, and so on. There was no way to explain this away as Americans making polite conversation. The interest burning in their eyes was beyond politeness. "I have always wanted to go to Russia and see how it is developing into a global technology center," the director of a blue chip computer company's venture fund informed me.
After a dozen conversations, I came to the conclusion that two countries are currently on the radars of the leaders of the American technology business: China and Russia.
The fascination with China characteristic of late 2001-early 2002 is fading. China, which terrified India several years ago with its desire to offer outsourcing at even lower costs, has indeed become an outsourcer, but for India, not the US. India is now sending China all the simple, routine projects it gets from the US. The issue of intellectual property rights has become a common topic of conversation in relation to China. Many feel the Chinese have no qualms about shamelessly copying everything that crosses their paths in the process of working with a partner, everything from know-how to design to finished products. Nothing of the sort has been heard of in Russia. Local Russian pirates may copy widely available commercial products, but apparently Russians have not sunk so far as to release the projects entrusted to them by their partners as their own. In China, however, this sort of problem has already become so common that an expert addressing this issue insisted that ignoring partners' rights and priorities stems from a Chinese cultural archetype so deep that the Chinese don't understand completely that they are stealing. Many companies that previously planned to open labs and production facilities in China are now reconsidering.
Russia appears in the minds of venture capitalists as a distant El Dorado with gold for the taking. Few have actually been there, which makes it all the more attractive from a distance. The Americans already know what we know: that there are a lot of well educated and creative engineers and scientists in Russia. Everyone thinks that all you have to do is dig around a bit in Russia and you'll unearth plenty of unique and competitive products. The motto "Go East" seems to be on everyone's lips. "Send me any business plan that you think looks interesting," one important venture capitalist told me. "If I'm not interested myself, I'll give it to one of my colleagues."
Out of all the countries worthy of their attention, Russia is one of the last places venture capitalists have yet to explore thoroughly. India, Europe, and East Asia, even if they haven't been mined, have at least seen some prospecting. Russia is virgin wilderness. The resistance to long overseas flights disappeared along with the boom, and now venture capitalists are prepared to travel halfway around the world in search of new stars. Differences in time zones or local legislation and rules, never mind language and culture barriers, are no longer automatically considered "red flags." Industry leaders are convinced that the rewards are worth the extra effort.
Alexander Livshits, the well-known Russian liberal economist, has often stated that the tech business in Russia has no future, arguing that global market was divided up long ago and that Russia's welcome would be far from warm. This defeatist attitude on the part of the esteemed professor, which reflects the mindset of most of the Russian elite, has no real basis in fact, as I now see it. If we can offer the world technology products that don't exist elsewhere, they will be snapped up. Russia is already perceived as a possible competitor to Silicone Valley and other countries attracting venture capital. While we Russians sat around wondering if we could join the world club of innovative technology, we were already in.
Expert (http://www.expert.ru/)
There are about 30-50,000 Russian specialists with university degrees working in Silicone Valley. Most of those with work permits used to be Indians and Chinese, who later went home after the crisis. I couldn't find a single Russian, however, who returned. "The thing is," explained Alexei Andreyev, an analyst at Draper Fisher Jurvetson, an IT venture capital fund, "Russians are usually among mission-critical employees. They are crucial. Asians are interchangeable and thus the first to take off, while companies keep hold of Russians until the bitter end because they are capable of coming up with a solution at the very last minute that will save both the project and the company."
The majority of Russians here are engineers and academics. According to Alexei Kudrashov, one of the directors of the StarOffice project at Sun Microsystems, you will not find many marketing or business development specialists among Silicone Valley Russians. There are more Russian lawyers, but they rarely specialize in patent or corporate law. There are only a handful of successful Russian entrepreneurs. Greg Shenkman and Alec Miloslavsky, founders of call center manufacturer Genesys, and Maxim Levchin, developer of the leading online payment system PayPal, are a few of the better-known names. Sergei Brinn, who left the USSR at age 5 and later founded Google, can also be considered a famous Russian in America.
Though ex-pats are cautious in their comments on the potential future of Russia's tech business, they have no intention of cutting their ties with Russia. Quite on the contrary: almost every Russian entrepreneur told me about their various Russian business contacts and their plans to develop a range of programs and initiatives targeting Russia. They are already working with Russian tech companies like IBS, Aptiva, and A4Vision, as well as with Russian subsidiaries of venture funds like Intel Capital and Mint Capital.
A few years ago, before I knew how things really were, I called the Russian tech ex-pats in the US the "fifth division" of the Russian technology business. Today, this seems a bit of an exaggeration. There are very few influential Russians, barely enough for a guerilla band, let alone an entire division. But not for long: the ex-pats are without a doubt open to working with Russia as a result of their integration into the culture of California. As one interviewee noted, one of the most important things you pick up from working in the US is to be open to mutually beneficial collaboration. Now, Russian ex-pats want to work with the folks back home and share what they can.
Go East
At Stamford University, I took part in the first AlwaysOn Summit, a conference organized by the founders of one of the most influential magazines on the technology business, Red Herring. The magazine's friends and partners, many of the leading names in technology and venture capital, also came to the conference, which, judging by the number of industry superstars in attendance, promises to become the Davos of the venture world.
I came to the conference with the same question: what does Silicone Valley think of Russia today? There are no words to describe the shock I got when the very first delegate I spoke to, the Indian president of Linux, found out I was from Russia. He exclaimed enthusiastically, "Oh! I have a research lab in Moscow! With ten, no wait, already twelve people!" I would have been less surprised if he had been Russian or a native Californian. But here was a technology global citizen, with an IT lab in Moscow. I just couldn't fathom it.
Almost all the technology entrepreneurs I spoke to in Silicone Valley can be divided into three groups. First are those who already have labs in Russia (Moscow, St. Petersburg, Nizhny Novogorod and Novosibirsk were all mentioned). The second group plans to set up a lab in Russia. Though the third group never had and doesn't plan to have a lab, they know people who do. When I went to the States, I came convinced that I know every Russian R&D organization connected to Silicone Valley, all three or four of them. In just a few days, my perspective broadened to include several dozens more.
A McKinsey report issued this summer and Sand Hill Group's Enterprise 2003 unexpectedly named Eastern Europe, including Russia, as the second most popular region for American corporations to offshore (13% of American companies plan to work in the region). Tony Nash, an influential technology analyst and former leading commentator for Red Herring, dedicated an entire lengthy article to Russian labs, calling them "skunkworks." This term is used in the tech business for a small "breakthrough" team, working with few time constraints in order to find innovative solutions to challenging problems. US companies' Russian labs, according to Nash, specialize in early-stage, high-tech programming. Basic technology gets developed in Moscow but polished into a finished product elsewhere. Sometimes these Moscow labs can evolve into something bigger. The founder of Quantum Art, Eduard Shenderovich, said that while the Moscow office was first created as a production center, it soon became an important source of sales.
When they found out where I was from, venture capitalists began to ask me detailed questions about everything that had to do with Russia, such as how many venture funds there were in Russia, what companies were interesting, if I knew any good companies to invest in, and so on. There was no way to explain this away as Americans making polite conversation. The interest burning in their eyes was beyond politeness. "I have always wanted to go to Russia and see how it is developing into a global technology center," the director of a blue chip computer company's venture fund informed me.
After a dozen conversations, I came to the conclusion that two countries are currently on the radars of the leaders of the American technology business: China and Russia.
The fascination with China characteristic of late 2001-early 2002 is fading. China, which terrified India several years ago with its desire to offer outsourcing at even lower costs, has indeed become an outsourcer, but for India, not the US. India is now sending China all the simple, routine projects it gets from the US. The issue of intellectual property rights has become a common topic of conversation in relation to China. Many feel the Chinese have no qualms about shamelessly copying everything that crosses their paths in the process of working with a partner, everything from know-how to design to finished products. Nothing of the sort has been heard of in Russia. Local Russian pirates may copy widely available commercial products, but apparently Russians have not sunk so far as to release the projects entrusted to them by their partners as their own. In China, however, this sort of problem has already become so common that an expert addressing this issue insisted that ignoring partners' rights and priorities stems from a Chinese cultural archetype so deep that the Chinese don't understand completely that they are stealing. Many companies that previously planned to open labs and production facilities in China are now reconsidering.
Russia appears in the minds of venture capitalists as a distant El Dorado with gold for the taking. Few have actually been there, which makes it all the more attractive from a distance. The Americans already know what we know: that there are a lot of well educated and creative engineers and scientists in Russia. Everyone thinks that all you have to do is dig around a bit in Russia and you'll unearth plenty of unique and competitive products. The motto "Go East" seems to be on everyone's lips. "Send me any business plan that you think looks interesting," one important venture capitalist told me. "If I'm not interested myself, I'll give it to one of my colleagues."
Out of all the countries worthy of their attention, Russia is one of the last places venture capitalists have yet to explore thoroughly. India, Europe, and East Asia, even if they haven't been mined, have at least seen some prospecting. Russia is virgin wilderness. The resistance to long overseas flights disappeared along with the boom, and now venture capitalists are prepared to travel halfway around the world in search of new stars. Differences in time zones or local legislation and rules, never mind language and culture barriers, are no longer automatically considered "red flags." Industry leaders are convinced that the rewards are worth the extra effort.
Alexander Livshits, the well-known Russian liberal economist, has often stated that the tech business in Russia has no future, arguing that global market was divided up long ago and that Russia's welcome would be far from warm. This defeatist attitude on the part of the esteemed professor, which reflects the mindset of most of the Russian elite, has no real basis in fact, as I now see it. If we can offer the world technology products that don't exist elsewhere, they will be snapped up. Russia is already perceived as a possible competitor to Silicone Valley and other countries attracting venture capital. While we Russians sat around wondering if we could join the world club of innovative technology, we were already in.
Expert (http://www.expert.ru/)