Arkady Volozh: From Tech Titan to AI Innovator – A Remarkable Resurrection

It seemed that Arkady Volozh’s reign at the forefront of the Russian technology sector had come to an end.

During the summer of 2022, the CEO of Yandex, Russia’s largest tech firm, found himself facing European sanctions. Brussels officials were accusing him of facilitating Russia’s aggressive invasion of Ukraine, prompting his immediate resignation.

Many who were familiar with the billionaire believed this setback would be short-lived. Now, over three years later, they appear to have been correct in their assessment.

At present, Volozh, now 61, leads Nebius, a sizable Dutch tech company that emerged from a deal to divvy up Yandex’s remaining international assets.

He achieved what many in the business elite struggled to do: successfully exit the Russian market and redirect his previous enterprise into a new venture. In September, Nebius attracted attention by securing an almost $20 billion AI partnership with Microsoft. Last month, it followed up with a similar $3 billion agreement with Meta.

“I’ve never felt so optimistic about the future,” Volozh expressed in an interview last year.

But who is the individual orchestrating this impressive rebound and how did he manage it?

Nebius and Volozh declined any interview requests. Consequently, The Moscow Times sought insights from nearly a dozen former associates, Yandex and Nebius staffers, and those who have closely observed his trajectory in Russia’s tech arena.

Their accounts illustrate the story of Russia’s former tech mogul as a careful, soft-spoken leader who excels at maximizing the potential of those around him.

“He was an exceptional product expert,” recalled Greg Abovsky, a former COO and CFO at Yandex. “At times, he would harshly criticize somebody for a poorly designed button, yet at other times, he would express immense pride in what they achieved.”

“He really had a way of getting under people’s skin,” Abovsky elaborated, “in both positive and negative manners.”

Born in 1964 in Atyrau, a town on the Caspian coast of Soviet Kazakhstan, Volozh moved to Moscow in the early 1980s to pursue studies at the prestigious Gubkin Russian State University of Oil and Gas, where, per his LinkedIn profile, he specialized in applied mathematics.

For a young entrepreneur in Russia, this was a promising time for wealth creation. The collapse of the Soviet Union opened up the markets, and Volozh began his efforts to carve out his niche.

He also reconnected with an old school friend from Kazakhstan, Ilya Segalovich, around this period. Together, they initiated a program aimed at indexing the Russian internet.

Thus, Yandex—a combination of «yet another indexer»—was born.

In a 2005 interview with The Moscow Times about his motivations, Volozh expressed a desire to create products beneficial for future generations.

“We developed services that we desired ourselves,” the billionaire stated. “Now, we envision services that our children and parents would appreciate.”

Early associates of his career recall Volozh’s vibrant character as he pursued this goal, despite the challenging environment of a crowded tech landscape.

“He was very energetic and proactive,” said Alexander Laryanovskiy, a tech entrepreneur born in Soviet Turkmenistan who first met Volozh in the late 1990s before being recruited to assist in expanding Yandex internationally.

Yandex, which eventually grew beyond just a search engine, was confident in its ability to dominate the Russian market. In 2003, the company rejected a $130 million acquisition bid from Google. When it went public in 2011, it defied expectations—raising $1.3 billion and securing a reputation as a household name.

“Yandex is truly the ‘Google’ of Russia,” commented Anthony Moro, who was then the director of emerging markets at BNY Mellon.

Volozh distinguished himself from co-founder Segalovich, especially in how he responded to the rapid decline of democracy in Russia during the 2010s. While Segalovich was out protesting for clean elections, Volozh opted for a more discreet political stance.

“Volozh, at least in the public eye, kept a distance from these matters,” asserted Andrei Soldatov, an investigative journalist and author of «The Red Web,» a book examining digital surveillance in Russia.

Segalovich passed away from stomach cancer in 2013, at which point Yandex had become the most profitable media outlet in Russia, making it a prime target for the Kremlin. Suddenly, Volozh found himself in the challenging position of managing this crucial relationship.

“I don’t experience any friction with the state… just as I don’t encounter friction with the weather,” Volozh stated in a 2017 interview with Wired magazine.

However, critics have accused him of leading a company that frequently compromised with the Kremlin.

Lev Gershenzon, the former head of Yandex News, recounted a significant instance in an interview with The Moscow Times.

In 2010, Gershenzon received a call from the office of Russia’s newly appointed chief tax official. A decade later, Mikhail Mishustin would replace Dmitry Medvedev as prime minister, but at that time, the 44-year-old Mishustin was still climbing the political ladder and needed favorable media coverage.

An official from the tax office expressed dissatisfaction with some negative search results concerning Mishustin on Yandex News and asked if those could be removed.

“There were specific and concrete demands,” Gershenzon recalled.

The matter was escalated, and ultimately, Yandex’s senior management chose to alter the search results relating to Mishustin’s name, Gershenzon noted.

Although Volozh wasn’t directly involved in the decision-making, Gershenzon pointed out that this incident highlighted the kind of concessions Yandex often made to the Kremlin under his leadership.

“His compromise was that to continue evolving and operating in Russia, we needed to ensure that influential officials were at least content with our actions,” Gershenzon stated, which fueled his discontent with Yandex.

This was the delicate balancing act Yandex managed—until it no longer could.

The full-scale invasion of Ukraine in February 2022 plunged Yandex into turmoil, similar to many large Russian corporations.

In the ensuing months, two executives and as many board members resigned, Yandex News was sold to the Kremlin-affiliated tech giant VK, and the company’s shares listed on U.S. stock exchanges were frozen.

Visitors to Yandex News would have encountered a distorted representation of the conflict that led to this internal collapse.

In the early days of the war, the aggregator heavily featured reports from pro-Kremlin sources, leading critics to assert that a vast censorship campaign was underway.

One former Yandex manager, who requested anonymity to speak candidly, described this period as filled with uncertainty for lower-level staff. About a third of his team’s leaders resigned, some believing that Yandex was disseminating pro-war propaganda.

“The majority of our employees were remote workers and lost access to their banks, prompting many to emigrate,” the ex-employee told The Moscow Times. “It was a stressful time for everyone.»

Volozh’s sudden departure that June signified just how unfixable these wartime shifts would be for Yandex.

When the EU imposed a sanctions package naming Volozh, it accused him of leading an organization “responsible for promoting state media and narratives,” contributing tax funds to the Kremlin, and supporting “actions or policies” undermining Ukrainian sovereignty.

Volozh dismissed these allegations as “misguided.” Those who anticipated a profound reflection regarding his Yandex departure—and perhaps a condemnation of the conflict—had to wait.

He eventually conveyed his sentiments in a heartfelt farewell message released just before New Year’s 2023.

“Yandex has been my life’s work,” he wrote, stating that thousands of former employees also contributed to the company’s achievements. “Thank you to everyone who has built and continues to build the finest tech firm in the country. I love and miss you all immensely.”

Despite this emotional farewell, there was no condemnation of the war, leading critics to interpret his silence as acquiescence.

In the autumn, a group of squatters occupied his Amsterdam mansion, displaying banners that read “Against War and Capitalism.” The following summer, journalists discovered he was now describing himself as a “Kazakhstan-born Israeli tech entrepreneur” on his personal website.

Whether it was due to negative press, a change of heart, or other reasons, Volozh ultimately chose to speak out.

“Russia’s invasion of Ukraine is barbaric, and I completely oppose it,” he said in a statement provided to the independent Russian business outlet The Bell in August 2023.

“There were reasons to remain silent during this extended process,” he added. “While there will likely be questions about the timing of my statement today, there should be no question about its core message. I am against the war.”

He claimed that his time had been occupied with assisting Russian engineers who chose to emigrate. Now, these individuals were poised to launch new business ventures abroad, “pushing forward technological innovation.”

The same could be said for Volozh, who is also in the process of embarking on a new project.

Yandex’s parent company was registered in the Netherlands in 2007. Former Yandex board member Esther Dyson noted that this arrangement ensured the company answered to a foreign regulator, helping to shield it from some Kremlin scrutiny and political exchanges that often accompanied operating in Russia.

“Though we were in Russia, we were subject to its government, but we were also outside of Russia, which restricted certain actions we could take as a business,” Dyson explained to The Moscow Times.

Nebius owes its genesis to this decision.

Amid the backdrop of Volozh’s period of controversy was an extensive legal struggle concerning Yandex’s future. Eventually, an agreement was reached allowing its Dutch parent company to sell extensive assets to a Russian consortium for 475 billion rubles ($5.2 billion) in cash and shares.

“The entire separation process was incredibly complex,” Dyson remarked, who briefly served on the Nebius board as well. “And unlike many companies, we ended up faring, I think, fairly well.”

“Many companies left with almost nothing,” she added.

This deal ensured that any initiative Volozh sought to establish with those foreign assets would be based in the Netherlands. The assets were formidable, including a significant data center in Finland.

In July of last year, Volozh introduced Yandex’s successor—Nebius, a firm focused on providing infrastructure for AI. He compared such technology to the “railroads during the industrial revolution,” asserting that Nebius would lead this development.

Currently, Nebius employs over 1,000 engineers on these initiatives, with many having transitioned from Yandex, Volozh noted in an interview.

One employee, who spoke on the condition of anonymity, mentioned that working for a rapidly expanding company promotes an “undeniably intriguing experience.”

“I have a very positive relationship with my company,” the Nebius employee stated. “I’m grateful for the move [out of Russia] and everything else, and I feel quite comfortable working here.”

About an hour’s drive north of Helsinki, Finland, one arrives at the small town of Mäntsälä.

This quaint locality may boast sights like a stunning 20th-century church and a selection of classic Finnish mansions.

And of course, the large, white structures just off the highway.

Shaped like the crest of a wave, these buildings house the powerful servers and cooling systems essential for meeting the growing demands of AI computing. An expansion at this facility is set to add even more capacity. Above the entrance where Yandex’s red and black logo once shone is the new emblem: “Nebius.”

The company is banking on the future of such facilities, with the Mäntsälä center being one of the key assets carried over from the Yandex split. Its international expansion has involved establishing GPU clusters and data centers in various locations, including London and New Jersey.

As demand for AI surges, Nebius believes that its industry expertise will draw in companies.

“This isn’t just an arbitrary organization,” stated Matt Weigand, a partner at venture capital firm Accel, which invested in Nebius, in a comment to Bloomberg.

So far, this strategy has proven effective. This fall, Nebius secured one of its largest clients. Under a deal potentially worth up to $20 billion, the company will provide cloud computing power to Microsoft.

Individuals who have tracked Volozh’s journey told The Moscow Times that if there is one factor that accounts for his successful pivot, it is his knack for identifying and managing the right talent.

“He excels at bringing together exceptionally talented individuals,” remarked Soldatov, the journalist. “That’s always been his strength.”

“He liked to say that the way to ruin a hamburger is not to flip it frequently enough,” recalled Abovsky, the former COO and CFO. At Yandex, this meant occasionally rotating “people around to take on different responsibilities and gain insight into various aspects of the business.”

Abovsky also noted that Volozh “was less a boss and more of a peer—like a player-coach.”

Despite the transformations that Nebius symbolizes, some facets of its CEO’s life have returned to a semblance of normalcy over the past year.

The European Union lifted his sanctions in March 2024, and according to Forbes, his wealth has stabilized to approximately its pre-war level.

Even Volozh’s critics cannot help but admire his remarkable rebound.

One of them is Gershenzon. Despite his disagreements with Volozh’s handling of Kremlin relations, he concedes that the former Yandex leader is an adept entrepreneur, one whose talents shine best outside of Russia.

“It’s wonderful that Arkady Volozh—a brilliant and charismatic leader—is not currently involved with the Russian war,” he stated. “However, this fact underscores that there were no barriers prior to the war that prevented creating significant initiatives without having to make these compromises.”