On 20 March, I met Ilya V. Ponomarev at a Starbucks near Federal Triangle metro station for coffee. It was a gloomy day but thankfully neither of us was caught in the rain. Ponomarev, just coming from a slew of meetings, did not order anything. He came in alone and looked like his picture, tall, blue eyes, and bearded. This is true save for the weariness from days meeting with business people and entrepreneurs.
Ponomarev is an outspoken member of the Duma of the Russian Federation, an accomplished entrepreneur, and a proponent for reform in Russia. He has been active in politics for more than 20 years. He is a graduate of Moscow State University, holding a Masters of Public Administration from Russian State Social University. Ponomarev started working when he was just 14 years old at the Institute for Nuclear Safety at the Russian Academy of Sciences. He then launched several start-ups and later went on to work for the oil services company Schlumberger and the now-defunct Yukos Oil.
Ponomarev is a serial entrepreneur, having launched his first company, RussProfi when he was still in high school. In 2007, he was elected to represent Novosibirsk in the State Duma where to this day he chairs the Innovation and Venture capital subcommittee of Committee for Economic Development and Entrepreneurship. This dovetailed with his work from 2010 to 2012 heading the International Business Development, Commercialization and Technology Transfer for Skolkovo Foundation. Due to his sole vote against the annexation of Crimea, Ponomarev faces strong headwinds in Russia.
What is the meaning of the September 15 Data Storage Law?
On the surface, the government of Russia wants to claim independence of the Russian internet. In their minds, this would prevent the possibility of politically blackmailing Kremlin. Localization of internet services would also allow data to be easily collected by the security services. As a member of the Duma, I was an advocate in 2009-2011 to create a national financial payment system on top of our e-government solution, allowing for a modernization of credit cards systems and the building of a platform for new and innovative Russian business to flourish. Unfortunately, this proposal was tabled at that time.
Now sanction concerns have dawned on President Putin, and he reacted to them without injecting the modernization or the e-government aspects. Now we cannot match even Chinese development of their local payment system Union Pay. The bad news is that major international players like Visa and MasterCard in the payment systems and Facebook in social media are at best silent or actually cooperating in closing down the Russian internet. I feel betrayed by them, frankly speaking.
What is the ideal of the internet for the current government of the Russian Federation?
There are two points of view held within the government. One held by Minister Nikolai Nikiforov is that is a platform. This is a reasonable perspective, which might allow the economy to grow and innovate. The second group sees it as mass media, and thus it should be controlled as it commands the heights of the economy in Russia. Disappointingly, security concerns have squelched the development in all but the clearly non-media related companies in Russia. Whereas in 2013, the Russian Federation was the second largest destination for venture capital funding after London and Berlin, this year venture capital inflows have plummeted as uncertainty continues. Moreover, the Bolotnaya Protests were seen by President Putin as a reason to start a class war with the entrepreneurial “creative classes”.
With the spike and drop of the core rates of the Central Bank of Russia, is Central Bank Governor Nabiullina acting rationally?
Speculators had a real role in stoking volatility in the Russian markets. Thus, the rise in the rates was intended to tame the speculators, and it worked. With them tamed, it is rational to lower the rates again to make a slightly more accommodative environment for businesses in Russia. Currently the economy--especially smaller and medium businesses--is in serious trouble and many of them are shutting down. Last year, the country lost several hundred thousand of SMBs, which I also interpret as a part of this “class war”.
What does the future of innovation look like in Russia?
Russian firms have had been highly innovative in telecom and financial services, in mobile commerce platforms and social apps. We have great technology intensive companies in OCR and cybersecurity. Nonetheless, many Russian firms have gone abroad within the post-Soviet space or to the West. Those firms such as Yandex have been, one by one, shutting down various services to prevent clashing with the government. Despite that, there are many strong core fundamentals of the Russian economy that will prosper again in a post Putin world. The diaspora of Russian technology entrepreneurs is strong and many remain tied to the homeland. With a change in the atmosphere in Russia, world-class innovation can be revived in Russia.
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The Future of Innovation in Russia
April 7, 2015
On 20 March, I met Ilya V. Ponomarev at a Starbucks near Federal Triangle metro station for coffee. It was a gloomy day but thankfully neither of us was caught in the rain. Ponomarev, just coming from a slew of meetings, did not order anything. He came in alone and looked like his picture, tall, blue eyes, and bearded. This is true save for the weariness from days meeting with business people and entrepreneurs.
Ponomarev is an outspoken member of the Duma of the Russian Federation, an accomplished entrepreneur, and a proponent for reform in Russia. He has been active in politics for more than 20 years. He is a graduate of Moscow State University, holding a Masters of Public Administration from Russian State Social University. Ponomarev started working when he was just 14 years old at the Institute for Nuclear Safety at the Russian Academy of Sciences. He then launched several start-ups and later went on to work for the oil services company Schlumberger and the now-defunct Yukos Oil.
Ponomarev is a serial entrepreneur, having launched his first company, RussProfi when he was still in high school. In 2007, he was elected to represent Novosibirsk in the State Duma where to this day he chairs the Innovation and Venture capital subcommittee of Committee for Economic Development and Entrepreneurship. This dovetailed with his work from 2010 to 2012 heading the International Business Development, Commercialization and Technology Transfer for Skolkovo Foundation. Due to his sole vote against the annexation of Crimea, Ponomarev faces strong headwinds in Russia.
What is the meaning of the September 15 Data Storage Law?
On the surface, the government of Russia wants to claim independence of the Russian internet. In their minds, this would prevent the possibility of politically blackmailing Kremlin. Localization of internet services would also allow data to be easily collected by the security services. As a member of the Duma, I was an advocate in 2009-2011 to create a national financial payment system on top of our e-government solution, allowing for a modernization of credit cards systems and the building of a platform for new and innovative Russian business to flourish. Unfortunately, this proposal was tabled at that time.
Now sanction concerns have dawned on President Putin, and he reacted to them without injecting the modernization or the e-government aspects. Now we cannot match even Chinese development of their local payment system Union Pay. The bad news is that major international players like Visa and MasterCard in the payment systems and Facebook in social media are at best silent or actually cooperating in closing down the Russian internet. I feel betrayed by them, frankly speaking.
What is the ideal of the internet for the current government of the Russian Federation?
There are two points of view held within the government. One held by Minister Nikolai Nikiforov is that is a platform. This is a reasonable perspective, which might allow the economy to grow and innovate. The second group sees it as mass media, and thus it should be controlled as it commands the heights of the economy in Russia. Disappointingly, security concerns have squelched the development in all but the clearly non-media related companies in Russia. Whereas in 2013, the Russian Federation was the second largest destination for venture capital funding after London and Berlin, this year venture capital inflows have plummeted as uncertainty continues. Moreover, the Bolotnaya Protests were seen by President Putin as a reason to start a class war with the entrepreneurial “creative classes”.
With the spike and drop of the core rates of the Central Bank of Russia, is Central Bank Governor Nabiullina acting rationally?
Speculators had a real role in stoking volatility in the Russian markets. Thus, the rise in the rates was intended to tame the speculators, and it worked. With them tamed, it is rational to lower the rates again to make a slightly more accommodative environment for businesses in Russia. Currently the economy--especially smaller and medium businesses--is in serious trouble and many of them are shutting down. Last year, the country lost several hundred thousand of SMBs, which I also interpret as a part of this “class war”.
What does the future of innovation look like in Russia?
Russian firms have had been highly innovative in telecom and financial services, in mobile commerce platforms and social apps. We have great technology intensive companies in OCR and cybersecurity. Nonetheless, many Russian firms have gone abroad within the post-Soviet space or to the West. Those firms such as Yandex have been, one by one, shutting down various services to prevent clashing with the government. Despite that, there are many strong core fundamentals of the Russian economy that will prosper again in a post Putin world. The diaspora of Russian technology entrepreneurs is strong and many remain tied to the homeland. With a change in the atmosphere in Russia, world-class innovation can be revived in Russia.
