Reinventing Success: Arkady Volozhs Bold Transition from Yandex to Nebius

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

In the summer of 2022, the CEO of Yandex, Russia’s largest tech company, was hit with sanctions from Europe. Brussels leveled serious accusations against him, claiming he was aiding Russia’s full-scale invasion of Ukraine. Consequently, he stepped down from his position.

However, those familiar with Volozh anticipated that this would be a brief interruption in his career. More than three years later, it seems their assessment was accurate.

Currently, Volozh, 61, leads Nebius, a prominent Dutch tech company that emerged from arrangements to divvy up the remnants of Yandex’s international operations.

He has achieved what many business leaders could not: a successful exit from the Russian market, transforming his former enterprise into a new opportunity. Nebius recently made news for securing a nearly $20 billion AI agreement with Microsoft in September, followed by a $3 billion deal with Meta last month.

“I’ve never felt this much enthusiasm for what lies ahead,” Volozh remarked in a previous interview.

But who is this individual driving such a noteworthy comeback, and what strategies did he employ?

Volozh and Nebius did not respond to interview requests, prompting The Moscow Times to connect with nearly a dozen former colleagues, both from Yandex and Nebius, as well as individuals who have observed his journey through the fluctuations of Russia’s tech landscape.

Their insights depict Russia’s erstwhile leading tech entrepreneur as a methodical, soft-spoken manager who excels at harnessing the capabilities of those around him.

“He was an exceptional product expert,” Greg Abovsky, a former COO and CFO at Yandex, recalled. “He could be harsh in critiquing designs, yet he also celebrated team achievements.”

“He had a profound impact on people,” Abovsky added, mentioning both positive and negative ways.

Volozh was born in 1964 in Atyrau, a town along the Caspian coast of Soviet Kazakhstan. He relocated to Moscow in the early 1980s to study applied mathematics at the esteemed Gubkin Russian State University of Oil and Gas.

For a young and ambitious Russian, this era was a prime opportunity to pursue entrepreneurial ventures. The collapse of the Soviet Union initiated a free market, and Volozh aimed to establish his presence.

During this period, he reacquainted himself with an old classmate from Kazakhstan, Ilya Segalovich. Together, they developed a program to search the Russian internet, leading to the creation of Yandex — a blend of “yet another indexer.”

Reflecting on his motivations in 2005, Volozh expressed a desire to create products for future generations.

“We used to develop services we wanted to use ourselves,” the billionaire commented. “Now, we consider services that our children and parents might find useful.”

Former associates from the early phases of his career remember Volozh’s charisma and zeal, even as the competitive tech landscape made it challenging to distinguish oneself.

“He was full of energy and initiative,” remarked Alexander Laryanovskiy, a tech entrepreneur from Soviet Turkmenistan who met Volozh in the late 1990s, subsequently joining Yandex for international expansion efforts.

Yandex, which eventually morphed beyond merely a search engine, was confident in its potential as a leading player in the Russian market. In 2003, it declined a $130 million takeover offer from Google. When Yandex went public in 2011, it surpassed expectations—raising $1.3 billion and establishing itself as a household name.

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

Volozh distinguished himself from his co-founder Segalovich, particularly regarding the increasingly oppressive political climate in Russia during the 2010s. While Segalovich advocated for electoral integrity, Volozh opted for a more reserved approach to politics.

“Volozh, at least on the surface, maintained a distance from such issues,” observed Andrei Soldatov, a journalist and author of «The Red Web,» which covers Russia’s digital surveillance and internet control.

Segalovich passed away from stomach cancer in 2013, at which point Yandex had become Russia’s most lucrative media entity, making it a target for the Kremlin. Volozh then faced the daunting task of managing that dynamic.

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

Nevertheless, critics argue that he led a company that frequently compromised its integrity in dealings with the Kremlin.

Lev Gershenzon, who once headed Yandex News, shared a notable incident during an interview with The Moscow Times.

In 2010, he received a call from the office of Russia’s newly appointed chief tax officer. A decade later, Mikhail Mishustin would be recognized for succeeding Dmitry Medvedev as prime minister, but at that time, he needed positive press to enhance his ascent in politics, Gershenzon recounted.

An official from the tax office expressed frustration over negative search results concerning Mishustin on Yandex News and inquired if such results could be removed.

“There were very explicit demands,” Gershenzon recalled.

The request escalated through the company’s hierarchy, ultimately resulting in Yandex leadership’s decision to modify the search outcomes related to Mishustin, Gershenzon stated.

Though Volozh was not directly involved in those discussions, Gershenzon emphasized that this episode exemplified how Yandex often conceded to Kremlin pressures during his leadership.

“His approach was that, to continue operating in Russia, we needed to ensure that influential officials were not necessarily happy, but at least content with our actions,” Gershenzon reflected, which fueled his desire to depart from Yandex.

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

The onset of the large-scale invasion of Ukraine in February 2022 created turmoil for Yandex, similar to many large Russian enterprises.

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

Visitors to Yandex News experienced a distorted depiction of the conflict that precipitated the internal upheaval.

During the war’s early days, the aggregator primarily showcased coverage from pro-Kremlin sources. Critics accused Yandex of conducting a widespread censorship campaign.

One former Yandex manager, opting for anonymity, described a climate of uncertainty for lower-level staff during these months. Approximately a third of his team’s leadership resigned, some believing that Yandex was facilitating the spread of pro-war narratives, he noted.

“Most of our employees worked remotely, which meant they lost access to their bank accounts and began to emigrate,” the former employee shared with The Moscow Times. “The tension was palpable for all of us.”

Volozh’s unexpected departure that June signaled the long-term repercussions that the wartime shifts would have on Yandex.

The EU’s sanctions package identified Volozh, accusing him of leading an organization “responsible for promoting state media and narratives,” contributing tax revenues to the Kremlin, and supporting “actions or policies” that jeopardize Ukrainian sovereignty.

Volozh described these claims as “misguided.” Those who anticipated a more reflective response or a denunciation of the war from him had to be patient.

Volozh ultimately expressed his feelings in an emotional farewell message released just before the New Year celebrations.

“Yandex has been my life’s work,” he expressed, acknowledging that thousands of former employees also contributed to the firm’s success. “Thank you to everyone who has helped build and continues to build the best tech company in the country. I love you all and send you hugs. I miss you dearly.”

Yet, he refrained from denouncing the war, and critics interpreted his silence as acquiescence.

That fall, squatters occupied his mansion in Amsterdam, displaying banners reading “Against War and Capitalism” from the windows. The following summer, reporters discovered he was now labeling himself a “Kazakhstan-born Israeli tech entrepreneur” on his personal website.

Whether motivated by adverse publicity, personal conscience, or other reasons, Volozh eventually chose to voice his opinion.

“Russia’s invasion of Ukraine is barbaric, and I am firmly opposed to it,” he stated in a message sent to the independent Russian business publication The Bell in August 2023.

“There were reasons for silence throughout this prolonged ordeal,” he continued. “Although questions may arise about the timing of my statement today, there should be no doubt regarding its core message: I stand against the war.”

He claimed to have dedicated his time to assisting Russian engineers who opted to emigrate, and these individuals are now poised to launch new ventures abroad, “continuing to propel technological innovation.”

The same is true for Volozh, who is also planning new initiatives.

Yandex’s parent company was established in the Netherlands in 2007. Former board member Esther Dyson noted that this arrangement allowed the company to answer to an external regulator, thus sidestepping some of the Kremlin’s scrutiny and political demands commonly associated with doing business in Russia.

“We were in Russia, subject to the Russian government, but we were also outside of Russia, so there were things we, as a company, couldn’t do,” Dyson told The Moscow Times.

Nebius is a result of this strategic decision.

Amidst the controversies surrounding Volozh, a prolonged legal dispute unfolded concerning Yandex’s future. Eventually, a deal was reached, wherein its Dutch parent company sold substantial assets to a Russian consortium for 475 billion rubles (approximately $5.2 billion) in cash and shares.

“The separation process was highly intricate,” Dyson reported, having briefly served on Nebius’s board. “Unlike many companies that exited with little to show, I believe we ended up doing quite well.”

“A lot of businesses walked away with nearly nothing,” she added.

The agreement allowed Volozh to launch a new venture using foreign assets based in the Netherlands. These assets included a significant data center in Finland.

Last July, he announced Nebius as Yandex’s successor, an enterprise focused on providing infrastructure for AI. He compared the technology to the “railroads of the industrial revolution,” asserting that Nebius would lead its development.

Nebius currently employs over 1,000 engineers on these projects, many of whom came from Yandex, Volozh mentioned in an interview.

One employee who spoke on condition of anonymity described the experience of working for such a rapidly growing company as “certainly fascinating.”

“I maintain a very positive relationship with my company,” the Nebius employee stated. “I’m grateful for their support in relocating me [from Russia] and everything else; I feel quite comfortable working here.”

Travel about an hour north from Helsinki, Finland, and you will find yourself in the small town of Mäntsälä.

This quaint locale features an impressive 20th-century church among other traditional Finnish architecture.

Additionally, prominent white buildings can be seen just off the highway.

Shaped like a wave crest, these structures house the powerful servers and cooling systems that companies rely on to meet the enormous demands of AI computing. An expansion of this facility is underway to increase its capacity. Above the entrance, where Yandex’s red and black letters once stood, a new logo now reads: “Nebius.”

The firm is banking on its future reliance on such facilities, with the Mäntsälä center being one of the primary assets retained in the Yandex split. Its international growth has included establishing GPU clusters and data centers from London to New Jersey.

As demand for AI surges, Nebius believes its industry expertise will attract corporations seeking partnerships.

“This isn’t some random organization,” remarked Matt Weigand, a partner at the venture capital firm Accel, which has invested in Nebius, in an interview with Bloomberg.

This gamble has already proven successful. Recently, Nebius secured one of its most substantial clients to date. By virtue of a deal valued at up to $20 billion, the company is set to provide cloud computing capabilities to Microsoft.

Individuals closely monitoring his career told The Moscow Times that Volozh’s successful pivot is largely attributed to his talent for assembling and managing capable individuals.

“He possesses an exceptional ability to gather incredibly smart people,” asserted Soldatov, the journalist. “He has always had this talent.”

“He used to say that overcooked burgers are a result of not flipping them often enough,” Abovsky, the former COO and CFO, shared. At Yandex, this principle translated into repositioning “staff periodically to assume different roles and learn various aspects of the business.”

Abovsky also commented that Volozh “wasn’t a traditional boss; he operated more like a peer, akin to a player-coach.”

Amidst all the change that Nebius signifies, certain aspects of its CEO’s existence have returned to a sense of normality over the last year.

In March 2024, the European Union lifted its sanctions against him, and his wealth has stabilized to roughly the same level it was before the war, according to Forbes.

Even Volozh’s critics admit they can’t help but admire his resurgence.

Gershenzon is one such critic. Despite his critiques of how Volozh managed relations with the Kremlin, he acknowledges the former Yandex chief as a talented entrepreneur, whose skills are most effectively applied outside of Russia.

“It’s wonderful that Arkady Volozh—such a brilliant, charismatic leader—is currently not engaged in the Russian war,” he remarked. “But this reality underscores that prior to the war, there were no significant barriers preventing such outcomes without compromising to the state.”