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.'"

The Russian Hacker

It's long been known that Russia [wired.com], the Ukraine [slashdot.org], Poland, etc. contain a vast wealth of programming talent. Look at the rankings of the world wide programming contests [slashdot.org]. Unfortunately, with their dismal economies, these talents are often used for ill rather than good [slashdot.org]. 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

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

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

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.

Academgorodiok

Now, if only we could convince that fool Zakharov to rush the Ascent project.

Good Essay on the Matter

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 [paulgraham.com]

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

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 [stanford.edu].

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.

NOT Silicon Valley

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

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.

Re:NOT Silicon Valley

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.

Banished to Siberia

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

You'd never have any problems cooling server rooms.

Silicon Tundra?

Or maybe Silicon Taiga?

Either way, they need a catchy name for the press.

SMAC

The movement towards tech is centered in Akademgorodok (Academy Town)

Huh, are we talking about Russia or Alpha Centauri ? :)

Server Farm

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.

Akademgorodok.com

The site is for sale.

So, is Siberia for sale?

At least their datacenters

will get free airconditioning!

Really?

Because, you know, Siberia has that *awesome* weather, system of law, and quality of life that attracts highly skilled and talented people... It would more like be a digital gulag for arrested Russian hackers :P

Xatchoo!

Xatchoo krasiviya Sibirskiya dyevushka. Is that right?

Yeah, sure

Given the excellent track record Moscow has exhibited in the past when it comes to use centralized planning to revamp the economy, feed their hungry, expand their ideology and beat America in the cold war, it is a cinch. Definitely the new venture will succeed. All Putin has to do is to order, "Innovate" and the Russians are going to innovate like gangbusters. Well, that is all the feedback Putin is getting for his bold new initiative. How can it ever go wrong?

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

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 [myspace.com], this kind of makes sense. And the proximity to Silicon Valley makes it easy for traditional tech investors to go down there.

Video Game Industry...

It wouldn't surprise me if the video game industry decided to decamp from Los Angeles to Siberia. With crunch time being crunch time all the time, the work conditions will match a Soviet gulag anytime.

In Soviet Russia, take #472

In Soviet Russia, when things are down, you are sent to Siberia.

In USA, when things are down, your job is sent to Siberia.
     

Super!

Now we can start using superconductors instead of the old semiconductor.

The climate is tough there

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.

This is why

http://ravil.astersoft.net/Prose/RussianProgrammer s.htm [astersoft.net]

Seems more like the next Berkeley to me

By Wikipedia's account [wikipedia.org], 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.

Oh Great

Sheesh. And here I have been hinting to my boss that yes, I did take Russian in high school and college, just in case any cool business trip opportunities come up. I was, however, thinking Moscow or St. Petersburg, not Siberia! :(

Ruuski yazik? Huh?

- Necron69

Insert Soviet Joke here...

All work in the gulag is unpaid overtime.

Putin says

Putin says: "Academgorodok will be next Silicon Valley... or else".

The Next Bangalore, perhaps?

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.

Won't Go More Than Three Feet, Then Die

"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."

That torpedoes things. Throwing money at business districts et al to artificially inflate development results in mostly empty business districts, and a more likely than not depressed economy where built, while businesses happily locate to areas of low taxes, rule of law, and respected property rights. Russia's business climate is dismal, its political climate threatening. Ham handed attempts to entice technology businesses to places themselves in such a poor business environment will fail. Successful governments attract business by limiting their intrusions into the economy, and keeping taxes and the regulatory burden low. Trying to essentially bribe businesses to move in with a new shiny office park will not hide the regressive decrepit state of affairs in Putin's Russia.

Also check out Badonkadonk

for something interesting.

Flintstones?

Did anyone else read "Akademgorodok (Academy Town), " And thought that Mr. Slate had diversified from his quary business?

Twist Twist!

Untapped talent!

This shouldn't really come as a surprise. The former Soviet countries have long been known to have a lot of programming talent available. Don't forget that scientists and engineering types were treated pretty well under the Soviet system and technology/R&D was considered strategic. it would make sense that some of the older talent is still around, and passed down to a new generation.

Also, the stereotype of Russian organized crime controlling most of the phishing/conning scams out there is based on fact. Some of the attempts are really lame, but a lot of the Internet frauds committed are very sophisticated.

I'm sure Russia is happy to have the concentration of talent. We'll see what the next 20 or so years brings in the way of Russian politics, but the current climate seems very pro-business. Almost too pro-business if some of the stories are to be believed...

Lack of extrinsic motivation.

As per research studies there is no such thing as "intrinsic" motivation. http://researchnews.osu.edu/archive/inmotiv.htm [osu.edu]
Even though they are talented, rest of the society does not inject the required "extrinsic motivation".

One minor detail

As a recent transplant from the planes to Silicon Valley, and having already been involved with 2 startups (and about to join #3), I'd like to point out one minor detail:

Silicon Valley has a culture that tolerates failure.

It is OK to fail here. It is not OK to fail in Japan, China, Russia or anywhere else.

Russian reality

Sorry for my strange english, but I want to tell some information about how russian programmers works. The first that you need in Russia it's education, BUT on the same deal the russian university can give you a good mathematical skills, but it's no good computer science education. In example, many university uses dos with Turbo Pascal/Watcom C, or more ... they uses ... Borland Deplhi on the win32 platform. And it's terrible. In the Russia if you want to be a good developer you *must* start working at university, and have a much self education. On the last year I was on the many interviews and I've listen the candidates for junior/senior developer position, and I can tell you that people with the long education stage on the university are BAD, they can't use mathematical skills to implement something, but people who hasn't university education does, they known mathematics and can use there skills. The other moment in the Russia - the most of developers in Russia thinking about migration to the Europe or USA, because the Russia is terrible country for his family - there are no warrantly for his wife or children from goverment. The "another silicon valley" is a "another people wants money" action. In the future the most of kind russian people will be migrate from Russia and Russia will be a stupid country that extracts oil and killing forests. PS yet another sorry for my strange english.

Pay

I'm a Russian software developer.

Are they going to pay me more than I get in Moscow? I don't think so. So why should I bother?

So here's your answer: no, it won't be the next Silicon Valley. Actually, it's not the first project of a kind either, there were a couple more [kommersant.com] already. So far, nothing had come out of this. Could it perhaps be because a "Silicon Valley" is not something the government can create just on its whim?

That's not going to happen

It's just a "popil" -- this new Russian word means getting profit from the government project without doing anything useful. Unfortunately NOTHING could help Russia to get out of economy shithole.

Even today with sky-high oil prices our economy does not really improve. We have much more officials than whole USSR had and everything is too regulated to start a new successful business. If you run a business more than 30% of your profit is going into bribes, because otherwise government won't let you function. Add insane taxes and sudden changes in tax laws that require you to have a good accountant who keeps everything up to law (these women ARE expensive!). Add tax office that has the right to just take your money from your company account and explain this action later (and even if you fend off them in the court they are not going to bear any punishment, even if it was a mistake made by low-paid official).

It's possible to run a startup in Moscow (because the city is huge -- about 20 millions if you include Moscow region and illegal immigrants), you can tap this human resource, and laws work a little better then in rural Russia, and you are not alone, there are thousands of new companies get created every month. But today average salaries in Moscow are getting close to Europe's. As unix/cisco sysadmin I earn about $19k/year (after taxes). And today it's not much because average three-room flat cost about $400k... But if you try to run a startup in rural Russia you'll get a lot of attention from hungry government officials and they'll strangle your business before you get ANY profit.

Unfortunately most of the people in Russia still believe in socialism. As result they support party "Edinaya Rossia" that's now resembles the old communist party (while real communist party, KPRF became nothing but a bunch of clowns). As result Edinaya Rossia who took majority in Duma enough to pass laws without looking at other parties makes more and more laws that strangle businesses (and general people's rights) further and most people support these moves without understanding that they strangle themselves.

i'll scream if I hear XXX next Silicon Valley

Like there have been dozens of such articles since the dot.com boom.

The Future Belongs to Siberia

"The Future Belongs to Siberia" is a Soviet slogan that my Russian babushka-in-law liked to repeat. It's a joke to westerners. However, in 50 or 100 years it won't be such a joke.

Siberia is the last great undeveloped yet habitable region of the Earth. It is vast, extending from north of the Arctic Circle down to the borders of China and other Asian nations, and from the Caucasus Mountains in the west to the Pacific; in total, significantly larger than all of Europe. The southern parts are temperate, far from the frozen taiga that most people imagine. It contains immense regions of forest, tundra, mountains, and natural resources of all kinds that have only begun to be exploited. Much of it still is reachable only by aircraft. Billions of people could live there, and eventually will.

In the near term, the Siberian cities are severely economically disadvantaged yet contain significant numbers of people who received advanced educations under the Soviet system, a combination that makes them ripe for offshore technology projects, as described in the original post.

- spike

Re:in Soviet Russia

In Soviet Russia, the obvious belatedly states you!

Re:in Soviet Russia

In Soviet Russia, dead horse beats you!

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

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

Oh wait...

Re:Banned

This is most likely is a flamebait, but I will respond. While it is true that a lot of malware's code originates from Eastern Europe, most of the botnets are located in USA. And as Internet is highly interconnected Russia does not give rat's ass about you banning IPs from Russia.

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

wow you'd think I posted something controversial or insulting to get modded down to a -2.

Re:Geek Oversight: Women

The Trans-Siberian College of Cosmology and Dental hygiene?

Because if I wear it any place else, it chafes.