but when you think about it giving someone a medal for using a mouse to blow up blips on a monitor really seems to devalue the medals of the guys who were brave enough to storm the beaches of d.-day or slog through disease and sneak field swaps in vietnam so maybe for the sake of the prestige of the of their medals let's just let the cybersecurity one goal but that's just my opinion. about them you're on the money with the business of russia is business i'm peter lavelle russia is a competitive high tech leader in the world in this edition of on the money we discuss what it takes to be competitive what specific skills and opportunities are found in the russian market also what are the next steps and what needs to happen for foreign investment to continue to i this market.

to discuss this i'm joined by dimitri rape in he is the c.e.o. of digital october technological entrepreneurship center maxime question eak he is the investment director at intel capital and we're also joined by yvonne sure start he used to director of research at skolkovo institute of science and technology all right gentlemen let's start up with the issue that a lot of people talk about and it's start ups in russia. talk us through that dimitri i mean is this one of the center of focuses of the i.t. sector right now well i don't think is there if you think you can really exist with all the startups so you can certainly use this to maybe servicing government and corporations but if you really want some growth you want some things which are you see consumer oriented and certainly we're talking about sort of the market for that . well in the market for startups is a strange sort of phrase i would say that yes there are startups in russia we can counter. many hundreds maybe thousands of some war three i do startups but

certainly the infrastructure and the ecosystem of course especially the success stories are much fewer much was developed in silicon valley or maybe some other places like new york city or a long them. what are you how do you in the late your competitors or do you want to do something completely different so in this sense i would just to say that i am somehow not completely related to the eighty business itself so i'm representative for instance of science and technology which is a lot to do which is second which is a practically the university and we're standing a little bit on another side of the pipeline so we have to feel this pipeline for creation of new startups with new talents are already hard. taking into account that we just started what's the biggest barrier so the biggest barrier right now is you have to create the whole infrastructure more or less from

a scratch. so and particular for the u.s. this call was created so why is it tell our viewers why was it created in the first place so the initiative was created by the russian government somewhere around two thousand and ten to actually did diversify the russian economy and move towards the in a very different to bring europe. ground would say so the initiative is about like actually was first to create this call called fundi shouldn't as actually the source of support in particular start start ups and develop into premier all spirit in russia so and as a part of the skolkovo initiative suit of science and technology is called here which i am represented here was created as the key point of actually supporting the whole infrastructure and the whole. dipping your real. enterprise actually to create this and to bring in all spirit soul because this call of science or technology has to create actually exactly the

talents for or make sure people don't go to silicon valley it is showing ok so in some sense skolkovo institute of science and technology has to help. stop the brain drain all that goes to bring green because it's called coincidence that you need to help russian terrence to realize their potential good time and what is the most interesting attractive thing about the i.p.o. market in russia today we're excited about your troopers and frank you need to distinguish between through two buckets of opportunities here one is related to. international resource which is clearly being driven by the master. but it was called demand here i mean brochure is the number one internet measure in europe and terms of the number of what you have to millions yet with over fifty million of you

or so you can. it ignores opportunity and creates a lot of business for you commerce companies commerce market alone is estimated or at all were probably billion dollars and then a second bucket is more in their core. knowledge or sector which is software and services and read on is really being driven by strong technical education which russia has. to deal with on with most i'm just saying that it's really hard for russians to create projects which are relevant on the global scale it least what's the biggest. power you need to know what's really is needed right now you need to know the cutting edge of many technologies cutting edge of the markets cutting edge of everything. it seems to me like it's very nature is pretty transparent i mean you can see what's going on out there can't you know but one thing is to see in the other thing is through being plugged in they really understand the sort of intricacies of the business models intricacies of. i don't know integration and

scaling up your whole well integrated is the russian market you know it wouldn't it's not the sort of the russian market is pretty well integrated in the way that people know what's going on outside of the market but. there's one story about the covers but i want to stress on the story of russians building projects in one thousand that are relevant globally because our mission is to just talk to you specifically to try to if we can bring the best brains from the west or from the east we can bring in through some telepresence lectures we can and we can get to the cutting edge of knowledge to rush into print. so the create projects which are again applicable globally that have customers not just in russia but also around the world in and you want to plug into the local market but how do you plug in elsewhere so first i would like to actually add to what the as i completely agree with me three so russian market itself is actually and i would say the direction of

doing the zeeshan which was chosen is pretty much related to the historical stance of russia we typically species nuclear and energy so these. but this is same time there are absolutely clear russian demands and one of the demand is a different the second one i would say by i mean it's so and in this sense for example so we are pretty much integrating all these five farias together so when we are trying to really establish the introduced to a new research which will help for example specialties to know the whole horizontal for petunias use in different areas including like i did also. for speed. cation for energy and wind and so on to these major sectors crowd out the other issues in areas as we just heard what the government is interested in provisionally yeah absolutely i think if you look at the enterprise you interpret software you know

which is what a dream i was referring to i think you should hear it is to build a successful business you really need to be able to compete on the global scale not just will hit hard it's not going that from russia i think a lot of people are going to really hard to pick their why is it hard to be the carrier i mean because the barriers are some strong you know company is a very was a few successful cases take for instance at your parallels but you know i think russia as you know got more potential and can definitely do better i think what have you. i mean for instance russia house very strong technical education right which is cost of what if you look at for. it's like marketing and. you know it's just not a good you have to be able to not only build a competitive product but you know to also market it and to market yourself where you have to marry a friend to get the different areas going to. consumer to remember other think you know something about will work. just sort of try to make you focused thought

that will truly missing in russia start ups is a good product management so people who really understand what the market needs and how this can be perfect i still make it to the service so and so you're saying geeks are not good at marketing. just marketing and it's also. in russia for the seventy years of communism time is the service mythology well so the genius desire to make create something of value for somebody else. whether it's being paid for it or it doesn't get paid but that's kind of i think deep rooted disservice when telling to be just kind of coming back but still with all the private property it's totally. you can't really see me like in the west it's more service driven in less technologically you know going so i completely agree with me to some of the retreat from my point of view is that it's pretty much historical background sold it's not only the service but also into bring your own spirit is completely missing i mean

so russia is. saying we're going to discuss it also i've been here for fifteen years and i've seen it grow we made it's growing right now because the new generation is getting in this business and actually trying to to benefit from from all of petunias use what they have actually blind their knowledge and. i would see the main problem before was the make and use them how the knowledge will be blight you know also how the how the result will be achieved because pretty much it was government oriented system where the main consumer were like i don't know russian and you have signed his. military all with something like this so and at the moment we are trying to change the direction monads and actually to be oriented on the market on the people and try to solve the practical tasks for life i would see progress being made yeah it can be

a little comment on that because what russia seems not to be doing enough is look at our countries and what they are doing because realistically we are not alone in this problem in competition for telomeres go out will you know we have germany we have u.k. competing for same interpret nor same pellant which could always be based in silicon valley and russia has the same issues as you know all the other countries in europe or elsewhere and i would say that even just a recent example when mark zuckerberg came to russia he came specifically to. to developers and when he was hanging out a dish talked over for a couple days that was the main audience squeeze book also he's looking for tell him here. we are russian companies or investors we often have to import some kind of quality to tell him the specifically men's you will tell him and sometimes. scientific tell and always take a dim acknowledgment tone from other countries this is actually very funny situations so i am. hearing that from the interpret you're

a party you're really the people who is actually on implication side but so i would see exactly the same story is on. so the reason right now the global community shall all run towards starting from the developing countries i don't know like like saudi arabia and finishing with various terrorist companies countries like ok gentlemen to jump in here we're going to go to a show breaking out of the actual bridge will continue our discussion and watch this technological sector stay. please join thousands of gadget gurus blog into the mobile world congress in

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welcome back to on the money with the business of russia's business i'm peter old l.t. mind you we're talking about russia's innovation in technology but first let's look at how russia is innovation seen as developing. the russian technology sector the first thing that comes to mind are russian scientists toiling away at a top secret lab somewhere in siberia a savage stereotype that persists to this day however the reality is much more exciting i.t. nuclear space and other technologies are experiencing dramatic growth with the state support and encouragement the sector has been getting in the past several years russian high tech ideas have great potential to turn into world class businesses many of them are developed here at the skolkovo innovation center which is russia's largest innovation supporter and a new global technology hub already nearly eight hundred startup ideas at skolkovo

have resident status and many of them receive financial assistance according to bloomberg global innovation and x. russia ranks the world's fourteenth most innovative country its peers with norway and belgium and is well ahead of china and even israel one of the signs for this is hyper development of the russian internet russian has become the internet second most used language according to a recent web survey by w. three techs russian internet giants such as yandex and mail dot ru group are prospering their revenues rose around forty percent in two thousand and twelve yandex share of russian web searches is more than double. that for google and other fast growing website is conduct which is europe's largest social network investment into the high tech is growing remarkably both domestic and foreign investments into russian firms more than doubled in value from two hundred twenty million dollars in

two thousand and ten to five hundred fifty million in twenty eleven russian resourcefulness and ingenuity our modern competitive advantages the challenge now is matching these great talents with financial and business acumen and this challenge is accepted reason look and on the money our team. india is a government supportive of the sector i mean it i mean we presence we know that of course but i mean a lot of people say you don't need the government you know incubators things like that i mean if there's money out there and there's innovation and there's entrepreneurship that's all you really need the things you can do without the government and if you want to be. there are sort of either walking fruits or things that really can quickly benefit a lot of people so we can do it on your own so we have private center so we most of the things we do ourselves but for certain activities we ask for government support

and so supportive you know that i'm supportive so we had to. come to talk to sort of support sort of things the minister of communication come to additional topper can talk about things and also what about iraq we're seeing and we all live in this kind of all of it's just a matter of execution sort of typically in rushing through that we all pretty high up then we can manage through the bureaucracy but that takes some effort and time but still it's manageable you know your endeavor is a good investment it's definitely a good thing so far yes so i would just to add to it that this is not only government money involved in this it's pretty much also involvement of the big companies including state owned companies for example score courtier right now. we're going to create fifteen center for research education innovation in some sort of distributed research center in. cross-cutting areas so it's actually again it will be concentrated on within five farias it's the nuclear by me and seen

energy or space so and each center is typically between like six to twelve million u.s. dollars per year and the funding for this center is reserved for five years so this is who funds it is there is the same percent fund it leaves the customer is that much money right now for example we have several occasion in our pipeline to create the centers for all of which are strongly supported by the b. companies that we can produce like ross. like like are they we continue. to go as far as i go and we are a lot of people would say you know when you think of the companies that you just met you know i don't think of them as being very savvy technologically at times ok to be this is this is exactly the point i mean so this company they understand that they have to increase their level of being technological companies and go towards like not to extract the resources but rather to develop new technologies always

least use these new technologies instructing these new resources whenever with whenever the government is involved they always ask the question do they get it ok . for example you don't care but all be. found in the world and also being a corporate venture fund and this theme of corporate venture funds in is no very. popular but this is a hot topic within the russian. big industry community so there is even a quote for e r. and d. directors who are talking about corporate venture capital. i don't think people really perceive in the capital as a corporate fund because. believe that really there is or lose connection with the specific instances for him thought but we can maybe yeah i mean i would. doing this for several decades globally and i think a truth is private sector over time because demonstrated that it can do better than government and so well in this area roger was right about pretty obvious but if it still to be mislead you mishal face it initially that is the federal government

needs to step up and needs to expand their hand in whatever shape or form you know develop a team and technological community i think that's important and if you look at some of our portfolio companies. geography in russia they have in one shape or form help from skulk around of trying to out you know goes a long way towards attract international capital into russia and i'm not talking about our existing people here starting thing to do this now which the driver what would you sell to an investor the reason why to come here. well you know russia has a lot to offer again first of all domestic demand it's the largest internet in our nation in europe over a fifty million of internet users if you look at the disposable income about has also been growing in the last ten years in the double digits or high single history major so there's a lot of consumer demand that needs to be taken care of and it's really tough for

foreign players to come and compete here so luckily companies have this advantage of knowing local noways their own infrastructure. you know do you my talked about and do you really have an edge against its local players sort of foreign players and they have this opportunity to create barriers or build up on the barriers and you know create a loyal customer base before you know a foreign players will come in i just ask questions. so you have a over thousand person other companies all around the world four hundred one hundred just one hundred ok one hundred. four hundred one so. i'm sure that some of those companies would really benefit from entering the russian market. for example we have a few examples and again right now there are very few pretty large advanced u.s. startups for example one was air b.n. b. the other was a survey monkey who came to the russian market initially because some p.r. and t.v. said you talked over to get an event and think so the came to us to get some

expertise about how they actually enter into russian consumer internet market but i'm sure you with your even the russians are able to have all the facts pretty use so that maybe another thing that you know absolutely nothing about maybe a little less relevant for startups because traditionally you know you would want to. build up on your market truman show drago people for expand into emerging markets like russia but for established companies and you know we don't need to go far here look at the bill in full debate in russia as a corporation soames all the ninety's. and we have all we're eight hundred years now in russia working on global projects not something about us law called for for this market so i think you could definitely see large corporations large companies dorrian business in russia for you know years now decades you know people always talk about brain drain and before we started the program to me you said people are coming back can you elaborate a little bit well we can people not getting that much do you want to come back

can't you work for russia but in california well i want to live in the states for years and they came back so i would be an example for exactly. what i call the. old move the in russia at this time both politically maybe economical or so people just kind of. huge crowds on the plains but there are other ways of people who get engaged here and those examples so we have maybe a small examples giving somebody people their chips or telepresence they have example somebody coming back and establishing a lead. maybe they have somebody hire former or caution speaking person to become a top manager in a startup of the funded so that's going to be small things but each of those things are important so maybe just to illustrate i'm always better to to demonstrate some success story i could tell that it's right now it's called we have twenty fields monster students and they have like where they are within the year master program

and the first all these very talented boys and girls they spent at mit you know really actually after this year so we have like several in very prestigious internet. of competition including ninety four so and something like this so we can't fly five projects we're really. really two two to be a start up absolutely. brilliant ideas behind it and this is like twenty people we can frank not five or five projects the sole running and probably another ten coming soon so and this is just demonstrating actually what happens if you put a russian tail and within the right in a very tough and supportive eco system it almost automatically when more people started so when the word rush is mentioned they will think technology when exactly

when all hope somehow road will soar over there every way we're going discuss with voters there for some success cases to be looked at you know to be build upon we're not quite as yet in terms of really have been on the wall the ecosystem able to generate new high quality to acknowledge a company were able to compete globally are thinking about still you know something we need to continue working our last word. in indulgence thirty will be a couple russian companies could lose to the new york stock exchange and have a market cap that's sort of for over there we ended up on a very good nope many thanks to my guests here in the studio and thanks to our viewers for watching us here on the money see you next time in states with already .

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