A “one that got away” shady business deal in Russia
Nine years ago, a colleague-of-a-colleague had a connection to someone who worked under Putin. Putin wanted to beef up Russia’s economic presence in the East as a hedge against the West’s global business dominance. Putin had selected Vladivostok—a port city abutting China and the Pacific—as the next big thing for Russian entrepreneurship.
Putin’s subordinate had reached out to the colleague-of-a-colleague, who reached out to me. My work is building entrepreneurship programs for governments, organizations, and accelerators. Russia has always been interesting to me. I’ve done smaller projects in Georgia, Armenia, and Azerbaijan. That was when I learned how hard it is to start a company in the Eastern Bloc.
Entrepreneurship isn’t easy anywhere. But entrepreneurs in the U.S. deal with minimal corruption. They can raise angel investment (this form of funding doesn’t exist in most parts of the world). Cultural perceptions around entrepreneurship are wildly different (In the United States, entrepreneurs get respect. In many cultures, “entrepreneur” is code for “can’t get a job.”). I’m pumped about this Russia project because of the challenge it represents—for entrepreneurship, the eastern bloc is playing on hard mode.
The guy I’m speaking with meets with me a few times. We put together a proposal. Anytime you are bidding and working out how to grow entrepreneurship in a region, you ask scoping questions. What does “success” look like? Who are the other players? What has been accomplished so far? He never gives me straight answers. “I’ll get back to you on that.” “We are in early stages so we don’t know anything.” And so on and so on.
When a contract isn’t a contract
I keep asking questions. He keeps giving me blank stares and shoulder shrugs. So I go deeper on research. The more I dig around, the less I learn. Google cannot offer me much of anything about the other names tied to the project. I do, however, realize amazing things about Russia’s business culture.
In the United States, we have contract law. A signed contract is an enforceable document. If a contract says you will perform a certain service and you don’t perform said service, the other party can take legal action against you. And this legal action has consequences—fines, penalties, punishments, jail time.
In Russia, a formal, signed contract carries as much weight as a handshake. It’s about as official as when you and your middle school girlfriend “make it official” when you are idiot preteens who have no idea what that means.
The contract is a first step to building a relationship, but despite the document scoping out the work and how much they will pay for it, a contract is more of a figurative agreement than a literal one. Apparently this trap catches Americans on the regular. They jump into the work after getting a signed contract only to realize that this is the first step of many: more meetings, cosigns from trusted third parties, drinking sessions between key players, conversations with government officials, and more until things become “official.” This is not the weirdest thing I will learn about Russian business culture.
“That gets you punched in the face”
“Get out of the building” is a core concept for entrepreneurs. This phrase captures the idea that business books, market reports, and blog articles never give an understanding of market needs and buying behaviors as much as a conversation with an actual human being. And the human you speak to shouldn’t be a friend or a colleague. It needs to be a stranger who, ideally, is a potential customer of what you are selling.
I have an exercise I have run in 22 different countries that gives entrepreneurs first-hand experience practice talking to potential customers on the streets. Teams take to the pavement and have direct conversations that, more often than not, completely shift how they perceive their customer.
Sometimes, this process blows up their notion of what their venture is. This is how I’ve seen the deaths of so many parking apps, tinder-for-friends, and Spotify alternatives. And this is a good thing—better to realize this now than after quitting your day job, raising tons of venture capital, or sinking two years of your life into a doomed venture. As a bonus, this activity brings with it an unintended side effect—stopping and talking to a passerby on a street corner is inherently uncomfortable, which serves as good preparation for the life of an entrepreneur. Some find this discomfort energizing. Others can’t cut it.
I have a Russian friend named…ahem…Igor. I ran this exercise by him and he made a pinched expression. “So you’re saying you want these entrepreneurs to walk through the streets of this town, stopping random people, and asking them questions? Cam, in Russia that gets you punched in the face.”
“Who Wants to Be a Millionaire” is a game show that has been localized in 160 countries. The Russian version, however, is a little different. Contestants have lifelines if they need help with questions. One lifeline is to ask the audience. But contestants in Russia do their best to not use that option.
Because the Russian audiences intentionally supply the wrong answers.
Some research on the subject reveals that “…audience behavior there [Russia] results from a general mistrust of those who gain sudden wealth.” The Russian psyche holds that if one of us must suffer, all of us must suffer. And people who find advantages or escape from the misery are not to be trusted.
As an American, this notion is hard for me to digest. I can understand people not going out of their way to help you. But making an effort to see you fail? This, more than anything, helped me understand the scope of challenges facing Russian entrepreneurs.
No Camaraderie for Comrades
Given all of the weirdness of the Vladivostok project, we kept our expectations realistic. Official updates came few and far between. Eventually, communication went completely dark.
Which is no biggie—when you are trying to bring in new business, you have to turn over many stones before you find promising projects. But damn. I realllllly wanted to help Russian entrepreneurs overcome roadblocks and become more prosperous.. And who knows, maybe I’ll get another shot when they try to rebuild after this stupid war.
In the meantime, I’ll do what I always do. Keep taking shots and try to surround myself with people who are the inverse of the Russian Who Wants to Be a Millionaire studio audience.
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