The Davos Word — Issue #2, Jan 17th 2017

The Russia House Newspaper | Tuesday, January 17th 2017 | Nr. 2 | rh2017.com

THE DAVOS WORD Tuesday Means Business at Russia House

As the sun comes up over Davos on the second day of the World Economic Forum, one major thought is creeping across the minds of WEF delegates in the small Swiss ski town – Tuesday means business! Once the allure of the first day has worn off and your meetings for the rest of the week are set in stone, it’s time to roll up your sleeves and get right into the action.

Digital Revolution Breakfast The main talk of the town is the fourth industrial revolution, a new wave of industrial technology which investors across the world hope will bring about a new era of productivity and profitability. Every type of industry, from agriculture to logistics to retail, will face stiff competition if they don’t adapt quickly to the new

technologies revolutionizing production at this very moment.

We kindly invite you to the “Digital Revolution Breakfast” at Russia House, where Ulmart major shareholder Dmitry Kostygin will join Russian tech legends from Kaspersky Labs, EM Communications, and ER Telecom on an expert panel to discuss the fourth industrial revolution. Find Dmitry’s interview and event details on page 2.

US - Russia Relations The second item on Russia House’s Tuesday agenda touches upon a sensitive and controversial political topic. With just days to go before the inauguration, many analysts have speculated about US President-elect Donald Trump’s promises to normalize relations between the US and Rus-

sia. We warmly invite you to join academics, politicians, and experts for a panel discussion called “Russia-USA: Dialogue After the Election” at Russia House this afternoon.

Official Reception Party Last, but certainly not least, Russia House is throwing a big party tonight with live music and good times until the wee hours of the morning.

Loosen your tie and put on your dancing shoes for the Russia House Official Reception Party. It promises to be an unseasonably warm evening with heart-melting hits from American soul-pop band Lawrence as well as top shelf Russian vodka Onegin. Find out more on page 3.

We hope to be honored by your presence at one, or perhaps even all of our events today at Russia House.

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Machines ‘No Threat’ to Human Jobs - Dmitry Kostygin, Ulmart

Dmitry Kostygin, Chairman of the Board of Ulmart

The Davos Word spoke with Dmitry Kostygin, a major shareholder and chairman of the board of the sponsor company Ulmart, several days before the World Economic Forum opened about the future.

Ulmart is often dubbed as “Russian Amazon”, but Dmitry Kostygin, chairman of the board, leans toward a similar Chinese service called JD.com. “Unlike Amazon, JD.com has its own logistics. In that respect we are closer to the Chinese provider. But Ulmart has its own effective model, and I’m sure that other services will adopt it over the next few years.”

In 2015, Ulmart’s overall revenue exceeded 62 billion rubles. Last year, the company crowned the Ecommerce Index Top-100 of leading Russian online retailers. Ulmart seeks to hold its IPO later in 2017 and will

strive to grow tenfold over the next five years. The Russia House in Davos is one of many Ulmart projects, which aim to raise funds into the future public company. Dmitry Kostygin favors the Russia House concept: “We want to show that Russian business is expanding, and we cordially invite investors to contribute.”

Past Dmitry Kostygin started as an entrepreneur in the early 1990s, when Then-President of the Russian Federation Boris Yeltsin established the “Decree of Free Trade”. Many people took advantage of the new freedom and started haggling to survive through the tough times. “I should have gone private and amassed vouchers” - Kostygin sighs – “But how can I make a hundred times more money now? – I’m not sure. I do have an idea,

and we are working it.”

Kostygin started his journey to become one of Russia’s top investors from a jeans store and became an owner of popular retail chains like Rive Gauche, Ulybka Radugi, Rjady, Lyubimiy Krai and, of course, the biggest online retailer Ulmart. He explains his success by claiming that he inherited his entrepreneurial spirit from his ancestors - both grandfathers were managers - as well as a steady will to persevere and move forward.

The investor’s tips for startuppers, however, echo the classics from business books: step out of your comfort zone, find your passion and work up to ten thousand hours. “Anyone can become an entrepreneur” - Kostygin assures – “No matter what you do, the earlier you start, the more you achieve - be it violin or tennis playing. For business, you’d better start selling at 12, like the Rothschilds did.”

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The Davos Word

Present According to Dmitry Kostygin, three modern trends shape the ecommerce industry in Russia: low cost business in every retail sector from fast food to transport, discount and outlet retailers, and additional online services which make purchasing easier for the buyer. Coupons, auctions, flash sales and other sales tactics compliment these three major trends.

However, if we take a more global perspective, Dmitry believes that the future of ecommerce is mass digitalization of our physical lives. Kostygin imagines that every human being may wear a smart 6-dimensional recording device, which will record not only time and place, but also data about choices, and store this information in a cloud server. “This kind of recorder would trace every individual’s action, – explains Dmitry. - What he or she eats, where he or she goes, with whom and why. That would help to explain cause and effect. Besides, our life would be safer – 6D-registers installed in cars and worn by individ-

uals will nearly erase auto collisions with pedestrians!”

Future The future is full of wonder, uncertainty, and inspires the mind of Dmitry Kostygin like nothing else. As an investor, Kostygin knows that his company provides jobs and salaries for thousands of employees. At the same time, he is concerned with maintaining competitiveness and knows that machine automation will replace many jobs in the future. However, the investor is confident that the fourth industrial revolution will bring more positive than negative effects: “There’s no threat in machines replacing human labor. What really matters is effective management in society.”

Kostygin sees the future as a quiet, practical and high-tech place – just like the roads in Switzerland: “If a car owner buys an alarm system, it should be located inside the auto so that the vehicle could deploy protective measures without disturbing anyone who happens to be nearby. If we choose

to build a road, it must be not only paved, but also equipped with a drainage and heating system, so cyclists could ride it all year round.”

Kostygin claims that the intense competition of the Russian market leads to an unhealthy entrepreneurial environment. Instead, the businessman favors the Swiss model, with their cooperative grocery chains and tight licensing control, as compared to the free and sometimes wild commerce in his home country. “When market competition is less fierce, society looks healthier. I encourage you to study Switzerland as a future pattern.”

Dmitry Kostygin will join a panel of expert speakers from other Russian tech companies, including Kaspersky Labs, ER-Telecom and EM Communications, for the Russia House Digital Revolution Breakfast on January 17. Don’t miss out on your chance to meet Kostygin and other Russian investors in person and hear them debate about the Internet of things, big data, and the fourth industrial revolution at Russia House!

Soul-Pop Group Lawrence Rock Out at Russia House A few dozen lucky guests tilted back glasses and got their groove on at the Russia House for our Pre-Party last night. Headlining the night’s festivities was Lawrence, a soul-pop band from New York, and they rocked the stage as our guests danced the night away. We sat down with Lawrence to find out more about how they formed and what makes them amazing.

Clyde and Gracie Lawrence – the sibling founders of the eight-member band which shares their last name – have been playing music together as far back as they can remember. Their parents made sure that music was an essential part of their upbringing. “We’ve been playing together forever,” Clyde said as he re-

called how he wrote and played music with his sister in the living room after breakfast when they were kids. Now they own the stages of North America and Europe. However, the siblings have never forgotten their roots. They still play music together with their parents and a little brother at home after breakfast.

Finding Their Own Way The road toward success in music is hardly ever short and Lawrence is no exception - they have been playing together for over a decade. Clyde and Gracie started performing with their friends at school and in small cafes, sharpening their performance skills and developing their own iden-

tity. “We grew up listening to old soul music and were always trying to bring a modern flavor to that and create a new kind of pop music,” Clyde says.

“

Our main idea is always to be live, real.

It’s easy to hit the track and just sing, but for us, every performance is a special thing.

- Gracie Now they define their style as soulful pop. Their main goal is to rock the core of their audience, which is why Lawrence always want to per-

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Lead singers Clyde and Gracie set the tempo for the party form live. “Our main idea is always to be live, real. It’s easy to hit the track and just sing. Especially when the concert is small and stakes are not that high,” Gracie explains, “but for us, every performance is a special thing”. Whether covering Rihanna or performing tracks from their first album called ‘Breakfast,’ Lawrence don’t allow anyone in their audience to stay indifferent when they perform live.

“

We grew up listening to old soul music and were always trying to bring a modern flavor to that and create a new kind of pop music.

- Clyde However, Clyde and Gracie believe that one factor makes their music exceptionally soulful. ‘’Everyone in the band has different majors, from music and psychology to urban studies and computer science. And it works pretty well. Each person brings their outside knowledge to the band.’’

Sibling Rivalry?

Like all siblings, Gracie and Clyde have their disagreements, but they are always on the same page when it comes to their work. “Everyone asks how it’s possible to work with siblings” – Gracie says laughing, “but we don’t really argue… At least not when it comes to the band and music.”

They say their sibling connection actually helps and the brother and sister are always ready to support and learn from each other. For example, Gracie always loved performing for an audience and it came naturally for her, while Clyde just liked playing for people and had to

Clyde hits the high note

take some pointers from his younger sister before getting the hang of it.

“It’s really nice to work together,” Clyde admits.

Lawrence will play one more event at Russia House before departing back to the States, so you still have a chance to see them before they go. The young musicians will perform their final show in Davos on the Russia House stage for our Official Reception Party, so if you don’t want to miss out on their melodic soul-pop, Russian vodka, and a head-spinning good time, make sure to make your way to Promenade 72 tonight. The action starts at 21:00 - see you there!

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Onegin Vodka - A Russian Classic Brought to Life

The em-“bottle“-ment of Alexander Pushkin‘s classic 1831 novel in verse “Evgeny Onegin“ One of the first things that people think about when they hear the word “Russia” is Russian vodka. Simple, the leader in premier alcohol distribution in Russia, is no stranger to Davos. The company specializes in importing top shelf alcohol from Europe, but this time Simple is bringing out its own brand – Onegin Vodka. A Russian vodka in every sense, Onegin is Simple’s answer to conquering both the domestic and international premier vodka markets.

Simple’s President Maxim Kashirin wanted to create a brand with deep emotional connections not with birches and lakes, but with classical Russian literature that still stands the test of time. Onegin Vodka’s label commemorates the time and place (Saint Petersburg 1831) when legendary Russian poet Alexander Pushkin finished his novel Evgeny Onegin.

Onegin Vodka’s brand ambassador Ilya Bubashvili explains the nature of the premier drink:

“Vodka is pure spirits, as pure as the Russian soul. It doesn’t have any strong shades, that’s why making vodka-based cocktails are very easy.”

Vodka is now trending in Europe, but it doesn’t live up to its foreign popularity in the Motherland.

Sales of the iconic Russian hard alcohol in the premium segment have been surprisingly stale because affluent people prefer good whiskey or cognac.

“In Europe and the US, they drink vodka on the rocks in a glass,” says Ilya. “Russians prefer cold shots served with hearty meals. Onegin was created to show that vodka can be consumed differently. The special edition of Onegin includes both highball glasses for vodka on the rocks and shot glasses for customary quick drinks during meals. Simple wants people to choose how they take their drink. Plus the box contains a small, printed edition of Evgeny Onegin. It is a perfect gift for mind and soul.”

Vodka tasting has deep roots in Russian culture and is the drink of choice for many different occasions.

Ilya Bubashvili connects vodka with the beginning of a new life: “When a baby is born, his feet get washed with vodka. When someone passes away, others mourn their friend or family by placing a piece of bread on top of a shot glass filled with vodka.

Even on New Year’s Eve, Russians pop champagne first, but the night finishes up with vodka anyway. Champagne can’t invoke such strong emotions.”

Simple is the alcohol provider of choice for Russia House and our guests will be able to try vodka cocktails mixed with their new luxury Onegin Vodka. Made with raspberry, pineapple, and citrus juices, the cocktails were created by Vjacheslav Lankin, one of the most popular bartenders in Russia. Be sure to make your way to Russia House to find out just how good Onegin cocktails actually are for yourself.

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Upcoming Events The Future of US-Russia Relations The inauguration of Donald J. Trump as the 45th president of the United States is only days away and the Trump administration has signaled to the world both in word and in deed that American relations with Russia will categorically change.

Trump became the first president elect to openly call for better relations with Russia, even saying that he would be willing to consider lifting all sanctions. Furthermore, Trump has chosen former ExxonMobil head Rex Tillerson, who signed hundreds of billions of dollars worth of oil deals with Russia, as his Secretary of State.

It’s become clear that Trump has said and done many things to indicate that his administration wants American-Russian relations to enter a new and unprecedented period of mutual understanding and cooperation. In fact, Russia and the US may even cooperate militarily for the first time since World War II in joint operations against ISIS. The reality of a Trump White House certainly seems set to fundamentally change Russian-American relations, but to what extent? Will Trump even be able to get enough support in Congress to push through any significant changes in the first place? If so, what new business opportunities will be created? Will Russia’s currently deadlocked relationship with Europe change?

Former BBC News Anchor and foreign affairs specialist Nik Gowing, famed for his legendary seven hour long non-stop coverage of the death of Princess Diana, will moderate a panel of expert speakers who will tackle these questions head on from many different angles. We look forward to hosting this lively and energetic debate at the Russia House at 13:00 on Tuesday, January 17th.

Vaillant Arena

Live Hockey Game in the Vaillant Arena Wednesday, January 18 – 18:00 Friday, January 20 – 14:00 Get ready for heart-pumping action as ice hockey stars and Stanley Cup champions team up with top-managers, public officials, and foreign guests for a friendly match right in the Vaillant Arena. Make sure to arrive early to get good seats for the event and cheer for your favorite team.

The first hockey game at the WEF in Davos was held in 2014, when the Russian delegation began the tradition of “hockey diplomacy” to promote the upcoming Sochi 2014 Winter Olympic Games. The 2014 hockey match brought together for-

mer hockey pros, diplomats, and businessmen from East and West, including former Russian Deputy Prime Minister Arkady Dvorkovich and Qualcomm Executive Chairman Paul Jacobs.

This year, the sports tradition goes on with the inclusion of Phil Esposito, one of the most famous former Canadian hockey players, joining the action for the first time.

Esposito was inducted to the Hockey Hall of Fame after finishing 18 seasons in the NHL and scoring a total of 717 goals in his legendary career.

He will be joined on the ice by politicians and billionaires from all over the world as they face off in a light-hearted match, passing the puck between each other regardless of any differences they may have had in the forum’s working sessions.

Ulmart Digital Revolution Breakfast January 17 07:30 - 09:00 Russia-US Relations: What’s next?

January 17 13:00 - 14:30 Russia House Reception January 17 19:00 - 23:00 Life’s Digital Disruption – 10 Years from Now January 18 15:30 - 17:00

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Резюме Номера ности откроются для бизнеса, и изменятся ли отношения России с Европой, которые, по-видимому, зашли в тупик? Именно эти вопросы будут обсуждаться на деловой сессии с участием экспертов в Русском Доме, 17 января в 13:00. Модератором встречи выступит бывший ведущий BBC News Ник Гоуинг.

Хоккейный матч на стадионе Вайллант Арена Вечеринка-открытие в Русском Доме. Прибытие первых гостей

Дмитрий Костыгин, Юлмарт: «Роботы не вытеснят людей, если общество будет грамотно управлять процессами» В 2017 году Юлмарт надеется выйти на IPO, а в ближайшие пять лет вырасти в десять раз. Поддержка Русского Дома в Давосе – одна из инициатив Юлмарта по привлечению инвестиций в будущую публичную компанию. Дмитрию Костыгину идея Русского Дома нравится: «Мы хотим показать, что российский бизнес живет и развивается, поэтому приглашаем инвесторов активно в нем поучаствовать». Сегодня, по мнению Костыгина, в российской онлайн-коммерции четко прорисовываются три тенденции: лоукостеры во всех индустриях, от фаст-фуда до транспорта, распродажи и онлайн-платформы. Плюс такие форматы торговли, как купоны, аукционы и флэш-распродажи. Но если смотреть на вещи глобально, то акционер Юлмарта видит в будущем массовую дигитализацию – вплоть до 6D-регистраторов на каждом человеке. Этакий смарт-девайс, похожий на гимнастическую накладку, который будет записывать данные за всю жизнь и складывать их в облачное хранилище. «С помощью такого 6D-регистратора, – объясняет Дмитрий, – можно будет проследить, что ты ел, где ездил, с кем, и почему. Отсюда выстроятся причинно-следственные

связи, да и жить станет безопаснее, ведь если регистраторы будут стоять на машинах и на людях, то машина уже не сможет сбить человека». Как сторонник всего нового, Дмитрий Костыгин видит в четвертой промышленной революции скорее позитивные, чем негативные стороны: «Не нужно бояться, что роботы всех вытеснят. Главное – это то, как общество сможет управлять всеми процессами».

Будущее отношений России и США Считанные дни остались до той минуты, когда Дональд Трамп официально станет 45-м президентом Соединенных Штатов. Администрация Трампа уже дала понять, что отношения России и Америки ждут большие перемены. Сам избранный президент неоднократно заявлял, что Белый дом готов к сотрудничеству – не исключена и отмена антироссийских санкций. Кроме того, Трамп уже назначил бывшего главу ExxonMobil Рекса Тиллерсона, на счету которого многомиллиардные сделки с нефтяными компаниями России, на пост Госсекретаря США. Как именно изменятся отношения России и США после инаугурации? Сможет ли Трамп получить поддержку Конгресса для перезапуска двусторонних отношений? Если да, то какие возмож-

18 января, среда, 18:00 20 января, пятница, 14:00 В рамках Всемирного экономического форума в Давосе по традиции пройдут хоккейные матчи с участием известных политиков, руководителей компаний и звезд мирового хоккея. Первая игра, положившая начало «хоккейной дипломатии», прошла на Давосском форуме в 2014 году по инициативе российской делегации для продвижения Зимних Олимпийских игр в Сочи. В этом году спортивная традиция продолжится, а специальным гостем встречи станет легендарный канадский хоккеист Фил Эспозито.

Выступление группы Lawrence на Официальном приеме Русского Дома Сегодня сцену Kaffeklatsch вновь покорит нью-йоркская группа Lawrence, выступающая в стиле soulful pop. Ее история началась с домашних концертов маленьких Клайда и Грейси Лоуренс в гостиной родительского дома. Теперь брат и сестра выступают в США, Канаде, Великобритании и Швейцарии в компании своих лучших друзей-музыкантов. «Мы никогда не выступаем под фонограмму. Это так легко – включить запись и выйти на сцену. Мы же всегда искренни со зрителем и стараемся найти отклик в сердце каждого», – призналась Грейси Лоуренс.

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Russia House (KaffeeKlatch)

The Davos Word The Russia House Newspaper is the official newspaper for RH’17, published by Ulmart and distributed free of charge with a daily circulation of 500 copies. Reporters are graduate journalism students at the Saint Petersburg E State University. Online version of the SS RH’17 Newspaper available at rh2017.com RA T S TAL Chief Editor: Brian Kean, Chief International Officer at Ulmart Reporters: Mykhaylo Bonovskyy Valerie Kuzmina Oleg Maslov Julia Shimf

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