Skolkovo: Lessons learned from Silicon Valley

Young Russian entrepreneurs visit Silicon Valley, discuss differences between California and Russia

A delegation of 40 young Russian entrepreneurs recently traveled to California to learn about what worked in Silicon Valley as they strive to launch their own business ideas and fuel the creation of a similar hub of innovation at Skolkovo. The entrepreneurs – organized by the U.S.-Russia Business Council (USRBC) and Russian business organization Delovaya Rossiya – participated in a symposium at Stanford University, visited the Plug & Play Tech Center, Google headquarters and also attended the USRBC annual meeting in San Francisco.  

At the symposium, sponsored by Stanford University’s Center for Russian, Eastern European and Eurasian Studies and organized by the American Business Association of Russian Professionals (AmBAR), the delegation heard directly from several U.S. and Russian business leaders about what it takes to find success, as well as from Viktor Vekselberg, head of the Skolkovo project, on plans for the high-tech center. 

Scott Jacobs of McKinsey & Company and moderator of the session discussed how Silicon Valley developed in contrast to other aspiring technology hubs including the area around in Boston.  He identified the following as the defining factors that allowed Silicon Valley to thrive where others have fallen short: 

1. A pipeline for innovation and talent such as universities and companies.  In Silicon Valley, this talent creation came from Stanford University and the University of California at Berkeley and local companies with research labs. 
2. Appetite for risk via venture capital and angel investor networks.  In Silicon Valley this factor is exemplified by the VC firms lining the well-known Sand Hill Road.
3. Local market for demand.  In the U.S., the market was hungry for new products and Silicon Valley was ready and able to deliver. 
4. The right culture.  Jacobs noted that in many areas of the world there is a social stigma connected to entrepreneurialism as failure is often part of the process.  In Silicon Valley, failure is celebrated as it is seen as part of the learning process.  Jacobs noted that in Silicon Valley if you’ve already failed once, you are encouraged to try again.

Many of the commentators on the panel noted that today’s Russia embodies many of these key ingredients necessary for Skolkovo to thrive. 

“Russia now has a business culture that is highly entrepreneurial.  In 20 years the country has gone through many developments – experimentation in democracy – that have laid the groundwork for innovation,” said Drew Guff, managing director and founding principal of private equity investment firm Siguler Guff.  “There is a critical mass now.  Institutes are graduating people who see the successes of earlier entrepreneurs.  There is a real angel investor community now.  There is a critical mass of entrepreneurs in IT – IT is an area where Russia has the greatest competitive edge.  There are competitive programmers. Their job is to do outsource programming and applications for global companies and they are being hired now to manage other teams of programmers – in India, for example – and that is also reaching a critical mass. “

The panelists also noted the unique differences of the Russian market and how its own technology center will develop. 

“If you try to grow chardonnay in different places, you will get a very different product,” said Alexander Galitsky, managing partner and co-founder of venture capital firm Almaz Capital Partners.  “Skolkovo needs to be built on a new platform.  It’s a completely different place but if we don’t learn from Silicon Valley, we will never succeed.  This is the beginning of big changes… if we give Skolkovo an adequate time period hopefully we will see that many Russian engineers will create their own companies.”

Vekselberg echoed these statements and reiterated his commitment to helping Russia create its own innovation hub. 

“This is the beginning… of course we will not replicate Silicon Valley – we are not trying to do that.  That was done in a particular country at a particular time.  Russia has a different development and having used the experience of the world community in creating such environments – Silicon Valley, Boston, Israel, India, China – every country takes its own way and chooses its own options,” said Vekselberg.  “We are not putting ourselves into any kind of box.  We just want to create this environment realistically.”