Russian investors can’t shake hacking’s shadow
Some venture capitalists are more wary about taking Russian funding
SAN FRANCISCO — Pavel Cherkashin, a Russian investor based in this city, thought he had the perfect name for a Catholic Church that he is spending $11.5 million US converting into a tech palace. It would be called Hack Temple.
But that was before the nearly daily deluge of news about Russian efforts to influence the 2016 presidential election by hacking computers and using Facebook and Twitter to spread inflammatory messages and sow division.
“We had so many concerns from our investors saying this would be inappropriate and we should change it,” said Cherkashin, 44, who planned to officially open Hack Temple this fall. “A bunch of Russian guys opening a hacker temple in the middle of San Francisco at a time when Russian hackers are considered the most evil in the world. They say you can’t.”
With news of the hacking and influence campaigns escalating all year, the Russian immigrant community of Silicon Valley, which numbers in the tens of thousands, is in a strange new position. Some Russian venture capitalists said startups were more wary about taking their funding, while several Russian-born engineers said they were being treated differently socially and in their companies. Lawyers also said some tech firms were installing tighter security measures restricting what data foreignborn coders can see.
At the same time, many said that as Russia gained a reputation for its hackers, interest in hiring its tech talent was increasing.
The tension is new. Russian immigrants helped build the last generation of Silicon Valley behemoths: Google co-founder Sergey Brin and early Facebook investor Yuri Milner are Russian-born.
Now when Cherkashin, a partner at GVA Capital, which is investing $120 million US in startups, pitches companies on why they should take investments from him, he gets skeptical questions as soon as they hear his accent, he said.
“It feels like if you’re a politician and you fell into a sex scandal, and everybody knows you for this, and every time someone recognizes you they have this smile on their face, ‘So how’s your personal life doing?’” said Cherkashin, whose firm was incorporated in the United States.
“This is how I feel every time I meet with an investor and they hear my Russian accent,” he added. “They have this smile on their face.”
Prospective partners and startups invariably ask the same question, Cherkashin said: Is his money clean?
“This question comes up two or three times a day,” he said. “I don’t think people would ask this question to a manager from another region.”
Julian Zegelman, an entrepreneur and a lawyer who represents and invests in Russian-speaking founders, said potential local tech partners worried they would accidentally get into business with the Russian government.
“They don’t want to be invested or dealing with companies whose technical talent is captive in Russia,” he said.
Leonard Grayver, a lawyer specializing in startups who is on the board of the American Business Association of Russianspeaking Professionals, said the hacking had put Russian tech talent at “the forefront.” His firm brokers technology deals between Russia and Silicon Valley, handling tech licensing and talent acquisitions.
As companies staff up with Russian talent, he is getting a new question that he finds bizarre: “Are we letting the wolf in the henhouse?” Some companies have asked him to help arrange for heightened internal security, he added.
“A lot of clients are trying to find ways to hire those Russian hackers and at the same time instituting heightened security protocols internally,” he said. “They’re isolating source code so you don’t have access to the main tree.”
Back at what may only briefly be known as the Hack Temple (investors want a new name before it officially opens), two young Russian entrepreneurs made breakfast sandwiches in the rectory kitchen one morning last week. The building has eight bedrooms, some with bunks to fit up to four; a living room full of midcentury modern sofas; and a patio covered in artificial turf and often used for beer pong. Before Cherkashin bought the building in January 2016, it was Nuestra Senora de Guadalupe Church.
In the cavernous nave, the stained-glass saints were covered in gauzy panels to soften the religious feel. Volunteers have fixed the broken organ so it plays again, now for parties.
“If there would be a city in the world where you can go to church and a hackers’ house,” Cherkashin said, “it would only be this one.”
On the wall along one of the aisles, Evgeniy Lapchenko, the Ukrainian artist, has remade Hieronymus Bosch’s “Garden of Earthly Delights.” Among the twisted human figures are tech luminaries: Apple co-founder Steve Jobs taking a selfie, revellers at Burning Man and Brin of Google in a self-driving car.
As for rebranding Hack Temple, Cherkashin has not found a new name he likes.
“It can be called the Startup Temple,” he said. “But it’s just too boring.”