Grid Dynamics CEO discusses the growth of technology in Russia

 Born in Ukraine during the time of the Soviet Union, Grid Dynamics founder and CEO Victoria Livschitz emigrated to the U.S. during college to receive a degree in computer science from Case Western Reserve University. After starting her career in Silicon Valley, Livschitz decided to utilize resources found both in California and Russia to open her own technology company. In an interview with Modern Russia, Livschitz discussed why she chose to return to Russia, the country’s strengthening business climate and her vision of the future of technology in Russia.

 Why did you decide to return to Russia and start Grid Dynamics?

By mid-2006, at the peak of my career at Sun Microsystems as a Silicon Valley technologist, I decided to leave the corporate world and start my own technology company, Grid Dynamics. Web 2.0 was changing everything in the world of IT, cloud computing was starting to open a new era in computing and I was ready to join the ranks of technology entrepreneurs that were creating innovation in the cloud space. 

Immediately, I was faced with a dilemma of where to establish and grow my engineering organization. Without much hesitation, I settled on Russia. While I needed exceptionally strong technical talent, it was more important to find staff with general intelligence, problem-solving skills and mathematical aptitude than with specific skills. The technologies my engineering team had to learn and master were too new to be found in any geographic market – I would have to develop the expertise from scratch no matter where I went. So it was paramount for me to find engineers with the ability to learn and innovate quickly in unfamiliar technical areas. 

I got very lucky. The first group of programmers I worked with in Russia was incredibly young - most were well under the age of 25, and incredibly bright. I started to work with a few of them on a pilot project and immediately recognized that they had all the qualities I was looking for. I established my first development center in Saratov, and today we also have development centers in Moscow, St. Petersburg and my native city, Kharkov. 

What was your experience like breaking into the Russian market? 

In late 2008, the Russian government began to spark interest in innovation, entrepreneurship and high-tech start-ups. My company, then barely two years old, got noticed by VTB Venture Capital, an early stage venture fund managed by Russia's second-largest bank. They funded us less than a year later. To the best of my knowledge, it was one of the first deals of its kind where a Russian government-sponsored venture fund invested in a U.S.-based early stage technology company.

At first Russian authorities did not have much experience in dealing with young companies that raise venture funds to develop technology, let alone Russian-U.S. technology companies like Grid Dynamics. Since then the Russian government has passed a number of laws to simplify international cooperation and make Russian deals more attractive, including significant tax breaks. It's still not perfect, but it’s getting better. 

I’ve also noticed a significant growth in the maturity and sophistication of the Russian venture community in a short amount of time.  Today, there are far more venture capital funds run by professional managers with international experience. Companies developing technology in Russia like ePam and Parallels are successfully competing on the global scale and becoming major forces in their respective, highly competitive sectors. I also see some serious U.S. investors starting to take interest in Russia.

Grid Dynamics has been operating in Russia for nearly five years now. Are you noticing any changes to the business climate?

There have been pretty significant changes. When I came to Russia, it was still a very closed and introverted economy. Cooperation with the West, true cross-border partnerships and any orientation towards a global market were virtually non-existent, at least early on in businesses focusing on technology in Russia. However, now there seems to be significantly more openness and dialog between Russian and American business leaders in all sectors of the economy, including entrepreneurship. 

The Russian government, and President Medvedev in particular, has done a good job reaching out to people like myself and inviting those of us sometimes called "Global Russians" – entrepreneurs living abroad who are interested in doing business globally – to consider working in Russia or with Russian companies and institutions. 

For example, last year I was invited to meet with President Medvedev during his trip to Silicon Valley with a small group of local entrepreneurs. The President left a strong impression. Dressed in jeans, a shirt and a blazer – vintage Silicon Valley executive style – he was well-spoken and low-key, asked a lot of questions and listened more than he talked. Some of the things he promised to implement to make Russia a more business-friendly country have materialized into laws since. 

I am a natural optimist, as all founding CEOs are in my experience. I believe Russia is making credible moves towards being better integrated into a global marketplace and maturing its operational capabilities in regards to technology creation, economic modernization and early-stage investments. It is also improving its business laws and leveling the field for foreign business people. 

What is your advice to U.S. entrepreneurs focusing on developing technology in Russia?

I am pragmatic. Business is about finding an edge in the global market and taking bold steps to exploit that edge in commercial interests. Russia can offer a significant edge to those who have the nerve and ability to exploit it. Great rewards await those who can harness the power of Russian engineering, attract Russian capital or address the sleeping giant the Russian market is today. Although there are significant risks and complexities involved as well, I believe it's getting easier for global entrepreneurs to find the right risk/reward formula in Russia. But they have to be willing to try.