By James Silver.
24th February 2012.
School number 1409 lies about ten kilometres north of Moscow city centre, in an exclusive enclave of gated communities. Through the rain-spattered windscreen, designer apartment buildings loom like an architect’s brainstorm. One block of flats is shaped like a ship’s sails. Another resembles industrial chimneys. A third, a crossword puzzle.
The school overlooks the vast expanse of a disused military airfield. We pull up at a security checkpoint by the gates. Under the gun-metal Moscow skies, the building leaps out with its jumble of yellow and green façades, horizontal grey stripes and deeper grey zigzags.
School 1409 is part of a hugely ambitious experiment devised by Alexander Evgenievich Shustorovich, a wealthy Moscow-born entrepreneur with top-level political connections in both Russia and the US. On the surface, Shustorovich’s project is a public-spirited attempt to bring Russia’s education system into the digital era. In the 2010-11 academic year, around 300 year-six pupils from 11 schools in cities across Russia, from well-heeled Moscow to the rural Siberian city of Tomsk and the mining stronghold of Magnitogorsk, were loaned a portable hybrid e-book and tablet computer with which to learn, do their homework, revise for exams and — soon — order lunch from the school cafeteria.
But this isn’t solely a social experiment. Shustorovich, 45, wants to create Russia’s next platform for digital interactions, one that his business controls. With every keystroke and swipe on his devices, he is building a giant real-time spreadsheet of personal data. Once millions of teenagers get used to learning, interacting and connecting via Shustorovich’s proprietary system, then what need will this and future generations have for social networks such as Facebook? “Facebook is Facebook,” he says. “But adding a social network on top of the [educational platform] will be very easy.”
The project is known as “elektronnij obrazovatelnij komplex” or E-OK, which translated literally means “electronic educational system”. E-OK itself refers to the group of patents the company behind the scheme has secured in Russia (pending elsewhere) for cloud-based educational services. The devices used in the experiment were designed and built by the now-defunct enTourage Systems, based in McLean, Virginia, and marketed as enTourage eDGe — “the world’s first dualbook”. Designed to be kid-proof, the device features interconnected dual touchscreens that open and shut like a book. The right-hand screen is a touch- or stylus-sensitive e-ink display for reading and writing, and the other is a colour LCD touchscreen for web access and video viewing. Its operating system is Linux with Google Android.
Unlike other electronic classroom aids, E-OK isn’t designed merely to complement books and desktop PCs, but to replace everything a pupil uses to study. Connected wirelessly (and soon via 4G) to the school’s year-six and -seven curricula — with years five and eight due to be added shortly — the devices aim to reboot how children learn, teachers teach and principals run schools. By gathering data from classroom test scores, exam results and attendance records alongside statistics from mandatory school medical checks and even food ordered by the catering staff, the system creates a real-time data chain which loops from individual schools, through regional hubs, to the Ministry of Education — right up to the Kremlin. Last June, prime minister Vladimir Putin signed a directive ordering Russia’s ministers of education and communications to evaluate and report to him personally. Both ministers have since reported back “favourably”, says Shustorovich, speaking in support of E-OK’s implementation in schools.
6C’s teacher, Irene Razuvaeva, introduces Sergei, father to Anastasia, one of her students. The device enables parents to monitor all of their child’s in-class activities, from test scores to pages or videos viewed. “You have control,” says Sergei, through a translator. “Also, the device has a video camera and microphone, so if my daughter is ill she can do her lessons at home.”
Provided free of charge at this trial stage, the device has proved an easy sell to schools. Not only do teachers have a digital tool for registration and marking but, in mixed-ability classrooms, pupils can move through the curriculum at varying speeds. The technology is already changing the way Irina Ilyicheva, 1409’s head teacher, manages her school. The trial has shown her the project’s huge potential: “The information flows from the child, to the teacher, to me and all the way to the district prefect.”
Pavilion on the Ponds is a fussy, old-fashioned restaurant with starched tablecloths and waitresses in frilly aprons in an affluent residential area of Moscow. It’s not perhaps the natural habitat of one of Moscow’s most dynamic entrepreneurs, whose media interests range from publishing houses to the Russian version of Fashion TV.
Alex Shustorovich surges through the dining room, nodding at the maitre d’ and shaking hands with other diners, before arriving at the table. Preppy and clean cut, he wears a crisp shirt and blazer and has the easy charm of the ultra-moneyed. He talks in a stream of ideas, swooping from topic to topic. Although unwilling to reveal his net worth, he is described in the Russian media as a billionaire (but does not appear in Forbes’ 2011 list of World Billionaires). His US-based company Pleiades has published thousands of scientific journals in Russian since launching in 1991, and now controls about 90 per cent of the market. E-OK is Shustorovich’s brainchild, and the sheer scale of his vision quickly becomes apparent. He intends to rewire one of the world’s greatest bureaucracies — the Russian state.
Over a parade of traditional local dishes washed down with shots of ice-cold vodka, Shustorovich outlines his argument: that schools have utterly failed to keep pace with technology. He plans to change that.
An American national, who divides his time between Moscow and New York, Shustorovich reveals that, in the project’s second year, there are currently about 10,000 tablets in almost 300 schools in more than 40 Russian regions. “And that’s a very minimal number,” he says.
Ultimately he intends that every child in Russia’s 50,000 secondary schools — some 16.5 million — will have their own tablet. “[The situation’s] so fluid right now. But if we continue to get the sort of traction we’re getting, eventually we’ll be in every school in the country.”
E-OK grew out of Shustorovich’s core science publishing business — New York-registered Pleiades Publishing Inc and its 11 subsidiaries including Akademija/Uchebnik, the division responsible for the project. The group is now the world’s largest publisher of English- and Russian-language science books, journals and other education materials from the former Soviet Union, China and Japan.
Pleiades publishes 2,000 scientific journals in Russian and the results of much of Russia’s domestic scientific research in 200 English-language journals. With partner Springer Science + Business Media, the group has been distributing journals electronically since 2005 (and independently since 2003), and building an interactive and social-networking engine for university students at elibrary.ru.
Shustorovich says that this laid the groundwork for the schools project. “We had three aptitudes which made us unique players,” he explains. “A long history of being conversant with technology, because we produced a huge volume of scientific information. Second, we had the experience with dealing with internet products in a financial way — our electronic sales of scientific journals and information for universities is in the high-nineties per cent [of overall sales]. And the third was that we knew how to develop school curricula.”
His history with publishing science journals electronically taught him that technology is “a great leveller”, he says. “If you go to a typical rural Russian school, the library there contains maybe a few hundred books. They’re isolated, so our project becomes their first great window. In affluent schools, for 12- and 13-year-olds, a personally owned computer is almost the norm. In poorer schools, they might have access to one, but they won’t necessarily own it. So when they get their hands on our device, it’s transformative for the psyche.”
Given that the private lives and loves of some of Russia’s best-known oligarchs often turn into a soap opera, it is an achievement that Shustorovich has (mostly) managed to keep his own life off the radar. Besides science publishing, his businesses include TV and radio, cable TV and advertising — and in June this year, he will become co-chairman of global talent management agency IMG Artists, in which he already owns a minority stake.
His Moscow and New York residences are part of a property portfolio that also includes homes in Paris and the south of France, a ski lodge in Colorado and a chalet in the Alps. “I like to keep my life out of business,” he says. “There was a bit about me in the press because I was in a relationship with somebody who was very public.” He’s referring to his former fiancée, the 30-year-old Russian socialite and TV presenter Ksenia Sobchak, once described by The Guardian as “Russia’s answer to Paris Hilton”.
Her father, Anatoly Sobchak, was the first elected mayor of St Petersburg and, in 1994, he made Vladimir Putin his deputy. A picture in Shustorovich’s office shows the couple with Putin, then president, at the unveiling of a monument to Sobchak senior, who died in 2000. Like Putin, president Dimitry Medvedev studied law under the former mayor at Leningrad State University.
Shustorovich clearly has good relations with key power brokers. But when asked directly how familiar Putin or Medvedev were with the E-OK project before launch, his reply is defensive: “Not at all,” he says. “How would they be familiar with it?”
Later, he adds: “The prime minister’s personal vision is very much in line with ours. As far as the president is concerned, he has an initiative around modernisation in schools and — apart from us — there are not really any wholesale initiatives out there. Now they are both very aware of us.” Shustorovich moved to the US with his parents, both scientists, when he was ten. His mother, Maria, was professor of mathematics at the National Technical Institute for the Deaf in Rochester, New York, where she was a specialist in the use of technology for learning. His father, Evgeny, was a chemistry professor at Cornell University.
Shustorovich pulled off the stunning hat trick of earning a BA, a Juris Doctor degree and an MBA from Harvard University, Harvard Law School and Harvard Business School respectively. He built up a science publishing business while in his early twenties that made him a multimillionaire. But even that pales beside the role he played in a deal that The Moscow Times described as “the deal of the century, a harbinger of disarmament and the end of the Cold War”.
There is no better insight into Shustorovich’s instinct for deal-making than his ability to cultivate, while still in his twenties, top-level contacts among US Republicans during the first Bush administration. This allowed him to become a pivotal player in the Megatons to Megawatts programme — an $8 billion (£4.9 billion), 20-year agreement, signed in 1993, in which highly enriched or bomb-grade uranium (HEU) from decommissioned Russian nuc-lear warheads is being recycled into low enriched uranium (LEU) to produce fuel for civilian US reactors.
Shustarovich moved in conservative political circles as his science publishing business started to grow, meeting a range of highly influential Republicans, including Max Kampelman, formerly chief arms talks negotiator for President Reagan. It was through contacts like these that the publisher became involved in Megatons to Megawatts. He says Kampelman brought the idea to his attention but “didn’t have a way of getting it across to the Russians”. He continues: “Max had the support of a lot of US companies as well as the government behind him. He and I brainstormed and I came to Russia and got everyone here, from the ministers, through all the bureaucracy, up to the president, behind [the deal].”
Where the deal became controversial was when, in 1997, nuclear-energy minister Viktor Mikhailov signed a provisional agreement for a joint venture between Russia’s Ministry for Atomic Energy and a commercial trader — Shustorovich’s US-registered Pleiades Inc — to sell $4.5 billion-worth of natural uranium. The Clinton administration loudly opposed Pleiades’ invol-vement — but the deal was signed shortly afterwards, reportedly earning Shustorovich tens of millions. Yet Mikhailov resigned less than a year later amid speculation that he was sacked. Prime minister Sergey Kiriyenko appointed a new nuclear-energy minister, Yevgeny Adamov, who signed a fresh agreement, sidelining Pleiades. “There was a big fight about that,” recalls Shustorovich. Pleiades filed a flurry of lawsuits, which were dropped in 1998. “I still think the [Russian] state was wrong. But I wasn’t going to fight the state.”
But fighting the state — albeit in the shape of the leviathan bureaucracy at Russia’s Ministry of Education and Science — is an apt description for what Shustorovich is now doing with E-OK. The following day, in his palatial Moscow office decorated with antique furniture, “almost across the street” from where he grew up, the entrepreneur says dealing with the Russian school system meant taking on “an extremely conservative” machine.
“The system is entirely focused on not getting it wrong,” he says, his seriousness somewhat undercut by Fashion TV playing on a silent flatscreen behind him. “That is its biggest strength and why it can put millions and millions of children through an education environment. But it’s also its biggest drawback, in that it’s not easily changed. The metaphor I like to use is that the system was set up during the time of Gutenberg, when he developed the printing press, and they’ve been printing that book ever since.”
Books, by definition, are linear, he says. “Even the way you think of a book. Okay, you can get books on audio files, you can download your book to a reader, but it’s still the same word-for-word and the same presentation style. You read the first page before the second, etc.
“But the fastest way to get something done is in parallel, not linearly.” His project-developers spent two years developing an electronic curriculum, which allowed children to move at variable speeds. They went through state licensing processes and extensive trials. “We graduated our first sixth-grade children, who’d been through all the grades, one to six, last year.”
One of Shustorovich’s biggest challenges was finding a tablet which met the stringent requirements of the Russian Ministry of Healthcare and Social Development, which restricts the amount of contact a child can have with computer screens which emit low-level radiation. Despite a national policy to connect every school in Russia to the internet, computer usage has generally been restricted to standalone IT classes and occasional research. The enTourage eDGe met the specifications he was looking for, but wasn’t selling particularly well. The eDGe has a 9.7-inch touchscreen that, when written on, will digitise text. Links built into books launch applications on the LCD display or in a web browser. At the time, it retailed at $499.
“[enTourage] were simply device-makers,” he says. “They didn’t produce content. As a result, all they could do was license books from other publishers and sell them via their device. And there was no synergy between the reader part of the device and the tablet side. It was like having a Kindle with a computer on the side. In all they’d sold about 10,000 [units]. But for us it was exactly what we needed.
Academija/Uchebnik trialled the device in schools across Russia from September 2010. Seven months later, Shustorovich bought the company. “The first version of the device which we’re currently using is a bit too expensive and has memory, disc-drives and all sorts of things we don’t need,” he says. “We’re planning that our mark two will be a different design. It will essentially be a dumb terminal. All we really need is two active screens, a video camera and a microphone. The good thing is that enTourage has intellectual property and manufacturing resources, and we wanted to get inside the code of the programs and the IP ownership they had.”
Shustorovich wants the device to be used primarily for educational purposes, with other features — such as downloadable games and movies — as add-ons, which must be bought from third parties. But it’s the system’s potential impact beyond the classroom that promises to be groundbreaking. For a country the size of Russia, gathering meaningful education or health data was almost impossible, he explains.
“Governments have always tried to find out how well their money’s being spent. But it took huge numbers of people and enormous amounts of money and — most importantly — time to do this. As a result the data would arrive late, it covered very small subsets of people and, by the time they had it, it was describing yesterday’s weather. Our system gives you the mechanism to monitor data in real time.”
He points to an experiment now underway in school cafeterias in Magnitogorsk — a city with about 100 schools. Data sets are being gathered on how much children spend, what they spend it on, cafeteria staffing levels, food orders and spoilage. Shustorovich’s team plans to create a smart system in which meals are paid for electronically via the device, so parents can see what their children eat and keep track of their money. In the next phase, they will also be able to pre-order meals.
Similarly, the project will generate a flood of real-time health data. The development team is already working with the Ministry of Health and Social Development on state-mandated health checks which monitor a range of children’s statistics, from chronic conditions such as epilepsy rates to simple weight and blood-pressure measurements — all of which go in the E-OK system, to be accessed only by the ministry and the student’s doctor.
With a wealth of transformative possibilities like these, you might assume that Shustorovich would be pushing at an open door. The truth, however, is very different. From the start, opposition has dogged E-OK. As part of an official state experiment in e-learning, other devices are being evaluated, including an e-reader backed by former deputy prime minister Anatoly Chubais, CEO of Rosnano, the Government-owned nanotechnology giant. Shustorovich doesn’t consider the “Chubais Tablet”, an e-book designed by Plastic Logic, a serious rival — he views it as simply “an e-reader with textbooks downloaded on it” — but Chubais presented his device personally to Putin.
Meanwhile, shortly after E-OK’s trial began, a lobby group, including the chiefs of two-dozen academic publishing houses, began to petition the authorities and the media to intervene. In a letter to the then-Moscow mayor Yuri Luzhkov, they wrote: “The introduction of [E-OK] will lead to financial losses… and ultimately to the potential collapse of a number of publishing houses. We consider this project to be without merit.”
In his cluttered office in central Moscow, Oleg Smolin sits behind a desk piled high with files typed in Braille. A deputy of the State Duma (the lower house of the Federal Assembly) and vice-chairman of the Committee for Education and Science, Smolin, who is blind, is a cheerleader for electronic education and an advocate for the E-OK project.
Through an interpreter, Smolin says that the suspicious nature of Russian bureaucrats has meant that the country has been catastrophically slow to embrace e-learning. “The world rating of the development of electronic technology in Russia is deteriorating,” he says. “So here we have to overcome the innate conservatism of many Russian educational officials — and the system itself.”
Smolin says that there are two main reasons for the opposition to E-OK. “Number one is the bureaucratisation of the Russian education system. My friends who are school principals tell me the number of directives and the amount of paper reporting has increased about 100 times over the last 20 years. The other is corruption. There are groups, within the government, who think that they will probably profit less from this project than they are currently from regular textbooks and educational aids.”
There’s another reason, too, which perhaps Smolin is too tactful to raise — namely, the way in which Shustorovich is perceived by his critics and how much, potentially, he stands to gain should the project reach all 50,000 schools.
E-OK will make Shustorovich hugely influential. If the scheme scales across the country, he will control the platform that will increasingly be the way Russian children study and prepare for exams — as well as buy and consume music, games and movies. Just as he built a social network for 70,000 university science students, he also plans a social network around E-OK. In other words, he sees this as a way to stifle Facebook’s growth in Russia, where the social-networking platform has just 5.2 million users.
With the live trial phase now complete (“we obviously lost money that year”), the second stage is underway. Akademija/Uchebnik will continue to own the computers, but will now loan them to participating schools and charge for supplying the curriculum — “the equivalent of text books” — from which Shustorovich expects to generate an ROI of “about five to six per cent”. He will also charge a consultancy fee “of about $3,000 to $4,000” for setting up a mirror server on site and providing other set-up advice.
In the next phase, the company collects revenue not just from content use, but from so-called “out of class” data. “First, we will charge a revenue-share fee to other publishers who participate in the system,” he explains. “The second revenue [stream] is services — cafeteria and health data — which we would get a commission for supplying. But there are a lot of other services, too, like printing out something from last year’s file or specialised search — such as if you want to find out a grade-point average for a certain group of universities – which I think we can charge for. And then, of course, there are the controlled vendors on the site, who go in the system with video games and books, for which we will get a fee.”
In the fourth phase, Shustorovich will stop charging for the curriculum altogether. “Then the school district will be able to stop spending money on computers, IT [departments] and textbooks,” he says. “The only thing they have to worry about is having good teachers and facilities. And because they get live data on how people are doing, they can build a better education environment — and we have a world of revenue opportunities for that.”
A month later, over coffee in a London hotel, Shustorovich is in a bullish mood. “We’re developing an arrangement with the national telecoms company, Rostelecom, who are part of a federal programme to wire up all the schools, to put at least the capability for our system in every school. It doesn’t mean every school is going to buy 1,000 of our devices or whatever, just that every school will be system-ready, so when they come in and say, ‘We’re ready,’ it can instantly happen.”
He knows he has pulled off a neat trick — a dazzling business plan, attracting attention in other territories including China (where an E-OK trial is also underway), with the potential to improve kids’ lives. Yet he also seems resigned to the fact that the price of doing business in Russia means that ultimately he will be forced to stand aside.
“I will end up with shareholders from large state companies and all kinds of control from the Ministry of Health and everybody else,” he predicts. “Ultimately you do need someone to drive the train forward. But by the time we get to the grand opening of the railroad, I’m sure there’s going to be a very nicely dressed chief engineer, not me, driving the train. I’m OK with that, because there’s no way this genie’s going back in the bottle,” he says. “I don’t think education in Russia will ever be the same again. We’re making too much noise.”
How does E-OK work?
— “Elektronnij obrazovatelnij komplex” means electronic educational system – a platform based on patents held by Shustorovich in cloud-based educational services.
— The enTourage eDGe, described as “the world’s first dualbook”, is (more or less) childproof and features connected dual touchscreens that open and shut like a hardback book.
— The right-hand screen is a touch- or stylus-sensitive e-ink display for reading and writing, and the other is a full-colour LCD touchscreen for web access and video viewing.
— Using Linux with Google Android, the enTourage eDGe connects wirelessly (and soon through 4G) to the school curriculums and to third-party-content providers.
— By gathering inputs from classroom tests, attendance records and medical statistics, real-time data is created which loops from individual schools to the Ministry of Education.