DFJ's Don Wood Talks to Russian President Medvedev

May. 26, 2010

http://www.nanonewsnet.ru/articles/2010/don-vud-dfj-prezidentu-medvedevu-luchshee-chto-mozhet-sdelat-pravitelstvo-ubratsya-s-d

Don Wood comments to President Medvedev and his comments back to Don---Google-translated version

Don Wood, DFJ - President Medvedev: "The best thing that could make the government - get out of the road"

My company in the market for 25 years and invested 650 startups. We did this not only in America but in India, China, Brazil, Europe, and would like to start doing so in Russia. We have already established a partnership with VTB and Rusnano to establish a new venture fund, and we are enthusiastic in this regard. We are ready to bring its 25 years of experience, to help local managers here in Russia in search of a new generation of entrepreneurs.

Our company was lucky: among our past investments have hotmail, which is used by 400 million people, Skype, a free Internet calling service, which is used by 800 million people worldwide, a Chinese search engine Baidu, which is used by 400 million people. Among the prominent companies that we are funding right now, is a manufacturer of electric Tesla, who this week drew the money Toyota, a little earlier - money Daimler-Benz, and if all goes well, a few months Tesla will be the first automotive company since the Ford , which appeared to the stock exchange in the U.S.

We are also funding a biotech company Synthetic Genomics, which this week fell on the cover of Life - the scientists of this company succeeded in creating artificial life: a computer program they were able to collect bacteria, which began to multiply myself. This historic event, and it had created new company that relies on venture capital.

Here in these companies we invest in the U.S.. Over time, the company grown in venture money, created 20% of U.S. GDP. Venture capital industry is very important. These companies have grown from wild ideas, wild ideas, put forward by the 20-year old men. In fact, if you look at great companies, based in the U.S. - Apple, HP, Cisco, Google, IBM, Yahoo!, Facebook - all of them were founded over 20 years. At this age, people are afraid of nothing. They have nothing to lose, and they are willing to take huge risks and throw a defiant challenge. I know that you, Mr. Medvedev, the age of 25 founded the company themselves. I do not know what she did, but it was the company. And motivation, entrepreneurial motivation - that it must maintain and Russia.

This morning from Victor Vekselberg, we heard a lot of innograde. Vekselberg has contacted us for advice. He said - we have a plan that you can advise us? And our group gave him quite a few valuable tips. He wrote everything down and eventually withdraw from the meeting with five pages of advice.
But he asked us to convey their advice to you. And I made a short list of our recommendations.
First - we believe that the establishment of a special city - it is a noble attempt. But it - only a piece of the solution. Entrepreneurship, innovation - a state of mind, not a place or building. Russia has yet to make a real leap to such a state, but this should happen, one important thing about her, we spoke too - you're in Russia must begin to respect the business, in every way to support and encourage him. Young entrepreneurs should be your heroes. Such is the case in Silicon Valley - the entrepreneurs we have real heroes, not politicians. Politicians heroes in Washington.
We also know that 9 out of 10 (and in recent years and even more - 19 of 20) of entrepreneurs fail. We forgive them their failings - we give them a try again and again, we always give them a new chance.

Entrepreneurs should start a business. And not only in Skolkovo: let them begin in the same St. Petersburg, where you are in the 25 years opened their business. You must create a virtual innograd across the country.
Perhaps, in Skolkovo you will have the resources to help entrepreneurs build companies, both in Skolkovo, and throughout Russia. Above all, what you should be sure - you encourage entrepreneurs nationwide.
One of the important things - each employee should receive a package of its shares. This practice has appeared in Silicon Valley, yet at the stage of its inception, there has been a pioneer and Hewlett Packard. They gave each employee a piece of the company - this may require some changes in legislation, part of the options - but it is, stock ownership, has created Silicon Valley.

It is also important to build innovation centers around good universities. The valley has arisen around Stanford University and UC Berkeley. They hold a very open policy: if a teacher or a student something they invented, they have an idea, they can withdraw from the university and create a company. Indeed, it was this way that the current President John Hennessy at Stanford University: he was a professor at Stanford, then he founded a very successful, and retired from the University, then returned and became president, and he understands the importance of university innovation ecosystem. Construction around the university - is a key thing.

Another piece of advice from our morning meeting - not so important to create incentives and incentives such as tax breaks or grants. That's good, but more importantly - to remove barriers to innovation. They're a lot, and the best thing that could make the government - to get out of the road.
You must create a good legal system, protection of intellectual property and private property, but you must leave the road and enable entrepreneurs to innovate.
Do not place the framework. I know that Rusnano - is a great organization. But why are they engaged only in nanotechnology? Predicting exactly where entrepreneurs will innovate, extremely difficult. If you brought them to innovate in a particular area, it only limits their opportunities.
I think it's important not to put sectoral restrictions. Do not say: "innovate here!". Open the door! Maybe it is in truth will be nanotechnology, but in reality there are many more important sectors.
The important thing - to attract foreign capital. Raise funds in the Western partners, the company attracts investment from Western foundations, and allow investors to register where they want. About 10 years ago, the Chinese allowed entrepreneurs to register a company offshore, because investors are afraid to invest in China itself. As a result, Chinese companies, even though registered in the offshore, poured a real flow of investment. Today, investors are not afraid to invest in the company, whose headquarters is located in China.

I would suggest you to Russia not to put more of the hukou restrictions for investors who do not have to force them to register it on the territory of Russia. Let recorded, where they want - do not put rules and restrictions.
Generally should not be tied to the boundaries - the boundaries of the modern world with its telecommunications, it does not matter. Do not lock people in one city or one country - to teach them in a good university, and give to innovate.
Another thing: I know that you are interested in energy efficiency and clean technologies, and actively invest in this direction. It is very important for the venture industry - is the fastest growing sector of venture capital industry, what about we call clean tech. This wind, sun, biofuels, efficiency lighting, for example, LED. If those dollars will go to the LED, it will save up to 20% of electricity. I know you have their own program of transition to energy-efficient lighting. So, this is now the second largest venture capital investment sector, and I want to say - when you invest in the company, these companies must be competitive in the global market. If this is a Russian company, it must be able to sell their product in the U.S., and vice versa - an American company, having achieved a breakthrough, should be able to sell their product in Russia.
The last thing I would mention: much of the foreign investment pouring into Russia, the direct investments. People buy real estate, shopping malls, cable television and other infrastructure. That's good, but it is not something that will change your economy. Economics are changing breakthrough innovations, which supports the venture capital. A venture capital abhors restrictions. Be alert and to distinguish between direct investment in reliable, low risk projects and high-risk venture capital investments in innovation. Keep the past. Then over time, and you have venture capital industry and technological innovations will provide 20% of GDP. That is my advice to you.

http://www.unova.ru/article/3685
President Medvedev - Don Voodoo, DFJ: «We have created their own companies to realize their ambitions and make money

Head of Draper Fisher Jurvetson presented to the President their ideas about how the state should support innovation. Russian President Dmitry Medvedev said: The state eventually withdrew from the road, but before that he will not light work. He told the president and the future Rusnano - the company eventually would need to leave the market.

President's press office

Meeting with the delegation of venture funds in Gorki
More information about the VC Trip:

inspiring, all-American speech. In many respects, would agree, but made his remarks so that you know my position. 

I totally agree with you that we should actively involve young people in this business, for innovation projects, venture capital projects. First, the youth is entirely different working head. You gave an example of a number of U.S. and world brands that have been created by people aged 18-24 years. And they in this period earned a lot of money and created the brands that are leading brands in high tech. Question - how to do it. 

You said that businesspeople need to be heroes, not politicians. But I can say - according to some research that I recently watched 90% of people want to be politicians, because he believes that this is the shortest path to success in life. Previously, by the way, this was not, it's amazing. This was not in the 80's, early 90's when I started my business experience, which you mentioned. 

By the way, I moved for two reasons: First, I like any person aged 23-24 years was ambitious, and secondly, I just did not have enough money. That is why we created our company: to realize their ambitions and make money. And we were partially successful. 

As for how to do business heroes. This is a difficult problem. This is a problem on the one hand, public policy, on the other hand, the responsible behavior of the businessmen who have to give the best examples of behavior. 

As to the barriers and opportunities to invest in certain areas. I think what you are saying is based on some misunderstanding: we have no problem with where to put the money, nobody will ever dictate business, at least, the last 15-20 years, which put the money earned from certain operations. 

The problem different: when we say that it is necessary to engage in innovation, invest in high technology, see how it is done in the same United States, we are told - it's great of course, but it would be better to invest their money in oil and gas. And this is a real Russian problem: we are so rich in natural resources that we have almost all want to do it in this business. The U.S. is not a poor country, but you have this period had long since lived, and now on it can be judged only from books and movies, some of which received an Oscar. But for us it is a problem. 

No one dictates businessman, does not tell him that you should invest in this area. It is necessary to have the most representative of the business was understood that the better he will take the risk, but create something new, put their money in this area, which can lead to breakthrough success. And maybe he will lose money. 

But this way of thinking, a paradigm of thinking. If a person is ready for this, he makes a risky investment, but if not, then it earns on other things: on speculation in securities, was going into the industry, is engaged in a conservative business. Of course we need to promote and show the best examples of how such a business path can lead to success both for the individual and for the country as a whole. 

Well, with respect to Rusnano. This is a good structure, but I would not exaggerate its capabilities and influence. It is good that we created it, I'm happy that it works, is engaged nanotehnolgiyami. But the ultimate goal is not to ensure that it worked and developed: the ultimate goal is to have new technology, firstly, and secondly, he began to actively develop private businesses. 

In the future, I believe the role of public infrastructure companies must be very small, just a minimum. If this sector will start to live your life, why do we need such large infrastructure companies? " 

They need to manage large industrial processes. For example, in order to manage the natural gas industry, we probably need a large government structure, or to produce any defense articles. 

I think that Rusnano and honorably do their duty, should ultimately be referred their powers to private companies or companies based on a mixed capital. And so I think this will be the execution of the Russian nanotechnology company's mission, but until they do a very important matter.