At the request of the "Start-up" project, venture capitalist Alexander Galitsky talked about how the abnormal succeed, why there is nothing in common between democracy and the creation of companies and how smart kids in the U.S. are different from smart kids in Russia.
Let's take the most successful examples in the Russian IT-Business: Yandex, Acronis, Parallels, Kaspersky, Veeam, Aelita. What do they have in common? Why did they make it, and others did not? The answer is very simple: all these companies are created and brought to a certain level by people that you call in English "crazy." In Russian, "Sumasshedshie" doesn’t sound too bad, but sometimes can be perceived in not quite the right manner. The creators of the above companies are abnormal people in a good sense. In today's world this is the main force, as they look at the world with completely different eyes than "normal" people. And their way of life is quite different than the usual person.
Recently, I heard somewhere that allegedly pre-2001 Russia had no IT-business. This was funny. In fact, the history of the Russian IT industry and software starts back in the 50’s. For example, a computer with RISC architecture was designed by the team of Evgeniy Shalupov, who later worked on my team back in the early 70’s and in 1972 flew into space. And if you remember a group of young guys from the Novosibirsk Akademgorodok, who in the mid-80’s created the revolutionary computer and operating system "Cronus," then it's safe to say we had a lot of great development, but there was no ecosystem for their commercialization. Our weakness was that we were doing things that were unique, but we were not focused on their commercial introduction. The Soviet Union had very serious innovations, but they rarely got into mass production, no one wanted to put these goods into the mainstream supply, everyone worked on exclusive versions. And these exclusives things, yes, they were cool.
When perestroika began, I was 30 years old. A little bit before that date, I joined a limited team as a young specialist at elite defense NGO ELAS. I started as a junior research assistant and in 1987 became the chief designer. I "took off" in the creation of software for the first satellite reconnaissance and space systems for electronic surveillance. We produced a video monitoring system for potential enemy territory to recognize objects and convert the analog signal to digital form and pass it through communications satellites. In the early 80’s it was a miracle. Previously, this was only seen in Hollywood movies, but now it is the basis of Google Maps and is available to any child.
Alexander Galitsky at a plenary session
In the early 90's I came to the government for support to help develop these satellite systems. And one person I respected, the then-deputy prime minister, replied: "We have no money for technology, we have money only for the construction of democracy." And that phrase so "inspired" me that I decided to retire from public service, because I did not and do not understand the construction of democracy, and when creating companies or complex technologies there is no democracy.
My first direct contact with foreigners took place in 1990. It was Bill Joy, John Gage (co-founders of Sun Microsystems), Rusty Schweickart (Apollo 9 astronaut) Astor Dyson and another group of people. Meetings were organized as follows: the curators from our special service led us to a restaurant, we sat down and talked. Language was naturally such that our conversations were mostly with our hands. But the main thing was clear without words. At one meeting, I just showed them a 22-layer polyamide plate. Everyone was making 6-layer plates, but in our institute we had 22-layers, thin. The guys from Sun were just stunned when they saw it. And not because it was secret - they were simply overwhelmed by our technology, for them it was a work of art. In the end, they came to us and we showed them a few things that struck them. For example, at the time I pulled out the satellite protocol IP - what is today called the Internet. This was already in the realm of "Star Wars" projects. We had done a communications system for satellite constellations and their connection with the earth and showed them actual work. To them it worked like a drug. They immediately wanted to collaborate.
My history with Sun evolved as follows. They invited me to see the Silicon Valley. After that trip I was left puzzled: damn, why isn’t our technology working there, why are we dead weight? Our technologies are competitive. At that time I knew nothing about the venture business, but as a result my colleagues and I developed a model - take Soviet technology that we thought would be suitable for the global market, give them the initial money to start in California, develop these companies in Silicon Valley, raise additional money from foreigners, and when the company had grown, sell it. Thus the country would make money, and our technology would enter the world market. We went to the Kremlin, to the officials soon to be involved in the State Committee on the State of Emergency. We spoke with them on August 12, just before the coup. They all liked it, all the suggestions and the calculations, and in the end we agreed on everything. On August 18, my guys and I flew to Teletsky lake to a closed academic conference on signal processors, and when we returned it became clear that there would no longer be any talk about agreements with Kremlin leaders.
Annual report meeting of Almaz Capital Partners, Lisbon, October 2011
I then already had e-mail, I even divided people into two categories: those with e-mail were my people, those without were like foreigners. When I returned, I saw in my inbox a request from Sun for 200 green cards for immigration to the United States. For me and my staff. I sat down and wrote, "Thank you, but the revolution has triumphed, there is no need for anyone to emigrate." All my guys were terribly upset about this when they found out. However, Sun reacted to all of this in the following way. They sent 20 workstations that then cost 25,000 dollars each to my name. At customs, 40 boxes, monitors and computers, were waiting for me. At first, I honestly tried to pass all this stuff to my state-owned enterprise, but under Soviet law there were no rules for expensive donations from a private source. And so I began to worry: I didn’t have a warehouse, it wouldn’t fit in the apartment. What to do? I started to call my friends, and one of them said to me: "What are you worrying about, I'll give you money. Rent an office, open a private enterprise." And so here I went into a private business named “Elvis.” There was nowhere to put the computers ...
In January 1992, Sun offered us a task - to implement the protocol to connect wirelessly to multiple computers in a network with according to a given size and standards. Hardware and software. We issued an order, they said, to Motorola and to some other company, why do not you try it, we've seen what you've done for the space industry. Now this was already something interesting. Two months later, we were all riveted. In fact, what is today known as WiFi - Protocol 802-11 was the result. But it turned out that no one needed it at that time.
It was too early, this technology was just ahead of its time. It happens. No one could understand why you need to transmit information at a rate of 4 megabits per second. They tried to show it then to leader of the mobile communications company Ericsson. They said, "19.2 kilobits per second is sufficient, 4Mbit has no commercial applications." I offered it to our scientific and defense structures. The former told me that the technology had to application for Russian science. The latter took a long time to decide, but decided not to replace the cables with radio signals in missile systems. Next came NATO. As a result, we sold this to the U.S. government, which went forward with the deal just because it was afraid we might sell our designs and patents to terrorists and then somehow use it for their own nefarious purposes.
In the spring of '93 we took a deal with Sun. They bought 10 per cent of our company and signed a five-year cooperation agreement. We then had not yet sold anything to the U.S. government, we were poor people, and for the guys from Sun it was the first investment in their history - and it was in a Russian startup with the strange but great name ELVIS +. We developed a number of solutions for Sun in the field of network security. The developments were many, but one is worth mentioning separately. At the end of 1994 we took and made VPN for Windows. Sun agonized over this for a long time, but could not crack the Microsoft driver - probably for ethical reasons. And we cracked it. This made me famous and respected in the Silicon Valley and beyond. Journalists, investors, executives of the world's technological leaders, and politicians sought meetings with me. Not to mention the intelligence agencies, both American and Russian. The fact is that our implementation of VPN was the first in the world and became some kind of exploding bomb, as we protected the internet from the security services and took it out of their control. We changed the rules of the game.
If you look closely at all the big global IT-companies, it turns out that they were created by people from 22 to 30 years old. All the world's discoveries are made by scientists at that age, in the years when brains work better. But if you study the history of most start-ups running in California, it would appear that the most successful of them are run people who are on average 40 to 60 years old. Why? Because at this age experience and knowledge begins to work. There is another statistic. Not many business school graduates can become good leaders of innovative startup companies. The reason is simple - they cannot take risks, they can no longer be crazy, since they follow traditional patterns of business. There are many examples where people created a very successful company, received an MBA and could no longer replicate their own success: tunnel vision prevented them.
I believe that there is a clear distinction between the people who create knowledge, and the people who use this knowledge to create something useful. The first, roughly speaking, are scientists, the second, engineers. And there is a third category of people - people who are able to "fly up and come down," that is, they can see the future. Such people are very few. They see the future, see what should happen. They understand that if you work just the way the world around you and customers say, you will stay behind because you cannot outstrip their way of thinking. And this applies to any industry, not just IT. Any creative work begins with a certain vision of the surrounding space and attempts to calculate the future. The question is how to find these people and move them so that they can create great projects.
What is different about our current elementary schools and those of the "bourgeois"? In the western learning environment there are a lot of people with different kinds of abilities. And at the same time they do not have the same criteria that we have. There, for you to be called gifted, is not necessary to just solve math problems well and sit quietly in class. There they base this title on principles of selection that are sometimes striking: they are much more multi-faceted. In our schools, you can see a lot of talented guys who get hammered down in the 3rd, 4th, 5th, or 6th grade, and they don’t rise to the top, because the they are close-minded, intimidated. As a result, we often see very capable adults who may have received a good education, but did not show their unique abilities. At some time in the process of realizing their talent, it was artificially blocked. In Soviet times, it was still somehow done: there were physics and mathematics schools, there were the Olympiad, there were other tools that discovered talented children, giving them the opportunity to develop talent. Now this almost doesn’t exist at all. But people are the basis of all progress. Nothing besides the accumulation of knowledge and talented people has been found or invented to move the development of humanity. The smart always overcome the strong. Sometimes not right away, but in the end they always win.
Source: gazeta.ru