How I Did It: Howard Dahl, President and CEO, Amity Technology

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To receive payment for some early sales, we bartered with the Russians. They would trade rapeseed, which you use to make vegetable oil, for machinery. We would then sell the seeds to a German agribusiness in a back-to-back transaction. Once, a customer offered us 30,000 polar fox pelts for a machine. It didn't feel right, so I turned him down. I found out later what the value of those pelts would have been if I had resold them to a furrier in Europe. I should have done that deal.

On my second trip to Russia, I was jogging along the Moscow River when I came upon a large tour boat that sat empty and idle. I stopped and found someone who spoke English. She explained to me that the economy was so bad that most Russians could not afford to buy tickets anymore. The ruble had in the previous year gone from a value of 1 to 1 against the dollar to something like 120 to 1. I asked how much it would cost to charter the 300-seat boat myself. She said it would be much too expensive for one person: 2,400 rubles. I told her I'd be back in half an hour for my $20 ride. On every visit to the former Soviet Union, I have at least one experience like this that captures the extreme opportunities that exist there for American companies.

Of course, one always has mixed feelings. The reason there is so much demand for my products is the same reason the boat ride was so cheap. The tragic history of mismanagement and neglect has left the people impoverished and really destitute.

I believe deeply in the proposition that one should understand the culture and history of a country that one intends to do business with, so I try to read at least one or two histories of Russia each year. What I've learned from these books is that the culture of distrust is deeply ingrained in the Russian people. That's why they are such good chess players--they have been conditioned to think several steps ahead of everybody else in order to survive. I was astonished to learn that, even in the 1990s, many Russians believed that the United States would seriously consider invading their country militarily. History has made them paranoid.

Once you do gain a customer's trust, unless you operate in the oil and gas sector or a few other sensitive areas, doing business in Russia is completely normal. In the ideal business relationship we don't even need a contract. After I give my word on something to a customer, my company and theirs will begin doing business with the normal commercial activities of purchase orders, shipping schedules, and payment arrangements.

We were greatly tested in 1998 when the ruble crashed. Orders for our products dried up because there was no money. Plus, we had extended credit to customers in U.S. dollars, and overnight, they could not pay us. We had to write off $600,000 worth of bad debts. At the time, we were doing $13 million in sales in Russia, so that was a significant amount for us. After that, we tightened our credit terms considerably. For a couple years I questioned whether we should continue, and it was during that time that many Western companies left Russia. Thankfully we remained.

Since 2001, all of our customers have been in the private, as opposed to the state-run, sector. This has made doing business much easier. People in agriculture speak the same language the world over. Some of my clients are now publicly traded, and many of them hire Western accounting firms to conduct their audits. Of course, there are a few customers with whom I am very conservative in my dealings, but that is also true in the United States.

It is not surprising that many American companies have stayed away from Russia, but they shouldn't. Russia is quickly becoming an attractive place to do business. The middle class is growing rapidly, and its members are looking for products of value. This group is made up of educated, sophisticated people who have great technical skills. They are also learning the soft skills like customer service. Of course, life is still very difficult for many people, especially pensioners and people who live in rural areas.

One thing I love about the Russians is that they are passionate about their cultural heritage. Once when I was there, I picked up a magazine in the city of Rostov, which has about a million people. The magazine had asked each of the city's business leaders to talk about their favorite poet, their favorite composer, their favorite novelist. All of them had thoughtful answers. Can you imagine if top business owners in the United States were asked those questions? Maybe one of them could name a poet for whom he had a deep appreciation.

Going to Russia was the best decision we ever made. It was the most strategic, and also the most personally rewarding by far. In the past 15 years, we've done more than $100 million of sales in the countries of the former Soviet Union, and we have orders for approximately $30 million for 2007--about 40 percent of total sales. I've made 46 trips to the region since 1992, and had to stitch new pages into my passport twice.

You don't have to be a big business to go to Russia. If you find the right sales agents and translate your written materials and manuals into Russian, you can enter the market fairly quickly. I've assisted eight to 10 companies in North Dakota in expanding to Russia.

The most gratifying thing about doing business over there, however, has been the reaction I have received from the people who work on these large farms. They offer me bear hugs and warm toasts over dinner, and tell me that seeding and tilling used to be the hardest part of their job and now it's the easiest part thanks to my equipment. So my original motive, to make machinery that helps people climb out of poverty, has in a sense been fulfilled. That has been a great joy to me.

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