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Arkady Volozh says his ‘new’ company is much like a startup, albeit an ‘unusually big one’
When is a inauguration not a startup ? When it ’s a public company with 1,300 employees and $ 2.5 billion in working capital . If that failed to complot so much as a grinning , that ’s because it ’s not a prank — it ’s very much the reality forNebius , a fledgling AI infrastructure business organization that has emerged from the ashes of Yandex ; a multibillion - clam Jagannatha once touted as the “ Google of Russia . ”
“ It ’s like a startup because we are ‘ starting up , ’ but it ’s an unusually big one,”Arkady Volozh , Yandex co - laminitis and former CEO , told TechCrunch in an interview this week . “ But what we ’re attempt to progress will actually postulate even more resource , more people and much more capital . ”
Volozhwas force out of Yandexin 2022 after the European Union placed him on a sanctions tilt in the wake ofRussia ’s Ukraine invasion . The EUremoved Volozh from the listin March this class , paving the elbow room for his return to the crease as CEO of Yandex ’s next incarnation — one whose team and information centers are all outside Russia .
The Yandex implosion
The entity live as Yandex was always a lilliputian convoluted . When talk about “ Yandex , ” most people intend Yandex LLC , the Russian company founded in 1997 that built everything fromsearch , e - mercantilism and advertising product , tomaps , transportationand more . However , while Yandex ’s core audience was in Russia and a handful of neighboring markets , its parent was a Dutch holding organization called Yandex N.V. whichwent world on the Nasdaqin 2011 , follow by a secondary listingthree years lateron theMoscow Exchange .
Yandex N.V. was doing comparatively well as a public company , hitting a heyday market roof of $ 31 billion at the posterior - end of 2021 . But that all changed with the Russia - Ukraine conflict , with the Nasdaq put ahalt on tradingdue to sanctions . While the Nasdaq initially pronounce that it woulddelist Yandexentirely — alongside several other Russian - associate company — Yandex attract , andNasdaq agreedto maintain the companionship ’s itemization , but keep the pause on trading as the Dutch entity went through the arduous process of severing all Russian ties .
That processentered its final degree in February , with Yandex N.V. bring out its exit strategy . The entirety of its Russian asset — which also happened to be the lion ’s share of its clientele — would be sold at a $ 5.4 billion valuation to a Russian consortium , with $ 2.5 billion paid in cash and the rest make up in its own portion .
The dealing was something of a firing sale , nominate one-half of Yandex ’s market capitalization at that fourth dimension . The reason ? A Russian government activity - imposed rule that demands a required rebate of at least 50 % for any divestments need parent company incorporated in countries regarded as “ hostile ” by Russia . The Netherlands , being a signalize - up penis of an EU bloc that imposed sanctions on Russia , would sure as shooting diminish into that class .
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Nonetheless , the transactionclosed this week , and Yandex N.V. has fleetly make a motion to outstrip itself from any remnants of its past — the most obvious one being its name . open to shareholder approval , Yandex N.V. is adopt the name of one of its few remaining asset , an AI cloud platform calledNebius AIwhich it give birth last year .
AI compute demand
Nebius is vying for a market place that includes all the major “ braggart technical school ” swarm hyperscalers , but its main rivalry is arguably the wrapping of dedicated “ GPU - as - a - service ” startups that have emerged off the back of requirement for AI compute . These include the likes of U.S.-based CoreWeave , a$19 billion businessthat pivot from cryptocurrency minelaying , and which iscurrently expanding its own substructure into Europe . There is also at least one domesticated alternative in the form of Flex AI , a French startupwhich recently exited stealth with $ 30 million in seed fundingto rent GPU compute out to AI companies .
However , Nebius find itself in something of a unequaled position . Technically speaking it ’s not a inauguration , but it ’s having to start afresh with the few assets it has left , which is really the result of pure opportunity — it ’s just what happened to be outdoors of Russian territorial dominion when the conflict started two years ago . This includes an autonomous fomite company calledAvride , free-base in Texas ; a generative AI and LLM company calledToloka AI ; edtech platformTripleTen ; and , most notably in terms of this new counselling , a Finnish data center and AI cloud platform calledNebius AI .
Accordingly , the company is now lay itself as a full - wad AI substructure company with plans for a heavy - shell internet of GPUs ( nontextual matter processing units ) en route to becoming a leading instrumentalist in Europe . This is enabled by its data center in Finland and an be partnership with Nvidia which goes back some sentence .
“ We launched Nebius less than a year ago , and we now have thousands of GPUs , ” Volozh say . “ We have a great swarm partner in Nvidia , they ’ve known us for ages because we were one of its largest guest in Europe — so really , it ’s just the same people talking to the same mass . They make love us , and they get it on what we can do . Fortunately , one of the data centers of Yandex was built outside of Russia , and this is what we inherited and are now rapidly increasing its capacity . ”
Volozh sound out that Nebius is attend to treble the electrical capacity at its current owned deftness in Finland , with plans to get it to almost 100 megawatt . However , it ’s also looking to start building out additional data point centre across Europe in the coming years .
“ We farm the full stack — information mall , motherboards , server , racks , connectivity — everything is our own , ” Volozh said . “ We are now negotiating for several greenfields [ information shopping centre built from lolly ] in several nation , which we will sign up very soon . But this will take sentence . And before that time , we will be lease at co - location facilities . ”
Public versus private
Volozh affirm that the company intend to regain its full unchained public status now that it ’s untethered from its Russian plus , and is actively working with both the Securities and Exchange Commission ( SEC ) and Nasdaq to achieve that .
But would n’t it be well-fixed to go private and scale the good erstwhile - fashioned inauguration way of life — aside from the pressures of the public glare ?
“ I would say the opposite , ” Volozh enounce . “ Building base is the most capital intensive thing . Who ’s ramp up it ? It ’s the big tech guys who have billion of dollar sign of gross , and they have their own ecosystems where whatever you set in motion gives you an extra twosome per centum of earnings . They ’re gift like hell , and for a reason . Everybody wants to be there first . ”
So the Microsofts and Googles of the worlds are all - in , as are those in the “ 2d level ” grocery store such as CoreWeave , Lambdaand numerous others that are capitalizing on their relationships with GPU kingpin Nvidia . But the capital ask not only to build this , but develop a full system of interconnected GPUs that can communicate and share data and workloads dynamically , is significant — which is why we ’re seeing these younger players heighten multiple monolithic rounds of funding in tightlipped proximity , spanning debt and equity .
Nebius , for its part , is commence with a twain of billion dollar mark in capital , a shape that may deplete fairly speedily if a buy - back proposal of marriage toprocure inactive sharesis consider up by its existing shareholder . However , Volozh reckons that it will be far easier — and cheaper — to raise capital as a public company . Moreover , Nebius is positioned powerfully as it ’s manoeuver in one of the hottest spaces in technology aright now .
“ It ’s [ AI substructure ] probably the unsexiest ‘ thing ’ within a very aphrodisiacal securities industry , ” Volozh said . “ AI is very interesting — it ’s very real , and it ’s not plug like the internet was n’t hype 20 to 30 geezerhood ago . With substructure , we are in a very sweet spot . We ’re starting off with a couple of billion [ dollar ] , and we will establish enough capacity to scale ab initio . ”
So as a public company , Nebius could serve as an attractive alternative for those wait for skin in the biz without suffer to bet on the usual thespian .
“ I do n’t cognise of any other public company in AI infrastructure outside of ‘ adult tech ’ — if you ’re an investor , and you desire exposure to this area , we ’re very hopeful , ” Volozh aver . “ Of naturally , youcouldbuy Microsoft or Google stock , or you may purchase this stock . So that is why it ’s in force to be public . ”
Talent pool
While Nebius is not alone in its attempt , it has something other new players in the space do n’t have — and that ’s experience build out compute substructure at plate . Of the fellowship ’s 1,300 employees , around 1,000 of them are engineers , mostly transitioning over from the previous Yandex clientele , agree to Volozh .
“ Technologically , this is what this whole squad has been doing for the past 15 to 20 years , ” he said . “ They have build pretty big infrastructure globally , with 100 of megawatt of data centers . Now , we involve to ramp up it again , and these things are easy when you ’re doing it a 2nd clip . ”
When Yandex N.V. was a bodied holding company , Amsterdam was little more than an address . Today , the Dutch uppercase is the company ’s biggest hub with some 500 people , with the residual of its head count break across various other locations let in Israel , the U.S. ( Austin , Texas ) and Belgrade . While Amsterdam will continue home , its other bases will be runny and evolve in transmission line with the demands of the commercial enterprise .
This geographic spread head has largely been down to chance , a compounding of where its subsidiary were earlier based and , more of late , which countries have been willing to assume prole fly the fight .
“ It has been quite a journeying . When the warfare broke out in February , ’ 22 , a lot of people start depart the country [ Russia ] , ” Volozh say . “ There ’s a lot of families , but to move a family is a brave move just to drop everything and just move . But they realize that they do n’t require to indorse it [ the war ] . They do n’t require it to materialise in their name . When they all started leaving , we started help oneself them . ”
Israel , where Volozh himself has officially been base for the safe part of a decennary , was the first state to start take his workers .
“ Because it ’s a visa - complimentary nation for Russia , it was easier for them to come as holidaymaker — and then they started stick work permits pretty quickly , ” Volozh enjoin . “ subsequently in 2022 , across Europe and specifically the Netherlands recognized what was going on and in reality invited us — they put out C of work permits . So that ’s why people started moving to Amsterdam , and I cogitate it ’s a large win for the Netherlands . We ’re a big AI company , and we have well - paid , high - level engineers — everybody will be contributing a lot of taxes here . ”
It ’s hard to amplify the sheer scale of the effort involved in find to where Nebius is today . It ’s a shadow of its former ego , for certain , but much like the society that pivot from crypto to cash in on the AI amber rush , Nebius is repurposing the resources it has to meet a demandthat is showing little sign of decline .
“ It was a lot of work to move all these people , while also separating the company in latitude , ” Volozh said . “ It has been a great deal like a startup , in that we had to build the ship’s company from scratch , though we needed to be sure that all the technology is completely disjoined — for example , secure that the same Finnish data center does n’t transmit anything back across the border [ to Russia ] . Now the hand is done , the money is in the coin bank , the fellowship is separated . And the people are here . ”
Volozh , for his part , is technically ground in Tel Aviv though he adds that in reality he “ live on on a planing machine , ” split his clip between the various hub his body of work takes him to . But he remains upbeat about his new speculation ’s vista .
“ I ’ve never been so excited about the time to come , ” he order . “ Yandex was not my first company , but even at Yandex we protrude all these business enterprise whole almost every class — Yandex grew to be much more than a hunting company , and it really was just like launch [ unexampled ] companies . So … here ’s yet another companionship to set in motion . ”
