November 21, 2016
The impact investor and social entrepreneur spoke to the TASS News Agency
The impact investor and social entrepreneur spoke to TASS about what type of threat the coming demographic crisis poses to Russia, how the future will be about social capitalism and why social and educational projects are so important.
- When did you understand that it was time to share, Ruben?
- I’ve always thought that this was the right thing to do. All my projects have been, and still are, partnerships, so looking at it this way I’ve always shared and continue to do so with partners, employees, friends… It’s not only money that one can share, but also, for example, joy and success. As always in life, the more you give, the more you get.
- But I’m specifically talking about charity, about the necessity to give to those in need, who have nothing themselves.
- You know, there’s no requirement to make such a strict divide. In my opinion, charity isn’t simply about giving over money. Make a donation, something gets built, for the sake of argument a church, and that’s the end of it.
I don’t do charity in this way, in the way that the majority understand it, I do it a little differently, I try to build working mechanisms, which provide for long-term sustainable philanthropic projects. Therefore, it’s not about how much I have earned and what part of it I give to charity.
- A tithe?
- For example, like buying your way out of civic duty. It’s important to understand that you live in a society where there are different people, and they all have different capabilities. The modern world is complicated and mutually intertwined. Social stability isn’t just a nice idea, but an area of responsibility, and not only for the government. The elites have a clear responsibility to create the mechanisms for the redistribution of resources, money, knowledge, which must help society become more balanced. It’s a matter of how you see life.
- It seems to me that not everybody understand this.
- I can’t answer for others, we are all different, everyone comes to this understanding at a different stage in life, and some don’t even come to it at all. Much depends on the plane of perception of the individual.
As for me, I’ve tried to think and plan for 25 years ahead for my whole life, and to be optimistic. I believe that in the next quarter of a century Russia will become a successful country with normal social and legal institutions, and with an environment where everyone can feel comfortable. There will be less hatred here, less conflict, stratification – both material and social. But this needs continuous effort. Everyone does what they can. Yes, some people in Russia are like shift-workers: they do some work here and live in the West, or create a home there for the future that is unconnected to this country.
During the crisis, the mood in Russia changed entirely. It is an enormous territory, a vast terrain, so it’s no surprise that we, just like a pendulum, swing from one side to the other. We easily move from optimism to depression. But, again, it all depends on the time-scale that a person is planning for.
- And in your opinion, what kind of phase are we in?
- Long-term I am completely optimistic, and short term pessimistic; as I appreciate that we have some serious challenges facing us. Not just the government, but also everyone who calls Russia their home.
Let us say that the demographic crisis is not connected to political institutes, inflation or the rate of the dollar.
In the twentieth century Russia has experienced a demographic catastrophe. I remind you that in 1913 there were 183 million people in the Russian Empire, this is when the world’s population stood at 1.8 billion. In other words, every tenth person lived here. Back then the USA had a population of less than 100 million.
A century later, and even taking into account that today’s Russian Federation has less territory than the Russian Empire, there are 143 million people here, while America already has 320 million.
- And in total that planet has seven billion.
- That’s what I’m saying! Russia now only makes up two percent of the world’s population.
It’s clear that this is a problem that can’t simply be fixed through economic measures. There needs to be a combination – the health of the nation, increasing the lifespan of the population, solving the problems of those cast aside, abandoned children, who since birth have grown up in orphanages while their parents are alive, and many others.
A separate topic is private property. There is still the mentality that what we have has been given to us temporarily, and that it can be taken away at any moment. I’m not only talking about the hundreds of thousands of registered companies but also about the basics, such as our own homes. For example, many of those who have a home within Moscow’s Garden Ring, the price of which is a few hundred thousand dollars, don’t even appreciate that they have a serious asset that they need to deal with correctly. We haven’t yet got a proper institute of private property, which is key for a market economy – either in terms of feeling like an owner, or in the overall judicial system and tradition of successors. In 10-15 years this question will become even more acute for those who made their money in the 1990s. To help owners of assets understand which is the best model for them, we created Phoenix Advisors, which undertakes wealth curation for owners, heirs and successors alike.
There is a fundamental challenge. It’s well known that society develops like a spiral, and today’s technology disruption is a new twist in its development. The scale of the impact on society is akin to what humanity experienced during the time of the great geographical discoveries, when South America was discovered and the sea route to India via the southern tip of Africa. And if the geographical revolution led to the renaissance, and then the industrial revolution, so today we are living through the technological revolution which will bring not only serious changes to our technology but also to the society, politics, education and many other spheres. Our entire way of doing things, which once seemed fixed forever, is now being brought into question. For example, who can say today what repercussions Uber will have for us, given that they provide work for millions of private drivers yet don’t own a single car themselves or make them. Especially as in a few years driverless cars will be around. You can say the same thing about Google and Facebook. The question isn’t about whether everything will or won’t move over to these platforms, and not about virtual technologies and their potential applications in education, medicine, science and everyday life, but about the qualitative change in the system of relationships, the process of interaction, public institutions and everything else.
Developing technology leads to, on the one hand, an increase in stratification, and on the other to the rise in increased interconnectedness – technological, informational. What does this mean? Today, the world has over 200 recognized governments, of which about 50 are affluent, and the remaining three quarters fall into the category of developing. Previously, the citizens of the leading countries didn’t think that the problems of the majority of the world could affect them, unlike today. The world hardly has any untouched areas any more, it has become interconnected, and what goes on in the problematic areas affects everyone. Now, it seems to us that refugees from conflict zones is an extremely serious issue, but in the meantime if the temperate of the planet rises by even a single degree, tens of millions of people from Africa and the Middle East will come pouring into Europe. This is many times the current number fleeing from Syria and Iraq. This wave of migration will not only overwhelm Europe – it will affect everybody. Therefore, there is an intensified polarization of global processes: on the one hand, everyone understands that there will only be more interconnectedness, on the other – there are more people who are afraid of change. They vote for Brexit, for Trump ... Isolationism and nationalist policies grow. It is a natural human reaction to the fear of change.
- But you’ve found your niche and are following it according to a plan.
- Once more, it is a question of choice and readiness to accept risk. You can say that everything is terrible, build a house with high walls, sit inside it and breathe clean air pumped though a special filter and wait for the bombs to go off. And you can think, “How wonderful it is that I’ve got enough canned food to last for two years!”
- Have you built yourself a bunker?
- No. While we have the chance, we should live like everything is going to be ok. One must be an optimist, you will leave children in this world…Or you won’t have children, if you don’t believe everything will be alight in the end. We are obliged to leave the world a better place than we found it. Otherwise it will turn out like Victor Chernomyrdin prophesied that our children will envy us. But seriously, you have to live life to the full. And absolutely think about the long-term. Do you know that in Japanese philosophy you’ll often come across the idea of living today as if tomorrow you will die. Don’t put anything off for later, do everything that you can today. Speak words of love to those you love, apologize to all those you offended… and learn, as if you will live forever. Every day, for 25, 30, 50 years…
There are some processes in society that last longer than our own lifespans. It seems to us that everything stretches out endlessly, but in reality it is all very quick. For example it has only been thirty years since the beginning of Gorbachev’s perestroika. Moses led his people through the desert for forty years, before there was a generation who didn’t know Egyptian slavery. It means that we still have another 10 years before we have a generation who weren’t born and raised in the Soviet period. This doesn’t mean that they will be better, they are just new, that’s all.
There is a big change coming in the mid-2020s, a change of the elites that grew up in the Soviet Union.
- Do you, Ruben, aspire to the role of Moses, at the same time trying to grow this new generation? I’m talking about the Skolkovo Business School and UWC College in Dilijan in Armenia. At the first you were the president for five years, and the second you built from scratch.
- It’s important to be consistent. Since the 2000s I have been saying that people are the main asset in the information society of the XXI century, over whom there will be fights. Therefore, education is extremely valuable. Russia in the 1990s lost not only hundreds of millions of dollars through money being taken out of the country. Much worse was the brain drain of trillions of dollars. People emigrated to Israel, the USA, Europe, South Korea…
- And they continue to leave.
- It’s possible that this is our biggest tragedy. Ultimately, just 3-5 percent of creative people are responsible for driving our progress, and there is a serious battle going on for them. Elon Musk from South Africa somehow didn’t go to France or New Zealand but to America. We have to do something so that the next Elon Musk at least doesn’t leave Russia, and even better, that he comes here, from South Africa, Kenya or the Czech Republic.
- And you are a believer?
- It’s impossible not to. But just to believe and pray isn’t enough, something actually has to be done. You remember the anecdote about the man who constantly asked God to let him win the lottery, and God eventually told him that he ought to go out and buy a lottery ticket? It is necessary to try not to be afraid to make mistakes and to believe that everything will come off. That’s the reason for Skolkovo and UWC Dilijan.
- So this is a lottery ticket?
- In some sense. We see how many children leave to study in the West, and our projects are about building a competitive educational institute in the post soviet space. We are working on the understanding that there is a demand for a new type of education. In society there has always been the concept of the master, who has complete knowledge of their narrow professional domain. Those who lived at the top of the social pyramid, the elites, had a deep complex of knowledge and a broader outlook. This is how it’s been for thousands of years. At the same time, ever since the industrial revolution, specialization hasn’t only been on the professional level, but also at the level of the elites. There have appeared narrow, specific areas, and everyone has to become a specialist in one of these. The entire system of education has changed, as has the social system, and the disconnection between groups of people has grown.
Today the process is going the other way – from analysis to synthesis, and at a different level. In the XXI century when any information, even the most specialized, is available and can be easily found, we are returning to not how much you know about a narrow specialisation, but about how wide your level of education is, combined with the ability to work at the junction of professions and fields of knowledge. Its not only good biologists that have competitive advantages, but also, for example, bioengineer-psychologists. The strict separation between the so-called ‘scholars’ and ‘techies’ becomes unnecessary, and may even be distracting. At the current level of sophistication it is important that people are able to see the big picture, can determine where there are key faults, and have access to specialized knowledge. So we try to develop in children the ability to see how one or another scientific fact is incorporated into the overall system of knowledge about the world and how it is projected, for example, through humanitarian values or laws in which society exists and develops. And impart such qualities, which are so important in the modern world, such as adaptability to new realities, the ability to be flexible and agile, to understand and accept other cultures.
Children from 72 countries study at our school in Dilijan. Not local Armenians, not the diaspora but Americans, Europeans, Australians, people from Asia and Africa. And in Skolkovo, along with the partners, we created a business school where foreigners could come. Yes, today the number of students from far abroad has shrunk, but we hope this is a temporary situation. We are pleased with the number of students from the CIS.
I won’t hide that I’m satisfied with what the Skolkovo Business School has achieved: the idea that rich and successful people in Russia being unable to work with foreigners and even deal with each other, has been shown to have not foundation. Plus, it is an effective partnership between the government and the Russian private sector.
And we are proud that UWC Dilijan has won an international architectural prize as the best public building in Europe, setting an architectural trend, and it was also the first project in Armenia certified to the BREEAM ecological standard.
- Who built it?
- The architect is an Englishman, Tim Flynn, along with a team from Russia, Germany, Georgia and of course Armenia, managed by the Moscow development company of my partner Gagik Adibekyan.
The same goes for the Skolkovo Business School, it is an example of how to create a unique complex, as the building itself presents a special message to the world. In ten years, Skolkovo has already produced many graduates. Despite the fact that there is a business school operating in Russia, a proportion of prospective attendees will all the same leave to study in America, France, London and Hong Kong. This is perfectly normal. But some decide that it is best to stay here. People ask me, “Why did you build a school?” And it’s because I want there to be a choice, including for my own children. There didn’t use to be an alternative, and now there is.
The biggest luxury and biggest responsibility is the right choice. Often people get scared and run away from it. We want someone to make the choice for us, then we can say that it’s not our fault. Our favourite pastime is putting responsibility onto our mum, dad, boss, government…because of this, the right choice is so important.
- Have these projects been an expensive journey for you?
- From the point of view of money? Yes, the outlay has never been returned in the form of dividends or anything like that. But, if we value it from the point of view of its importance to the country and its emotional return, I invest in the future, including my own, and what is more important than of my children. This might sound grandiose, but in fact it’s just the truth.
I admire those who help the terminally ill, the homeless and the poor. This is real missionary work. What we do is undertake impact investing, and we don’t make a distinction that we will make some money here, and spend money on charity over there. This model of mixing business with philanthropy is becoming popular around the world now, and our projects are based on a blended approach – mixed at all levels, capital, business activity, education, training people.
I think that this model of social capitalism can save the world. Something similar is already happening in Sweden, Finland, and Norway. If only the US Senator Bernie Sanders was 10 years younger, he would have become the Democratic candidate for the US presidential election. Both he and Trump hit a pressure point in society, which is the most developed in the world today, Sanders had said a lot about socialist ideas, although he is not a communist…
- You call yourself a social entrepreneur, although to most this seems like an oxymoron.
- You have to change your perception. This is in part a question of terminology. We live in a world where on the one hand, there is a gap between public authorities and the scientific and cultural elites, who often do not understand each other, speaking the same language and using the same terminology. On the other hand, there is a strong stratification in society as a whole. There is a negative prejudice against the rich. For people receiving a modest salary, it is difficult to understand how, let’s say, a lawyer or a trader earns hundreds of thousands of dollars. Of course, there is a feeling of injustice.
- Do you often come up against misunderstanding?
- Even rejection. It’s usual. One of the biggest skills of a real entrepreneur is to not be afraid to leave their comfort zone. Russia is a country with an unpredictable climate and life can be difficult, and there are people who strive for stability at any price. Some people think it’s better fiddle with anything so as not to make it worse. What if something goes wrong? Entrepreneurs are inherently disruptive, irritants that can do something wrong, something different. The communal system was about the need to help each other survive, and not to think about prosperity.
For most people, the new is fraught with danger. I remember well Abel Aganbegyan’s 1985 speech, when I was a freshman at Moscow State University, and he was an adviser to Gorbachev. Asked about the restructuring, Aganbegyan said, “We have started the process, like a huge pendulum. We are making it move, but we don’t know if it’s in the right direction. If we make a mistake, it can break through all of our supporting walls”. Doctor Aganbegyan proved to be visionary: running the restructuring processes led to the breakdown of all the walls built up until the collapse of the USSR.
Russia has a few options, to exit from the demographic crisis: combine with Europe or with China, try to restore the economic unity in the post-soviet space or do absolutely nothing. Here are the four scenarios I don’t see that there are any others. If you have a fifth alternative, I’ll gladly listen to it.
It’s not yet happening with Europe, although I continue to believe that this is the best option for us, with China – while willing – there are certain risks. Therefore the best choice in this situation is to increase the economic space, adding a few hundred million to the 145 million who live in Russia, which is necessary for the sustainability of long-term development. The question remains how to do this, through forcible administration or providing economic benefits for everyone?
- How are you prepared to help the situation?
- I’ve repeatedly said, everything that I have done and still do is directed towards creating the mechanisms for changing the economic and social environment. Take, for example, the PHILIN (Philanthropy Infrastructure) project, which works towards supporting the infrastructure of Russian NGOs and charities. Its purpose is to create normal institutes for those who are doing charity projects, and those who want to help and are prepared to donate their money. Today, we serve 30 family and social funds that used to do everything “by hand”.
Now that these organisations are getting professional services, I’m certain that in three years their size will grow several-fold and can accordingly help that many more people. The funds will raise significantly more money, build fundraising campaigns and charitable programs, relying on modern financial, legal, operational and IT infrastructure.
PHILIN undertakes institutional philanthropy so that people rely on institutions rather than acquaintances. If we are talking about timescales, then we are looking 25 years in to the future, otherwise the whole thing makes no sense.
- And why did you create the Aurora Prize?
- This is an award, which is given for an outstanding contribution in saving lives and promoting humanitarian ideas. The project has become much larger than we originally thought it would be. From the beginning we wanted Armenian’s to overcome their victim complex, something that has been haunting us since the time of the 1915 genocide, which is a deep internal pain. We wanted to show the world an example of how people, persevering through a terrible tragedy, surviving and getting back on their feet, are ready to help and give to those who are in need.
But it has become clear that what is happening today in the world makes the subject relevant to everyone. All of our projects can be characterized by the word ‘glocal’, a combination of global and local. Initiatives like Aurora characterize this concept well.
When we began to receive the biographies of those people who had saved others, we had the desire to say thank you to them. These are unique examples of nobility and courage, the triumph of humanism. The winner receives as a grant $100,000 and can donate a further million dollars to those who inspired their humanitarian activities.
- The money is passed on to other people and funds?
- Exactly. This is the whole idea. The result is a unique model, a kind of perpetuum mobile, a mechanism of giving back.
- For the Aurora Prize candidates, are there a geographic or thematic restrictions?
- Neither geographic, thematic or national. We’ll even be happy if there is an occasion when we can give the prize to a Turkish citizen whose activities meet the criteria for the award. I want to emphasize: neither I nor my partner, co-founder of the awards Noubar Afeyan, participate in the selection of the winner. This is done by the selection committee of nine members, of which only one is Armenian – Vartan Gregorian, who heads the Carnegie Corporation of New York and is one of the most respected figures in the academic world.
- Who else makes up the commission?
- Three Nobel Peace Prize Laureates, well-known human rights activists from Liberia, Pakistan and Iran, a humanitarian activist from Australia, the former Presidents of Ireland, Costa Rica and Mexico, the actor, director and philanthropist George Clooney. The first co-chairman was Elie Wiesel, also a Nobel Prize winner and Holocaust survivor ...People who are respected around the entire world.
We try and find and distinguish those who systematically set about helping and saving others, in the knowledge that they put their own lives at risk in doing so.
There are many awards ceremonies in the world, but in the area of humanitarian values there is nothing like it. Our Aurora Prize for Awakening Humanity is the biggest of its kind. Its not about human rights, but human values, which, its seems strange to say, now sometimes clashes with human rights, and this is also a new challenge that needs to be discussed openly and publicly.
- You also have a project called “Surpass Dreams”. Although what could possibly surpass our dreams?
- Troika Dialog’s mission was this: We are creating the future today to surpass our dreams tomorrow. Troika no longer exists, but the community of people, who have gone on to join different organizations still remember how to take the first step in business. Young people who came to Troika as interns, after a few years were running their own departments and became partners. Young men and women achieved a rapid career rise, and it is important that their success story has continued outside the company.
Today, many of the former partners of Troika head various financial institutes. For example, Vladimir Potapovis on the board of directors of VTB Capital Investment Management. Andrey Zvezdochkin is the general director of Aton. We want to continue what was started and produce even more successful examples. Surpass Dreams is a free programme for those who are currently only studying business. It’s important to add practical experience to their knowledge. The students we select have the opportunity to get practice in the best financial institutions – Sberbank, VTB, Aton, CleverDATA, Credit Suisse...
You know, when we hired people to work for us at Troika Dialog, in the interview we asked people what their dreams were. Eighty-five percent answered something material – a house by the sea, a beautiful car, fashionable things… about 10-12 percent dreamed about flying into space or something fantastic. The remainder said that they wanted to try to change the world for the better.
- You, of course, are for the latter?
- Yes, I’ve never dreamed of material things, and nothing has changed since. I dream of living in a world where reason and human values prevail over greed and cruelty.
We all have our problems, the only difference is in how we approach them. I have always taken pleasure from work, doing what needs to be done, talking to interesting people and trying to do as much as possible and I hope that I will be able to continue to do so.
In conversation with Andrei Vandenko | TASS