Is Yandex, Russia’s Largest Tech Company, Too Big to Fail?

Editor’s note: Arkady Volozh resigned as CEO of Yandex on June 3, 2022, after the European Union sanctioned him.

Arkady Yurievich Volozh seemed to be in a good mood. It was February 11, his birthday, and the 58-year-old billionaire CEO and co-founder of Yandex, the Russian tech giant, was in the kind of open and engaging mood you might call private life, after the casual Russian word privet for hello. He was speaking from his car in Tel Aviv, bragging about his father — an octogenarian oil geologist who had ‘discovered’ oil in Israel, Volozh said — as we talked about my upcoming trip to Tel Aviv to interview him. for this story.

For more than 20 years, Yandex has been known as the “Google of Russia”: it started as a search engine in 1997 and still holds 60% of the Russian search market. But over the past decade, this label has underestimated the company’s inescapable ubiquity in the daily lives of Russians. Yandex Music is the national leader in paid music streaming, and Yandex Taxi is the best carpooling app. Millions of Russians use Yandex Navigator, Yandex Market, Yandex News and Yoo Money (formerly Yandex Wallet) to travel, shop, read and spend money.

Volozh has only recently begun to make his business less dependent on his business in Russia — and the whims of President Vladimir Putin — by tiptoeing west. Yandex Taxi formed a joint venture with Uber in 2017, and in 2020 Yandex began testing self-driving cars in Ann Arbor, Michigan. Last year, the Yandex Rover robot, a sort of six-wheeled Igloo cooler, began delivering food through a partnership with Grubhub to college campuses in Arizona and Ohio, with plans to expand to 250 US campuses. Yandex had also launched delivery services in London and Paris. On the day of our call, Yandex had a market capitalization of $16 billion on the Nasdaq, and about 85% of all its shares were traded in the United States.

Most of Yandex’s 18,000 employees are still based at the company’s headquarters in Moscow. But Arkady, as everyone at Yandex calls her, Western-style, stripped of the formal Russian surname, now more or less lives with her family in Israel. For several years, Israel was an R&D center for new products, especially in the transport sector, which Yandex aimed to bring to markets in Europe, the United States and the Middle East.

During our call, Volozh asked if there was anything in particular I wanted to see during my visit – the Old City of Jerusalem perhaps? I saw that, I told him. My goal was to spend as much time as possible with the reigning Russian tech baron and try Yandex’s new products first hand. Yandex had recently acquired an electric scooter company in Israel. How about a scooter ride? I asked. Of course, he said.

Volozh had seemed to have mastered the high-flying act that all Russian tycoons with global ambitions attempt: adapting to Kremlin pressure while attracting wary Kremlin investors and partners in the West. Erased, cerebral, respectful, a soft-spoken boardroom with a salt-and-cinnamon goatee, he “doesn’t come across as a driven entrepreneur,” John Boynton, Yandex’s U.S. board chairman, told me. . In short, he is the opposite of the stereotypical, boastful, political, knife-fighting Russian oligarch. “He’s more of a techie than a business tycoon,” says Esther Dyson, an American angel investor and until recently a Yandex board member. In a country that is still heavily dependent on oil and gas exports, Volozh has been an unyielding visionary of the tech industry, imagining future possibilities – from natural language research to self-driving vehicles – and believing in his “community of geeks”. “beloved Russian to build these technologies. .

His penchant was to keep Yandex away from immediate political issues. But that suddenly became impossible. On the morning of February 24, two days before my flight to Israel, I received a text message from a public relations person at Yandex. “We are deeply sorry,” the person began, but “events, which are beyond our control, are creating great uncertainty.” My meeting with Volozh had been postponed, until “the situation permitted”.

The situation was that, hours earlier, Putin had launched the military invasion of Ukraine. “Uncertainty” barely described the difficult existential situation that Volozh, Yandex and all Russian tech players suddenly faced. I received the text shortly before the US stock markets opened; by noon, the price of Yandex shares had more than halved. In the following days, Uber announced that its three Yandex Taxi board leaders were resigning immediately, and Lithuania’s transport minister called on Google and Apple to remove the taxi app from their platforms.

Leave a Comment

Your email address will not be published.

%d bloggers like this: