Date: November 23, 1998

Locator: Livingston

Title: From Russia with Capital

Author: By Rob Garver

Subject: The boss is in Northern New Jersey, the workers are in Siberia.

Watching Zachary Sapozhnin try to explain his company”s product in English is like watching a garden sprinkler try to handle the flow from a fire hose. The ideas are obviously coming a lot faster than the words, and Sapozhnin dissipates the excess energy with sweeping hand gestures, nervous laughter, and by tousling and retousling his unruly dark hair.

His start-up company, Siber Systems, which he helps run from his Livingston home, creates software that even a native speaker would have a hard time explaining. Siber Systems” primary product, known as CobolTransformer, allows users to make system-wide changes in computer software written in the programming language Cobol, or to translate programs from Cobol to another language altogether. The need to make this kind of change is becoming more and more important as large corporations migrate from mainframe-based systems, in which each worker is connected to a single central computer, to client-server-based networks, in which each worker has a full-strength PC at his desk.

Sapozhnin”s poor English is not an issue with many his of employees, who are located eight and 12 time zones away, respectively, in the Russian cities of St. Petersburg and Omsk. Siber Systems–and Sapozhnin–won national attention recently when they were interviewed for a story about the troubles facing Russia on CBS”s “Sunday Morning” news program.

“It is not very easy to manage people remotely,” comments Sapozhnin, “but it is so cost-effective that we don”t care.” To the 10 programmers in Russia who communicate with Sapozhnin by phone and e-mail, Siber Systems is a safe haven in the stormy Russian economy. Many have not been paid by their Russian employers for months, says Sapozhnin.

“We are very proud that we are able to do this,” he says. There is a large base of highly educated, technical professionals in Russia who have found themselves without meaningful home-grown work in recent years. “It is a real job for them,” Sapozhnin says. “They make real developments.” Sapozhnin plans to travel to Russia this week to firm up the company”s structure in his homeland.

It is not difficult to understand why Sapozhnin still feels a strong connection to his country. When perestroika made business ownership possible for Russian citizens in 1988, Sapozhnin was one of the first to take advantage of the change. He founded a St. Petersburg company that translated technical manuals into Russian for foreign technology companies doing business in what was then the USSR. He sold his stake in the translation business two years ago and came to the U.S., looking for investment opportunities. He found one in Siber Systems.

Sapozhnin”s role with Siber Systems is that of major investor and manager of the offshore software development teams. The core technology behind CobolTransformer was developed by another Russian immigrant, Herndon, Virginia resident Vadim Maslov, who serves as the company”s CEO. The heart of the CobolTransformer program can be replicated in software dedicated to other computer languages, something the company is working to do right now.

Maslov, a native of the Siberian city of Omsk (hence “Siber” Systems) presented market-ready technology to Sapozhnin, who came on board in February of this year. Within a few weeks, Siber Systems had announced a licensing agreement with Fujitsu. Since then, with a marketing effort limited to a Web site and some Internet newsgroups, further sales have been made.

Sandy Allinson, president of Allinson-Ross consulting in Mississauga, Ontario, confirms that his company found Siber Systems on the Internet, and that he has been “very” satisfied with Cobol-Transformer. “Cobol is a legacy language and there is a lot of it out there,” he says. “People who want to migrate [Cobol] code need this kind of product.”

Sapozhnin says what has happened so far in 1998 is just a start. “What these eight months have shown is that this technology works, it can be sold, and clients can be happy,” he says. In the beginning of 1999, the company will be looking for a second round of funding to support a larger-scale marketing effort.