Arkady Volozh: The Google-beater who drives a tatty old Volvo

Want to know what Solzhenitsyn thought of Dostoyevsky, or the best place in St Petersburg for borscht? In most countries, you might Google the answer, says Businessweek. "But a Russian would be more likely to Yandex it." Few outside Russia have heard of the Yandex search engine, or of its inventor, Arkady Volozh. That might be because this shy billionaire keeps his head down. Unlike your average rich Russian, he owns neither yacht nor plane, and eschews chauffeur-driven limos for a tatty old Volvo. And he isn't interested in politics, either. Instead, his single-minded ambition is to thwart Google's push eastwards.

So far, he is making a pretty good job of it, says Newsweek. "Like many foreign invaders before it, Google's advance on Eastern Europe has floundered on the difficult terrain of Russia." Most European markets have fallen without a fight. But the Russian internet, with its Cyrillic script, has proved a tougher nut to crack. Google currently commands just 15% of the search market, compared with Yandex's 55%. That's a particularly galling statistic for Google, given that co-founder Sergey Brin was born there, "and the first words that came out of his mouth were Russian", says the International Herald Tribune. It seems that "even this most polyglot of companies can sometimes get itself lost in translation". And Russia is a big one to lose. Google's own forecasts suggest revenues from search advertising will double to £1bn by 2010. Right now Yandex will be the prime beneficiary.

Volozh, 44, doesn't look much like a Silicon Valley entrepreneur. For one thing, the ponytail is missing, says The Moscow Times. But like his peers in the West, "he has a quick mind" and a tendency "to crack wry jokes when least expected". Yandex's journey, from start-up to giant-killer in eight years, is all the more remarkable since it took place with no backing from venture capitalists. Kazakh-born Voluzh trained as a mathematician and was working for a state pipeline research institute when perestroika began in 1987, says The Sunday Times. He got his first break when "kooperativs" (small private businesses) were legalised and he was ordered by his boss to get into business. Volozh's kooperativ, Magistr, exported pumpkin seeds and imported PCs from Austria. But for Volozh, technical director at 24, it spelt big bucks. "We were paid in hardware... and I earned two personal computers in one year," he recalls. They represented a huge sum: "enough to buy my first two-bedroom Moscow apartment".

Subscribe to MoneyWeek

Subscribe to MoneyWeek today and get your first six magazine issues absolutely FREE

Get 6 issues free

Sign up to Money Morning

Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter

Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter

Sign up

It was a logical step from there to start dabbling in software and, during the 1990s, Volozh worked with linguists on a program to parse the complex grammar of the Russian language. He thought the application had potential as a search engine, but when he touted it to established internet portals, they all rejected it. So Volozh and his partners set up their own company, calling it Yandex a play on "yet another indexer". It is anything but. Yandex quickly unseated the then-Russian leader, Rambler and has never looked back. "I'm very proud... that we have created... a great brand that sends a positive signal about Russia and the great talent that is here," Volozh told The Sunday Times. "People abroad don't realise that there are many positive things happening in Russia. Yandex is one of them."

Fast-moving Yandex plans a $5bn initial public offering on Nasdaq

Yandex's offices are a Moscow oasis for homesick Silicon Valley types, says The Sunday Times. Employees walk around in T-shirts, determine their own timetable, eat at a free canteen, and can play pool and table tennis at work. More pertinently, 120 key specialists have stock options in the business a first in Russia and are about to become very rich, says Businessweek. If all goes to plan, Yandex will float on Nasdaq this autumn in a $5bn offering that represents Russia's largest-ever tech initial public offering. Analysts are predicting "a blockbuster": Yandex offers a rare, and comparatively safe, way to get exposure to Russia's burgeoning consumer economy. But the vital question is whether Arkady Volozh and his colleagues can keep predators at bay until then.

Its growing brand power has already attracted unwelcome attention from Alisher Usmanov, the metals billionaire and Arsenal FC shareholder. Then there is the competition. Yandex is generally considered to have hung onto its lead because it has a better handle on "local-specific content" and is more expert at navigating the Russian net, says Newsweek. It is also "innovating in a hurry" to hold off Google. Having homed in net payment systems that allow customers to make online purchases from scratch cards, it is now betting on social networking it has acquired Moscow's leading business networking site, MoiKrug.ru ("My Circle"). Russia is just one of four major national markets where Google isn't on top. Volozh hopes to keep things that way.