It took Arkady Volozh 20 years to build Yandex into Russia’s Google, Uber, Spotify and Amazon combined, says Wired – and just 20 days for “everything to crumble”. The country’s preeminent tech giant has been so stricken by the Ukraine war that there are doubts about its survival – at least in its current form.
Western sanctions have led to Yandex’s shares being frozen on US stock exchanges, which in turn has led shareholders to seek repayment on convertible note guarantees, reports Radio Free Europe. The company says it doesn’t have the $1.25bn to cover the sum. The now untradable stock is down nearly 80% since November, wiping off more than $20bn in market value. Big-name Western partners are deserting in droves.
A Russian miracle
Founded as a search engine in 1997, Yandex has spent years cultivating an image that it was far enough removed from the Kremlin to be considered a secure investment, says the Financial Times. It succeeded well enough to be viewed as “a Russian miracle” in Western tech circles.
Subscribe to MoneyWeek
Subscribe to MoneyWeek today and get your first six magazine issues absolutely 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
But now Volozh’s hopes of becoming “a significant player on the global tech stage” have been smashed. There are also growing worries about its position at home, says Bloomberg. Russia’s “omnipresent tech company” is “facing a looming shortage of hardware” as US sanctions bite. According to sources, it may run short of semiconductors to power its servers in a year to 18 months’ time. By general consensus, the disaster couldn’t have happened to a nicer chap, says Wired. Arkady, as everyone in Yandex calls him, comes across as “the opposite of the stereotypically boastful, political knife-fighting Russian oligarch”. Indeed, he’s described as “self-effacing, cerebral, respectful”. The US angel investor and former Yandex board member Esther a business magnate”. Others consider him a visionary leader. He also clearly has skills in diplomacy – mastering the “high-wire act” of running an independent business while remaining on the right side of the Kremlin.
Born in 1964 to a Jewish family in the capital of Soviet Kazakhstan, Volozh’s father was an oil geologist and his mother a music teacher. As a child he was something of prodigy and attended a special school for students gifted in mathematics, where he formed a close relationship with “an equally precocious youngster”, Ilya Segalovich.
The pair headed to Moscow for college and after graduation started a series of small IT companies in the 1990s, “tinkering” with “the possible but unproven commercial potential of the internet”. Volozh likes to boast that their first search engine went live in September 1997, almost a year before Google. By 2009, it had a 56% share of the Russian-language market. Two years later, when Yandex floated on Nasdaq raising $1.3bn, it was hailed as the start of a new era.
Tiptoeing westward
Segalovich, who was openly antiKremlin, died in 2013, leaving Volozh running Yandex alone in an “increasingly nationalistic” climate. But lately Volozh had begun “tiptoeing westward” in a bid to make the firm “less reliant on its Russian business – and on the whims of Vladimir Putin”.
Yandex formed a joint venture with Uber and launched delivery services in London and Paris. But its most showy project is a Michigan-based selfdriving car trial launched in partnership with Grubhub. Volozh has long lived in Israel. He may now form the focus of a senior staff exodus, says The Times of Israel.
A Reuters report this week suggests that Yandex’s CEO Elena Bullina has resigned and left Russia for Israel. “I cannot work in a country that is at war with its neighbours,” she wrote. The company’s fate now hangs in the air, its former champion Esther Dyson told Radio Free Europe. “The future of Yandex depends on the future of Russia.”
-
Christmas at Chatsworth: review of The Cavendish Hotel at BaslowMoneyWeek Travel Matthew Partridge gets into the festive spirit at The Cavendish Hotel at Baslow and the Christmas market at Chatsworth
-
Tycoon Truong My Lan on death row over world’s biggest bank fraudProperty tycoon Truong My Lan has been found guilty of a corruption scandal that dwarfs Malaysia’s 1MDB fraud and Sam Bankman-Fried’s crypto scam
-
Why undersea cables are under threat – and how to protect themUndersea cables power the internet and are vital to modern economies. They are now vulnerable
-
Share buybacks rise in the UK – what effect will it have?Share buybacks are gaining popularity in the UK – good news for investors
-
Is now the time to buy Marshalls?Former market darling Marshalls, a landscaping and building products supplier, looks too cheap. Is it time to buy this once-admired stock?
-
Top UK stocks with healthy cash flows and dividend yieldsThree promising UK stocks according to Alan Dobbie, co-manager, Rathbone Income Fund
-
Warren Buffet invests in Domino’s – should you buy?What makes Domino's a compelling investment for Warren Buffet's Berkshire Hathaway, and should you buy the UK-listed takeaway pizza chain?
-
4Imprint makes a strong impression – should you buy?4Imprint, a specialist in marketing promotional products, is the leader in a fragmented field
-
Invest in Glencore: a cheap play on global growthGlencore looks historically cheap, yet the group’s prospects remain encouraging
-
How to save the dying UK stock marketThe UK stock market is in long-term decline. To fix that, we must first recognise why equity markets exist and who they should serve
