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Innovation in a Fallen Empire

This is a story that I need to tell.


It's about a man who made a name for himself without connections, investments, or a handout in the aftermath of a fallen empire. Only armed with knowledge and an idea. An idea that took him from zero to $44,000,000 in less than 10 years. Writing about Dmitri Borisovich Zimin drew something out of me. I have a soft spot for underdogs, and this was a pleasure to research.


I uniquely grew up in a 10-year period of Russia when the illusion of democracy and freedom was fresh. There was no Putin. There was no "Ukraine problem." There was a drunk at the top of the government, political unrest, and instability. When empires fall, queues start to form.


Empires fall often. Change is inevitable. The Soviet Union was an empire. A closed-loop system. A different political system. The opposite force to the West. In its 69th year, it collapsed. The reasons are plenty, but that's not the point of the story.


The focus of the story is people. Specifically, one person, someone who against all odds fought his way to success. This story matters because it is recent. It's not as far away as the Great Depression or the time when individuals succeeded with no indoor plumbing. The luckiest people in the world, the privileged West, are struggling. They are struggling with a change in the economy, a change in the work structure, with the rising cost of living, with the political divide. Everything is unknown. Status quo no longer exists. They are struggling with change, but change is inevitable. How does one change when all you know is comfort?


What happens to the people when an empire falls? Your life is uprooted. What you've trained for, what you've studied, everything you believed in is gone. You must start over and learn everything anew. What do you do when the government controlled all industry and that government is no more? The system that promised your future is gone. You are a child abandoned by your parents. The system is a lie indeed. Your life was protected and padded with socialist ideals; you were cared for. There was a plan, and you knew what to do to succeed. Overnight that security disappeared. How do you accept a system that was your mortal enemy overnight? Some did, some didn't. The free market was suddenly available to everyone. All at once, open markets sprung up everywhere reselling goods from China. When I was growing up in Russia, it was impossible to get a legitimate copy of a movie or a music album. I was a pirate from my birth.


There is a funny story from Louis C.K. He was in Russia during the early 1990s and was in need of shoe glue because his shoes were falling apart. He approached a teenager who had exactly what he needed. Why did the teenager have shoe glue on hand? Its intoxicating fumes can take you away from the realities of your crumbling empire.


Success is not an accident. It takes persistence and belief in your mission. People made millions during the Great Depression, and people made millions during the 1990s in Russia. You've heard about them by now, you understand them. They are the ones with their yachts seized, but this story is not about the connected ones who grabbed all they could from a collapsed government. This is a story of a man who fought his way through. A man who used every ounce of ingenuity to create a life for himself and his community. Dmitri Borisovitch Zimin was one of the people responsible for establishing telecom communication within Russia in the early 1990s. Against all odds, he fought his way to the top using his unique position, his knowledge, and his understanding of the newly formed capitalist system in Russia. He was just an academic and an inventor. He came out on top in a freshly formed neoliberal capitalism of 1990s Russia.


Dmitri Zimin had his beginnings in academics like many others in the USSR. He was a radio engineer and spent 35 years in the Radio Technical Institute of the Academy of Sciences of the USSR. An innovative and creative man, he invented over 100 scientific works and inventions. In the mid-80s, he was appointed as the deputy chief designer for an anti-ballistic missile system's antennas. In the final years of the USSR, there was a significant reduction in defense contracts for the Radio Technical Institute for the reasons you all know. It was clear that things were changing. The government that ran all was no longer there to support him.


Telecommunications was not a priority for the USSR in the 1980s. Somewhere deep in the ethos of Communism, there was a belief that communication within the region should not be advanced. The government didn't invest any funds into the advancement of telephony. My family had to line up to establish a landline in our apartment in Moscow Region in the late 1980s. We only got a phone line to our apartment in 1994 through a private company.

Dmitri Zimin saw the writing on the wall; he could see that Yeltsin's government was preoccupied and did not prioritize the establishment of communication within Russia. A government, no matter how mighty and powerful, is not flexible enough to expand a cellular network. It lacked funding and ingenuity required to invest in Research and Development. The development of this “unknown” technology would require capital and planning, and the path to earn money wasn't well defined. That does not serve a newly formed government. As with all technological advancements in our history, this path was left to the innovators. It wasn't a government that invented an airplane or a lightbulb. The path is left to the ones among us who have an idea and run with it.


Dmitri Zimin, the innovator, created his path. He didn’t whine and complain. He didn’t reach for shoe glue.


There was no investment, there was no government to guide him. He had to do it on his own. So how do you do it? In 1992 he established a company Vimpel-Communications (VimpelCom) and became its President and General Director. That company brought the first AMPS station to Moscow, Russia's first cellular communication. There were two other companies at the time who were racing along with him, Nordic Mobile Telephony (NMT) and Mobile TeleSystems (MTS), but they were well-funded and connected. Dmitri Zimin had no financial backing or connections. MTS was run by Vladimir Yevtushenkov, a very well-connected individual who had family ties to the mayor of Moscow.


During his work at the Radio Technical Institute, Dmitri Zimin worked with other scientists on enhancements for antennas to detect anti-ballistic missiles from the US. By luck or divine intervention, the frequencies of an antenna, 850 MHz, met the exact frequencies of the Advanced Mobile Phone System (AMPS). The primary analog mobile phone system in North America from the 1980s to the early 2000s. Dmitri received a regional license to use these frequencies from the military to build a cellular network in Moscow. Meanwhile, MTS and NMT already had countrywide frequency licensing. At the time, MTS already had licensing for an advanced GSM frequencies spectrum in 1992 across the entire country. Having spent time in Moscow City Government, Vladimir Yevtushenkov was a very well-connected individual.


In 1991, Zimin had a goal of establishing cellular telephone communications in Russia. During his research on how to bring telephony advancement to Russia, Dmitri Zimin learned about the 850 MHz cellular band and requested permission from the Russian Military to use it. That's all the support he received from a government body, permission. Dmitri Zimin established a private commercial enterprise "KB Impulse," which acquired the license to use the frequencies. Using his connections from the Radio Technical Institute, he hired experts in communication systems.


He had the frequencies, now he needed to find a provider of a base station with limited resources and no funding or government backing.


He traveled all over the world, speaking with people and companies who had a very limited understanding of his position in the world. A story he liked to tell at parties in the later part of the decade was his visit to Paris to speak with a potential vendor. Due to an expense mix-up, the Russian delegation had to pay out of pocket for the last night of their stay. They used their souvenir money and negotiated breakfast out of the bill. When the morning came to leave, they walked to Charles De Gaulle airport. I like to imagine it was a brisk walk with a pep in their step.


They found their first base station from an Australian vendor. The base station and "commutator" (an exchange device that connects the station to the public telephone network) were loaned, but the trouble did not end there. The primitive exchange device reminiscent of a suitcase did not connect to the public network, the cellular phones could not make phone calls to landlines. The Australians couldn't help because Russia's network was uniquely proprietary. Dmitri Zimin called for help and asked an Engineer from the Radio Technical Institute, Vladimir Volynskiy, to figure out this problem and fix it. It took 2 months to connect the exchange between the Base Station and the Public Switched Telephone Network.


All systems go. The base station was installed on the roof of the Ministry of International Affairs building in Moscow in 1993. It was time to sell.


How do you sell to a country where the average wage was $23 a month? You charge $4,000 USD for it. The first phone weighed half a kilogram and was aptly named "Molotok" (hammer). The cost and the aesthetics didn't stop people from lining up around the block. The demand was so high that there's a story of a famous singer being kicked out of the building as he tried to make it to the front of the line by flashing his status. The lineup is a sacred Russian principle. One must prove your worth to get ahead of the lineup.


The sweat and tears paid off; Dmitri Zimin was on his way up. International companies started to take notice. Three companies signed agreements with VimpelCom to become vendor number two in the region - Ericsson, Nortel, and AT&T. Dmitri Zimin was wined and dined, relished. The West began to see opportunity. A place void of cellular communication is a gold mine. AT&T and Nortel were canceled, and Ericsson became the second vendor.

Even though VimpelCom was making a profit, they didn't have enough capital to invest in good equipment. Dmitri Zimin negotiated with Ericsson, and they financed the equipment, delivery fees, customs duties, installation, and maintenance. Ericsson even purchased fax machines and provided paper for refilling. Ericsson installed a base station in 1994, and Dmitri Zimin became a multimillionaire.


The innovations didn't stop for Dmitri. As soon as he established an AMPS connection within the Moscow Region, he worked tirelessly to digitize the standard and increased its capacity three times. In 1996, he finally received GSM frequencies for the entire country. That year VimpelCom was the first Russian company listed on the New York Stock Exchange.

In 2001, VimpelCom was bought out by AlphaBank, and Dmitri Zimin was paid out $22,000,000; he had shares worth an additional $22,000,000 and he maintained his position on the Board of Directors. A year later, Dmitri Zimin founded Russia's only private funder of scientific research, Dynasty Foundation, with the purpose of the development of scientific research and education in Russia. And for that endeavor in 2013, Dmitry Zimin was awarded the Andrew Carnegie Medal of Philanthropy, becoming the first Russian philanthropist to receive it.


Not bad for a man that started with nothing.


Innovators are the nerds that sit on the outside. They don't sit in comfort. They don't wait for the hand to give them warm milk, even when that hand was extended to them for 40 years. They look at the world in a different way. They see a land of opportunity ready for them. It is by luck of the draw that Dmitri Zimin was an innovative man who trained his creative mind for 40 years. He wasn't a scientist who rehashed old ideas; he created. Created he did. Against all odds, he connected Russia through cellular communication and created a company that is still operating today.


All research has been acquired from open-source information available on the internet.





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