Moscow’s #1 Real Estate Online Platform Goes Public | CIAN Launches IPO.

CIAN is the online platform that offers nearly every available property in Moscow. If a property is available for sale or for rent in Moscow, there is a nearly 100% chance that it will be listed on CIAN. And now CIAN is offering an initial public offering in both New York and Moscow.

In a previous post, I detailed how to use CIAN to find an apartment in Moscow.

Reuters has done a fantastic job of explaining the nuts and bolts of the IPO. In this post, I would like to explain why I use CIAN with my Moscow real estate agency, and also talk about some of the other players in the Russia online real estate space.

There are certainly some juggernauts in the Russian online space. Avito is hands down, Russia’s largest online trade platform. This is the site you would use to buy and sell anything from used furniture to finding a guy with a truck who can help you move. It also offers real estate listings. According to the Russian business news site RBC, Avito has a market value of $4.9 billion. Avito attempted to buy CIAN recently, but that deal was blocked by the Federal Anti-monopoly service with the argument that they would then control more than 50% of the online real estate space.

The Russian real estate market has been white hot this past year, and CIAN is a central player.

The primary online Russian giant is, of course, Yandex. They aren’t just an online search engine like Google, or just a news aggregator. They have merged with Uber to control the booming taxi market, have their own car-sharing service, and also provide home grocery and restaurant delivery, to name a few. Yandex is a smart and powerful company, so when I heard that they were moving into the real estate space a few years ago, I assumed that this spelled the end for CIAN. I couldn’t have been more wrong. CIAN is continuing to raise the rates for posting properties on their site, and agencies and homeowners alike, are paying up.

Looking for an English-language Real Estate Service in Russia?

The other interesting player is Sber, formerly known as Sberbank, that is now successfully diversifying into areas outside of banking. Sber offers a platform where an owner can offer their property, the buyer can organize financing, and all of the legal matters are taken care of in the bank, thus making redundant much of what a realtor offers. With Sber’s muscles, I am also fascinated that they don’t seem to have much of a dent in CIAN’s business.

Avito, Yandex, and Sber are very much national names, used in nearly every nook and cranny around this vast nation. CIAN is more Moscow specific, which makes sense given the enormous economy of the capital city. In my view as a Moscow realtor, the key advantage CIAN has against its competitors is an easy-to use-platform with a strong accountability feature. If I’m looking at an ad on CIAN, I am almost 100% sure that the ad is real. On other platforms, I don’t have this confidence.

Can Foreigners Legally Own Real Estate In Russia?

It will be interesting to see the future of CIAN with the looming IPO, and with their reported plans for expansion around the nation. For Moscow realtors like me, we continue to see CIAN as THE central player in the online real estate scene in Moscow. And it will be fascinating to see what plays Avito, Yandex and Sber have up their sleeves.

And on a personal note, with all of these massive, smart, and nimble companies essentially removing the need for much of what realtors offer, I have seen many of my competitors close up shop. And I am inspired to provide more value than an online platform, through understanding of the local market, knowing what negotiation levers are available and providing comprehensive due diligence throughout the process.

How US Sanctions Against Russia (Don’t) Work And Hurt Americans

“Russia will not change its course because of sanctions”.

It was nearly two years ago, and I agreed to go on a Russian political talk show.  Little did I know that this situation would become very personal for me.

At that time, Russia and the United States seemed to be caught in a game of who could do the most petty trick against the other.  Shutting down diplomatic presence, for example, really means nothing to anyone except for those who are simply trying to live their lives, and happen to have a connection between the two countries.

To put it simply on how sanctions don’t work: Regardless of your political views, I think it’s clear:  Russia has ZERO intention of giving up Crimea, or apologizing for any alleged interference in any election process, even if it did buy some Facebook ads.

If you’re American and reading this, you also know that the US government has ZERO intention of changing its opinion of Russia anytime in the near future.  And to give you an idea of how ineffective sanctions are, some of you are only right now learning that Russia has also created sanctions against the US.

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I’m no Trump supporter, but he does make for a great GIF. 🙂

With the background of flooding in Houston, I suggested a constructive approach on the talk show but was fairly quickly shouted down.  The man I argue with in this short clip is Greg Weiner.  He moved from Russia to the States, lived there for some time, and now represents the USA on Russian political talk shows.:

I didn’t last long as a political talk show personality.  It seems I didn’t have a strong enough position for or against America or Russia.  My stance of judging each situation separately, not taking sides, and offering constructive solutions apparently didn’t make for very good television.

If you want more in-depth political analysis on how sanctions don’t work, you can check out this Forbes article that I just stumbled upon.  Because this is now about how this became personal for me, an American in Russia.

Again, at the time of my talk show adventures, I didn’t take the sanctions very seriously.  I saw that the sanctions were pointed at a small group of people and businesses, none of which I have any relation to, and to repeat myself: why take anything seriously if it produces zero result?

As regular readers know, I don’t just blog:  I run a Moscow real estate agency, wrote a book in Russian, run a Russian language YouTube channel, and help Russian businesses grow their business in the West.

But my view on sanctions changed this year when I decided to also start a small trucking company in Russia.  Together with a Russian business partner, we created a business plan, and I quickly saw the clear upside.  I then showed it to my brother Tim back in Ohio, and he also saw the potential.  Tim’s LLC, that he had used for various side hustles in the past, became a partner in the Russian trucking company, and made a no-interest loan to the Russian company.  The amount wasn’t small or big, but we saw that leveraging the amount through Russian bank financing, we could start our small business off with three 18-wheel tractor-trailer trucks.  That’s when the problems began.

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Our first truck, but we currently have no way to make any payments back to our US partner… because of American regulations that have caused our American partner’s bank accounts to be shut down.

We were put under some fairly heavy scrutiny in Russia.  Although it was stressful at the time, in retrospect, the Russian tax authorities’ concerns were not baseless, and actually had our American partner’s interests in mind.  It seemed they were mainly concerned that we were really going to do business with the money that came in from the no loan contract and not planning some fraud like bankrupting the company and running away with cash.

After we had worked through all of this on the Russian side, problems began for Tim.  The bank that he used in Ohio, and asked him to close his accounts.  He asked why, and they refused to give an answer.

We realized that something strange was afoot, but weren’t sure how to proceed.  Tim then went to 3 or 4 more banks in Ohio, and they all refused to open an account for him.  Again, they refused to give an explanation.  This was maddening for me.  If nothing else, this is not the America that I know.  If a business is refusing to serve its customers, it should be able, or even required, to give a reason.

We found out about an organization called OFAC.  This is the Office of Foreign Assets Control.  Tim called OFAC.  In short, after that phone call we were relieved to understand that we were not somehow unwittingly involved in anything illegal, but concerned to hear that because of regulations, banks simply do not want to have anything to do with servicing any business account with any connection to Russia.

My conclusion:  Neither government has changed its views one iota because of the sanctions.  There are issues for businesses, but big business is mostly unfazed.  But here we are, small business, working to develop a life for ourselves and our families, and to create jobs, and we are the ones suffering the most because of the sanctions.

I do not even blame OFAC for this.  They are simply following the procedures created by legislators.

What I am suggesting is dialog.  And I strongly recommend and even beg US legislators to re-consider how your legislation is hurting small business ventures between our nations.  This serves no purpose for business, and I dare say serves no purpose even for your supposed agenda of spreading “American democratic values”.  You have failed, and you need to set it right.

Because when you have no qualms with buying Russian gas and oil, but Americans in both in the USA and in Russia become the main victims of your half-baked policy, your hypocritical absurdity becomes clear to all.  You are involved in a series of “petty tricks” that serve no purpose except to save face in front of your constituents, and in the end hurt small business and those folks who genuinely want to develop constructive ties between our nations.

P.S.  This situation has forced me to pay more attention to politics than I really care to.  But while the lawmakers do what they do, we have a business to run and obligations to fulfill, so this text is also a request for help.  If you have experienced a similar situation with US banks and know how to navigate the way out, I would really appreciate any tips or insight.  Thanks!

Can Foreigners Buy Real Estate Property In Russia?

 

And updated version of this post is available here.

The simple answer is “Absolutely!”.  It’s sometimes surprising to me how often I hear the question of whether foreigners can buy real estate in Russia.

But there are also many other questions that arise, such as whether it is possible for foreigners to secure mortgages towards their real estate purchase in Russia.  The quick answer on that is, yes it is also possible.

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Some real estate in Russia will surprise you as it breaks some of the stereotypes you might have, like this modern loft-style apartment in Moscow, in the Paveletskaya neighborhood.

Blogging is my hobby, both with this Planet Russia blog and also with The American blog and YouTube channel, both in Russian.  But one of my main sources of income is the real estate company I founded some years ago, called Expat Flat, which provides real estate service for foreigners in Russia.

I really enjoy both sharing about life in Russia with the blogs, but also making foreigners feel at home in Russia through the real estate service.

I recently made a quick and simple video about foreigners owning real estate in Russia for the Expat Flat Facebook page.  Check it out, and then let’s look at some of the details of buying real estate in Russia.

Now, let’s look through some of the details:

Mortgages

It is possible for foreigners to secure mortgages in Russia.  Generally speaking, you will need to prove a steady official income.  And in most cases, you will need a down payment of 15-20%.  The interest rate can be 10-12% annual.  It is best to find a reputable mortgage broker or real estate agency to help you in this process.  I also recommend only working with major banks, because as a rule of thumb they are less likely to nickel and dime you with the small print.

Commercial Property

If you are looking for real estate investment opportunity in Russia, I would strongly recommend that you consider looking at commercial property options.  The return can be higher than residential real estate.  And you can hire a property manager to take care of all of the details, so that you can live your life comfortably either in Russia or abroad.

Quite often, commercial property that is for sale already has a long-term reliable tenant, so that you can be immediately guaranteed a continuing source of income.

Of course, there are many types of commercial property in Russia.  I highlighted some office space, located directly across the street from the Kremlin, in this video:

Land

As with all the points in this post, there are plenty of exceptions and nuance.  But as a foreigner you can also own land in Russia.  I own a few small plots of residential land.  And I think this can be one of the most intriguing options if you are in Moscow long-term on a budget or in a smaller city around Russia.

In the Moscow region, for example, it is possible to buy a piece of land and build a small, simple house, altogether for under $35,000 USD.  Of course, if you are new to Russia, you will most certainly want a reliable partner to help you through all of the building process and red tape.  Hiring someone reliable will save you money… and nerves!

Residential Property

In most cases, the simplest thing to do is buy an apartment.  The process is simple, but again, it is strongly recommended to hire someone to work with you, and to make sure that all of the documentation is correct and above board, and to help you analyze the best deals on the market, and perhaps offer a few options that you might not have thought of before.

Here’s another video of a flat in Moscow that again shows that there are many unexpected real estate options in Russia.

Taxes

This is where things get interesting.  The property tax is shockingly cheap, but most importantly, Russia changed the law on real estate sale for non-residents at the beginning of this year.  This is important because in the past, there was a heavy tax on the sale if you were not a resident of Russia at the time of the sale.  But now, with the changes in the law, if you have held the property for five years or more, there is ZERO tax in Russia on the sale.  This is important to understand if you are looking at being in Russia long-term and want to avoid paying rent, or if you are looking at investment opportunities.

Hope that information helps!  If you have questions, please don’t hesitate to comment below or to contact me at Expat Flat.  I look forward to continuing to open Russia to you a bit at a time through this blog, and if you are serious about living in Russia long-term, perhaps I can be of some assistance with real estate.

 

Business in Russia | How to have a successful ‘first date’ with your Russian partner

Russians will often want a very quick and frank discussion so that they can understand whether the business relationship is worth their time, shares Andy Frecka, an experienced business negotiator living in Russia.

As an American who has now called Russia home for 19 years, I love negotiating on behalf of Russian businesses with their Western counterparts.

 

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Lately, I’ve taken special notice of the question “Do they have money?” often within 15 minutes of the beginning of the meeting. This question can take different forms such as “Are they ready to sign?” or “Do they understand why we are meeting?” but the point is the same, the Russian businessperson will want to quickly understand whether their Western counterpart is worth their time.

I may not know much, but I am well aware that it’s not usually a good idea to ask a girl to marry you on the first date. With that, I often find myself encouraging my Russian friends to not rush things, but to simply enjoy the process.

Unfortunately, it is often a misunderstanding early on a first date that can spell the end of what could be a fantastic romantic relationship, and the same is true in business.

Based on the first date question “Do they have money?” here’s a pair of paradoxes I have learned while working for Russian businesses:

1. Russians aren’t famous for punctuality, but once the meeting starts, they will want to move forward quickly

Russians will often want a very quick and frank discussion so that they can understand whether the business relationship is worth their time. Americans, on the other hand, will usually show up to the meeting on time, but will want to create a trust building process that will seem bafflingly lengthy to the Russians. The problem is that the Russians will understand this process to be a signal of disinterest by the Western partners.

2. Russians are well known for bureaucracy, but are more spontaneous than their Western counterparts

Relating to the previous point, if they understood that the Westerner is not interested in partnership, they will often simply begin looking for other partners, without completing the process. With all that Russia has to offer the world, I think this is incredibly unfortunate. This is why I am spending more and more time working with Russians in better understanding how to relate to Westerners.

So, what can you do if the timing between you and your Russian counterpart is out of sync?  Before judging and walking away after just the first date, consider the following.

Both the Western and Russian points of view are incredibly pragmatic… in their own way

You want transparency, the Russian wants to get to work and make sure they will get paid. Fortunately, these two points do not conflict with each other.

Russians value authority over transparency

You will put them at ease if you start the meeting showing what you are capable of, rather than using “small talk” to get a feel of who they are. “Small talk” can always come later, but it is often confusing to Russians if it is used towards the beginning of the talks. (Alternatively, I teach Russians to relax and enjoy the small talk at the beginning of meetings, if that is the way the Westerner wants to start.)

Explain your company’s process by using stories

I was recently working for a Russian company which was in partnership talks with an American company. The American who had come for the talks did a fantastic job of explaining how his company had worked out a similar arrangement already with a company in China. This gave us an idea of how they viewed the process of partnership formation, showed us that it was already working, and also gave us a good understanding of the length of the process.

Stay engaged with your Russian counterpart as your company goes through its process

If you keep silent, the Russians might understand you are not interested, and look elsewhere for potential partners, and you might lose a fantastic deal.

Russia has much to offer the world, of course, in natural resources, manufacturing, and technology. I have also been intrigued as of late, in how much Russia has to offer in educational systems, the arts, and mind-blowing tourism destinations.

So, don’t miss out on what could be years of mutually beneficial relationship for your business, simply because of a small misunderstanding on your first date.

Andy Frecka was born and raised in the great state of Ohio in the USA, but for the past 19 years is proud to call Russia his home. He is the founder and marketing director of Expat Flat, a Moscow real estate agency, and in recent years has enjoyed working in negotiations between various Russian and Western businesses. Andy also runs the Russian language blog “Amerikanets,”speaks frequently on foreign business relations, and is the author of Matryoshka: Как вести бизнес с иностранцами (How to do business with foreigners).

 

This post originally appeared in Russia Beyond.  You can check it out here.

Visas to Russia for Americans and Canadians

As an American who has made Russia my home for the past 20 years, I am often asked about how best to get a visa to Russia. Truth be told, I have been here so long that I have lost track of many of the visa requirement changes for newcomers to Russia.

With that, I have found myself frequently recommending the services of Marcus Hudson of Let’s Russia for Americans and Canadians who are looking to get visas to Russia.

I asked Marcus what some of the most frequently asked questions are for folks who are looking to apply for Russian visas and how he would answer. Here they are. Please keep in mind that the Russia visa application process can vary per country, so these questions and answers are at times specific to Americans and Canadians who wish to apply for visas to Russia.

Can I do business on a tourist visa? Can I travel around Russia on a business visa?
Yes and yes. But if you have a tourist visa and you’re doing some business, have intentions to do tourism as well. It’s best if can prove your intentions in the rare case you’re asked by passport control.

Will I be at risk of visa denial or getting arrested in Russia if I have served in the US military?
You will if you are a spy or if you are involved in spy activities. In all other cases, no. Having served in the military does not disqualify you from getting a visa to Russia. In circumstances when you have or had high security clearance to sensitive information or highly-qualified specialist in military technology, the Russian government most likely already knows about you.

I’m going to Russia to start doing business. I understand I need an invitation letter from a Russian organization. How can I get a business invitation letter to Russia if I haven’t establish business contacts in Russia yet?
This is a common question from small businesses, entrepreneurs, self-employed and digital nomads. In order to make business contacts you need to travel to Russia. In order to travel to Russia, you need an invitation from a business contact. And around it goes….
The best option is order a business invitation letter from an intermediary like Let’s Russia because we have contacts in Russia that will legitimately invite you as a potential business partner of theirs. We also assist in drafting the accompanying business letter to reflect actual intentions and plans for your trip. Some Russian consulates have been requiring an explanatory letter from the Russian organization inviting guests.

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Marcus Hudson of Let’s Russia

How can I get a visa transferred to a new passport if my old one has been damaged or I’ve run out of pages?
You can have a visa transferred in Houston for $69 if the original visa was issued in Houston. Otherwise, you would need to apply for a new visa.

I was adopted from Russia and never had a Russian passport. How can I get a Russian visa?
Typically, you don’t. You have to apply for your Russian passport. This takes awhile because you’ll need to gather proof of your citizenship first. Russian children who are adopted from Russia do not lose their citizenship.

In which situations should an American apply for a 3 year multiple entry visa?
There’s no reason not to apply for the multiple entry visa! Starting March 2019, the consulate fees are all the same price, regardless of visa type or number of entries. With this change, we recommend applying for the multi-entry visa up to 3 years. If you’re passport is expiring before then, you can still apply for a multi-entry visa up to 6 months before your passport expires.

Can members of the same family travel to Russia on different visa types?
Yes. But minors accompanying parents usually need to have the same visa type as their parents.

How do I decide which visa to apply for?
Many people want to travel to Russia for a specific period of time. That’s their priority. They don’t care so much about the purpose of travel. We’ve created a specific tool to help people through this process. Check it out here. This is useful for most passport holders, not just Americans.
This way, you can decide on the type of visa based on the time they want to spend in Russia rather than the other way around, and you are not limited by time based on your purpose of visit.
However, we recommend all our customers that the rule of thumb is that when going through passport control, you need to be prepared to answer, “What’s the purpose of your visit?” You should not get a business visa if you do not intend to do business.

These questions are perhaps just the tip of the iceberg when it comes to applying for a visa to Russia. That is why I always recommend using a visa service to take away any stress related to the red tape. I am happy to recommend Marcus and the Let’s Russia team as I have personally seen both their professionalism and patience in answering the many questions that can arise before and during the Russia visa application process. You can begin the visa application process with Let’s Russia by filling out this quick form here.

Russia is open for tourism and business. To simplify the visa process, I recommend a service like Let’s Russia.  Your situation might be unique and it is helpful to have someone working with you and answering your questions as you apply. We look forward to seeing you in the Motherland! 🙂

 

Couch Potatoes Cheer For Food Delivery In Russia

If you thought the McDonald’s drive-thru was lazy, Russia has brought the art of apathy to a whole new level with automated food delivery service.

There are two main food delivery services in Russia:  Yandex Food and Delivery Club.

Yandex Food is in 24 Russian cities while Delivery Club, is only in Moscow, from what I see.

In the end, Yandex will win… at everything, in Russia.  They are taking over, from taxis to money transfer systems, now real estate, and much more.  If you think of Yandex just as “Russia’s search engine”, you are missing out.  It is much more.

And that now includes swarms of young men with thermos-box backpacks, hustling and bustling through the streets of major Russian cities, rushing steaming victuals to the famished masses, who are too lazy to do anything more than stand up from their couch and open their front door.

These food delivery guys are improving their physical condition, while the rest of the population is rapidly degrading.  If I were into conspiracy theories…

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In the event of a zombie apocalypse, these will be the only survivors in Moscow

Not only is pushing buttons on your cell phone easier than brushing your teeth, combing your hair, and changing out of your pajamas… it’s also usually quite a bit cheaper.

A Burger King bacon cheeseburger, 3 Whoppers (w/cheese), 3 medium fries, one order of “village-style” fries and 15 chicken nuggets for 500 rubles.  That’s about $7.69 (USD).  And the best part is, that’s the price only if it’s delivered.  If you made the effort to put on your shoes and coat and walk outside and breathe fresh air, the price would be considerably more.

All the nutrition, without all of the cost and exercise:  Here’s how my wife bought all of that fantastic food, delivered to our home, for our kids, on an evening when she and I were out.  Delivery Club was having a promotional sale:  If you spent 800 rubles or more, they would subtract 300 rubles from the total and give you 15 chicken nuggets.  And yes, the delivery itself is included in the cost.

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How did the creators of the movie Wall-E see our future so clearly?

These food delivery services aren’t limited to fast food.  It seems any restaurant that wants to stay in business had better link itself to the service, including even some of the lesser-known establishments, like this small Indian restaurant.  So, whether you fancy sushi, pizza, shish-kabobs, vegan, or a steak, you can just push a few buttons on your iPhone and lay back and wait for the doorbell to ring.

And because these food delivery systems are incredibly efficient and convenient, they are also very disruptive.  It will be very interesting to see how it affects the restaurant business, and over time real estate value, particularly for restaurant locations.

And the other night when my wife and I were out and our kids were devouring Burger King at home?  Well, she and I were sitting with some friends in Vokrug Sveta, which I sort of refer to as a “trendy international food court”, and watching the food delivery guys rush past, with their thermos boxes.

And that’s when we got a fantastic Moscow money-saving idea:  why not walk into a busy Moscow food court, sit down at a table, and then order delivery from the restaurant of your choice to your table.  Pretty sure it would work, you would save money, and maybe some time.  And why embark on that arduous expedition to the cash register when you can just sit in a chair and look at your cell phone?

If you try that genius idea, please be sure to let me know how it goes.  As for now, I’m feeling hungry, and if I were to go into the kitchen, I might need to put food into the microwave to warm it up and then put my plate in the dishwasher.  Seems pretty complicated.  I might as well just pick up my phone and see what sales Delivery Club is offering today…

 

 

 

Tony Robbins’ Epic Moscow Fail

The news cycle will quickly forget the fiasco of Tony Robbins in Moscow, but it is important to take what lessons we can from such fails to improve cross-cultural understanding.  And for those who plan to do business in Russia, this sad event is a treasure trove of how NOT to do business in the Motherland.

If you don’t know who Tony Robbins is, that’s perfectly ok.  But a quick snapshot is that he is billed as being the #1 Life Coach in the World and the most expensive business consultant in the world.

If you check out his upcoming events, you will see statements such as this:

“4 days with Tony in London will help you to break through your fears and limitations, to reconnect with your inner power, to awaken your hidden energy in your body, and to set global fearless goals for decades!”

Tony Robbins has coached the likes of Bill Clinton and Oprah.  I have watched a few of his performances and listened to some podcast interviews.

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Tony Robbins

And to be clear, I do think that there is some usefulness to motivational speakers, but I don’t know of any motivational speakers that I will pay $440 (the minimum price for one day at Olimpiisky Stadium in Moscow with Tony) to listen to for a day.

With that, I never had a second thought, I had no plans to go watch Tony.

It seems that I made the right choice as, judging by the internet, the event was a disaster.  Here are my thoughts on what went wrong, why, and what could have been done differently.  Some of these points will be as obvious as some of Tony’s “Disappointment destroys you!”, for that I apologize in advance, but I think when opening a business in Russia, we often overlook the most obvious.

Choose Your Russian Business Partners Wisely

Regardless of your opinion on Tony Robbins, he is a professional, and he runs high-end professional events around the world.  Unfortunately, those he partnered with in Russia proved incapable of running a large-scale event, let alone an event with tickets that ran up to $7300 per person.

This is really too bad, because Russia is more than capable of managing large-scale events.  The World Cup as an obvious example, went off recently without a hitch, and the two matches that I attended (including the final) were absolutely flawless.

Russians Don’t Like Standing In Line

Perhaps your view of Russia is one long bread line.  If so, that stereotype is more than antiquated.  There are still lines in Russia but even after all these years it’s not like anyone has become used to them, particularly at an upscale event.

In the case of Tony Robbins in Moscow, folks were left standing in line for more than an hour, waiting for translation headsets.  And according to Russia Beyond, many of those headsets didn’t even have batteries, so they were left scrambling to local stores to buy some before the event started.

And most attendees, like Twitter user Dmitry Glazunov, took to social media to complain about the chaos.

Punctuality Matters In Russia

In the book that I recently wrote in Russian for Russians on “how to do business with foreigners”, I discuss in length the need for punctuality.  This is because punctuality is not Russia’s most distinguishing trait.

At the same time, if you have come to Russia on business, you had better be on time.  This is particularly if you are focused on the type of clients who will pay thousands of dollars to listen to you for a couple of hours.

Tony’s Moscow show started 3 hours late (!).  That would have been absolutely okay if there had been fighter jets flying around inside the covered stadium with champagne flowing from the rafters.  But there weren’t, and I think, most importantly, this made the crowd feel played.

Russians Love Authority

So, why did Russians pack out the stadium in what was Tony’s largest one-day crowd, paying more than folks in the West pay for a similar event with Mr. Robbins?

One Facebook friend “Dmitry” wrote after the event that he had gone to “learn more about business seminar styles, since he was running business seminars himself, and that he had wanted to show his girlfriend a great day out, full of emotion”.  And he felt that in these regards he had been successful.

The point that Russians love authority is something that I have written about concerning negotiations in Russia.  But if you are #1 in the world, at practically anything, you will draw a crowd in Russia.  The marketing campaign for Tony Robbins in Russia was very smartly focused on the points that he is #1.  Russians love authority.

And some of my Russian friends seemed to enjoy casually mention that they were going to see Tony Robbins even months before the event.  This also was a display of authority.  Or at least disposable income.

If you are planning to market a product or service in Russia, remember that authority matters, but also as we learn in this almost fable-like experience with Tony Robbins, so does execution.

Russians Value Substance Over Feelings

Ok, this is a theory.  But since I am running business seminars myself, I began to watch more closely what Russian business trainers do.  I was surprised and impressed at the volume of information they would produce in a very short amount of time during their training sessions.

Compare this to what I have seen with Western business trainers, and the motivational/informational ratio in the West seems to shift away from the informational side.

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This Russian Tony Robbins meme says “Close your eyes.  See how everything immediately became dark?”

I don’t have a strong opinion on this one way or another, since both sides have value.  I question the ability of the audience to absorb all of the facts of a Russian business trainer, and I also question the value of a motivational performance.  In my case, if I don’t want to work, I just need to remember that I have a family.

I saw an evening TV talk show where one of the guests said that the only difference between Billy Graham coming to Moscow in the early ’90’s and Tony Robbins in 2018 was the cost of admission.  I do not share this sentiment, but I understand the point, and it might be worth considering by Western church organizations who wish to reach out to Russia.

In the case of Tony Robbins, I suspect that the Russian attendees expected more hard material for their money, particularly since the hype didn’t measure to the level of the entry fee.  This point is proven by Russian Esquire reporting that one attendee has now taken the event organizers to court claiming that Tony Robbins simply repeated phrases and made everyone clap for four hours.

Instagram user @art.coaching asks is Tony Robbins a genius or a scam artist and then proceeds to give a much more balanced view of the Tony Robbins event than most of the Russian internet.  She says she didn’t have to pay full price, wait in lines in the heat, and says she didn’t receive new information, but was reminded of important points that are easy to forget.

Fool Me Once Shame On You, Fool Me Twice Shame On Me

I heard that Tony Robbins is planning to visit Moscow again.  I think it will be very difficult for him.  In any case, the prices will be much lower, and the crowds much smaller.

The main reason for this, in my humble opinion, is that going to watch Tony Robbins a week ago in Russia was a sign of success, and today it is a sign of mind-feebleness.

As a matter of fact, the word I saw most used for the event in Russian cyberspace was лохотрон, which when translated into English means something like “automated idiot machine”.

Anyone who goes to a Tony Robbins event again in Russia will do so in disguise and in the dark of night.  Because in Russia, what others think about you matters.

I think it is a sign of envy to those who have more money, but immediately following the fiasco, the Russia internet was jam-packed with taunting of those who had gone to watch Tony Robbins.  If everything had started on time, if the event had been run in a way to match the price tag, then following events would be a slam dunk for the organizers.  Now, I believe, it would be a tremendous waste of resources.

Moscow Might Have Higher Standards Than You

Perhaps if Mr. Robbins had run this event in another city in the world, it would have gone great.  The folks would have reacted “with understanding” to the lines and the tardiness.  They would have gone home and told all their friends about their life-changing experience instead of their tails between their legs, like what happened in Moscow.

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The mega-city of Moscow is incredibly difficult to impress.  It even seemed to take it a couple weeks to even be won over by the World Cup this summer.

So, if you come to Moscow for business, you had better come with your A-Game.  Moscow is much more than the stereotypes you have perhaps unwittingly accrued over the years.

In Conclusion

I don’t fault Tony Robbins for any of this, and I think it will only be a blip on the screen of his worldwide brand in business. I would expect he is disappointed with this even if “Disappointment destroys you!”, and perhaps has also reached the conclusion that he should have partnered with different folks for the event management.

Perhaps Mr. Robbins will even be able to use this experience to improve his work around the world.

And I don’t fault my friends who went to watch Tony Robbins.  That’s their personal decision, and I wouldn’t want to be judged for the different ways that I choose to spend my money.

For my Russian friends who have enjoyed making fun of those who participated, get a life.  Small people discuss people.

But I do hope that for those foreigners who want to do business in Russia, that we can learn from the mistakes of others.  And avoid becoming part of a лохотрон or even worse becoming the automated idiot machine ourselves.  Because if you become the лохотрон your business in Russia is done.

Matryoshka: How To Do Business With Foreigners

When you think of Russia, do you think of capitalism?  What about customer service?

If your view of Russia is that are still waiting in bread lines, you might be more than a little surprised.  Some months ago, I was assisting a client from Europe in relocating to Moscow.  “This is real capitalism, the stores are open at least until 9 or 10 in the evening, and even if they’re closed, you can often get what you want delivered any time of day or night, 7 days a week… where I come from, almost everything is closed at 5 p.m.!”, he exclaimed.

This European newcomer’s statement is probably true for most of Russia’s major cities.  The days of bread lines are long over.  And although the economy is facing its share of challenges, foreigners are often surprised at the hidden benefits of doing business in Russia.

There is plenty of bureaucracy here, but in many ways, the bureaucracy is different than in the West, which provides some hidden advantages.  For example, you can open a sole proprietorship or an LLC quite quickly and easily and can usually start off with a tax rate of 6%.  Or, if you want to become a realtor for example, no training or licensing is required by the government.  Your ability to stay in business will be much more dependent on your ability serve customers with excellence than anything else.

I can remember my first trip to Russia in 1995.  I walked into a store that was literally called “Store”, there was a barrier between me and the shelves, and the “customer service representative” behind the counter wouldn’t even bother to look at me when I entered.

Those days are also long over with shopping centers and malls continuing to pop up at what I would almost call an “alarming” rate.  And you can help yourself all you want off the shelves, and more often than not you will be bombarded with smiles and offers of assistance as soon as you go anywhere near the store entrance.

But even with these improvements that I have had the chance to witness over the years, I still often felt that Russia was selling itself short.

I saw that the Russian people did not see the value of much of what they were producing, or thought that these products, services, tourism destinations, or educational systems would not be interesting to the rest of the world.

I have already told you about some of the exceptions to this rule, including my friend in Perm who makes high-quality handcrafted guitars at a very reasonable price, or about Nadezhda Molugova, who took the Russian art education method, adapted it for Western students and opened the Florence Classical Arts Academy.

I recently had the opportunity to visit the legendary Rostselmash harvest combine factory in Rostov-on-Don.  I really didn’t know what to expect, but was blown away by both the facility, the professionalism of everyone I met there, and also their worldwide vision.  I found it fascinating that when I asked some questions hinting about politics, they expressed absolutely zero interest in the subject.  Instead, as it turns out, they have production facilities around the world, including in the USA and Canada.

Here are some shots from inside the Rostselmash production facility from my Russian language vlog:

These are all positive examples, but I have found it fascinating that many Russians don’t believe that their idea would be interesting to foreigners.  And even if they think it might be interesting, they don’t know where to begin.

That is why I wrote a book in Russian.  It is called “Matryoshka: Как вести бизнес с иностранцами (How to do business with foreigners)”.  Although the book is only 116 pages, it was not an easy project, and from start to finish took about two years.  “Matryoshka” is the Russian word for the famous nesting dolls that are an obligatory souvenir purchase for any first time visitor to the Motherland.  And in the book, “Matryoshka” is symbolic of any product, service, or idea that Russia can offer the world.

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I was recently talking with some Russian journalists.  They were at first praising me for the book and my Russian video blog project, but then they became almost aggressive and began to sharply question why I don’t create more English language content.  I then, of course, told them about the Planet Russia blog, but more importantly, told them that it is not my responsibility to represent Russia to the world- it is Russia’s responsibility.  I would just like to provide some pointers in how Russians can present their products, service, and ideas to the world in a more effective fashion, and perhaps more importantly, first convince them that they have value.

I certainly hope that “Matryoshka” serves this purpose.  I have started to travel and present the book and also do some business seminars on the subject, with a particular emphasis on the difference between the way Westerners and Russians approach negotiations.

So far, I have presented in Moscow, Vladivostok, and Rostov-on-Don and I am encouraged by the feedback of the Russian businesspeople that I have had the privilege to meet.  Later this month, I plan to go to Dagestan, a place that I have dreamed of visiting for many years.

I have also been encouraged that the book received some good attention, including from Forbes Russia.  If you speak Russian, you can download the book on Amazon Kindle, or order a hard copy here.  You can also usually find a copy in most major bookstores in most large cities in Russia.

I guess this post has sort of turned into a book commercial, but it is also sort of an explanation as to why I haven’t been blogging as frequently recently.  The book and Russian video blog project have taken up much of my time in recent months.  But on the other hand, they have introduced me to new people and ideas that I can’t help but sharing with you.  Or should I say “Matryoshkas”…