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Monday, October 25, 2010

Striving for excellence

Mikhail Treyvish, president of monitoring agency OmniGrade and a member of Marchmont’s Advisory Board. The blogger can be reached at:

I just returned from Madrid; I hadn’t been there for three years. Arresting my attention were more paupers on the streets than before; the streets themselves were sort of unclean. I saw all the signs of problems Spain has been facing in its effort to combat the most recent financial crisis—the crisis that has brought that country 17% unemployment and the status of one of Europe’s ailing economies, discouragingly abbreviated as PIIGS.

But there is a lucky exception in Spain, an eye-catching stroke on a crisis-painted picture of financial doom and gloom. It is Santander, now the Euro zone’s largest bank by capitalization—the level it has reached without any government bailout so widespread among its more prominent European colleagues (and who knows – maybe thanks to that). Now Santander is not only the Spaniards’ pride; it’s their hope too.

The Santander example is evidence that all people are equal—in the sense that each of us has a chance to become an entrepreneur and build the world’s best business irrespective of whether one enjoys any recognition in his country, region or village, or not.

Micro-financing came as a business from Bangladesh; Nokia from Finland—once barely known in the hi-tech world—grew to become one of the largest international telecoms; one of the global majors (and the leader in Germany, for instance) in antivirus software is now Kaspersky Lab from commodity-dominated Russia.

It is not so complex to be number one in the world—striving for excellence is what it takes. To be the best you must be daring and prudent. Daring—in generating new ideas and new products; prudent—in choosing partners and spending resources. And if your company has become number one globally, it will undoubtedly be number one, say, in Nizhny Tagil. It’s not so guaranteed the other way round.

I, for one, am also an entrepreneur running a small rating agency. I’m working to make it the world’s best by simply striving for excellence—trying to outstrip in quality such majors as, for example, Standard & Poor’s or Moody’s.

I met with the director of a Russian company that makes ice-cream some time ago. His company is working towards leadership in the European market—because relevant EU regulators have officially recognized their ice-cream one of Europe’s best. I could set further examples that I know of, but I’m sure there are more examples still unknown to me.

During his most recent visit to Russia Jack Welch said that what Russian entrepreneurs lacked most was courage. We need the above examples to get more daring, while prudence is what life itself teaches us.

Monday, October 18, 2010

Well done, Mr. Schwarzenegger!

Just a week ago I was lucky enough to meet in Moscow at the U.S. Ambassador’s personal residence, Spaso-House, many venture capitalists, industrialists and business people from tech sectors, which came to Russia from Silicon Valley together with Gov. Arnold Schwarzenegger.

It was a very impressive event, and I was excited to be part of that. To be honest, I had been wondering why Gov. Schwarzenegger came to Russia and how he was able to bring all those people. He answered my question with his speech.

He said that when he was with President Medvedev in Silicon Valley in summer, the latter was very impressed and the Californian governor really understood that was a visionary president; he was proud to present the state and Silicon Valley to the Russian president and his entourage. So, Mr. Medvedev simply extended his hand and invited the governor to come visit Russia.

There’s a ‘Reset’ going on between the two countries and President Medvedev is raising the profile of this relationship with a focus on innovation sectors. There are many areas, in which our countries may have conflicting interests or opinions, but this is an area where we have an opportunity to jointly and collaboratively solve global problems. And this can help boost both Russian and American economies.

Gov. Schwarzenegger basically indicated that he was there to promote Californian business in Russia. Nothing wrong in this, especially as there are so many Russian programmers and entrepreneurs living there and establishing new links between his state and Russia.

As many recent examples show, Indian software programmers have played a significant role in the development of Silicon Valley; and so have Chinese businesses. It’s clear that Silicon Valley has achieved its success because it has been very open to immigrants from many emerging markets around the world for the last 50 years.

But the trend is such that many of those entrepreneurs who once came to Silicon Valley are now going back to their home, either temporarily or even permanently.
The Indians are doing this, and so are the Chinese. The Chinese even have their own government-funded Sea Turtle and Sea Gull programs in place to encourage this with generous financial incentives! It’s clear that the Russians will be part of that trend too. So, President Medvedev is also trying to encourage this.

Gov. Schwarzenegger understands that it’s in the interests of his state to encourage the development of interaction between the original Silicon Valley and the new ‘Silicon Valley’, which will be a guiding example in Russia for technology and innovation development across the RF.

Of course, there was a PR aspect in the event. It’s one thing to have a low-profile group of venture capitalists visiting Russia. To have a major Hollywood figure, a globally recognized brand name like Arnold Schwarzenegger is another thing; it adds prestige and profile to the trade delegation. And both leaders perfectly understood that.

But the main message was that the risk level should be lowered on both sides of the relationship to encourage real partnership in science and technology sectors. By leading the U.S. trade delegation Gov. Schwarzenegger may have wanted to show other Americans that this is an interesting thing for Californians to be doing. It’s also a signal to Russians that California is taking the Skolkovo process very seriously since the governor came here himself. So, all parties are interested in mutually beneficial business that can generate profits.

I expect that as a result of the meetings in Moscow there will be a lot of media coverage in the U.S.; these prominent venture capitalists will be asked, “what do you think of Russia?”, “is Skolkovo just an image or is it something real?” In fact, I spoke with many of those venture capitalists myself; they are in fact looking for real opportunities. They were wondering what Russia was doing to create an innovation economy and what U.S. companies could do to participate in that; they are looking to set up Russo-American VC, PE and strategic partnerships to expand Russian innovation projects into U.S. markets.

So, was this all just some Hollywood hype to promote a new ‘Potemkin village’? No, I don’t believe so. Time is money, and the top VC leaders in the U.S. would not be the type of people to waste either their time or money. This was a serious milestone on the U.S.-Russia ‘Reset’, and I was impressed that the Californian governor chose to put his reputation on the line to lead such a delegation! Well done!