Cisco, Twitter Pledge Russian Investments During Medvedev California Trip

Russian President Dmitry Medvedev came to Silicon Valley with a goal: convince investors that his country is a safe place to put their money and resources.

His pitch led to commitments from Cisco Systems Inc., Twitter Inc. and California Governor Arnold Schwarzenegger -- and a maybe from Apple Inc. Chief Executive Officer Steve Jobs. Medvedev, 44, met with the leaders to get a first-hand view of Silicon Valley and drum up support for Russian’s own attempt at a technology hotbed: Skolkovo, an area near Moscow.

Russia’s bid to create a technology economy is helped by a strong infrastructure built during the Cold War, as well as its educated population and the money to invest in innovation and research, said Darrell West, director of governance studies at the Washington-based Brookings Institution.

“The trick now is to commercialize their knowledge and form partnerships with other countries to take advantage of the expertise that exists elsewhere,” West said. “The president has put his personal prestige on the line, and that should give Western entrepreneurs some confidence about longer-term prospects.”

The Russian leader arrived in San Francisco on June 22 and met with Schwarzenegger, who agreed to send entrepreneurs to Moscow to learn about investment opportunities. The next morning, Medvedev visited Twitter, where he used the microblogging site to post his first tweet.

Twitter Expansion

Twitter CEO Evan Williams said the San Francisco-based company aims to expand in Russia, home to about 1 percent of its 190 million users.

At Cisco, Medvedev met with CEO John Chambers, who pledged to invest $1 billion in Russia during the next decade on innovation and business development. Apple’s Jobs presented Medvedev with an iPhone 4 and promised to think about a proposal to come to Russia and set up a small research center.

The challenge now is ensuring that Russia can foster innovative companies, said Kathryn Stoner-Weiss, a senior research scholar who studies Russian politics at Stanford University.

“It’s fine to go around Silicon Valley and talk to people, but if you don’t create a secure intellectual-property environment and taxation system, it’s not’s going to matter,” said Stoner-Weiss, who has written two books on Russia’s government after the fall of communism.

Attempt to Diversify

Medvedev has asked billionaire Viktor Vekselberg to oversee the creation of a Russian version of technology hub in Skolkovo. The idea is to spur innovative technologies that will help the world’s biggest energy supplier diversify its economy.

That kind of project can’t be handled by the government alone, said Steven Weber, director of the Institute of International Studies at the University of California, Berkeley. It requires an entrepreneurial class that is willing and able to create businesses, he said.

“There have been a variety of attempts over the last 15 or 20 years in lots of different countries to create their version of ‘Silicon Valley,’ and the history of those efforts is quite unfortunate,” Weber said. “It’s almost guaranteed to fail.”

During the trip, Russian nationals living in Silicon Valley told Medvedev that creating startups in their home country is “extremely difficult.”

“We Californians want to help -- the questions is, does Russia have the administration for small businesses?” said Olga Potapova, who was asked by U.S. colleagues to help bridge ties with Russia. “When I say that it costs me $35 to open a company here, no one believes me, as it is all different there. There is no mechanism to make it simple.”

To contact the reporters on this story: Lyubov Pronina in San Francisco via Moscow office at 7732 or lpronina@bloomberg.net; Ryan Flinn in San Francisco at rflinn@bloomberg.net

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