Will Russia create the next Sillicon Valley??

By: ispeculatornew
Date posted: 07.26.2010 (4:00 am) | Write a Comment  (5 Comments)

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A few weeks ago, you might have heard about Russian President Dmitry Medvedev coming to North America. He made the trip for the G7 & G20 meetings in Toronto, Canada. At least that was the official reason… Medvedev combined the trip with a visit to America to visit Barack Obama. He also made a point of visiting a few company headquarters.. Companies such as Twitter (he ended up creating a profile), Facebook, Apple and Google. Was it random that he ended up visiting the top technology companies instead of companies from any other industry? Of course not!

Russian ambitions

Russia has made it clear that it wanted to become a major player in the tech world and would put major efforts into it. While many natural resource rich countries have been trying to diversify their economies, most of them have done so by creating tourist attractions. Russia is going down a much more challenging road.

All of you who have knowledge of Russia and its history know that when the country has large ambitious projects, its puts a lot of energy into getting things done. Medvedev’s visit was certainly a nice official way of making its ambitions clear but there is certainly much more going on behind the scenes. Some  say that the tech industry is a bit like the nuclear technology from a few decades ago when the Americans had a major advantage which Russia ended up catching onto prior to the Cold War.

How is Russia catching up?

There is no doubt that Russia has a lot of distance to cover to compete with the US in terms of knowledge, infrastructure, etc. It has money and certainly has the capacity if enough will and resources are dedicated to this project.

Digital Sky

There are many different ways of course but the more open way is having companies like Digital Sky take increasingly large stakes in some of the top tech companies such as Facebook & Zynga. The Russian internet holding company (kind of a Russian IAC Interactive) has also made deals with AOL and others. From the surface, everything about Digital Sky looks legitimate and it looks like any other venture capital fund but it has been very aggressive about its investments in American tech companies. Are there hidden intentions?

Spying

Yes, Russia like most other developed nations has spies gaining military and political knowledge. However, you might have also read about the 10 Russian spies that were caught by the FBI on American soil. These individuals had not been trying to get military or political secrets but rather had been told to gain trust from American companies in the financial, technology and other fields. Agents such as Anna Chapman (seen on the right) had been in America for years trying to get corporate secrets and technology. Chapman, like the others was caught and sent back to Russia in exchange for our own spies who had been caught over there. But the big question is how many others are there? Does Russia have enough knowledge to start up the next big technology company?

It did not take very long to get some answers as Microsoft (MSFT) confirmed that an employee named Alexey Karetnikov, in his 20s, had also been arrested for spying. It is unclear what this man was working on but clearly, Russia spies have been getting closer and closer to sensible data. This is significant news and it would certainly be interesting to know who is getting the information from these spies. Government only? Or are corporations also getting their share of the pie?

Do not doubt Russia

The country has proven for centuries that it was a force to be reckoned with. Slowly but surely Russia has been regaining some of its lost power in recent years in the military, political and even commercial spheres. Guess who the top money making money is according to the most recent Fortune magazine report? No it is not Exxon, Microsoft or Apple but rather Russian gas company Gazprom, the same company that has been used to put political pressure on Eastern and Western Europe. Could the same be done if the next Facebook or the next Twitter was Russian? I guess time will tell!

Not necessarily evil

While you can see that I think Russia is getting ready to compete in a very strong way with American technology giants, I don’t think we need to be scared. Competition is good and will likely spur even more innovation. But unlike the US auto industry, I think it is critical to look at what’s being done by foreign corporations and governments to avoid being surpassed. What are your thoughts on this? Do you think Russia will be able to create a new and improved Silicon Valley?

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5 Comments

  1. Comment by Panda Mike — July 26, 2010 @ 9:58 am

    Hum.. this would be quite interesting to see how Russia will finance their valley.

    I guess that if they use their oil money, they will certainly have enough resources to create another techno valley. The key point is : will they be able to attract the best techno guys?

    Sounds a lot like the KHL trying to “steal” NHL player in the hockey industry!

  2. Comment by The Financial Blogger — July 26, 2010 @ 3:36 pm

    they look like they will try the same strategy as they did with their KHL (in the hockey industry). I guess that using petro dollar is always a good way to make your project happens!

  3. Comment by IS — July 27, 2010 @ 3:49 am

    @TFB – Did not think about that comparison but it’s an excellent one. Indeed, dollars always help to set up an entire industry:)

  4. Comment by IS — July 28, 2010 @ 4:07 am

    @Panda Mike – I think they already have many of the top techno guys in Russia, it’s about keeping them there:)

  5. […] is that Russia is becoming less dependent on the oil and agriculture economies as it works on creating its own Silicon Valley. Research also shows that tax revenues from the government are up this year despite a flat oil […]

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