Land of No Opportunity for Russian Zuckerberg
Comment of the Day

April 22 2014

Commentary by David Fuller

Land of No Opportunity for Russian Zuckerberg

Here is the opening from this informative column by Leonid Bershidsky for Bloomberg:

It took the man known as "Russia's Zuckerberg" fewer than six weeks to go from extolling the virtues of his country's business environment to emigrating, possibly never to return.

Pavel Durov, 29, is the founder of VKontakte, the social network that got its start by copying an early version of Facebook and became twice as popular in Russia as Mark Zuckerberg's creation. According to TNS figures from January 2014, VKontakte had 52.7 million monthly active users in Russia to Facebook's 25.4 million. One of the reasons for such popularity is that pirated videos and audio tracks, as well as porn, are widely shared on VKontakte.

Durov, however, is a hero to many younger Russians who live on his network. So when, on March 11, he came out with a post listing seven reasons why they shouldn't leave Russia, they listened.

"In recent months the subject of emigration from Russia is growing more and more fashionable," Durov wrote. "As is my custom, I will go against the trend."

Durov's seven reasons to stick around ranged from low taxes -- Russia's flat income tax rate is 13 percent -- to the beauty of Russian women: "As someone who spent years outside Russia, I can confirm that the percentage of pretty girls in Russia is substantially higher than in most other countries." The tech entrepreneur also praised his native country for the "freedom of expression" it provides ("a creative attitude toward restrictions is our national feature," he wrote), and its "development potential."

On Tuesday, however, Techcrunch published excerpts from an e-mail correspondence with Durov. "I'm out of Russia and have no plans to go back," the VKontakte founder declared. "Unfortunately, the country is incompatible with Internet business at the moment." He went on to say that "I'm afraid there's no going back, not after I publicly refused to cooperate with the authorities. They can't stand me."

He was referring to his recent claim that, as chief executive officer of VKontakte, he refused to provide the Russian counterintelligence service with the personal data of Ukrainian activists who ran groups on the social network. Durov said the decision cost him his 12 percent of the company, which he sold to a partner and ended up in the hands of Alisher Usmanov, Russia's wealthiest man. Usmanov's now controls VKontakte.

David Fuller's view

This is another in the long list of reasons for not investing in Russia while an authoritarian kleptocracy is in charge.

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