Ruminations on Russia

That old chestnut - how do you measure innovation? From the FT (don't think that it's subscription only).

"The warning should be heeded by those western observers who, dazzled by China’s rise in basic manufacturing, breathlessly proclaim it is destined to become a global leader in science and technological innovation."

Technorati Tags: Economy, Russia, Technology, Venture Capital

With thanks to Siberian Light for this one British Petroleum - Kremlin secrecy talks:

A lot of stuff from MosNews the long and short of which is.......The best outsourcing company in the world ever, otherwise known as the FSB scams itself more revenues.

A source close to TNK-BP said that the company was forced to replace foreign directors and to outsource all the work with maps and secret information to Russian companies.

To be frank the scams just get more pathetic. Look for the line in TNK-BP's accounts in 2006. Fees paid to useless idiots to do nothing in order to keep some malignant form of government of our backs.

A company who uses my services is raising money at the moment. The company imports stuff, quite a lot of it really. A potential investor wants to know how "white" they are.

a - "Except for customs; completely...."

q - How much does it save you

a - nothing

q - why do you do it

a - because we like our goods to arrive in the same millenium

The rules have changed recently - now the real rules are applied. It just costs more to get a certificate that badminton rackets are not dangerous ($1,000 per consignment through DME) and storage costs for non-storage in customs now equal 60% of COGS. All in costs to play according to the rules - "other" in COGS = 90% of COGS.

Long live the Chinovniki.....

Technorati Tags: Company, Corruption, Russia

Start with a large one. Screw your best friend. Have him made persona non grata. Invest in a President to ensure that your stay-out-of-jail card remains valid. Invest in a football club. (Employ a bunch of useless bankers, sorry the first letter was a w) and at the end of the day, or at the end of the end.

A SMALL FORTUNE.............owned by someone else.

However, Sauer believes the motivation is simpler. He lives in a posh suburb of Moscow, where his son plays football with Abramovich's, and after 16 years in Russia he is an anthropologist of the oligarch tribe. Sauer explains: "These people have money, but they don't have status, so what do you do? You try to acquire status. In 1920s America there were tycoons who did exactly the same. They bought newspapers, went into art, that sort of thing

Oil Money Pumps Into Football - and who said I could not make it as a Sun headline writer.

p.s. congratulations to Derk who got out without selling his soul. Unlike his successors.

If you care I live here. Who says there is no free press.

Interesting piece from Wired on blocking Blogs from Investment Banks. No Longer Safe For Work: Blogs. Not necessarily because it says anything that we don't know about Investment Banks ability to bury their head in the sand, but because of what James Enck has to say about the value of research to his buy-side clients.

The sort of research that I mostly require comes from Blogs. From time-to-time I need hard numbers, but mostly I need smart people to think about how the future, both immediate and medium-term (tomorrow to 5 years). People such as James do a great job of doing that.

From today's FT. It requires subscription so I have pulled out a line. There remains a mental block amongst the political elite that the Narod have a sort of mind of their own. It can be influenced but is increasingly resistant to manipulation. The greatest risk to economic stability is a failed transition of power.

Manipulation alone is not enough. Real appeal is required.

Khodorkovsky Sent To Remote Siberian Camp:

"Our country is headed by small-minded, vindictive people. Mere revenge -- that's the only motive."

Pretty difficult to be any clearer about the Fifth Directorate Thugs.

What's the Difference Between a Developing Market and an Emerging Market



None; they both make money. A grab from the front page of this evening's FT.com

Technorati Tags: Emerging Markets, Russia

My mornings are fairly standard, albeit that crawling out of bed thing gets harder as winter approaches. Sometime between 8 and 8.30 I am sitting at my computer scanning the overnight email and reading the morning news. This is a combination of RSS feeds via the wonderful NetNewsWire and traditional news websites.

It struck me last night that these break down in to two separate groups. The international news I read via RSS feed, including my sports news but with the dishonourable exception of The Deal. Any news that I read on Russia has to be read on the original website.

A comment on this Blog reminded me of Esther Dyson's $10,000 bet that Russia will be the world's leading software developer by 2010. Brilliance in software engineering is a good thing, but if that code is written in isolation then it may not serve a greater good. Web2.0 has the technology world jumping and down with joy, particularly if you are Sergei and Larry. There are deals being done all around the blogosphere. Wikis and Tiddlywikis (my current favourite if I can work out how to make it work for me) will make a significant difference to how we work in the future. If you are not deep in to this then the chances are that you will not be engineering software to change the future.

Offshoring companies like Luxoft (by the way you desperately need to change your ad copy) and Epam Systems probably don't care. I do because if Russia does not address innovation and soon the very bright will go and work elsewhere.

Technorati Tags: Innovation, Russia, Technology

Yet more geniuses, or is that geniae, at work Russian Securities Agency Wants to Limit IPOs Abroad. Has been tagged as a Kanutian policy(as in King Kanute).

Update - I decided, on reflection, that it is not only Kanutian but also Phyrric.

Technorati Tags: Phyrric, puppy, Russia

Philip Stephens associate editor and senior commentator at the Financial Times is my favourite columnist. He has written defendable sense ever since I first started reading him. They include some pieces on Northern Ireland which were truly fantastic. He may have been taken in by Blair's now a Christian, now a politician Jekyll and Hyde personality longer than the body politic - or maybe until his book was published - but it was not a fundamental error.

He is primarily a British political commentator who occasionally strays in to US politics. This comment (subscription only) on the relationship between VVP and the G8 is maybe a little outside his normal beat. Except that it was obviously informed from inside the British body politic. His comments regarding the differing views of VVP by Bush and Blair highlight fundamental foreign policy differences. More concerning were his distinctly unpolitic comments on the relationship between Berlusconi, Chirac and Schroeder and VVP are actually scary. It's rare for an article on Russia to leave me feeling depressed about both Russia and the EU. This did both.

Acting subserviently in front of the Imperium will leave only a sore ring. Whilst none of the soon to be ex-leaders-of-EU countries is a great believer in democracy (or the act of voting - which seems to be democracy's lowest common denominator) they are not, nor will they ever be as cynical about it as VVP and the Fifth Directorate Thugs. I remain ambivalent on whether democracy has been harmed by Putin's term in office. But Russia's ability to project beyond it's borders has grown massively. Fortunately the idiots running the lunatic asylum have yet to learn that their soft power is so much more powerful than their hard power. Lets hope that the EU develops a spine before the inmates elect someone whose competence extends beyond being able to resist a bottle of vodka.

Apologies for the quality of this post - read Philip's article.

The New York Times published a long article earlier in the week on the auto industry in Russia. There are lots and lots of great points on the opportunities for the global car manufacturers to sell cars with such strange accessories as brakes, windscreen wipers that actually remove the muck from the windscreen and, vitally important when its -10 outside, heated car seats. The article is worth reading.

If the NY Times could explain to me its headline Oil Spreads Wealth in Russia, and Russians Are Spending It on Foreign Cars and the inherent link. Now if the article was about how the Ferrari dealership sold out on the day it opened, or the Bentley dealership just down the road from Lubyanka whose opulence actually intimidates me I might be a buyer. But lets examine who is buying Hyundai's, and Ford Focuses and Kia's and Skoda's. They generally don't work for, own or steal cash from oil companies (the obvious link). A tiny few work for companies that service oil companies, auditors, lawyers, and the army that is required to look after the BP expats-wives (known locally as BP Princesses). But to be honest they always earnt enough to not have to buy a Hyundai. The lucky few who feed off the cash that falls from the tables of the super-rich oil men in Moscow have not grown more numerous over the past few years. Nor are the oilmen of Siberia driving demand. Nor are the Government's overflowing coffers causing cars to be bought. The cash that Putin just spent on pensioners, teachers and doctors is not going to buy cars. It might change consumtion patterns towards higher value goods, but they will still be necessities, not niceties like cars.

A better headline should be "Growing economy Sees Greater Wealth Trickle Down." This is a boom driven by local consumption that spreads its wealth far more rapidly than oil will ever do. Oil creates corruption and the corrupt don't drive Hyundai's.

Technorati Tags: Economy, Oil, Russia

My ex-colleagues at DFJ Nexus, are confident that they will have a first close of their tech fund targeting technologies emanating from Ukraine, Russia and the former Soviet Union. Venturewire has the article.

I remain an advisor to the Fund and wish them well. I fought to raise the same fund for 18 months with people who knew what they were doing - we failed. The fact that they are succeeding means that they are doing something better than we did. Notwithstanding I believe that making money is going to be a long haul.

Udachi.

Technorati Tags: Russia, Venture Capital

Siberian Light posts on the costs of getting a Visa for entry to Russia. Below are his direct and assumed costs.
Here’s (roughly) how I broke down the costs:

$350: My time for one full day (approx 1 full day)
$500: My colleague’s time (approx 3 hours)
$250: My Partner’s time (approx 30 minutes)
$500: Our Moscow office’s time (approx 1 full day)
$200: Actual visa fee (we were in a hurry, so had to express it)
$100: Travel agent (for courier to stand in line)
$100: Couriering documents back and forth

I had to liaise with our Moscow office, going back and forth, to ensure that my colleague provided enough information about his stay for them to fill in the forms and stand in line for hours at the Ministry of Foreign Affairs - just so they could get an official invitation
My colleague had to head out into town to get new passport photos taken (in matt finish, of course - and where can you find a machine printing those nowadays?), before collating all the documentation necessary to fill in his own visa application formI had to write an introductory letter, signed by a Partner, confirming that my colleague was indeed employed by the firm, and that they would be financially responsible for him
We had to employ a courier from a specialist firm, whose only responsibility was to queue up for hours on end at the Russian embassy, handover the paperwork, then collect the finished visa.

So far our (wife and I) costs this year must easily exceed $5k:

3 nights in Zurich airport hotel on way back from New Year holidays because the visa was not ready "due to the holidays." - 3x2xEuro150 = Euro900 (plus incidentals like eating)
1 Day Visa Processing Cost - Euro200 (ish)
3 Returns to Consulate in Bern Euro300 (one hell of a railway)

6 Months later
2 same day processing for visas - GBP800
2 return flights to UK (OK there are other reasons as well) - $1,800
Time spent with mine and my wife's family - uncountable.....

And we are still trying to get them registered.

Rather than emailing everyone who with a random joke I will post it instead. There will be a cultural miss here if you have no idea what Frosties are or who Tony the Tiger is for that matter.......

A blonde calls her boyfriend and says, "Please come over here and help me.

I have a killer jigsaw puzzle, and I can't figure out how to get it started.

"Her boyfriend asks, "What is it supposed to be when it's finished?"

The blonde says, "According to the picture on the box, it's a tiger."

Her boyfriend decides to go over and help with the puzzle.

She lets him in and shows him where she has the puzzle spread all over the table.

He studies the pieces for a moment, then looks at the box, then turns to her and says: -

"First of all, no matter what we do, we're not going to be able to assemble these pieces into anything resembling a tiger.

"He takes her hand and says, "Secondly, I want you to relax. Let's have a nice cup of tea, and then....." he sighed,

"let's put all these Frosties back in the box."

My wife (SWMBO) and I sat opposite Stoppard and Arkady Ostrovsky when they arrived in Moscow after Minsk. A classic bad Friday night after a long week we were drinking and eating and drinking to end the week, Stoppard was listening to his guests.

Not sure what made me Google him; this is the result. It's difficult to pick out outstanding sections of this. It's all outstanding; here are some quotations to convince you that I am right. read it.

This is a rubber-stamp "democratic republic", with the last collective farms, the last KGB, the last dissidents in the pre-1990 sense of the word, and - in President Alexander Lukashenko - the last dictator in Europe.

The journalist Dmitriy Zavadskiy was a young man who worked for the Belarusian affiliate of ORT, Russian public television. In July 2000, Zavadskiy was supposed to meet a colleague arriving at the airport. His car was found parked there. He hasn't been seen since.

The reason for his "disappearance", I was told, is that Zavadskiy was working on a story about the Belarusian special forces' presence in Chechnya on both sides. I had a friend with me, Arkady Ostrovsky, who reports for the Financial Times from Moscow and has pretty much covered the waterfront on Russian affairs. I saw Arkady blink and stare, and perhaps bite his tongue.

Last year Irina, now remarried to an American, made a statement before the US House Committee on International Relations. She told me the story she must have told a hundred times - "Anatoly and Victor drove away in Anatoly's car, to go to the sauna. Anatoly asked me to come, but I decided to stay home. Later, witnesses told investigators what happened. Anatoly and Victor left the sauna and got into our car. Immediately after they turned the corner, a car cut them off. My husband tried to back up but he was cut off by a second car. The doors of our car lock automatically if you hit the brakes. So the people who jumped out of those two cars broke the windows and pulled out Anatoly and Victor. Traces of Victor's blood were found at the scene. They were put into separate cars and driven away. Our car, a Jeep, was later towed away by one of the squad."
Irina says she is certain the two men were killed within a day or two. The cherry-red Jeep was never found. According to "information", it was flattened by an armoured troop carrier and buried.

Technorati Tags: Russia

Konstantin at Russia Blog posts lengthily on Why Russians Do Not Smile, in public at least.

I'll post his picture of The agrarian peasant (Saratov circa 1993) for entertainment.

He was incensed by an article by Olga Nikitina “Combining a Rude and Very Hospitable Reputation.” In particular the assertion (albeit not directly by Nikitina) that it is as a result of the lack security after the collapse of the Soviet Union that causes public introspection catches his ire. Konstantin heads back back to the nature of isolated peasant communities (everywhere is isolated if you have to walk) as a more likely cause. His thoughts are worth reading.

Firstly Moscow for a 12 million person city rates way ahead of London and New York for personal safety (unless you count anti-social driving) Blaming public introspection on a lack of safety is indeed rubbish.

When I first arrived here in 1994 I was particularly struck by the fact that no one would catch your eye when walking down the street. It's changed now and Muscovites (which is not Russia) are as heads up a city population as you will find. I ascribed it to the travails of communism and whatever euphemism you want to use for the excesses of Stalinism and the KGB. Maybe Konstantin's take on the nature of peasantry not only explains Russian's outward reticence but also why it was possible for Beria et al to divide and murder.

Technorati Tags: Russia

The Daily Torygraph writes the standard why was Abramovich allowed to sell and Khordokovsky get TB here. It's fairly open about the alleged links between VVP and Abramovich. Certainly more explicit than a publication in Russia could be.

I wonder when we will learn the real Abramovich story - I somehow feel it will be a story my grandchildren will read about - and I don't have any kids.

Posted in full, and without comment, from David Hornik at Venture Blog on VCitis:
In a Woody Allen moment, I was reading the DSM IV (the American Psychiatric Association's diagnostic manual for mental illness) to make sure I didn't have the mental equivalent of a "tumor the size of a golf ball." But, as Woody Allen himself points out, just because you're paranoid doesn't mean people aren't out to get you, and sure enough, I've diagnosed myself with a full blown mental illness -- it's called Narcissistic Personality Disorder (NPD) or, as I've renamed it, Venture Capitalitis. Of the Personality Disorders available to me (Histrionic Personility Disorder, Antisocial Pesonality Disorder, Schizoid Personality Disorder, Obsessive-Compulsive Personality Disorder, etc.), Narcissistic Personality Disorder may be as good as mental illness gets. Which is a good thing because best I can tell NPD is running rampant on Sand Hill Road.
The DSM IV is the Fourth Edition of the Diagnostic and Statistical Manual of Mental Disorders. Its purpose is to assist mental health practitioners in diagnosing and differentiating among mental illnesses. Accordingly, it takes the form of a list of diagnostic criteria which, if met in sufficient numbers by a particular person, indicates that that individual has the particular mental disorder in question. The diagnostic criteria for NPD are telling. NPD is diagnosed by "a pervasive pattern of grandiosity (in fantasy or behavior), need for admiration, and lack of empathy, beginning by early adulthood and present in a variety of contexts," -- sounds like VCitis already doesn't it. Narcissistic Personality Disorder is "indicated by five (or more) of the following:"

1) Has a grandiose sense of self-importance (e.g. exaggerates achievements and talents, expects to be recognized as superior without commensurate achievements).

2) Is preoccupied with fantasies of unlimited success, power, brilliance, beauty, or ideal love.

3) Believes that he or she is "special" and unique and can only be understood by, or should associate with, other special or high-status people (or institutions).

4) Requires excessive admiration.

5) Has a sense of entitlement, i.e., unreasonable expectations of especially favorable treatment or automatic compliance with his or her expectations.

6) Is interpersonally exploitative, i.e., takes advantage of others to achieve his or her own ends.

7) Lacks empathy: is unwilling to recognize or identify with the feelings and needs of others.

8) Is often envious of others or believes that others are envious of him or her.

9) Shows arrogant, haughty behaviors or attitudes.