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How Russian Tycoon Yuri Milner Bought His Way IntoSilicon ValleyBy Michael WolffEmail AuthorOctober 21, 2011 |8:41 pm |Categories: Wired November 2011

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How Russian Tycoon Yuri Milner Bought His Way Into Silicon Valley | Wired Magazine | Wired.com http://www.wired.com/magazine/2011/10/mf_milner/all/1

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In less than two years, Yuri Milner's fund has gone from zero equity to more than $12 billion in assets.Photo: Greg GirardThis is my first trip to Moscow, and Yuri Milner, the worlds most successful investor in social media, is taking me to his parents apartment,which he bills as a typical middle-class Moscow dwelling. Its drab Soviet brick outside. The none-too-reliable-looking elevator is encircled by acrumbling staircase. But inside, the apartment is genteel and highly recognizable to me. Its like many you would find on the Upper West Sideof Manhattan, a cramped and comfortable set of rooms without a recent paint job, filled with too many tchotchkes and way too many books.Milners father, Boris, is an 81-year-old former professora specialist, during the Soviet era, in American management practices no lesswhohas written or edited more than 50 books and is eager to show me all of them. Do I know, surely I do, Professor So-and-So at Ohio State or


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Professor So-and-So at Georgia Tech? His less garrulous mother, Betti, who lays out a table of tea and copious sweets, is a physician whopracticed at the Moscow Department for Disease Prevention for almost 40 years.The message seems clear: Milner may have invested in virtually every social media powerhouse, from Facebook to Twitter to Spotify. He mightbe the vanguard of an entirely new financial philosophy. He might be the most controversial money guy in Silicon Valleysought after, feared,and derided in more or less equal measure. But at heart he is just a nice Jewish boy.

To many, Milners success is not just too much, too fast, but also somehow unfair.

Which might help explainand Milner very much wants to explain himselfhow it is that he has gone from investing in a macaroni factory inMoscow to upending the American technology business. I believe, too, he is trying to say his success story ought to be just as appealing as any inthe Valley.It certainly hasnt played that way in the tight-knit club of Valley venture capitalists. In fact, the more successful Milner has gotten, and thefaster he has compounded his successbeginning with his night-raid investment in Facebook in 2009 and now encompassing major positionsin Zynga, Groupon, Twitter, and Spotifythe more suspect and outr he has come to seem. Hes definitely not your conspicuousnon-consumption Valley billionaire.Kara Swisher, who, with Walt Mossberg, runs The Wall Street Journals D Conference, one of the prestige events in the technology business,told me with arch inflection how Milnera Vladimir Putin look-alike with a dark undershirt always peeking out of his collarhad shown up atthe conference with a blonde model towering over him. (Swisher was only slightly sheepish when she found out this was his wife.)Whats more, a whisper campaign has dogged his American adventure. Indeed, among the early backers of his investment fund, Digital SkyTechnologies, was Alisher Usmanovone of the richest men in Russia, who even other Russian oligarchs find, to say the least, a little dodgy.(Usmanovs rsum includes alleged Kremlin associations and an overturned conviction for fraud and extortion. He also has a near-$18 billionfortune in mining, steel, and telecom, as well as the obligatory ownership stake in a British football team.)Oh, and his housethat has not helped, either. Milner, who runs his business from a no-frills office suite in Moscow, is spending more andmore time in the Valley and so has bought a place in Los Altos Hillsnot just the Valleys most expensive house but, at a reported $100 million,among the most expensive in America. (Milner is embarrassed about this and seems aware that he may have misjudged how this purchasewould be seen. Anyway, he has heard that there is another US property sale that will soon trump his.)To many, Milners success is not just too much and too fast in a land of too much and too fast but but and here people start to petulantlyphumpher somehow unfair: Heres an outsider who has handed out money at outrageously founder-friendly termspaying huge amountsfor relatively small stakes, essentially buying exclusive access to the most desirable companies on the web! It is his outsiderness that seems mostirritating and even alarming. How is it that an outsider has spotted opportunities that the Valleys best investors missed? Does Milners successsuggest that the rest of the world is starting to horn in on what has been, to date, as American as apple piethe Internet future and Internetriches?Thats why Im herein Russia and in his parents apartmentto try to figure out just what his advantage is. If he is a game changer, howexactly does the game change? Im curious, too, about what hes after personally: He seems to want respect from the Silicon Valley folkbutwhy would he? Why does he care what they think? Milners rise as a power-brokering investor happened so fasthis fund went from zeroequity to more than $12 billion in US assets in less than two yearsthat his story has not had time to come out.


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Russia may well be the most captivating place on earth for businesspeople, because it is purely about cause and effect. All of the powerdynamics are on the surfaceheres who has the money, heres who has the influence, heres who controls the resourcesso all you need is thegumption and savvy to take advantage of them.

STAKING OUT SOCIAL MEDIAIn just over two years, Yuri Milners investment firm, Digital Sky Technologies, has taken big positions in some of the Internets mostimportant and promising young companies.

May 2009FACEBOOK

$200 millionDecember 2009

ZYNGA$180 million investment round

(with Andreessen Horowitz and Tiger Global Management)

April 2010GROUPON

$135 million investment round


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(with Battery Ventures and Rugger Ventures)

January 2011FACEBOOK

$125 millionJune 2011

SPOTIFY$100 million investment round

(with Kleiner Perkins and Accel Partners)

July 2011AIRNB

$112 million investment round(with Andreessen Horowitz and General Catalyst Partners)

July 2011TWITTER


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$400 millionAfter the collapse of the Soviet Union, a class of robber baronsthe oligarchsrose to control much of Russias vast resources. In adisorganized and corrupt process of privatization, they came to very cheaply control vast reserves of Russias export wealth; oil, minerals,lumber, and wheat passed from government to private hands.A not inconsiderable point: A disproportionate number of the oligarchs are Jewish. The Jews in Soviet Russia, often kept from taking officialcareer paths, came to thrive in the gray and black markets. Hence, they were among the only capitalists in Russia when capitalism emerged.Milner, a half-generation younger than the first rank of oligarchs, is himself selling gray-market computers when the end of the Soviet Unionarrives. He buys old DOS machines, imported or smuggled from the US, and delivers them at appointed street corners.His father, displaying another side of Jewish business tradition and acumenthe cautious sideisnt pleased. Milner is slacking off his studiesas a physics graduate student and doing things that could get him into trouble with the authorities. His fathers solution is both predictable anda wild leap into uncharted waters: His son should get an American MBA. In 1990, Milner enrolls in the University of Pennsylvanias WhartonSchool, where a close friend of his fathers is a professor.This leap for Milner is radical in all the obvious, transformational, emotionally topsy-turvy ways that might be imagined (he is, at Wharton, agreat oddity), but it is also a leap into one of the most dramatic and picaresque moments of American capitalism. It is the age of the takeoverartistMichael Milken, Carl Icahn, Ronald Perelman, Henry Kravisand Milner falls in love with them all: These are very romantic figuresfor meand they are very American.Meanwhile, his own country is imploding and turning into, for some, a highly profitable free-for-all. Watching from afar in Philadelphia andfilled with great envy, Milner, after Wharton and a three-year stint at the World Bank, comes back to Moscow.He goes to work for the now imprisoned Putin enemy and founder of Yukos, then Russias largest oil company, Mikhail Khodorkovsky, who inthe mid-90s was in the process of devouring, some would say by extraordinary means, great parts of the Russian economy. Milner proposes toKhodorkovsky that they try a legal takeoverAmerican style, and the first ever in Russiaof a candy company. The takeover fails (Milnerwrites a book about the experience, pleasing his father), and he goes out on his own. In 1998, he assembles a group of investors and buys amacaroni factory. Russia has just defaulted on its debt, and Milner figures thats the end of the days of imported macaroni.But macaroni is hardly the point.Nobody in the digital world knows that the man in the Russian macaroni factory exists, but his nose is pressed to the glass. Sitting up late atnight in the factory, as his cash flow mounts, Milner is focused on the US. It is the apogee of the dotcom moment, 1999, and Milner fastens ontoan American business theoryand it consumes him.The theory holds that the Internet is an advertising medium where users themselves create the vast amount of content. In other words, asMilner understands it, the same ocean of advertising revenues that have gone to traditional media might now go to the Internet, but without theoffsetting costs of having to actually create content. Voil.From margin standpoint, Milner notes, this is very magical.But then the bubble bursts. Mail.ru, then the biggest Internet company in Russia, valued at its height at $100 million, crashes too.Milner, with his macaroni cash flow, buys it on the cheap.The gray-market Soviet hustler turned would-be Russian oligarch is now a dotcom entrepreneur.


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I first meet Milner in 2009, over coffee at the Four Seasons on East 57th Street in New York, a few months after he has made a surpriseinvestment of $200 million for a 2 percent equity stake in Facebook.Milner is the new boy in town. He obviously knows few people, does not travel in elite technology circles, and fails most of my name-droppingtestshe doesnt even pretend to know who he should know. Correction: Through Mail.ru, he does know the Goldman Sachs money guys inRussia. Indeed, Milner seems to have been almost personally inspired by the Goldman-propounded view of the BRIC countriesthat capitalaccumulation and high growth rates in Brazil, Russia, India, and China could alter the economic balance of power in the world.The very decision to invest in Facebook is partly the result of a gossipy Moscow dinner with the Russian Goldman guys, during whichinbetween pitching their investment-banking servicesthe bankers mention that Facebook might be looking to do a major investment round.This is just months after Lehman Brothers collapsed, with the world economy plunged into crisis. MySpace, the leader in social media, issinking fast. Nevertheless, Milner is stirred.Whats more, he has money in the bank. Or he can quickly get it. Milner has created a separate fund to invest in internationaland especiallyAmericanInternet companies, with Usmanov taking the biggest stake. The oligarch has the money and an interest in Internet properties,including, along with Mail.ru, an investment in the news sites Livejournal.com in the US and Gazeta.ru in Russia. The fund is called Digital SkyTechnologies, and Facebook is its first target.


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Milners new house in Los Altos Hills cost a reported $100 millionmaking it one of the most expensive homes in the US.Photo: 2011 Google-Imagery; 2011 Geoeye, U.S. Geological Survey.But even at this dire international financial moment, a call from an unknown Russian, however flush he might be, to then Facebook CFOGideon Yu seems quixotic. Yu politely expresses his lack of interest in Milners offer. But Milner gets on a plane, flies to California, and calls Yufrom San Francisco. Yu, begrudgingly impressed, agrees to a meeting. Milner proposes a game-changing deal.Pre-IPO investments in even high-flying tech companies that are not yet profitable usually conform to a specific pattern: A prestigious VC firmgets certain preferences when it invests (i.e., it gets its money out first should the company go public) and gets seats on the board (which meansit gets a direct voice in the future of the companyalmost always one that advocates an IPO as soon as possible). Milner offers somethingradically or foolishly different: an investment with no such preferences and no board seats. In effect, his money is like IPO moneynoadvantages for regular shareholderswithout the burden of an IPO (the time suck of a road show, the administrative costs of being public, theshort-term earnings pressure of the market).The proposal represents, too, a philosophically new and audacious view: Once a company reaches a certain sizea billion-dollar valuation byMilners reckoningits investment profile changes. It holds enough market share and has established enough brand identity that it representssignificantly less risk than VCs have traditionally considered startups to have.But thats not how the rest of the world interprets it. Instead its seen as a desperate and rather vulgar deal on the one handMilner buying asmall stake in Facebook, valuing the entire company at $10 billionand, on the other, Facebook debasing itself by taking Russian money.Russian money! In fact, it seems rather like a desperate deal for both parties (in the midst of the banking crisis, Facebook has only two otherbidders for this roundand none from the top VC tier).

The dumb money has just bought itself potentially unlimited access to what is arguably the most important company to hit the Internet in adecade. One of the fastest accelerations in digital history has just begun.

Sitting in the Four Seasons, I dont come out and say, Facebook has taken Russian money, so what does that tell you about the state of theindustry and the state of social media? It tells you that social media is probably not such a great investment. But its certainly what Imthinking.I pepper Milner with questions about more conventional issues: the burden of privacy concerns weighing on Facebook, the callowness of MarkZuckerberg, the shadow of MySpace.The Russian is not just monosyllabic but, I detect, bored. Or brooding. I am not understandingand I am not alone in not understandingthebig picture. I am not getting that, in a matter of months, it will be clear that social media is transforming the fundamental behavior of theInternet. And I am not getting the big picture of Yuri Milner, that he has, yet unbeknownst to anyone, altered the power equilibrium oftechnology money.I have invested in four social networks. More than any other, Milner explains.But thats in Russia and Poland In other words, in a market that can hardly be compared to the US.Same. Social is a better way to interact with digital world. It is better than search. Implications for everything. Total change.And something else that I am not getting, because nobody knows it yet. Although Milner seems to have made a chumps deal without all theprotections that early-stage money is usually entitled to, for a period of time he has gotten one thing: a right of first refusal on any other


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Facebook stock that changes hands.The dumb money has just bought itself potentially unlimited access to arguably the most important company to hit the Internet in a decade.One of the fastest accelerations in digital history has just begun.More than a year later, I run into Milner in the lobby of the Ritz-Carlton in San Francisco (he hasnt yet bought his house). Since we last met,he has raised his stake in Facebook to almost 9 percent (2.4 percent held by the Mail.ru Group, the rest by Milners investment company, DST),and he has made the obvious leap into Zynga and Groupon. If he is not yet loved by the Valley, he seems now to have come to know almosteveryone there. In fact, he has become something of a ubiquitous figure, speaking at every technology conference.How are you? I ask, wondering if I should suggest coffeebut Milner is often so terse that this seems a frightening thought.Good.What brings you here?Oh fading off.His phone rings. Conversation ends. I read the answer to my question in the paper a day or so later. Google has reportedly made a $3 billion bidfor Twitter, which was countered by a bid for a stake in the company from Kleiner Perkins that valued the business at $3.7 billion, which in turnwas countered by a bid from Milner that valued the company at $4.2 billion. Twitter takes the Kleiner money at nearer the Milner valuationuntil eight months later, when it takes the Milner money, too, although this time at an amount that values the company at $8.4 billion.Its the new reality of social media: Wherever something is happening you now find Zelig-like Milner. He will keep buying. Money for him is noobject.As this is all unfolding, just before Thanksgiving, Milner in his blue sweat suit is having coffee with Mark Zuckerberg at a Palo AltoStarbucks. The two have developed an easy relationship. Zuckerberg says hes thinking about raising another billion or two. And fast. He doesntwant the distraction; if hes going to do it, he wants to do it in 60 days. Milner says that even for him, a couple of billion in 60 days is a lot, buthell deal.Milner, not only the largest outside investor in one of the worlds most sought-after companies but, thanks to his relationship with Zuckerberg,one of its gatekeepers, cuts Goldman into the deal. This is a substantial reversal of Goldmans usual position, in which it decides who gets toinvest while mostly closing everyone else out. Goldman agrees to put in $375 million of its own capital against Milners $125 million and raisethe rest from its standing clients. It also splits its 4 percent fee on the total money raised with Milner and, as well, splits the 5 percent fee onwhatever investors gain beyond their initial investment. It is, for vaunted Goldman, an almost unheard of arrangement. And possibly for thatreasoninternal squabbling at the firmthe deal leaks. Last January, on the day before the offer is to be made, The New York Times AndrewRoss Sorkin calls Goldman and says hes got the story, causing great gnashing of teeth. The firm believes that if the offer is issued after a story inthe Times, it might be in violation of SEC rules about marketing securitieshence, in a panic, Goldman issues the offer via email before theTimes story breaks. Two things happen: Goldmans clients clamor to invest, and the offer is immediately oversubscribed by a factor of 13, givinga dramatic preview of Facebooks IPO strength. Within days, Goldmans lawyers, suddenly nervous, nix it. At any rate, they nix it forAmericansbut not for Goldmans foreign clients, who, including Milners stake, complete a $1.5 billion round that values the company at $50billion.


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Milners new house in Los Altos Hills cost a reported $100 millionmaking it one of the most expensive homes in the US.Photo: 2011 Google-Imagery; 2011 Geoeye, U.S. Geological Survey.Milner and I are once again eating breakfast at the Four Seasons in New York. It is one year since we first met at this hotel, which he uses asone of his floating offices while in the city. Now, Im asking if hell cooperate on a profile for wired. He equivocates about that topic but is muchmore forthcoming as he discusses his own rising position in the social media revolution. It is clear that his horizons are continuing toexpandfrom investor to worldwide intellectual force. I must analyze, Milner says as he considers my request, from what I do now, whatwill be the impact two or three or five years in the future. What is the statement I want to make? It is an opportunity to take a position on globalscale.Indeed, a month later, Milner calls to tell me that he is one of six technology figures who have been chosen to brief the leaders of the G8 nationsat this years summit in Deauville, France. It is a remarkable example of his rising profile and the amount of power he has come to wield. TheG8 Internet colloquiums will include a series of high-profile speakers from among the digital elite: from the US, Zuckerberg and Googles EricSchmidt; from Japan, Hiroshi Mikitani, CEO of online retailer Rakuten; from France, Maurice Levy, head of ad agency Publicis Groupe, andStphane Richard, CEO of France Telecom. And then Milner.


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Why Milner? Partly because he has so ably insinuated himself into extraordinary networks, but also because he is the only one here who hasroots in an upstart economy. That gives him unique perspective. Russian president Dmitry Medvedev, in an effort to jump-start onlineentrepreneurialism (and distinguish himself from his predecessor, Putin), has become as anti-regulation and laissez-faire as anyone in theWest. Next to his government, France, Germany, and even the US represent the hoariest conventional views. Milner is presumably here torepresent non-American entrepreneurialism at its most ambitious and successful.Milner speaks last. By the time he takes the stage, the five other digital representatives have all discussed policy and outlined the likely growthof their various businesses. Italian prime minister Silvio Berlusconi is asleep, and the other G8 leadersDavid Cameron, Barack Obama,Medvedevare distracted by their iPads. Milner gives a smart and clarifying speech about social technology. He sees networks like thosecreated by Twitter and Facebook as steps in the development of a global brain. The entire social landscape adds up to a new collaborativeconsciousness that transforms the nature of information and, as well, the existing monopolies of it.Milner may be a kind of prototype for his idea of a global braincertainly he has achieved some sort of global being status. Traveling alone,or often with his wife and daughters (ages 6 and 4) and his mother-in-law, and keeping his Moscow office staffed 24/7, he seldom spends aconsecutive week on one continent. Quite frequently he will do every continent, save Antarctica, in a week.This is part of the discordant behavior that makes him an anomaly, if not a sore thumb, in his new Los Altos Hills neighborhood. Silicon Valley,despite being at the center of the digital world, is a hopelessly insular and actually rather hermetic place. Even its famous immigrant cultureemphasizes joining the SV way. For all its talk of innovation, it resists almost anyone who is not part of its mainstream. Before Milner, it waseven difficult to buy your way inmoney in the Valley, the best money, the money that gets the best deals, always has a certain pedigree. EvenNew York money, not to mention money from God knows where, is regarded as lesser and suspect.But Milners upstart and almost otherworldly status, while not necessarily helping him make friends with his new neighbors, has given him anew and, in many ways, disquieting advantage in the circumscribed digital world. He may be among only a handful of people who operate inmultiple markets at the same time, without local infrastructure. This makes him a kind of free-floating statea connector, a go-between, theultimate independent player.It is not just his access to global capital or his facility in markets where being an American is not necessarily an advantage (in the past 12months, he has invested more than $1 billion in Chinese Internet companies) or his incredible and ever-expanding sources of intelligence in thefast-growing global digital market. No, it is simply that he likes it: Hes happiest being in transit.And yet, of course, Milner, despite his global consciousness and peregrinations (and 25,000-square-foot Los Altos Hills home), is Russian.While in some sense he has tried to move himself from this baseMail.ru went public in London in 2010, and DST is all but set on doingbusiness in only non-Russian-speaking countrieshis home and base are in Russia; until two years ago, the majority of his capital was stillRussian (today, 70 percent of his capital comes from outside his country); and, one suspects, the people who can most complicate his life areRussian.Indeed, despite his global expansion and the personal fortune he has amassed on paper from DST2 percent annual fees on the funds $1billion in capital; 20 percent on gains of more than $10 billionhe seems very much attentive to the politics of Russia. Or, perhaps moreaccurately, to navigating the politics of Russia, gaining distance, but not too much distance. Not getting ahead of himself. Knowing his place.Milners invitation to interview him in Moscowwhich arrives as though it had always somehow been expectedcomes with a conditionattached: that I come first to Saint Petersburg and moderate a panel at what is called the St. Petersburg International Economic Forum. Likemuch of Russian capitalism, its an insular imitation of something elsein this case, the World Economic Forum in Davos.


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This is, I realize, a complicated, possibly even amusing, bit of theater in which Ive been cast in a minor role. Milner himself is playing manyparts. He is the organizer of the panel as well as one of its main draws. He is the interviewee as well as the stager of the interview. Indeed, helays it out for me: These are the people I should call on to speak for the Russian view; this is who I should call on to speak for the Americanview; this for the international view; and Milner for the view in between.The Russians on the panel include Dmitry Grishin, whom Milner has installed as CEO of Mail.ru, now the second-largest Internet company inRussia, and Arkady Volozh, CEO of Yandex, the largest Internet company in Russia. The Americans are Mary Meeker, a former Morgan Stanleyanalyst who now works as a VC at Kleiner Perkins Caufield & Byers, and Jim ONeill, the Goldman banker who coined the term BRIC. Andrepresenting the international view are Daniel Ek, the Swedish cofounder and CEO of Spotify, with which Milner has been in the process ofnegotiating an investment, and Peter Vesterbacka, the roving head of marketing for Rovio, the company that created Angry Birds. (WhileMilner seems decidedly skeptical about the companys claims that it will shortly be bigger than Facebook, he has discussed investing in Rovio.)And, as well, there is Russian president Medvedevthe main point, I assume, of this whole exercise. That is, I am told that there is a goodpossibility that Medvedev will show up for the panel. He will appearif he appears (but, wink-wink, he will appear)after the panel has begun.At that juncture I have been instructed to say, Welcome, Mr. President. It is an honor to have you join our session. May we invite you to joinour panel?In fact, when the moment arrives, I fail to notice Medvedevs entrance into the packed room until Milner elbows me in the ribs, with, I note, thefaintest smile.Successful people, it should not be a surprise, are often trying to explain their success to themselves as much or more than to others. AsMilner takes me on a tour through his Moscow, he seems to be marveling at himself. Not at all in a prideful way. Hes almost a witnessonetrying to explain and illustrate both his ordinariness and his uniqueness.Dinner is in his apartment in the outskirts of Moscow. Its three well-secured floors in a comfortable, almost LA-suburban-style high-risedecorated by his wife, Julia. They moved here just two years agopart of the wide transformation in their livesfrom a much smaller in-townhome (which Milner has given to his nephew). Other than the sheer size of the new place, the only element that really distinguishes it is thatwhere someone else might have crammed in a lot of artwork, Milner has crammed in video screens, each tuned to some global news outlet orreal-time social media application.

Milner tells me that he didnt quite graduate from Whartonhe was, in fact, a few credits short.

Its here, before dinner, that Milner tells me that he didnt quite graduate from Whartonhe was, in fact, a few credits short. Its a pointedadmission; he seems to want to clean up the record (and to point out that many successful people in the Valley never graduated, which perhapsincreases his credibility!).Dinner itself, stiff but pleasant, is partly prepared by his wife and partly a take-out buffet of hummus and tabbouleh. His two daughters, whoMilner hopes will demonstrate their English, join us. They are charming if reluctant performers.In the morning, Milner and his driver fetch me at my hotel. The first stop is his new synagogue, a tonier and more conservative temple, andwith more security, than the one he grew up in. Jewishness is a pronounced theme in the tour: The Jewish boy, having some sweet revenge, hasbecome a member not just of the Russian establishment but of the new world technology order. But sentimentality goes only so far. When I askabout just how observant he isrefraining from mentioning that his wife is obviously not Jewishhis response is piquant: Very limited.


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He offers a yarmulke from the communal bin as a souvenir.We chart the oligarchs rise through neighborhoods and schools that give neither a sense of destiny nor, for that matter, much sense of the longSoviet pall that fell over half of his life. But, clearly, the fact that the pall has lifted still seems like a marvel to him. He recounts his fathers nearbrush with Stalin and, when we reach Red Square, recalls still with some breathlessness how he was here, with few others, when the Soviet flagwas lowered and the Russian flag hoisted.Trying unsuccessfully to cut the line to visit Lenins tomb, Milner sketchily outlines his own current place advising the governmentappointedby Medvedev to sit on a committee that seems, by my interpretation, to be akin to the Council of Economic Advisers. Curiously, he casts this inalmost pro-American or new-generation terms: The two non-politicians on this committeehe and Mikhail Prokhorov (owner of the NewJersey Nets)are both heavily invested in the US.Lunch is at a new Italian restaurant with a terrace that overlooks the White House, Russias Parliament, which in 1991 was occupied bydissidents. Milner points out the stretch of road where he was standing that day and the stretch just ahead where various other bystanders werekilled. Milner retreated into this building, on top of which is the restaurant where we are now eating our quail risotto.We decamp to Moscow State University, where he graduated with a degree in theoretical physics. Walking the small park, which counts as thecampus, in front of the massive building, Milner, who was slotted into the lesser track instead of the more elite one, gives another rueful pictureof the systems slights to Jewish students and Jewish ambition.It is hard not to read the obvious: Who would be more gobsmacked by the implications of social mediathe prospect of everyone constantlytalking to one another without an arbiter, mediator, or censorthan a citizen of the former Soviet Union? Likewise, who would see it as morerevolutionary and valuable?That is the singular insight that transformed Milner and through which he is transforming technology finance: It seemed worth more to himthan to anybody else (at least anybody else with money).In a way, he is to social media what Michael Milken in the mid-80s was to many non-credit-worthy companies. Like Milken, Milner, in partthrough the lens of his own lifes experience, saw another level of value entirelyif the world was being transformed by social media, it wasmore valuable than anyone thought. And, too, if technology companies had reached a certain level of value, that was a pretty good indication oftheir permanence.Accordingly, he upped the ante and put social media and himself at the center of technological development.Indeed, there is a different or further mission. Hes more beholden, hes more in awe, than the Silicon Valley establishmentblas9 or cynicalas any other establishmentis of its geniuses. There is always something vaguely oppositional about the relationship VCs have with thecompanies they invest in. They are trying to maximize their positions, to pay as little as possible and cash out for as much as possible.Milnernow the singular link between the major players of social media, Zuckerberg at Facebook, Mark Pincus at Zynga, Andrew Mason atGroupon, Jack Dorsey at Twitter, Daniel Ek at Spotifyis not thinking about individual deals but is aligning himself financially and strategicallywith the founders and reaping the benefits. Already, he competes with the topmost VCs in terms of personal wealth, and he is arguably nowmore importantMilner is setting the price.Next year, in Scotland, Milner tells me, he will host a gathering of all the Internet companies in the world that have a valuation of more than $1billionhe is setting the agenda, reordering the power structure.In a sense, the elites of Silicon Valley have a good reason to be suspicious of Milner. He has stolen, or at least moved, the center of their world.Contributing editor Michael Wolff ([email protected]) wrote about the death of the web in issue 18.09.


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As an American living here in Russia and very much a "fan" of Yuri Milner's, I would like to suggest that I was a bit disappointed thatMilner does not make more of an effort to explicitly encourage local Russian entrepreneurs.

The Runet (Russian speaking internet) will soon overtake Germany as the largest internet market in Europe and it is quickly beingpopulated by hungry, clever, and technically rock-solid developers. The missing variable is optimism, which it has been said, is theoxygen of start-ups.

Thus, I'd encourage Milner to make a point of using his new-found global positon at the top of the technology peak to look back over hisshoulder and rally the next generation of young Russians coming up the slope.

** Perhaps his +1BV Conference next year ought to be held down here in Sochi (host city for 2014 Olympics)... not Scotland. That way,Milner and Alexander Tamas could invite the leading Russian entrepreneurs, as well. A win-win.

We're quiet happy to have him in Scotland. Glasgow is host city for the 2014 Commonwealth Games.

Cheerie-bye.


15 von 25 17.05.2012 22:37

My impression is that Milner will stay away from Runet for a few reasons:

1. He's a pure financial player. This means that he doesn't want to run things, he wants to IPO things - and the IPO part issomething rather problematic with Runet

2. Runet is not the best place to make money. Even with some outrageously popular browser games like Fight club, the developersdidn't manage to secure additional financing or go global like the aforementioned Zynga did, not the least because they didn'tbecome the media darlings the way Facebook did.

Besides, people like Milner need to persuade other people to part with money in order to invest money. I'm more eager to bet thathe's a diversifier for Usmanov and some others and not a serious player; all he did in Russia was spin off the clones of successfulWestern sites. How he'd manage to do some venture investment is a mystery to me.

This comment was flagged for review.

Your reply is nothing more than a Spam/Scam to suck in unaware readers.


16 von 25 17.05.2012 22:37

"The Jews in Soviet Russia, often kept from taking official career paths, came to thrive in the gray and black markets." I'm sorry, but Ibelieve this is a faulty statement.

It was true in many countries in medieval times and in many countries even later, possibly Tsarist Russia, but the reality is that, in 1937at least, Jews made up 5.7% of the Party, but the majority of the government. (p305 Stalin: Court of the Red Tsar - Simon Montefiore)

I'm not an antisemite or anything, but you caught me nearly on the page, and in the Soviet Union, government controlled everything, so Ithink it would be a ridiculous assertion to say ethnic Jews were somehow locked out. I don't doubt they were baited and massacred butso was everyone else during that time and in that place.

Sorry, Indiana, I have to disagree. I do not doubt statistics you quote (forget the author); however, the situation changeddramatically shortly after the WW II when authority "discovered" (or rather fabricated) a plot among Jew doctors to killgovernment officials.

It may be true that in prior years Jews were very active in the Soviet government. The reason was that the majority ofleading Bolsheviks were intellectual Jews which were not welcomed in other political parties. These were people who organizedthe Revolution and the following reconstruction. Many of them were purged by Stalin later. After the 1950, the party for Jewswas over.

The government set quotas for accepting Jews into some universities and closed their access to others completely. Certainprofessions were virtually closed for Jews. I am not going to get into details; but as a half-Jew who lived in the USSR for 35 years,I can attest to validity of the author's point. The only small problem I have is when the author claims "theoretical physics" to be a"lesser track instead of the more elite one". I do not know about Moscow; but in other regions theoretical physics was very elitetrack (because of its influence over defense industry?) where Jews were not allowed. I know of a person who was a winner of ahigh school national physics competition and then "failed" university entrance physics exam...


17 von 25 17.05.2012 22:37

Just ask yourself, where did he get all this money - my bid, it's a money which were siphoned off russian government budget usingcorrupt schemes and deals which his oligarch and former-kgb friends are famous of.

And what does this Putin's golden boy really do? He just making money for his handlers buying stocks of unprofitable social networkingbusinesses for maximum possible price on worst conditions possible, inflating the bubble, speculating, corrupting the corporate "elites"who themselves want to be corrupted.

So, its a corruption and money laundering - plane and simple. And a clear sign of it is "his" 100m house.

It was macaroni money buddy, calm down!

Remember son, there is always money in the..macaroni factory.

The author's contempt for Milner is annoying. The author never overtly criticizes anything Milner has done investment-wise yet insistson including petty barbs about the size of his house, racial background of his wife, and Milner's "Russian-ness" and alleged outsiderstatus. It's almost xenophobic. It's a global stage, get used to global investors. This is disappointing coming from Wired. I'm generallyinspired by Yuri Milner's career, and that's because he's proven himself a visionary a million times over.


18 von 25 17.05.2012 22:37

I'm reminded of another Russian Jew, Tevye, who noted what he would do "If I Were a Rich Man" in response to being queried withquestions that would "cross a Rabbi's eyes":

And it won't make one bit of difference if I answer right or wrong.

When you're rich, they think you really know!

About a level higher than the PayPal mafia

Amazing in this world of interconnectivity, social media and instant information, we have a private to publicly trade stock market that isin the stone age. There are hardly any companies going public any more which is ridiculous given the technology avialable. We need awho new system where the investment public can participate in new deals earlier rather than being the "out" for the big money when thedeals go public.

Though smart and intelligently authored, it is Michael Wolff's clear view of the present and near-term future that may be most valuable


19 von 25 17.05.2012 22:37

in his insider's Yuri Milner view. Those decisively leading with globally interconnected, people-empowered perspectives, who embrace, ifnot invent new deal and monetization structures, will find resources and ruling shifting to them. Even, like Mr. Milner, marveling at howsoon they have become players on the new borderless stage.

Disruption comes to the clubby VC community. Damn!

On any given day in the Valley I see a ton happening there. The "insiders" tour reveals investors shaking hands with starry eyedentrepreneurs still at Stanford pursuing their undergraduate studies at Coupa Cafe, Silicon Valley's elite matchmakers Amy Andersen ofLinx Dating interviewing CEOs and other who's who at the hidden Allied Arts in Menlo Park, and A lister Silicon Valley's power houseexecs holding court and taking up residence at the Rosewood- literally living there in their one of five homes on the property at a mere100K a month.

Thanks. Nice post. makina turkiye

Excellent article. Thanks.


20 von 25 17.05.2012 22:37

Sounds like his Dad's books might be worth reading. His son is apparently putting his father's teachings to very good use.

Welcome to America. Run by the rich, FOR the rich!total-privacy.se.tc

Sorry, Indiana, I have to disagree. I do not doubt statistics you quote(forget the author); however, the situation changed dramaticallyshortly after the WW II wseo danmanhen authority "discovered" (or ratherfabricated) a plot among Jew doctors to kill government officials.

Itmay be true that in prior years Jews were very active in the Sovietgovernment. The reason was that the majority of leading Bolshevikswere intellectual Jews which were not welcomed in other politicalparties. These were people who organized the Revolution and thefollowing reconstruction. Many of them were purged by Stalin later. After the 1950, the party for Jews was over.


21 von 25 17.05.2012 22:37

Michael Wolff's article nothing but snobby, arrogant and full of bitterjealousy for powerful business successes of someone with humbling uprisingfrom outside of USA. After reading this article I left with strong filingof disgust an especially after this: - To many,Milners success is not just too much, too fast, but also somehow unfair.May be unfair to you mister Squeamishness and fastidiousness. Pull yourhand from your rear and try to do some Angel or VC investments WW or do businessdevelopment for yourself. Swallow some bitter pills failures ,Bite the bullet of losses,try to recover and move on. Then and only then if you smart and lucky enoughto be successful, your public opinion will have a value. For now nothingbut bitter jealousy for someone who follow pure core American Ideals of:from Rags to riches.

Somehow to much bitter jealousyMr. Wolff, to much jealousy.

I think you came into this article with a set of expectations and twisted what Wolff wrote to fit them. To many, Milners success isnot just too much, too fast, but also somehow unfair is referring to how *VCs in Silicon Valley* feel about him. Whether that's trueI don't know, but it's a perfectly valid statement to make when writing about an outsider making inroads; almost always theestablished dislike the upstarts. Why would Wolff care? He's not a venture capitalist himself; he's a writer. If he was jealous ofevery single rich person he met, he'd never have time to write the article.

You need to chill out a little bit.


22 von 25 17.05.2012 22:37

Michael Wolff's article nothing but snobby, arrogant and full of bitterjealousy for powerful business successes of someone with humbling uprisingfrom outside of USA. After reading this article I left with strong filingof disgust an especially after this: - To many,Milners success is not just too much, too fast, but also somehow unfair.May be unfair to you mister Squeamishness and fastidiousness. Pull yourhand from your rear and try to do some Angel or VC investments WW or do businessdevelopment for yourself. Swallow some bitter pills failures ,Bite the bullet of losses,try to recover and move on. Then and only then if you smart and lucky enoughto be successful, your public opinion will have a value. For now nothingbut bitter jealousy for someone who follow pure core American Ideals of:from Rags to riches.

Somehow to much bitter jealousyMr. Wolff, to much jealousy.

You simply didn't get it.


23 von 25 17.05.2012 22:37

Michael Wolff's article nothing but snobby, arrogant and full of bitter jealousy for powerful business successes of someonewith humbling uprising from outside of USA.After reading this article I left with strong filing of disgust an especially after this: - To many, Milners success is not just toomuch, too fast, but also somehow unfair.May be unfair to you mister Squeamishness and fastidiousness. Pull your hand from your rear and try to do some Angel orVC investments WW or do business development for yourself. Swallow some bitter pills failures ,Bite the bullet oflosses, try to recover and move on. Then and only then if you smart and lucky enough to be successful, your public opinionwill have a value. For now nothing but bitter jealousy for someone who follow pure core American Ideals of: from Rags toriches.Somehow to much bitter jealousy Mr. Wolff, to much jealousy.

@ Edward,....It is difficult to catch black cat in the dark room, especially if there is no cat in the room KNFThere is not much to get, between arrogance and jealousy - onlyentrepreneurial impotency

Uh wow...you really dont get it. See, he wrote an article, and when he says "To many, Milners success is not just toomuch, too fast, but also somehow unfair there is no value judgment there on the part of the author at all. You fail atreading comprehension.

Oh yeah, its always about the money lol.being-anon.eu.tc


24 von 25 17.05.2012 22:37

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