Building a New Silicon Valley in a Post-Soviet Dictatorship
With Riga in the rearview mirror, the bus plods north. Latvia’s flat pine forests flash past under low grey clouds, but Oleg Kuryan, seated towards the back, is interested in neither. Right now, he’s in crisis mode.
Just before the bus left the capital city, he got an automated e-mail that his website was down: His Belarusian data plan hasn’t worked since the bus crossed into the European Union. And he has no one to call, since both of his business partners are sitting across the aisle.
“That’s one thing we’ve learned already on this trip,” Kuryan says. “We need to have at least one person not going anywhere.”
Kuryan works his way up the aisle to the one person on the bus with a solid data plan: me. I hand over my iPhone and Kuryan sets to work, ticking off some of the challenges Belarusian entrepreneurs face as he types. “The government’s focused on supporting state companies, even if they’re not profitable—tractors, big machines. We are closed in borders. We don’t have good relations with the European and, especially, US markets because of our government,” he says.
And yet, like startup founders around the world, Kuryan, 29, brims with optimism. Because whether in Belarus or the heart of Silicon Valley, the only surefire way to fail is to believe failure is inevitable. “In any country,” Kuryan says, “it is possible to earn money.”
Still, it’s not easy. That’s why, not so long ago, a few dozen fledgling entrepreneurs boarded a bus in downtown Minsk to learn what the tech scene looks like beyond Belarus. Dubbed the Baltic Bay Area Road Show, the trip would take them from Minsk to Helsinki, Finland and back in a little less than a week. Along the way they’d stop in Lithuania, Latvia and Estonia – three of Europe’s fastest-growing and most dynamic economies – looking for business partners and moral support. Most of the 30 entrepreneurs on the bus had ponied up $325, a few weeks’ pay for the average Belarusian, to come along.
The schedule so far has been brutal: a pre-dawn start, an hours-long wait at the border, an afternoon of networking in Lithuania, and a practice pitch session the next night in an attic co-working space in Riga, Latvia. For some, it’s their first time pitching in English, or outside of Belarus. Or ever, at all.
Kuryan’s company, Boostant (“Boost, like boost your business,” Kuryan says, “and ant is an insect who works hard”) sets up social media contests for marketing agencies. He’s a natural salesman, brimming with confidence. He’s tried to pack extra sales meetings with marketing firms in Latvia and Lithuania into the trip’s already crowded schedule. His hero is serial entrepreneur Elon Musk; his goal, to go to space someday. When I suggest he might somehow be at a disadvantage in the Internet start-up world, Kuryan bristles.
Maybe, he replies, being from an impoverished, politically repressive former Soviet republic might actually be an edge. “What I like about Belarus is you’re so limited in opportunities,” he says. “The Belarusian mind is always thinking they need to find some hack—a way to earn something from nothing, all the time.”
The “potato republic” of Belarus is no paradise for entrepreneurs. It is Europe’s last dictatorship, a benighted holdover from the Soviet era whose president has held power since 1994, thanks in no small part to a KGB that actively intimidates and harasses opponents. Belarus ranks as one of the most corrupt countries in the world, and four-fifths of its economy is state-owned. So perhaps it’s not so surprising that regulators and citizens alike regard tech start-ups and small businesses with no small amount of skepticism.
But that attitude isn’t unanimous. In the past few years, a small, determined, and growing community of entrepreneurs has tried to leverage Belarus’ deep pool of programming talent to foster a start-up scene. The goal is to change Belarus’ business culture – and just maybe its politics.
Tapping it may be tough, but there’s plenty of potential: When it comes to tech know-how, Belarus is no backwater. Once part of the Soviet Union, Belarus was home to some of the USSR’s most sophisticated military manufacturing industries, from optics to electronics and computers. To feed the demand for engineers, the Soviet-era educational system emphasized science, programming and math, with Belarusian schools like the State University for Informatics and Radioelectronics among the best technical schools in the communist bloc.
Then the Soviet Union fell apart, fragmenting into republics that had to make their own way in the post-communist world. Belarus’ educational system was one of the few assets it inherited when it gained independence in 1991. Its universities and technical schools, once the pride of the Soviet Union, still turn out thousands of engineers and programmers every year.
But with no tradition of entrepreneurship, all that technical expertise hasn’t translated into a sizeable start-up scene. Belarus, like many of its East European neighbors, has instead become a destination for American and European companies looking to quietly contract out the grunt work of the web and app economy.
Ironically, this attention from outsiders may contribute to the country’s own startup scene lagging behind. Talented programmers can make four times the average Belarusian salary at outsourcing companies. Risk-taking is frowned upon. The country has no venture capital firms. “In Belarus, there’s a very big outsource way of thinking. We work for someone, and get money. We are poor, and we work for rich countries. We do the code, but we are not the owners,” says Dmitri “Dima” Dudin, an idealistic 30-year-old whose Vans and baggy black hoodie belie the two years he spent designing radar systems for the Belarusian army. “This is the mentality there for ten years, and it’s hard to break.”
Imaguru, a scrappy, solitary Minsk start-up incubator that’s organizing the trip, hopes events like the Road Show can help – and perhaps alter the country’s moribund political landscape, as well. “If you read 1984 by George Orwell, that’s what we have,” says Ksenia Maksimava, the slight 23-year-old Imaguru employee who’s in charge of keeping the road show on schedule. “Being a company that is trying to develop entrepreneurship in Belarus is already a kind of opposition.”
In November 2013, Imaguru opened a 9,000 square foot co-working space, Belarus’ first, in a building that once housed a Red Army gun sight factory. The landlord and reluctant authorities had never heard of co-working, so after six months of bureaucratic battles they called it a “business club” to secure the necessary permits. “We try to change society with the business, try to make our country better,” Maksimava says. “I’m an optimist. You have to be, to survive.”
‘Money, Money, Taxes, Taxes, Money’
The sun is setting over Tallinn, Estonia—a city famed for its technological successes, most notably Skype—when the bus pulls up outside the US ambassador’s residence. Spilling out into the dark parking lot, the group buzzes with excitement: Belarus hasn’t had a US ambassador since 2008. By order of the Belarusian government, only five US diplomats are allowed in the country at a time. Maksimava retrieves token gifts from underneath the bus. “We give him gift, maybe he gives us food,” says Kuryan, dragging on a cigarette. “And visas!”
Inside, chairs are crowded into the residence’s foyer. The evening’s keynote speaker is a Silicon Valley contract lawyer. He reads from notecards, unloading terms like “parent-subsidiary flip,” “collapsible transactions,” and “execution path” on the bemused Belarusians. “You’ve got to pay attention to the tax issues,” he says. “You want to get it done before the US lawyers get involved.”
Afterwards, the aspiring entrepreneurs confer over the hoped-for chips and salsa. Lawyers and US tax law don’t seem to be high on their list of concerns. “We are not allowed to open companies and bank accounts in another countries without permission from the national bank,” Kuryan says. It’s a huge impediment, since inflation sometimes hits 50 percent a year, making the Belarusian ruble as good as worthless.
The tax-law presentation strikes others as subversive. “All I heard was ‘money, money, taxes, taxes, money,’” says Dudin. “That guy was just saying how to avoid US taxes, with the ambassador sitting right there. How is that possible?”
Late that night, over microwave lasagna in the kitchen of a Tallinn hostel, Dudin says he was shocked to discover the man taking coats and setting out folding chairs as everyone arrived was an American diplomat, not a butler. It seems you can take the boys out of Belarus, but it takes more than a bus ride to take the Belarus out of the boys.
Next stop, Finland, a three-hour ferry ride across the Baltic Sea. At AppCampus, a Nokia-funded startup incubator on the outskirts of Helsinki, the Belarusians get ready to present their ideas for the fourth time in as many days.
The competition is fierce. The room is filled with entrepreneurs from Finland, Estonia, Israel, Spain, Germany and the US, all hardened veterans of dozens of pitch sessions. The Belarusians are out of their depth. After one early presentation, AppCampus director Paolo Borella suggests practice time in front of a mirror.
In the back of the room, Kuryan looks nervous for the first time, shifting uncomfortably in his chair until it’s his turn in front of the projector. He tries a new line on the bored-looking audience. “Even a technologically challenged babushka can do it in 15 minutes.” Crickets.
The gray sky outside has turned nearly black by the time Dudin clicks open his first slide, which reads “Stop Web Disability.” At every pitch session so far, Dudin’s been the group’s star. His product is an easily-installed plugin that uses a laptop’s webcam to track a user’s face and move the cursor. He calls it … “Stop Web Disability.”
Dudin wrote the whole thing in a 24-hour hackathon, together with two friends from Minsk’s State University of Informatics and Radioelectronics. He tells the audience the plugin could turn cheap netbooks into web-accessibility devices for people paralyzed from the neck down who can’t use a mouse or keyboard but can still move their heads. It might change lives in places like Belarus, Russia, and China, where there’s Internet but few other accommodations for the disabled. “The Web is the most powerful social space invented, ever,” he says. “I think it’s a bug in the system that these people can’t use Wikipedia, can’t use Twitter.”
It’s a TED-level dream, with a terrible name, middle-school show-and-tell level presentation and a business plan to match. The first question from the audience: How’s he going to make money? “I hope for the help of social organizations, maybe donations. But the next steps, I don’t know,” he says, shrugging. “I think ideas should come from the soul, not how to monetize it.”
Afterwards, I ask Borella for a review. “The Belarusians are good on technology. They code, they fix, they get things done. But they need a lot of practice on stage in front of an audience,” he says, almost outraged on Dudin’s behalf at the disconnect between the program’s potential and Dudin’s presentation. “That last guy? What the fuck? An American would have sold you the moon.”
The next day is SLUSH. It’s Europe’s biggest start-up pitch-fest, a carnival of booths, slickly designed presentations, and hard sells. Companies ranging from garbage-picker robots to an outfit that hopes to be the Vistaprint of press-on nails were all there, hoping to catch the eye of venture capitalists, clients, or journalists. These days, SLUSH (motto: “Welcome the dark. Embrace the cold”) draws thousands of participants, all jammed into a cavernous former cable factory on the outskirts of Helsinki.
Imaguru hadn’t registered for a booth in advance, nor had any of the Belarusians on the trip signed up early enough to snag one of hundreds of pitch slots. Nonetheless, Maksimava has come a long way to be here. She and another Imaguru organizer unload their booth materials and the Imaguru banner from beneath the bus and join the steady stream of people heading through the front doors, as surreptitiously as one can with a black bag of 12-foot long metal poles. Boostant’s Kuryan nodded his approval. “They do not know if they can, but they will try,” he says. “It is typical Belarusian method.”
After surveying the crowd – and the security guards – inside, they scrap the original plan, stashing their poles under some bleachers not far from the front door. They then proceed to secure two tables right next to the information desk, using laptops, coats and backpacks to occupy prime real estate near the event’s main stage. The Finns are too polite to ask them to move, even after they unfurl a rolled-up “Baltic Bay Area Start-Up Roadshow!” banner.
Nokia employees in blue and white-checked shirts abound. At the lunch break, members of Team Google project a big-man-on-campus image with matching blue varsity jackets; Rovio’s reps are dressed down in embroidered Angry Birds hoodies. Kuryan, in a thin green Boostant t-shirt, shivers in the Soviet-length line for baked potatoes.
The trip’s entrepreneurs soon scatter, networking and taking notes on pitches. The Imaguru organizers get busy trying to recruit mentors. They fearlessly approach the biggest names they can find with invitations to visit their co-working space in Minsk. Videographer Lena Drozdova, 34, who’s documenting the trip from start to finish for Imaguru, lands a short interview with former Rovio CEO Peter Vesterbacka. But when she downloads the video to her laptop, she’s nearly reduced to tears – there’s no sound.
Undaunted, she spots Vesterbacka in the crowd a few hours later and decides to try again. Dragging him back to the Imaguru tables, she asks him what he’d tell folks back in Minsk thinking about starting a business. “If we here in Helsinki, not the center of the world, can do it, you can too,” he yells into the camera. “Why don’t you get off your ass and get it done?”
It strikes me as an asshole thing to say. The conference itself is evidence that start-up entrepreneurs in Belarus and Finland have little in common but their longitude. The Belarusians, though, are unfazed, crowding around taking cell phone pictures of the balding multi-millionaire in his red hoodie. “He had no idea where Minsk is,” Drozdova says later.
By 6 pm, SLUSH is heating up. The pitch stages have turned into bars, and someone else is picking up the tab – maybe Supercell, maybe Nokia, no one’s sure. Everyone snags as much beer as they can carry, stuffing coat pockets full of Finnish brew. When I talk a bartender out of a near-full case, I am almost awarded honorary Belarusian citizenship.
Buzzing from their brush with Vesterbacka’s startup mojo, the Road Show crew descends on the “Rovio Room,” decorated with Star Wars-themed plush Angry Birds merchandise. Angry Bird Chewbacca and Darth Vader pillows the size of pumpkins are passed around for selfies. Constipated-looking Rovio employees shoot dirty looks at the Belarusians as the volume climbs. “I think we’re too Russian-speaking for the Rovio room,” Dudin says, glaring back. They take their beers elsewhere.
The next day is a hungover whirl of pitches and networking. No one in the group takes it as seriously as Nikolai Kekish, a thin, 27-year-old programmer with a blazer and a leather briefcase whose company, CatalogLoader.com, uploads inventory to online stores. Kekish says he collected precisely 25 business cards, met one competitor, and spent the rest of his time watching pitches.
Two days at SLUSH left Kekish more confused about the start-up scene outside Belarus than when he left Minsk. The business plan slides he’s seen are especially puzzling. “I don’t understand how not to receive revenue for three years. It’s a strange model for me,” he says, so earnestly I think he’s pulling my leg at first. “They’re not profitable, and they won’t be profitable for five years? Maybe I don’t understand something. ”
Outside in the dark, the bus is idling. The drive home to Minsk will take 24 hours, plenty of time to reflect. Kekish knows he has his work cut out for him. “Our presentations are ugly and not very interesting and we looked not prepared. From Finland, they were prepared by a designer. The guy who is speaker is really self-confident. We can do it, but it takes one or two years to learn to be good on stage. It’s easier just to hire someone,” he says. “I don’t see barriers. If you are an entrepreneur, your only task is to find a way how to do it.”
The Road Show sets off again this year.