Report from the Russian (Entrepreneurial) Front

11/23/09Follow @BillAulet

November 20, 2009, Moscow, Russia—I write this from the Moscow airport on my way home to Massachusetts after teaming with MIT colleagues Howard Anderson and Peter Kurzina to teach a week-long boot camp on entrepreneurship for the first class of MBAs at the new Skolkovo Business School. Skolkovo* is a private business school strongly supported by Prime Minister Vladimir Putin and, hence, the top Russian business leaders. It not only has lots of money (the school is currently housed in a 5-star hotel), it has access to the highest echelons of business leaders (we had billionaires come speak to the class) in the country.

Nonetheless, we knew we had our work cut out for us when we came upon a quote from Putin that said, “Anyone who opens a new business in Russia should be given a medal for courage.” Mmmm. I came to Moscow not knowing what to expect, and I leave with many surprising observations, which I summarize below.

1. Russians don’t generally smile. If you expect a lot of smiling faces and “have a nice day” lines, you have come to the wrong place. While they might warm up once you get to know them, on first encounter they make New Yorkers seem like Mr. Rogers welcoming you to his neighborhood.

2. When you arrive at the airport, make sure you have a driver pick you up. As I got off the plane and failed to find my driver, I was pounced on by no less the two dozen taxi cab riders who looked very suspicious. Fending them off is a full-time job.

3. Russians feel compelled to argue. Our first day of class, we were under siege. We fought back, and when it was my turn after my colleagues had been treated unfairly, I moved one of the offenders (Nicholas) from the back of the room to the front and started right in saying that I was not as nice as Howard and Peter and they better look at me as the bad cop, to which one student immediately responded, “we will see.” Midway through the lecture, with the students arguing about most every point possible even if they did not have the background to knowledgeably do so, I announced that, “No matter what, you all just like to argue.” To which Anton in the front row immediately responded, “No we don’t!”

4. After 24 hours, Russia was not high on my list of favorites. Despite the nice hotel, the above developments, coupled with daily snow and a lack of sun, had me wondering why we came here. To cap it off, the New England Patriots had lost to the Colts in a big football game back in the States because I was not able to telepathically keep coach Bill Belichick from making a stupid 4th down “go for it” call. He would never have made that call if I was sitting in front of a TV watching the game. Oh yeah, Howard and I had both lost our credit cards, too. My decision to miss Saturday and Sunday pickup basketball for this was looking like a bad one.

5. Then the tide changed. First of all, we accepted that every point was going to be argued and we pushed back and adjusted our style to fit their needs better. If they were going apply full court pressure, we were now ready to respond. There also appeared to be a silent détente reached between us and the class. The cease fire allowed for more dialogue and we were beginning to understand each other much better. Howard was also discovering the joys of authentic Russian vodka in our nightly sessions. Behind the unsmiling faces of the students, a sense of humor and friendliness started to show through the cracks. A few were buying into what we were saying and small victories were starting to be won. It was a five star hotel after all.

6. Engineers and scientists are everywhere. As we got to know the class and a parade of outside speakers came in to supplement the program, we realized that engineers and scientists were as common in Russia as Red Sox fans are in Boston. There ain’t much else. One of our guests was former physicist Vlad Terziev, who is the founder and CEO of Vesch, a huge … Next Page »

Bill Aulet is the managing director of the Martin Trust Center for MIT Entrepreneurship and a senior lecturer at the MIT Sloan School of Management. He is also the author of “Disciplined Entrepreneurship: 24 Steps to a Successful Startup”, published by Wiley, which was released in August 2013. Follow @BillAulet

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  • http://www.linkedin.com/in/davidgowel Dave Gowel

    Bill: Loved your article. I’ve taught LinkedIn to over a thousand people, and of those, only one guy tried to go toe-to-toe with me in front of 70 biz leaders on why he thought LinkedIn was going to be a dot com bust and why I was wasting my time teaching it: a Russian (and a friend!) named Anton. Sign Clearly Creative up for the reciprocal visit next year.

  • Vinit Nijhawan

    Bill, reminded me of my several trips to the Soviet Union and then Russia from 1988-2001 when I was at Payload Systems and we negotiated a program to conduct protein crystal growth research on their space station. I have heard that Moscow has completely changed but from your description, not that much! It was clear back then that people from the Baltics would become entrepreneurial since they spent only one generation under communism. People in Russia were two generations away from mercantile thinking and my feeling was that it would take them a while.

    I did pick up one idea from them and that was to mutually sign-off on meeting minutes. It really made communication much better.

  • Rob Lemos

    Bill,
    Great insight and perspective on Russian B-school education as well as the entrepreneurial ecosystem. Perhaps their quarrelsome nature will indeed produce a more creative commercial model.

    By the way, do you intend to write for the MIT Entrepreneurship Review when it launches this spring? MITER has some outstanding support around Boston and is looking to do something that might complement Xconomy.

  • Uri Mariash

    Bill,

    Great stuff.

    It was really interesting to read your impressions on Russia. I agree with you about the culture in Russia and feel that it might be challenging for international companies to operate in Russia without the right guidance.

    I’ve been traveling to Russia recently for work and found the business environment to be very different from the U.S but at the same time it’s a huge market that can’t be overlooked.

  • Bill Aulet

    Rob,
    No worries. I will continue to write for Xconomy and also write for the MIT Entrepreneurship Review. They really address two different markets with different rythmns and different material. Xconomy is a daily rythmn and the MIT Entrepreneurship Review, as I understand it, will be more of a weekly rythmn with an ability to dive deeper into issues. Both have valuable roles in promoting the ecosystem. While people may well read both, the topics and content will be different. Good question. Looking forward to MIT Entrepreneurship Review. When do you plan to launch?

  • Bill Aulet

    David,
    Will take you up on your offer.

    Vinit,
    Thanks for the perspective. There are a lot of smart people over there and it is changing very, very rapidly from what everyone said. Soon it will be like any other European city for business (or very close). For business it is great that things are converging but it is sad in many ways for tourists.

    Bill

  • Bill Aulet

    Uri,
    Great to hear from you. It is a great market opportunity for sure but somethings do need to change — like not requiring a special line on your P&L for bribes.
    But it will.
    Bill

  • Irina Starikova

    Bill, Your comment about Russians being argumentative was the biggest surprise for me and naturally (being a Russian myself) I first wanted to disagree. Yet, after some thought, I can see why your students debated so much in class. They are the young business elite who all should have had very successful careers and developed well-founded beliefs about how businesses and startups should work. It is only natural for them to critically evaluate everything you had to share when teaching and argue whenever they felt it was not matching with their prior experiences.
    Irina

  • Sergey Nikolenko

    Bill,

    Thank you for verifying Russia has a lot of business opportunities. How attractive do you think the students will be for local businesses in August 2010?

    Which industries do they reprsent or what kind of interests might they support?

  • Howard Anderson

    Accurate Bill but would add “Imagine a country where Sergey and Brin would be cool guys”…. “Imagine a country where they tell you that your are full of crap BEFORE you speak”…”Imagine a country where you have a line item for “payoffs, bribery, influence” in your business plan”. All in all, good week and enjoyed it.

  • Bill Aulet

    Sergey Nikolenko,
    I think the students that will be here in August have a strong understanding of the Russian market and what will work there and how. In addition, they will be MBA students so understand the fundamentals of business. Many of them are entrepreneurs already in their careers but have not scaled the companies to more than 10 (with one exception). They are very strong on the technical side and not as strong on the sales and marketing. They are on the young side for MBAs but all have some work experience. They have a terrific work ethic.

    I know however from the emails I have gotten that they are checking this over in Russia so I will let them respond and tell you more specifically and directly what skills they have.

    Dmitry and crew, would you please respond directly?

    Bill

  • http://entrepreneurship.mit.edu/MITER Eduard Viladesau

    Bill,
    A brilliant article! This must have been a fascinating experience. The fact that you’ve been teaching entrepreneurship courses in so many different countries and cultures clearly allows you to have a balanced and integrated perspective!
    Like Rob, I also hope that you’ll be able to bring this perspective to the MIT Entrepreneurship Review when we launch it at the beginning of February.
    It will be a great addition to the ecosystem to have you on board with us and also writing for Xconomy!
    Eduard

  • Nick Sinilov

    Bill, thank you. Great article. Probably not the best season to visit Moscow, though.
    I’m glad you saw my teachers Howard and Peter alive and on their way back to Boston – we missed them in Managing in Adversity class here at MIT Sloan…
    Regarding “Russians feel compelled to argue” What do you mean?! – just kidding

    Thanks
    Nick

  • katya

    Bill, it was very interesting to read the impressions of an American’s first trip to Russia. This gave me the opportunity to see Russia through your fresh eyes (I’ve been living in the US for the last 15 years). I am puzzled by some of your impressions: you are surprised to see normal life and normal people on the streets as if you were expecting to see bears roaming the streets of Moscow. I might be biased given my Russian heritage, but the new Russia is much more similar to the US, than it is different. It is also more similar especially as compared to other former USSR countries, Asia and other parts of the world. It is also similar to the US when some of its citizens are trying to justify “strong leadership” that can help them deal with the modern issues of corruption, erosion of values, underdevelopment, etc. These voices exist but do not represent the majority’s view: not unlike George W Bush is being revered by certain US circles while considered war criminal and mass murder by the majority of the rest of the world. While the role of Stalin is being discussed in Russia, in Mongolia the authorities are basing the whole new national identify on Gengis Khan, the strong leader uniting Mongolia and creating a Mongolian nation, who is considered by the West as the cruelest and blood thirsty killer of many peoples. In the capital of Mongolia they have a DC Lincoln-like monument for Gengis Khan on the main square, the airport bears his name, and do national vodka and beer. His atrocities are not even mentioned in history book for the next generation. The new Russia is more nuanced than you had the opportunity to experience during your visit and I hope it touched your heart to be curious about it from now on.

  • Bill Aulet

    Clearly this article has stirred up a lot of passion from the emails I have gotten which is good (like Katya’s email). A few comments based on the feedback that I should add:
    1. We had limited data from which to deal with.
    2. Moscow does not represent all of Russia like NYC represents all of the US.
    3. The people we dealt with were primarily less than 30 and there is a whole generation from the USSR where they were forced to be very compliant (i.e., not argumentative) and not show initiative. It had been the opposite problem that we saw. We were told about this but it was not evident in our week long experience.
    4. I have no interest to argue politics. I just thought it was very interesting and a different perspective than we see or think sitting in Boston. It was just an observation.
    5. At the end of the week, we had a much deeper appreciation and understanding of the new Russian style and psyche. It is also a very interesting business opportunity. So we did get a much more nuanced view than we had before we left (we never expected bears in the streets) and it certainly stoked our curiousity and emotions to learn more in the future. Great week.

  • Erdin

    Bill, your excitement about Russia is very similar to the excitement of many Americans who visited Russia in the early 1990s — they saw a sea of possibilities and were impressed by the ingenuity and resourcefulness of post-Soviet people. Many of the hopes have been dashed since then, despite Russia’s advances on the economic front in the early 2000s. I hope your hopes won’t follow a similar fate. A prosperous Russia that promotes free enterprise could bring a lot of value to the world at large.

  • Albert Park

    Bill, sounds like you had quite an adventure!

    I recently visited some of the post-Soviet Balkan states, and the smile thing was the first difference to get to me, as well. But as a French acquaintance told me, we Americans are “stupidly optimistic”. Hmmm… I swear I’ve seen that on a top 10 list somewhere for successful innovators… :P

    I certainly hope you’re right about the future prospects of Russia. A recent WSJ article quoted that “untimely death in jail has become almost an occupational hazard for Russian entrepreneurs”. (this is in relation to the Hermitage lawyer’s death) While this may be a firebrand statement, Medvedev has made it no secret that corruption and ethics are limiting growth in his nation. Even if the society is educated, how will they succeed if there is no faith in the [legal] system? Even entrepreneurs need their lawyers…