Russia Attempts to Build Its Own "Silicon Valley" De Novo

Russia’s version of Silicon Valley — an "innovation city" built from scratch on the outskirts of Moscow — is finally starting to take shape. The project, popularly known as Skolkovo, has already lined up over $1 billion in financing from Western tech giants such as Cisco and Nokia as well as the official government support of both Prime Minister Vladimir Putin and President Dmitri Medvedev. All Skolkovo needs, quite simply, is an influx of the right technology start-ups to make it work. Which begs the question: Is it really possible to create a state-planned high-tech hub in an emerging market like Russia, where Western institutions such as IPOs and venture capital are virtually unknown and the free-wheeling, risk-taking culture of Silicon Valley has yet to take root?

...it will require the types of incentives — both financial and creative — that will encourage the best and the brightest in Russia to choose careers in technology and technical fields when they could easily be making fortunes in natural resources and finance. It is the same choice ahead of many young American graduates — either a career in investment banking or with an established Fortune 500 company, or a risky attempt to create a new company with a speculative new technology. For now, the odds appear to be stacked against Moscow - the nation’s business regulations are notoriously difficult to negotiate, with the country ranking among the most difficult in the world to do business in. _WaPo

It is a question of evolution vs. intelligent design. Silicon Valley evolved naturally due to a confluence of economic and intellectual factors that was largely unplanned. The Russians, on the other hand, are attempting to transplant innovation into the heart of a stagnant statist autocracy. The odds are against this approach.

The COO of the Skolkovo Foundation feels more optimistic about the project's potential:

What we are trying to do is build a world-class innovation center. And, if you study innovation centers around the world, whether they are Silicon Valley, or Boston, or Cambridge, or Singapore, you’ll find 4-5 core elements that together create an environment that allows innovation to happen. The first element is people, and that’s basically based around a strong university doing scientific research. And that’s what we are building with MIT. The second you find is policy, some type of government support. Silicon Valley came out of the original DoD contracts in 1950s. We have that government support coming from the Russian government in the first phase of our project. The next thing you find I investment money. And that is initially coming from the government and also from the private sector. You need the money to build these physical assets and to attract people and to fund start-ups. The next element is a physical infrastructure, a physical place, where people can within a certain amount of proximity interact and work together. Digital advances, telecommunication advances have reduced the need for a face to face interaction. But still, being in close proximity – researchers in close proximity to a venture capitalist, students in close proximity to the researchers, multinational laboratories in close proximity to the researchers they are funding – all these things tend to work better when they are in one place. That one place for us is Skolkovo city inside Moscow area, about 100 ha. You put these elements in place and you find, if you get very lucky, they all start to interact and create synergies together, where they start “feeding off” each other and you get a nice virtual feedback loop. And that’s what we are trying to create in Skolkovo. These elements in place simultaneously, once they start working together, they start interacting, they start developing innovation that we witness in other successful innovation centers around the world. _Voice of Russia

But look at what Putin's Russia has done to earlier Russian innovators: It has thrown them in prison, forced them into exile overseas, and in some cases it may have liquidated them, KGB style.

To Putin, innovation represents a threat to his absolute control of power in Russia. All dictators such as Putin, and would-be dictators (such as Obama?), fear the private sector ferment which is likely to spawn all types of new forces likely to be disruptive to the established power blocs. That is why dictators tend to destroy innovation whenever they can, to limit the number of surprises they must face.

Russia needs an infusion of fresh, new blood, and new ideas. Without new approaches, Russia will shrivel and die in stagnant statist autocracy. If not under Putin, then under some other bombastic autocrat. For Russia to live and thrive, something has to give.