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Answers ABBYY CEO Sergey Andreev to questions from readers Habr. Part 2. Grant

Dear readers and writers of Habr!



Before answering the questions about the grant, I decided to make an introduction again to rely on a very important foundation.



Let's understand the objectives of the state in the field of IT sector of the economy. I think that the correct goal sounds like this: The IT sector is considered as one of the 5 extremely important sectors of the economy, requiring accelerated and even advanced development. A specific task on this background is the accelerated creation of new and development of existing domestic IT companies competitive in the global market .

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If someone disputes this statement, then it is better to contact the Public Chamber and the Commission for Modernization under the President of the Russian Federation and argue with them. Argue, object, suggest other industries. This is definitely not for us and not for this discussion.



If there is agreement on the above issue, then let's think about what to actually do to accelerate the development of existing and the creation of new IT companies? How to support? What to stimulate? If supporters of the free market come here now who say that there is nothing better than a market for the development of competitive IT companies, then I, excuse me, disagree. Because the free market today has a significant feature. It is open to giant international companies that are hundreds of times more than the most successful Russian IT companies. Free competition between an elephant and a mouse is slyness. And, more precisely, it is a struggle to maintain the current status quo. Someone wants to fight for it?



Total - for the support and incentives need non-market measures and preferences. This means that expenditures from the budget or extra-budgetary funds are coming. Therefore, FOR ANY expenses will be, and someone will receive some funds from the state. If someone cannot live with this, and only requires market “support” without spending from the budget, then he needs to find peace with himself. For there is no support without expenses. Therefore - either support and stimulation (with expenses), or the market.



It is also completely clear that , provided that the support target is chosen correctly , the larger and “non-market” support measures will be, the more significant the result will be. Give a little bit - good too. Somewhere someone will be a little better. Give more - it is reasonable to expect greater returns. We do not forget for a minute about the purpose of the event - the creation of a new or development of an existing IT business. That is, when choosing support measures, we, of course, have to carefully analyze where the funds go, how they are used, what and where they are spent, what are the prospects for returns from such support.



That is, in fact, the key issue is not the degree of non-market, but the correct choice of incentive objects and a set of reasonable conditions imposed on the incentive object.



If you think that among the 10 companies that have already received grants in Skolkovo, there are unworthy ones, then argue and offer Skolkovo experts more worthy.



If, in fact, someone did not want to stimulate anyone, then why now discuss a specific grant of a particular company - it is necessary to discuss the inexpediency of non-market measures in principle. There are many of them, and their size substantially exceeds 475 million rubles. It is inappropriate to grasp at such a small target. Recall non-market gas prices in the country, recall target subsidies from the budget and reserve funds to sinking enterprises that occurred in 2009. What is the gun on the sparrows? Walk, so walk! But if you do not want to walk, then you should not agitate the public. Sense is not visible.



That, in fact, is the foundation on which decisions are built around this grant:

  1. The support of the domestic IT industry is required.
  2. Support is only non-market actions, that is, associated with the costs (or lost income) of taxpayers.
  3. With normal control and reasonable selection criteria - the more we spend, the more support, the greater the result.
  4. We trust the choice of Skolkovo on the list of grants provided, or we offer our more deserving ones.


Further there will be answers to more detailed questions that I hope will remove the remaining ambiguities about the grant.



This is not the last block of answers to questions. In the near future I will publish the rest.



How did the company achieve the allocation of funds?



We have submitted an application to the Skolkovo project. Experts evaluated this application and decided that it is worthy of co-financing from the Skolkovo Fund. I believe that our application was recognized to be consistent with the goals and objectives of Skolkovo, because the work to be carried out by Abi Infopoisk should become technologies and products that have no world analogues and are capable of creating a very large and high-quality business that is successful in the international arena.

An important factor to be analyzed is the readiness of the business to co-invest in this project amounts that are not less than the Skolkovo fund invests. This factor is present and greatly reduces the risk of the fund to waste money.



Another important factor is the assessment of the potential of commercialization. Here, obviously, ABBYY’s experience in selling high-tech products on world markets was taken into account.



It is important that the intellectual property arising in this project will belong to a Russian company - the resident of Skolkovo. Hence, the profits will also settle in this company. The money of the fund and the money of the co-investor company (ABBYY) will be spent in Russia, primarily on the remuneration of our domestic specialists.



But the beta should be shown, and then many experts have doubts.

...

But now the situation has completely changed. The shareholders were all our taxpayers, and, therefore, the whole society.



For this reason, you are required to publicly:



1. Demonstrate your beta. Or give a detailed report on the tests.

2. Roll out a reasonable schedule with deadlines, mail-stones, etc.

3. Issue a report on funds spent



Doubts are explicable. The task we aimed at was not solved by anyone in the world. There are a lot of technological risks and problems at all stages of development. But the specialists with whom we show this, with starting skepticism, remain satisfied with the level of technology development and approvingly say: "You are on the right path, comrades."



Our taxpayers did not become ABBYY shareholders. This is an exaggeration. Much of the data you requested for publication is still confidential. The world consists not only of good people, and not everyone wishes us success. Even shareholders we are not obliged to demonstrate the beta version and give detailed reports on the tests, if they have few shares. Of course, there is a schedule with the Milestown, and it was “rolled out” into a financing agreement. Therefore, people, their head, and not a reputation on Habré responsible for the money, he was seen and controlled.



Regular reports and audit in the contract is. To make the position on the project more open, we can offer a small calculation.



Any business pays taxes that go to the state budget. And although Skolkovo gives substantial tax breaks, let's estimate how much money will be returned to the state from the project.



Project costs consist mainly of salaries and direct purchases (rental of premises, communications and computer equipment). Salary is the biggest expense, significantly more than half of all expenses. Two taxes are connected with the wage fund - contributions to social funds (Skolkovo rate - 14% from the first 463 thousand rubles of salary per employee) and income tax (13%). All the company's business expenses include VAT at a rate of 18%, which cannot be reimbursed for the Skolkovo resident, i.e. paid in full in the budget. Also, employees of the company, spending their salaries, also pay VAT on most of their purchases.



The figures below correspond roughly to our plans for this project.



The number of employees is about 250.

Salary on hands for the most part of employees - from 50 thousand rubles. up to 80 thousand rubles. per month.

PH - 221 million rubles. per year (including personal income tax).



The project budget for three years consists of 475 million rubles. from the fund and 475 million rubles. from ABBYY. That is, in the year the expenditure budget will be 317 million rubles. The total taxes from the project will be approximately 86 million rubles. per year :







This amount will grow over the years in direct proportion to the growth of the business (we estimate the minimum and we do not take into account the growth of business).



The total state investment in the project is 475 million rubles. This amount will almost completely return to the budget in 5 years only due to tax revenues. From 6 years on, the company will bring a net profit to the budget.



How profitable is such an investment from a financial and investment point of view? The net refund for the state is about 20% per year. At the same time, a working business, in essence, guarantees protection against inflationary contraction of the investment base. It turns out that the state has acquired a tool with a profitability of 20% and protection against inflation. For comparison, cash bonds with protection against inflation give 3-4% per annum. For private equity investments, a portfolio return of more than 10–15% + inflation is a great success.



Thus, even if we completely distract from the strategic, social and other benefits of developing a highly intelligent business in Russia, a grant to a successful enterprise in 50–50 mode with a private investor is a very profitable investment for the state.



Will a project developed with state / taxpayer money become public domain? Does the state have the right to use your practices (new) after you receive a grant? Will source codes be available to taxpayers?



I want to remind the financial background of the project. We have already invested in it more than 1,000 person-years, which we estimate at about 50 million dollars. We are going to invest about 16 million more dollars (474996000 rubles), and the Skolkovo fund will invest about 16 million more dollars (474996000 rubles). That is, the proportion is about 66 to 16. In such circumstances, talking about free distributions of everything that we did, do and will do, seems premature.



In the previous topic about Skolkovo, the accusations were addressed to ABBYY that you are making a closed product for money from taxes (this is about this grant), how can you comment on these statements.



It is known that developed countries seek to subsidize those strategic sectors of the business that bring long-term public benefit. For example, they contribute to improving the competitiveness of the country, improving the environment, increasing employment, etc. For example, the British government through the Carbon Trust www.carbontrust.co.uk/Pages/Default.aspx donates substantial sums to companies developing renewable energy (solar, wind) in the country. The European Union, through the CORDIS project cordis.europa.eu/home_en.html , distributes grant grants to companies developing technologies in key areas, and so on.



ftp.cordis.europa.eu/pub/fp7/docs/financialguide_en.pdf , p. 71. It says how much funding is made. For research and development allocate no more than 50% or 75%. 75% receive non-profit organizations, SME, universities, researchers. Commercial companies receive 50%.



cordis.europa.eu/documents/documentlibrary/91594641EN6.pdf This document is entirely devoted to the description of the use of rights to the research received. The basic principle is written in 4.1 on p.7. It says that the rights belong to those who created the result. It is not necessary to give anything out to a project. Inside the project rights must be issued in accordance with the rules of the project, so that the project was executed.



The goal of Skolkovo is to increase Russia's global competitiveness in the field of high technologies. To achieve this goal, various methods of support are used, including grants that will spur the creation of technologies that bring Russia forward in the global IT market. Infinitely depend on the price of oil is impossible.



In the introduction to this post, I tried to articulate the dilemma as clearly as possible. It is that either we support the right projects or we don’t support them. It is already clear that among the readers there are people seeking more restrained support. Well, for example, to investment money. But they did not decide, and the decision was made differently.



Is this decision support? - Yes.

Is it helpful to recipients? - Yes.

It leads to the solution of the economic goal of the country? - Yes.



If you think about whether there is a difference between a grant and an investment in a business that did not come to success, but went bankrupt, it is clear that there is no difference. Money is spent, and it is impossible to return it in the case of a grant, and in the case of an investment. Is there a difference between a grant and an investment if the business is successful? There is. With the investment you can return the money by selling shares. However, it’s not the fact itself that is important whether you return the money or not, and the other is business success. Therefore, if it is successful, then, as the calculation showed above, even according to the most conservative estimates, the money will return to the state very quickly. A risky initially, but a successful business will receive an award in the form of a grant. But on the other hand, to decide, of course, the state.



Why is it more profitable to invest this money in ABBYY, and not, for example, in grants for students' research projects?



Is it not profitable to invest this grant in the development of something from scratch, to make a product, to sell, to invest part of the funds in the development of the old, and to invest another part in the new?



In our case, against the background of a decline in the financing of science in the country, this banner (science) is picked up by a commercial company that conducts fundamental breakthrough research with high applied prospects. The ABBYY team in Russia has graduate students, associate professors, 31 PhDs and 3 doctors of science! Pulls on the whole division of scientific research institute! Against this background, state support for such a grand initiative does not seem strange. Is the state interested in effective science? Here she is! At the same time, the state usually finances science 100% and is completely unsure of the result. And here the business has already financed the project for 50 million USD and will finance another 16. The state will invest $ 16 million (474,996,000 rubles). Thus, a proportion of 16 to 66 is emerging with a high potential for commercialization, which is very difficult to expect from ordinary scientific research. After this, it is difficult to say that this is a bad model for the development of science. Play it, of course, will not be easy. Not yet seen other similar commercial projects.



ABBYY with the support of Skolkovo not only creates jobs for smart people (who would easily find work abroad). Thanks to the Compreno project in Russia, the general level of knowledge and competence in an extremely promising area of ​​applied linguistics is rising. And this spurs the creation of businesses in Russia that use and develop these technologies. In the end, this pushes Russian exports of intellectual products.



Is it more profitable or unprofitable to invest money in student projects, in the development of something from scratch? Hard to say. Have you tried to be an investor in high-tech businesses? The investor wants success. Cases with students and projects from scratch, in which the probability of success is high - up to a little offensive. The main problem of the Skolkovo Foundation, in my opinion today is not related to the fact that there are too many applicants, but to the fact that there are too few of those who want to give money. There are a lot of projects, but everyone has some significant weak points. In our case, the probability of success is high.



You receive financing (as indicated in the documents on i-gorod.ru) at the commercialization stage. Do I understand correctly that the technology has been developed, and you get the money to “pack” and sell this technology?



The ultimate goal, of course, is commercially successful products. But the purpose of financing is the development of new technologies and products. This is definitely not “packaging” and sale. Moreover, Skolkovo resident companies are allowed only research and development activities, and not the deployment of a marketing and sales complex. This is a reception company and a grant is issued only for these purposes.



I wonder what reports and how often I will have to provide to Skolkovo. Are there any success criteria attached to the plan that ABBYY will have to report on?



  1. To date, we have not received from the Skolkovo Fund 475 million rubles. We received 79 million. 166 thousand rubles.
  2. We have invested our 79 million. 166 thousand rubles.
  3. After six months, we must produce a list of products and / or their components and technologies with specific measurable qualities.
  4. In case of successful passage of control, we will receive the following 79 million 166 thousand rubles from the fund and add our 79 million 166 thousand.
  5. Every six months there is a similar control and a decision about the expediency of transferring the next portion of funding.
  6. It is also controlled on what and where the money was spent.
  7. Under the contract, we must create a number of products in the field of translation of texts and search technologies. If we create and present them, it means that the money was spent in a targeted manner and led to the planned result (finished products or their modules).




The control over this fund is enormous, since the entire Skolkovo project is under the control of the President personally and is obviously very important from the point of view of the immediate prospects.



According to Skolkovo, 474,996,000 rubles were allocated for ABBYY. According to your words, told the journalist Cnews, the company received 450,000,000 rubles. Journalists, as always, did not hear well, did not understand, deliberately podgadili? Or are you wrong? Or almost 25 million rubles a little bit evaporated along the way?



In an interview with CNews, the numbers are rounded. Since ABBYY conducts international business, and we receive most of our income in international markets, we have an internal accounting currency - the dollar. The dollar exchange rate has recently changed rapidly, and value judgments have not kept track of this dynamic. We have always estimated this financing at about $ 15 million. So I made a mistake with rounding on the background of a rapidly changing course. The amount of funding for the project is 474,996,000 rubles. This information is also in the official sources of Skolkovo: www.i-gorod.com/participants/ooo_abi_infopoisk



Are you planning to cut or just honest work? : D



Only honest work. Colleagues, this project is in plain sight. Here you can't spend a penny wrong. Here the main concerns should be related to hypercontrol rather than corruption.



Do you think it is right and normal that the “parent” company of the recipient of the state grant is registered in Cyprus? Why do we need a complex and meaningless ownership scheme of the company “Abi InfoPoisk” (first two other companies, and then - Cyprus offshore)? How does this fit in with the principles of business openness and fair business?



Very worthy question. But there is no less worthy answer to it. The Russian companies of the ABBYY group suck up their income from abroad , and do not take Russian income abroad. Until 2010, a tax regime operated for software exporting companies. We passed under it and used it. The criterion for the use of special regime was, including, at least 70% of export earnings in the total revenue.



We work as a pump injecting funds into Russia. We spend them here on wages to smart people, taxes, rent, purchased services, etc. This is our main difference from international companies. We live here.



If a company is engaged in international business, it must build an international structure. All international companies have offices in different jurisdictions, without breaking the laws ... The usual requirement of international investors is legal head office outside Russia. Since 2002, we have a foreign venture capital fund in our minority shareholders - Mint Capital.



How else was it possible to register a new company that is part of an international group? Use as a founder directly Cyprus company? Registration would take about three times the time. If you do not see villains everywhere, then all questions can be found very simple explanations.



According to the investment agreement, the money received must be spent exclusively in Russia for the purposes of software development. The approximate budget is given above. IP rights must remain in this company. Speaking about taxes in Russia and about the company "Abi Infopoisk", it should be noted that the tax regime in Skolkovo is better than in Cyprus, the Bahamas, the Cayman Islands and anywhere else. Derive profit from the Skolkovo company anywhere it does not make sense. If we do a successful business in Skolkovo for 10 years, then there is no reason for concern. Everything is good: profits in Russia, jobs in Russia, IP rights in Russia. And what will happen after 10 years, nobody knows. But most likely the world will change, and the organizational structure of many companies, including ABBYY, will change so much that it is absolutely impossible to assume anything about it today.



It was also very important to use a completely new company for the residence in Skolkovo. It is transparent, it is much easier to control and verify.



Wrote it and decided to continue a small investigation. If a company believes in Russia, then probably its patents are registered with the Russian office, is it logical? I searched uspto.gov and found this: www.uspto.gov/web/patents/patog/week41/OG/html/1359-2/US07813011-20101012.html "Assigned to ABBYY Software Ltd, Nicosia (Cyprus)" . Hmm, the same company registered in Cyprus.

why? Because only a fool will keep intellectual property in Russia. And ABBYY is not a fool. But not patriots.



Software patents are important only in America. It is there that there is a completely unusual legal system that allows you to patent fairly obvious things and aggressively use these patents either for trolling a successful business or for attacking a competitor. In Europe and Russia, such cases are very difficult to remember. Therefore, the focus of patenting for the international business of selling software, of course, greatly shifted to obtaining patents in the United States. Is there any special reason to register US patents for a Russian company? Usually - no. Well and, besides everything else, Mint Capital preferred the “warehousing” of IP Rights in a more familiar jurisdiction.



However, there are two very important points to this answer.







And patriotism, in our opinion, is not when flags are waving, but when you have a choice from the options, among which there is useful for the country, useless and harmful, and you choose useful. In this sense, we are patriots. And we have a choice, believe me.



Someone is only doing, and someone has already done and was waiting for this grant to develop a base, which without him to be another twenty years on our own. And such a company could deal with the project itself with its own resources, without taking them from those who really need them.



I have a partly close project, although some of your problems have already been solved) The approach based on a single entity language is excellent, but in 5 years when there will be a large base it will come to you that something is missing in it, which I ran into in due time.



This grant is hardly suitable for you. You’re probably not ready to put $ 16 million on the table. And among other things, it might be worth submitting your project to Skolkovo? Maybe what you have been waiting for so long lies and waits for you?



Do not you feel ashamed to take money from crooks and thieves?



We have seen officials in Russia who do not take money. And if someone cannot live with this, then neither we nor anyone else can help him, because he lives in a fictional and very bad world. And we live in a different world, and in our world you can get that kind of money, use it for business, do not steal, do not roll back and achieve success, which the whole country will be proud of later. In which world you live - choose for yourself!



Recently it became known that the singer Beyonce sent a million dollars to charity, which she received from the Libyan dictator Gaddafi several years ago. How soon will you start telling that you didn’t know anything about the people from whom you take money, and for what charitable purposes will you send $ 16 million?



Are you ashamed to take money from a state that cynically holds its critics in prison on trumped-up charges, tortures a financial lawyer, steals billions of rubles from a Western investment fund? In the state, where, according to official data, voiced by the president, the sum of kickbacks from government orders amounts to a trillion rubles a year?



Do you have a passport of a citizen of Russia? Do you pay taxes in Russia? If so, do you think this is a compromise with conscience? You are trying to translate this discussion into a political one, but I don’t want it. My assessments of the Russian state are not as polar as yours, and I believe that if my state does something right and useful, then it is possible and necessary to cooperate with it. Our company could not have originated in the USA or in any other country. Our company could only arise in Russia / Soviet Union. Because We exist not only thanks to 20 years of hard work, but also thanks to the Scientific School with a capital letter. , , , , . 700 . 99% . . . , . , . ABBYY FineReader ABBYY Lingvo 30 130 . , , . , , 300 . , , , , Apple, Google Microsoft . , , - , .



Are you a member of the United Russia party - a party of crooks and thieves? And David Yang?



No, neither I nor David, we are not in United Russia. Everyone must do their job. , .



, , , ? , , , , / ..?



. .



To be continued

Part 1. ABBYY Compreno

Part 3. Skolkovo, Linux and other questions

Source: https://habr.com/ru/post/115423/



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