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America's Silicon Valley founders suggest “taking government out” and letting Russian startups grow through private money, but some also note that Russian factors lead to more government involvement.
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Skolkovo is what Mevedev always said the first Russian Silicon Valley and it is a good start for the modernization of the Russian economy. We are an Industrial Design company located in Krasnodarsky Krai and we found out that this region is a preferred place to move in high skilled people from around the world.
Why the Russian government started such an activity not far from Moscow is easy to explain, it motivates more government people in the country to support a similar activity in their regions.
Probably, the unstable situation in part of the Caucasus region (Chechenya, Georgia) played also against that alternative. If in the future there is stability and a free flow of goods, people and services between all the Republics in the Caucaus region it will be the time for Sochi.
Bogdanov, yes what new high tech companies want is both employers and employees to live in a comfortable enviroment, and anything which helps to promote comfort and happiness while working is taking into account, so not only financial support (venture capitalists, and credit), academic support (universities and laboratories), infreastructure (broadband connection, good roads) but also the weather (sun and sea) All that help to create a comfortable enviroment.
It can be said that the Moscow oblast has, or can have in a short period, the first three elements but not the last one.
Well, Sochi is still there and it will be the opportunity for private Russian and international investors to create an alternative there without Government intervention (with the exception of infraestructure being bult for the Olympics) So it could be a completely private initiative (even a private University could be bult) to see if it is more successful than Skolkovo in two decades...
The question is -- why Russians decided that the Silicon Valley Model is better for them? As I said, at least, this is how the Government sounds. The Silicon Valley is very unique environment which cannot be recreated even in other parts of the US. Say, Massachusetts, which is packed by the universities, would seem a good place for it. But, this model didn't work there. The US, as many other countries, mostly uses the Techno-Park model.
To make a parallel between two approaches, I would say, that Silicon Valley is a "liberal capitalism" and Techno-Park is a "state-controlled capitalism"(socialis m). The first one is very dynamic, highly adaptive, and self-organizing. But unstable, "moody", and short-term oriented. The second one -- more stable, more predictable, long-term oriented. But, it is more bureaucratic and less flexible.
So, again, the question -- what path Russians want to choose? And why? I believe, the hybrid approach will not work...
I am not criticizing the Russian government for its desire to boost the Russian high-tech industry. Quite in contrary -- it is honorable goal and I fully support Medvedev's efforts and I would like him to succeed with this. The point which I am making -- I do not see that Russians clearly determined/understan d the path how to modernize the high-tech business. If they want to use the "Techno Park" model -- that is fine. It works. It was proven not only in other countries, but in the Soviet Union as well, were the series of techno-parks have been created and successfully operated in different parts of the country. But, if they decided to use the "Silicon Valley" model (which I believe, what Medvedev is always advocating) -- I don't think they will succeed with their current approach. Which is incoherent and based on some false notion of Silicon Valley business model.
It may be surprising for you, but, I personally, think that due to a lot of similarities between Russia and the United States (I mostly mean the mentality of people), Russia has better chances to succeed with the "Silicon Valley" approach than any European and Asian countries. And as one of the prove of this -- a lot of Russian engineers and scientist are currently working in the Silicon Valley companies. And feel themselves quite comfortable here. Which not necessarily can be said about people from some other countries.
Sochi would be a great place for the Russian Valley. At least, I would consider to move there. But, I would never go to work in Skolkovo.
Univers ities and research centers? That is big deal. I agree with you. But, ask any professor currently living in Moscow if they are willing to move to Sochi -- I bet, a number of them would say "yes". At least, most of my University teachers (in Moscow) spent their summer vacations in the Russia's South. So, if the Government would put some money -- I believe, a couple of great Universities can be created in the Caucasus region.
If all what is needed is a garage and a valley, then the place is anywhere. Any day somebody with his friends can build a "Silicon Valley" without Government intervention....No need to criticize the Government for not helping if its help is not necessary.
Also Inditex (Zara) was started by a tailor (Amancio Ortega) and his wife (Rosa Mera) in a shop in the city of A Coruña (Spain), in my region, during the 70s, and now it manufactures $15 bn. and it is the biggest cloth retailer in the World.An economics professor called José Maria Castellano had an important role in its expansion applying high tech and marketing to the clothing industry...
Anywa y, access to capital, professionals and infraestructure do help a lot.
Bogdanov, I also asked myself why the project was not built in a warmer part of the Russian Federation (next to Sochi), or in the Far East (next to S.Korea, Japan and China)
Probably the reason is that the most important Russian Universities are in Moscow and also the headquarters of most Russian corporations.
Zel enograd at least created Sitronics and other companies during the Soviet era.
Yes, the Indian experience in Bangalore has been successful taking into account that India´s income per head is just $1,000, 8 times less than Russia, 30 times less than Spain, 46 times less than the U.S.A....Companies like Infosys have been created in Bangalore.
But the truth is that the U.S. is the largest World Market with a common language (English) while the European Union is divided in smaller markets by language and history (German, French, British, Italian, Spanish, Dutch), and that means a clear advantage developing products of any kind.
So, for Russia, it is more precise to talk about Asian parks from South Korea, Japan, Taiwan etc, which have been very successful creating New Economy corporations. As a consequence of language, market size and way of life not many foreigners have emigrated to S.Korea, Japan or Taiwan, but their research is impressive, and in fact for decades have been so successful that Americans had to protect their home market (Plaza Accord to devalue USD against the Yen, for example) Even inside the U.S. market many Asian corporations have left apart (sometimes buying them) American companies, and market share.
If Russia can keep inflation under control, the rouble could be weak and help exports of Russian products as S.Korea or China are doing
Silicon Valley is just an inspiration for other parts of the World, even if none has the same market base. Asian tech parks are closer to the Russian reality. And I am sure Russia will have its share in the World market of high tech products.
October 14, 2010, 23:30, Enrique wrote
> And about the U.S. the truth is that without the support of the U.S. Navy, which established the first research centers in the San Francisco Bay during the 40s area and NASA, there would have not been Silicon Valley. The roots are in military research. Also, internet is a web developed by the U.S. Department of Defense which was open to the consumers. And so the GPS system.
By roots in military research I assume you mean the WW2 Harvard Research Radio Lab ( at Harvard University) run by Professor Terman from Stanford University. WW2 electronic research dollars went to research Universities. After WW2 Terman returned to Stanford University and set up a secret research lab funded by military dollars beginning in 1946. Then he sent his students out to establish start-up companies in the area we now call Silicon Valley. Many of these companies had "Black departments" ( military secret departments ) in addition to commercial departments. But in order to do this requires a business environment that Russia will have to embrace in order for Skolkovo to be successful, and I think that is what the "private" recommendation means.
Enrique: "Skolkovo will not be Silicon Valley, but it will help to keep in Russian soil thousands of scientists and engeneers that otherwise would have emigrated."
Let me tell you, Enrique, as a Russian, how I see the situation. Let say, I grew up somewhere in the Russian East (Ural,...) and I got enough talent to work in Skolkovo. There I will meet and work together with foreign engineers/scientists and companies. If I am good enough, sooner or later, I will be noticed and get an offer from one of the Western/Eastern companies to move and work in there countries. I may not resist that temptation if my conditions are met. Note, that almost nothing holds me in the Moscow vicinity -- I am not local (note, also, that I even dismissed such important factor as cold whether). So, my point -- many best Russian workers in Skolkovo will end up in other (warmer and well-developed) countries. And this is not completely hypothetical. This brain-draining is happening during entire history of Russia. And I do not see any reason why it would stop now...
The reason why Europe failed to create its Silicon Valleys exactly the one I mentioned in my first comment -- those European countries do not have appropriate environment for it and they think that they are smarter than Americans. Another example -- India, which managed to succeed with its version of Silicon Valley. Because? a) There were pretty pedantic when they copied the actual Silicon Valley (due to many Indians know about it very well from their own experience). b) They put their Valley far away from the capital city. The Silicon Vally is a city of engineers and not yet another government structure. It is based on individual activity and driven by goals of individuals (not by government).
Skolkovo remembers me more the private-public Asian research parks of South Korea, Japan, Taiwan, China or Singapore,...none of them well known in the media, but which have been very successful and dozens of New Economy Corporations have been created. In fact, a great part of World research comes now from those Asian centers. If Skolkovo reaches a level of success similar to any of them it woud have been worth the effort.
Asus, Hitachi, Baidu, Samsung, LG, Sony, Acer, Fujitsu and hundreds of other companies are Asian.
S.A.P., Kaspersky, Siemens, Nokia, Indra, Philips and hundreds of other companies are European.
By the way, about a half a year ago, I expressed my opinion that the Skolkovo project has some fundamental problems at the start (again, due to disinformation of the Russian leaders by bad advisers). For example, its location. The project would had better chances to become something similar to the Silicon Valley, if it resided far away from Moscow. For example, the best place I see for it -- the North Caucasus. It is not only better (warmer) climate (which would attract more talents from the southern countries -- China, India, Iran, Central Asia, ...), but, also more dynamic and internationally diverse, which would create more comfortable atmosphere for foreigners in general. Plus, it would politically benefit Russia -- pumping a lot of money in that region would create jobs there which, in its turn, would stabilize the economical/political situation and weaken the separatist/terrorist movement. But, Russian's worst enemies -- Russians themselves. They don't want to think out of box (they focus on Moscow only) and about distant future...
Bogdannov, of course Skolkovo is a business iniitiative, a market oriented initiative. And that is the difference. I agree with that. And, precisely, in a couple of decades the result of the initiative will come from the fact that there are new private corporations developed in Skolkovo. The trith is that Western European countries have also tried to create a "European Silicon Valley" for decades, from Spain to Britain there are numerous examples (in Spain they used the term over a decade ago in Barcelona´s Vallés Valley calling it "Silicon Vallés") and none of them obviously has been as successful as the Californian original....but it has help to keep thousands of scientists and engeneers in Europe, and dozens of new companies have been born.
So, being Russia´s GDP similar to Western European individual countries like the U.K. or France (at PPP) or Spain (at nominal price) it is evident Skolkovo will not be Silicon Valley, but it will help to keep in Russian soil thousands of scientists and engeneers that otherwise would have emigrated. And dozens of new corporations will be born from the effort. So the expectations are different.
And about the U.S. the truth is that without the support of the U.S. Navy, which established the first research centers in the San Francisco Bay during the 40s area and NASA, there would have not been Silicon Valley. The roots are in military research. Also, internet is a web developed by the U.S. Department of Defense which was open to the consumers. And so the GPS system.
If you claim that you are historian of the Silicon Valley, then I would challenge your credibility on this. Silicon Valley is not a research center per se. This is a business enterprise in the first place. This is the environment which converts ideas generated in universities, research centers, and other places (of course, including Silicon Valley itself) into the actual products. This is money making and not money sucking machine, which almost all research institutions are. This is the environment (at least, in its original form) where ambitious (mostly young) guys challenged the conventional way to do business (just to survive or become rich) and as a result braking many barriers and inventing things...
By the way, in addition to what GaryMax said (which I confirm), I give you couple of more examples of the "silicon" stories. a) Hewlett and Packard chose location for their company (in the Valley) because it had cheapest land around and not because it was really great place. b) The Apple's first computers were boxed in the wooden cages (because, they didn't have money to do it differently). c) One of the founders of Intel, had to borrow $500 from his grandmother to create the company... Where, on earth, do you see the US government there?
Based on what they are trying to do today, I think, Russians have been misinformed about what Silicon Valley really is. So, as a result, from my point of view, current Skolkovo is not a Silicon Valley by spirit. This is just another gigantic government driven research center (similar to Zelenograd).
And also, Enrique, think about, -- if Americans (who created and successfully run Silicon Valley) telling you how to repeat their achievement, why would you question it and start listening, say, Europeans or Russians instead? Does it make any sense to you? And isn't it a demonstration of arrogance? "Russian specific"? Tell me what is it specifically?
Pacific Asia and San Francisco...that is Vladivostok! (with less sun but closer to China, Japan and Korea)
All in all - this is still exciting that Russia is trying this. Silicon Valley also had some key ingredients beyond the Government - sunshine and cheap housing and beautiful San Francisco to the north, and access to Pacific Asia. It also has Sand Hill Road - venture capital center of the world (for now).
I really hope this happens for Russia - it would be great and (I think) make the world better and break down some of the old cultural barriers between Russia and America. Good luck and respect for doing this!
A real mix of true and false. Arpanet is not Silicon Valley. No, Silicon Valley was not started by the US Government,
The Father of Silicon Valley
This has an inside story. After the war, Stanford University had some financial problems. The Stanford professor of electrical engineering, Frederick Terman tried to solve the problems. He conceived the idea of establishment of the Stanford Industrial Park by leasing part of the university's land to high-tech companies for 99 years. The park established in 1954 can be considered the core of the Silicon Valley. Furthermore, he encouraged his students to start their own companies rather than to go to the east and join the "establishment." Among them, Hewlett and Packard followed him. The company started in the garage is today the company called Hewlett-Packard Co., a global giant
The Birth of "Silicon" Valley
With a series of inventions, all made from "silicon," semiconductor at AT&T Bell Laboratory in 1947, Integrated Circuit (IC) at Fairchild Semiconductor in Mountain View in 1958, and the first microprocessor named 4004-chip at Intel in 1971, the Computer Revolution broke out and went on. By then, several big companies such as General Electric, Ford Philco and IBM established their facilities in Palo Alto and other neighboring cities such as Mountain View and San Jose. The phrase Silicon Valley was coined by journalist Don C. Hoefler in 1971 in a series of articles for ELECTRONIC NEWS, a weekly industry tabloid.
Not so different because Silicon Valley started also as a U.S. Government initiative. And, in fact, the new internet companies arrived after the U.S. Department of Defense opened "arpanet", which become "internet" thanks to the "w.w.w." (world wide web) devised in the C.E.R.N. (Center for European Nuclear Research) in Geneva, which is also a public initiative from several European Governments, like the L.H.C. or ITER. Or like the GPS, which was founded by the U.S. Government to supply the Defense Department and after the Cold War was also opened to private corporations.
So, in the U.S. also the intervention of Government was the driving force creating Silicon Valley...Only decades later private companies replaced the Government. From this point of view Skolkovo´s business intervention is much stronger than it was in Silicon Valley at the beginning.
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