Siberia - The Next Silicon Valley?

eldavojohn writes "CNN Money is running a story about Siberia's rising tech industry.The movement towards tech is centered in Akademgorodok (Academy Town), with a 15 percent annual increase in the number of firms. Even though the area industry's worth is still fledgling compared to other areas, the growth cannot be ignored. 'President Vladimir Putin has also taken note, backing the construction of a $650 million technology business district with $100 million in state funding for infrastructure. "We simply mustn't waste this chance," Putin declared in Akademgorodok following a 2005 trip to tech-savvy India, "especially as other countries have achieved success without such a strong starting position." High tech is the sort of thing that the Kremlin, realizing that Russia's natural resources can't last forever, would like to develop.'"

Comments

The Russian Hacker

[eldavojohn]

It's long been known that Russia, the Ukraine, Poland, etc. contain a vast wealth of programming talent. Look at the rankings of the world wide programming contests. Unfortunately, with their dismal economies, these talents are often used for ill rather than good. I, myself, have two anecdotal stories of my friend's user accounts being hacked by unknown parties in the Ukraine. All in the name of 50 USD.

Why?

Surely, I reasoned, with the amount of time they took to set up that scam and avoid authorities, they could have gotten a job like I have and done something good for even more cash--but, that's my naïve American attitude for you. The job market probably doesn't exist there where they live.

Nothing would make me happier than to see these people given an opportunity to move somewhere close to make money, help their economy, establish an industry/infrastructure for future generations & to get these programmers off the street and into a job ... however, that could just be my naïve American attitude again.

On an offtopic note, I used to "cool" my computers in Minnesota by placing them next to the window during the winters, I'm certain you could cut down cooling costs in Siberia using similar strategies.

Re:The Russian Hacker

[AKAImBatman]

Look at the rankings of the world wide programming contests.

According to your link, we should be hiring the Polish. The Russians did better than the US's 4 out of 48, but they still didn't take any sort of lion's share at 8 out of 48. And in any case, TopCoder is not a useful metric of anything except for, perhaps, cowboy coding. Many of the key skills required to launch a successful technology business are not measured by simplisitic coding riddles.

On an offtopic note, I used to "cool" my computers in Minnesota by placing them next to the window during the winters, I'm certain you could cut down cooling costs in Siberia using similar strategies.

I hope you realize that Siberia is not a frozen wasteland. Siberia covers such an area (where you'll find many of the Chukcha tribes), but it also covers more temperate climates. Not to mention that these programmers wouldn't be a bunch of smart guys packed into a cold little shack. They'll probably be in a building not much different than those found here in America. Which means that they'll have the same cooling and heating problems as we do. (We have horribly cold Chicago winters, I can assure you that they help cool our servers very little.)

Surely, I reasoned, with the amount of time they took to set up that scam and avoid authorities, they could have gotten a job like I have and done something good for even more cash--but, that's my naïve American attitude for you.

The truth is that most of those who have the willpower to do something "good" for even more cash, also have the will to go where the dollars are. Which means that many of them immigrate to other countries rather than hang around in Russia. With Moscow's economy booming, that may eventually change. But for now, Russia has a difficult time holding on to their talent. That talent that they do hold onto may feel their talents underappreciated in the nascent Russian tech economy.

Re:The Russian Hacker

[Zontar_Thing_From_Ve]

Surely, I reasoned, with the amount of time they took to set up that scam and avoid authorities, they could have gotten a job like I have and done something good for even more cash--but, that's my naïve American attitude for you. The job market probably doesn't exist there where they live.

Good jobs exist in Ukraine, but many of the people there have a "live for today, screw tomorrow" mindset, which is why they do things like this. They have learned that tomorrow may never come, so you better get what you can ASAP. This is why they do things like this.

Ukrainians are good people, but like the rest of the ex-USSR (the Baltic States may be an exception), they have this weird sense of entitlement that you can't really understand unless you go there. They think that because somebody in the West has more money than them that they have a right to steal some of that money to improve their own lives. They have very unrealistic expectations for their society. As Jim Morrison sang once "We want the world and we want it now!" They expect to have the same standard of living as the Western EU now instead of having a more realistic goal of trying to encourage foreign investment and trying within 10 years to get to where, say, Poland is today. Most of the Ukrainian citizens want to be where the UK is today and it's just not realistic. This lack of realistic expectations and sense of entitlement leads to massive disappointment with reality and a willingness to scam and steal on the internet to try to get closer to where they perceive they should be.

Good jobs do exist, especially in Kiev, but millionaires and rich foreigners have ruined the Kiev property market, which is another problem that the Ukrainian government is going to have to deal with down the road. Imagine making, say, $800 US a month and living in a city where all around you every day are new buildings with condos that cost $500,000 US and you have an idea of the kind of insane economic disparity that goes on. Similar craziness can be found in Russia too and I wouldn't be surprised if Belarus had some of it as well.

Not to start another endless thread, but it's better now to say "Ukraine" in English and not "the Ukraine". It's a long story, but basically it was considered OK to use "the" when it was part of the USSR but not now that it's an independent country. Do a search for a Ukrainian embassy in your favorite English speaking country and you'll see that at their website they don't use "the" in the country name. It's just Ukraine. Those who argue passionately for the use of "the" are either speakers of some language other than Russian, Ukrainian and English (ie. the rules are different for French) or a native of the region who learned English grammar using an old Soviet era grammar book where it was argued that the use of "the" was correct.

Re:The Russian Hacker

[Cyberax]

When I first visited Novosibirsk it was about -40C (-40F for the Americans :) ). Not that I was surprised - I live in Russia, but in area with a little bit more mild climate (we usually have only a few days per year with -30C, generally it's about -15C in winter).

But still, it may be a little bit extreme for the rest of the world. Besides, Novosibirsk is not very close to the European countries or the USA.

As for Technoparks (Tech parks), Putin is going to do a right thing (IMHO). Government is funding development of infrastructure and office buildings. So IT companies will have a good infrastructure and will be able to work without worrying about Internet connectivity and office space.

Re:The Russian Hacker

[Johnny Mnemonic]

They'll probably be in a building not much different than those found here in America. Which means that they'll have the same cooling and heating problems as we do. (We have horribly cold Chicago winters, I can assure you that they help cool our servers very little.)

Well, that might be due to poor design. I read an article about a data center built in Minneapolis, which can also be terribly cold. The Data Center made use of "environmental cooling" ie sucking in cold outside air. The DC operator bragged that he didn't need to run his chillers at all for 3 1/2 months of the year; that he used the excess heat to warm the offices, and if those got too warm he warmed the loading dock. In fact, often the incoming air was too cold so it had to be prewarmed first (also from the excess temp of the servers themselves). You might consider making better use of the natural cooling temps to help with your DC, it's the latest thing in DC design.

I wouldn't be surprised at all if DCs in Siberia were going to attempt to do this also, provided that Siberia is truly that cold.

Re:The Russian Hacker

[CRCulver]

They think that because somebody in the West has more money than them that they have a right to steal some of that money to improve their own lives.

And you apparently think you have a right to make blanket statements about an entire country. I for one would never say "Americans think..." or "Brazilians think..." without heavy qualification and citation.

Good Essay on the Matter

[AKAImBatman]

To anyone who thinks that Silicon Valley is going to show up elsewhere in the world, I highly recommend reading the following essay by Paul Graham:

Why Startups Condense in America

Among his points, there is one in particular that (I think) gets overlooked the most. His seventh point, "America Is Not Too Fussy" is really a key issue. Like it or not, many Amercian startups bend the rules to find the most expedient solution to getting into business. 95% of the time, this bending of the rules is harmless, and actually benefits society. However, many countries would simply enforce their regulations to the point where that startup would never exist. I find his point to be amazingly enlightening.

Take a gander at his article, then come back to the matter of the Siberian Silicon Valley. Does Siberia have the infrastructure? The desire? The willingness to bend the rules? The lack of a police state? Free and open immigration? Cross pollination of employees between companies?

I think you'll find that many of these items exist there, but many do not. Silicon Valley is Silicon Valley because it has all of those things in spades. Now if only it didn't cost a bloody fortune to live there. :-P

Re:Good Essay on the Matter

[The-Bus]

Think of it as a lofty, maybe unreachable goal. Of course you can't replicate Silicon Valley in Siberia. Some random town Wyoming can't decide to become "the next Tokyo" either. There's systemic problems in Russia that no amount of buildings, fiber, and computers will fix. But it's a start.

And they've got land to spare, or so I hear.

Re:Good Essay on the Matter

[igny]

From Graham's article, Might there not be an alternate route to innovation that goes through obedience and cooperation instead of individualism?

In my opinion there is. After all the Cold War was a competition between the two different ideologies, and no matter what you might think, Soviet Union did not lack innovation.

Re:Good Essay on the Matter

[SerpentMage]

I read the article and have to disagree. I would have agreed to the article pre-9-11-2001, but not anymore.

Here is why:

1) Sabarnes Oxly is making it harder for corporations to do business. You can argue about its merits or lack of, but it makes life more complicated.
2) Immigration is becoming truly difficult in the US.
3) Travel within the US is becoming downright ugly due to the overdone security constraints (eg SSSS on your ticket is the kiss of guaranteed delays and pains.)
4) IP and patents are getting in the way of doing business. Lawyers are trigger happy to sue and it is taking its toll.

So while the US has many good attributes it is becoming more and more difficult for people who want to build technology. Just last week I was talking to other speakers at a conference and they were becoming concerned on the over-regulation and over-complication of the technology industry.

Re:Good Essay on the Matter

[hey!]

Well, I'm not sure what "bending the rules" means. But it helps a great deal if what rules there are are (1) documented, (2) rational and (3) fair.

I'm not a big fan of the complacent notion that America succeeds because God made us better, whether God is and old guy in the sky or some kind of historical determinism that has finally created the perfect human disposition. Instead, I think that we got an early start on the idea of fair, open and impartial laws, which unlocked and attracted vast reserves of untapped human talent in a place with vast untapped reserves of natural resources. As a result there's a lot of capital in this country looking for places to live. The situation is self reinforcing. A fair system makes rational investing possible, an unfair system tilts the table towards bad investments. Either way people with money win, but only under a fair system people with ideas can win too.

The problem with Russia is that its political and legal systems are crap. The same with China. The fact that their systems aren't as horrendously bad as they were twenty years ago has helped, but I do not thing they are capable of sustainable growth. This lack of sustainability has nothing to do with lack of human talent, far from it. But any system whose priority is to keep the powerful in power will eventually find it convient to quash that talent.

As an example, consider the $650M business district. Governments of all stripes do that sort of thing. But what happens when they get it wrong? What happens when it turns out that the district is in the wrong place, or that the businesses that the connected people establish there are threatened by some upstart business run by a couple of guys out of a garage in a Black Sea resort town? What happens is that the friends of the government get their returns guaranteed by the exercise of state power.

That's the problem with crony capitalism. In the long run, don't expect great things out of an economy where a sound investment always starts with courting the right officials.

Re:Good Essay on the Matter

[avronius]

...there are still plenty of people trying to make their money or gain power off of the backs of others This is, very much, a capitalistic attitude. Almost every business exploits the resources around them. There are those who primarily explot physical resources (Abitibi exploits renewable trees, UK Coal exploits non-renewable coal), and those who primarily exploit intellectual resources (Microsoft exploits software developers, Intel exploits hardware engineers).

The only real difference between what has happened in North America (and Western Europe) and what might happen in Russia? The amount of money that you get paid to be exploited.

Re:Good Essay on the Matter

[Red Flayer]

I'm not a big fan of the complacent notion that America succeeds because God made us better, whether God is and old guy in the sky or some kind of historical determinism that has finally created the perfect human disposition.

Manifest Destiny as a political idea has been dead for a long time.

The problem with Russia is that its political and legal systems are crap. The same with China.

And yet China still manages to have top scientific researchers in every field -- and continues to liberalize both economically and politically. See this.

But any system whose priority is to keep the powerful in power will eventually find it convient to quash that talent.

And how does that differ from the US? Economic power is being concentated in fewer companies and individuals, who will be more easily able to affect government -- we've seen it already. Will the pendulum swing back? I don't know, in the age of mass media, whether we can check the power of the few.

What happens is that the friends of the government get their returns guaranteed by the exercise of state power.

Again, how does this differ from the US? KBR. Diebold. ExxonMobil. Boeing. The ones who write the laws are the lobbyists for the companies that benefit from them.

China, Russia, and the US are approaching each other in terms of politicoeconomic systems. The major difference still remaining is that of IP regulation and protection. If the rigid IP control system is doomed to fail (as many slashdotters believe) then China and Russia are poised to dominate -- since IP is relatively worthless in those countries, and is ignored almost at will. Seems to me that they would have a competitive advantage, in having hugely successful businesses in that climate already.

Re:Good Essay on the Matter

[CRCulver]

Of course you can't replicate Silicon Valley in Siberia. Some random town Wyoming can't decide to become "the next Tokyo" either.

Dubai has gone from a quiet little emirate to the economic powerhouse of the Middle East in just forty years, with little but visionary leadership and can-do spirit (unlike neighbouring Abu Dhabi, Dubai's oil resources are meagre). I guess the lesson is, it's dangerous to claim a given place could never end up gaining prominence in a few decades' time.

Re:Good Essay on the Matter

[hey!]

Manifest Destiny as a political idea has been dead for a long time.

But the attitudes behind it live on.

Again, how does this differ from the US? KBR. Diebold. ExxonMobil. Boeing.

Because the ideology that privatizing public functions automatically make them more efficient is hogwash. The government doesn't buy services like military logistical support from a preexisting market that has already established efficient equillibrium prices. So when it privatizes such a function it has to turn to a small group of vendors capable of meeting government specifications and complying with (and sometimes exploiting) its bidding and accounting procedures. The reason the private sector is, on average, more efficient than the public sector isn't that the private sector is populated with virtuous geniuses. It's because in markets with many suppliers and customers and low barriers to entry, inefficient businesses have countless competitors ready to underbid them.

In a market with only one customer, and with major barriers to entry, waste is actually more likely than if those services were provided by the government itself.

And yet China still manages to have top scientific researchers in every field -- and continues to liberalize both economically and politically.

If you read my original post, I never said the problem with China is that it didn't have talent. Nor that they have failed to liberalize. But the bottom line is that the government remains above reproach or accountability. Under the current, unsustainable growth, everybody wins practically no matter what happens. What I'm saying is an unaccountable government can be counted on to make selfish choices when decisions get hard.

NOT Silicon Valley

[zoomcloud]

Having lived for six years in Russia, and five years in Silicon Valley, I feel somewhat qualified to opine. There is a HUGE factor lacking in Siberia: Rule of Law. A hard working programmer or IC designer can expect to have his work (IP) *stolen* within one month of publication or commercialization. Russia does not observe copyright or patent law. Yes, they have a lot of highly intelligent people. I married one. Yes, they have some buildings and power stations. Unfortunately, it's not enough to build a strong information economy. Russia will eventually bring Rule of Law to their economy - out of necessity - but it won't be soon. Ydacha!

Re:NOT Silicon Valley

[yada21]

a HUGE factor lacking in Siberia: Rule of Law. Russia does not observe copyright or patent law.

Good for them! This will allow market forces to make their economy more efficient. I guess it's not obvious to most people here, so I'll explain how it works(1).

If a company is using more resources (labor, gold) than it produces it's not adding value to the economy. This is expressed as profit's or in this case, a loss. Faced with theft/piracy firms will adapt their business processes, i.e. keeping staff's children as hostage or hiring former Spetznas trouper's to kill anybody who pinches their wares. On the other hand, if the company pirating (as you'd say - I'd call it 'liberating') their stuff is able to afford better goons, or to bribe off the first companies' heavies, then it is by definition more efficient - if not it wouldn't have the money to do so.

In summary, rule of law is for wussies and communists.

(1) taken from one of my speeches on the subject that I give regularly around the world

Re:NOT Silicon Valley

[Silver Sloth]

So when a band of Hell's Angels have beaten you up and are busy gang raping your 12 yr old daughter that's fine, because they're obviously, by definition, 'more efficient'.

The rule of law is for people who want to live with other people. That's why every successful society has one.

Re:NOT Silicon Valley

[bberens]

So what you're saying is that there's extensive opportunity for businesses based on open source and the 'software as a service' model to flourish to solve various business needs throughout the country and region? What it will not do is allow monolithic conglomerates to take over. Small and medium sized shops should be able to be fairly successful in this environment.

Re:NOT Silicon Valley

[clovis]

We've heard this BS before. It doesn't work.
Once again an example of theory versus actuality.

We can test your hypothesis through observation. Make a list of countries where "rule of law applies" and a list of those for which the "rule of law" is secondary to rule of fist.

List 1: Wussies: Follows Rule Of Law
United States
Western Europe countries
Australia
Japan

List 2: Strongman: Uses Goons and Bribes to conduct business
African countries
Afghanistan

You can list all the countries in the world and rank them according to how well they ascribe to the importance of the rule of law and rank them according to almost any measure of success and you can see the nearly one-to-one correlation. Get fancy and manova it if you want.

My lists are short of course. They show the extremes and there's a continuum in between.
Countries in list 1 would be chief among what you call the "wussies and Communists".
Also list 1 is a list of the "richest, most powerful, capitalist and gets to have their way in almost everything".
As for list 2, well "market forces" do override "rule of law" there.

Banished to Siberia

[mu51c10rd]

Does this make it a good thing to be banished to Siberia? If not, what are they saying about their high-tech workers?

A definite plus

[matt328]

You'd never have any problems cooling server rooms.

Re:A definite plus

[Xync]

The joke is good, but keep in mind that "Siberia" is a really big place. Everywhere in Russia east of the Urals qualifies which means 2/3 of the largest country on the planet is Siberia. Since Novosibirsk and Akademgorodok are in the southern part of that huge region, the summer temperatures get "hot" (80+ F), and since Akademgorodok sits next to a large lake, it's muggy to boot. Come July the people are going to want some temperature control (which is hard to come by), not just the servers.

SMAC

[alexhs]

The movement towards tech is centered in Akademgorodok (Academy Town) Huh, are we talking about Russia or Alpha Centauri ? :)

Server Farm

[jshriverWVU]

I've always wondered why someone hasn't put up a huge server farm in places like Alaska or Russia. From my underestanding a big "cost" is in the cooling. If you can recycle outside air to keep the place cooler that's a free resource.

Re:Server Farm

[zlogic]

Actually it may become too cold. -40C (which is a common winter temperature in a lot of regions) makes diesel fuel freeze and materials shrink, which is bad since every material shinks differently and things like heatsinks may break. And low temperature causes water to condense, which is just the same as dropping the server in a bucket. The result? Servers would need to be heated, replacing a cooling bill with a heating one.
Not to mention that 3000+ km of fiber is extremely expensive.

Re:in Soviet Russia

[Mothra the III]

In Soviet Russia, dead horse beats you!

Re:Another stab at what appears to be a required j

[robyannetta]

Siberia, huh? To attract bodies, they may want to make it as family friendly as possible, like adding a water park.

Oh wait...

Re:Really?

[Paulrothrock]

That's funny. The most talented hackers I know can go for days without knowing what the weather is like.

What's this, the 9th "Next Silicon Valley"?

[trimbo]

We've had "Silicon Prairie" (Champaign, IL). "Silicon Alley" in New York. There's more I'm forgetting right now.

Ultimately all of the talented people who live in places designated to be the next Silicon Valley end up moving to Silicon Valley! We live in a beautiful area and get paid better. Top talent won't stay in Siberia, or Champaign, when they can live in San Francisco.

If there's any "Next Silicon Valley", it would be Los Angeles. Recently it seems that more of the interesting startups are in LA than the Bay Area. Given that so many of the Web 2.0 properties are more about entertainment, this kind of makes sense. And the proximity to Silicon Valley makes it easy for traditional tech investors to go down there.

The climate is tough there

[roman_mir]

I was born in Ukraine in the former USSR and lived in Yakutia (North East of Siberia) above the Arctic Circle for 6 years. I can tell you this: it's freaking cold in the winters. Of-course it can be a plus for development of more indoor activities, like computer programming.
--

By the way, here is something from the article that I think can work both ways:
The low cost of rent, services and salaries - roughly one-fifth of Western prices - appeals, but so does a system that builds on the foundations of science to produce programmers. "None of our programmers in Novosibirsk are programmers by education," Intel's Chase says. "They are physicists, chemists, biologists, mathematicians. They are, first of all, scientists. Secondly, they learn how to program as an afterthought." - I am sure there are brilliant scientists among those people, but I cringe every time when I hear about the scientists turned programmers as an afterthought. They will not produce modular easy to maintain and understand code. They just can't. They will solve problems with their code though, I am sure, and probably this fact will substitute for a lot of problems in the code structure itself, but I had to maintain/fix code designed by people like that (HydroOne and Avema contracts are some of the examples,) the code will suck. But so what, the bad code and the cold weather are not the worst problems in Russia. The worst problems are these: the government that is unwilling and incapable to prevent crime against business-people, the government that actually feeds on the crime against business-people.

Do not expect Russia to become a place where the next Silicon Valley will be born within the next three decades at least. The main problem is that there are no investors in their right minds who can expect reasonable return on investment, because their money can disappear in a flash and not even due to a bad business plan or bad coding, but simply because the local mayor's office will tell the owners that the building, where the people are working is not fire safe or water proof or bird shit proof or whatever the story is this week, and the business will be closed until large amounts of money exchange hands. Then the same story will repeat itself the next week. Oh, and the competition or whoever decides that they are competition will not bother trying to build a better product, they will just hurt/kill the business owners one by one if their demands for lots of money are not met, etc.

Re:The climate is tough there

[Animats]

I was born in Ukraine in the former USSR and lived in Yakutia (North East of Siberia) above the Arctic Circle for 6 years. I can tell you this: it's freaking cold in the winters. Of-course it can be a plus for development of more indoor activities, like computer programming.

Like Boston. Some years ago, someone from MIT was recruiting me for the Media Lab, and as we were walking across the campus to the T station, it was sleeting. He commented "There are fewer distractions out here". I got back on the plane to California.

Seems more like the next Berkeley to me

[gravyface]

By Wikipedia's account, Academy Town seems more like the next Berkeley or Stanford to me: strong academic history, plenty of space and amenities, lots of young talent, good facilities, huge natural surroundings (check out arial photo). And it sounds like there was quite a bit of "rule bending" there (better rations, cottages instead of apartment blocks) during the Soviet era. It may not match Silicon Valleys' economic might, but it may surpass it in terms of creativity and innovation.

Re:In Soviet Russia, take #472

[olyar]

Thank you! I was scrolling, and scrolling looking for the "In Soviet Russia" joke.

I mean, this is Slashdot, and this article was just begging for it, and all these folks are having this serious discussion...

People. We're losing our edge around here! First the jokes, then the serious discussion.

Sheesh.

The Next Bangalore, perhaps?

[stereoroid]

Or the next Dalian? Bangalore is booming despite its restrictions on immigration & emigration, hardware imports, and its flaky infrastructure. My company has a support center there, and some fairly epic problems sending hardware to India for internal use only (never mind resale).

Manpower is also a problem; you'd think Bangalore would be awash with engineering graduates, and IIT is churning them out, but what happens when you need someone with actual experience? In my company's case we've been lucky with expatriates returning to India from the Middle East (mostly) and the USA (a few). We just don't find quality local candidates worth interviewing.

Will Russia be any better, with its lack of internationally-recognised qualifications and standards? I fail to see how any Silicon Valley comparisons are worth considering, even as a joke.

Re:in Soviet Russia

[jimstapleton]

Horse zombies scare me. I prefer it when dead things act as they should...