TechCrunch Moscow: From Russia with a lot of tech love

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On Monday this week TechCrunch Europe held the first ever TechCrunch Moscow event. We expected 300 people. We attracted around 500 attendees and another 400 went on the waiting list. The whole thing was in English, and the video stream brought in 10,000 (yes, ten thousand) more people watching live. Many more are now watching the archive. which is here. There is a large archive of photos – I have never seen so many photographers at a tech event – and you can work through them by starting at the beginning here.

To experienced Western tech conference goers, the event may look and sound like any other tech gathering. But I was told repeatedly that our event was highly unusual in format, content and, crucially, atmosphere. Not bad for an event which we cooked up only a few weeks ago with Edward Shenderovich of Kite Ventures partner Telemarker, and ably assisted by Maria Adamian and our own Alena Dundas.

TechCrunch Moscow was held at the first Russian private tech incubator, the Digital October Center, located in the historical manufacturing building Krasny Oktyabr. This is significant for a fascinating reason – it’s part of the “Red October” (Красный Октябрь in Russian) building named after the Russian Revolution. So it was appropriate to be holding a revolutionary event there for entrepreneurs. Digital October created a dedicated event web site featuring bios of all the speakers and a dedicated Twitter feed and we used the hashtag #TCMoscow.

I really don’t want to exaggerate, but the whole event was awesome, and its significance is only now beginning to sink in for me. For Russia stands on the brink of a fascinating new age in the role it will play in the new Internet economy. Many predict that it will overtake Germany as the largest consumer Internet market in continental Europe within the next two years.

According to the Russian-based organisation Public Opinion, between 2009-2010, the Internet using audience in Russia reached 43.3 million, or 37% of the population of 139 million people. That’s up from 32% the previous year. In Germany there are over 65 million Internet users as of June this year or 79.1% of the population of 82 million. Even as Germany’s growth flattens, Russia has plenty more room for growth.

Some 81% of Russian Internet users go online from home (including 24% – only from home), 31% – at work. GfK-Rus says that last year in 2009, the proportion of users of broadband Internet reached 59%, mobile access via cell phone – 50%, ADSL – 44%, WiFi and WiMax – 27%.

So Russia, already home to some of the brightest engineers on the planet, is poised to become a fascinating place for tech startups.

But at the same time as this ocean of opportunity heads towards Russia, another ocean is swelling up to meet it, namely Russia’s tragic reputation as a country struggling with vast amounts of corruption and what appears to be officially sanctioned graft. How could one ignore headlines like a Russian judge saying people will be drawn to dictators if corruption is not addressed, headlines like “Seething Cauldron of Corruption“, and statements like “The country’s kleptocracy has degraded to such a level that criminal gangs and government officials have teamed up to create powerful organized crime syndicates.” This, from a Moscow-based newspaper, not some outsider.

I have to say, to read such things, but at the same time be presented by such a tsunami of enthusiasm and the warmest of welcomes from our Russian hosts left me feeling almost emotionally drained. I have enormous respect for startups and entrepreneurs operating in such environments in Europe.

But what needs to be empahasised from this event was what happened on the ground – and this was hugely encouraging.

Logistically the event was fantastic, given that Digital October is not even yet officially open. We had some initial problems with the microphones and A/V, but we adapted.

We had speakers from most of the main players including Mail.Ru, recently IPO’d, and Yandex, although the famously elusive founder of “Russia’s Facebook” Vkontakte failed to make an appearance, which I gather is normal for him. More on Vkontakte later.

There were a large number of great panels and fireside chats. I will do some more posts about the day soon, but for now here is a brief overview.

Zaptolabs gave an overview of their Cut The Rope iphone app which has been hugely successful, selling over more then 3 mln copies on the App Store.

Arkady Volozh, CEO of Yandex, Russia’s leading search engine, was cautious not to disclose any plans about a proposed IPO, although hinted that it was one of many options at their disposal.

Yandex is using a local incubator to spin out companies that it night incorporate or buy. They may well look at internationalising their brand but for now want to extend their reach into other former Soviet territories and monetize better there. “We are now overqualified for just one market,” said Volozh. Their priorities are search improvement, going global, maps and geolocation based services and social graph search. There are no plans to create their own social network – more of a specialized partnership with leading social platforms in Russia. I assume he meant VKontacke.

Igor Shchyogolev, the Minister for Telecommunications made a series of slightly unconvincing statements about avoiding a top down approach to telecoms but he mad an interesting aside: he admitted his own son had used a filesharing network, but had found it much easier to pay for apps and music via the iPhone, an example where legitimate ecommerce means would gain traction for just being easier.

Talking on the clone market, Elena Masolova told how here GroupOn clone was bought by GroupOn and said clone were going to be a way for Rusiian companies to learn before going on to create more innovative companies. I’m not sure I agree, but when you have a market as large as Russia I can see here point in purely pragmatic terms. Dmitry Stavisky of Evernote put the contrary point of view.

In a fascinating panel about people moving back to Russia, entrepreneurs Damian Dobershtein of KupiVIP and Kirill Makharinsky of Ostrovok.ru told stories of how they decided to head to Russia for the opportunities there. New billionaire Dmitry Grishin, the CEO of Mail.ru was interviewed by Emma Barnett of The Telegraph, was revealing. More of that later.

Presidential advisor Arkady Dvorkovich took time out from a event at Skolkovo, Russia’s new innovation centre, to address the delegates. This guy deserves a blog post of his own, but suffice it to say that it’s rare to find a government advisor at this level on Twitter and actually using it. And let’s just remind ourselves that this is in Russia.

In an advertising panel Annelies van Den Belt of SUP and Derk Sauer of Independent Media, talked about the digital media and advertising market in Russia which is clearly growing, though hurdles remain, in particular regarding how publishers react to the rise of social media. Demyan Kudryavtsev, Anatoly Karachinsky, Guy Faulconbridge took part in what effectively became a debate about the future of media and journalism.

And a panel about investing in Russia featured Yan Ryazantsev, Igor Taber, Pavel Bogdanov, Mattias Ljungman, Alain Caffi, Sergey Karpov, moderated by Edward Shenderovich. Again, more soon.

Serial investor and entrepreneur Morten Lund made an appearnce via Skype to get the crowd warmed up to creating a startup. Finally we had a Start Up Pitch Battle run by Arkady Moreinis featuring nine early stage startups in Russia. Again, a separate post is coming.

For now, here’s a Reuters TV report:

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