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How Russian Tycoon Yuri Milner Bought His Way Into Silicon Valley

197 points by razin 15y ago

jakeonthemove 15y ago
"It is his outsiderness that seems most irritating and even alarming" - that's the main issue that people seem to be having with Yuri. If he was American, he would be yet another success story, flashier than the others, but still competent enough to have made it big. As much as I admire the Silicon Valley investors who live in a normal house and drive a normal car, it's Milner's choice to go all out and get some expensive stuff if he wants - I suspect growing up in Russia, they didn't have access to any kind of luxury items when the Union collapsed, so the desire to get all the big houses, yachts and expensive cars is understandable. By the way, I like it how he bought Mail.ru when it was cheap - it was certainly a smart investment (it's now the biggest mail service in Runet, not only Russia itself), at a time when most of them thought the fancy American invention, the Internet, went belly up.
- guard-of-terra 15y ago
  Given the background of Milner described in the article, I'd argue he doesn't care about material comfort and luxury. At all. Like Perelman - who lives with his mother in the middle of St. Peterburg, sees a lot of opera and is happy with that. His 100M home is probably just another investment. He had bought a part of California state, tiny but pretty impressive one. He can also live in his investment which is a bonus.
  - adlep 15y ago
    His mother and father were relatively hi ranked Soviet officials. He had it "made" in SU. Also, the guy bought a 100 million dollar house. YES, he cares about the material comfort and luxury. If you don't, you live in a regular apartment or a sub- million dollar mansion.
    - guard-of-terra 15y ago
      You named the reason why I think he doesn't care. He had everything he needed and it didn't cost them money. The only you could buy with money in USSR is some pompious things. Items. In USA, you buy better education, better health care, better neighbours, different social circle, better leisure, better future - you buy all that with money. You didn't buy these with money in USSR. His parents had all this because of their status, not because of their high wages. You could only put your money in useless and overpriced things. If you don't care, you can live anywhere. Might as well invest in some expensive property.
      - JanezStupar 15y ago
        You obviously have no idea about how SU or any other Warsaw Pact country worked.
        guard-of-terra 15y ago
        That's ad hominem, and a pretty funny one at that.
        JanezStupar 15y ago
        Indeed it is. Upon my realization that I should try harder to disqualify you, Edit timer has already passed. So I will offer my clarification here. This notion, that somehow in Eastern Block everybody had their basic needs covered in an egalitarian fashion while in Western Capitalism, to get any kind of (fair?) treatment one better be lined with cash is sorely mistaken. In reality Eastern Block was very much as your average 1% > 99% scenario. The ruling elite (Cream of various Party organization and their relatives) had it all (doctors, money, travel, education,...). If an unprivileged person wanted some of the services that were reserved for the Party elite - one would have to pay bribes all the way to destination. Average folk didn't get any meaningful service level on security, education, health,... So basically the only difference between East and West is/was that in West you don't have as high probability of being imprisoned/killed/have property confiscated while trying to go about doing business. Furthermore in regards to Yuri - his parents were obviously well liked by the regime (high, excellent positions) which enabled them lucrative careers and lifestyles. In Soviet Russia - you didn't get to travel round the world and do business - unless Regime could be certain that you can be trusted (e.g. are a part of the system). p.s.: For reference check Northern Korea, whats going on there was pretty much the golden standard for socialist regimes.
- 0x12 15y ago
  If his 'outsiderness' is so irritating and alarming that's just nicely dressed up xenophobia. And from what I've seen of it SiliconValley is not much prone to that. So why is it different with Milner?
  - antimarketing 15y ago
    First of all, an attempt at a correction to one of the motives of the article. I think Milner's jewish background has nothing to do with his success. His family, while Jewish, had and still have a complete worldview that only a member of the russain intelligentsia can have. It is such a bizarre and wonderful world-view and way of life that it defies my abilities to explain — being delicate among a world of merciless brutality. The cultural class of Russia really are a class apart. I suspect that the influence of growing up surrounded by cultured Russians, as few of them as they were in Soviet Times is why he always stands a little bit disconnected from the crowd. The air of Russian culture is gentle but always restless. Russia is a land of big crowds but the intelligent among that people always desire to be a little bit aloof, if not in solitude.
  - bluekeybox 15y ago
    A significant percentage of oligarchs from the former USSR carry a very bad reputation because the means through which they became rich are often suspect and shrouded in secrecy, which is understandable given the lawlessness of the 1990s in that region, and which to some extent continues to this day. Russia since the collapse of the USSR has been a lot like certain parts of the U.S. were during the time of the Prohibition -- giving orders to physically terminate rivals is or was daily business. After finding out more about Milner, I am now more convinced that he is not at all the "robber baron" Al Capone type, but a genuine businessman who is both lucky and smart. Wrote this just to explain the possible reasons behind the initial worry, being myself from the former USSR. I think this also explains why Milner cares about establishing a reputation in the Silicon Valley as opposed to being completely aloof to what other people think.
    - tptacek 15y ago
      When part of what makes you "smart" is the hands you choose to shake, and the most lucrative hands are also the ones buying all the television stations and running the shadow government... Al Capone wasn't a robber baron. He was a criminal entrepreneur. The robber barons have universities, foundations, and financial institutions named after them. The distinction between mobsters and robber barons is germane.
- tptacek 15y ago
  No. The issue is that to most of the social class that makes up the Valley, every high net worth individuals from a CIS state is "Russian Mafia". If that's xenophobia, fair enough, but it's a specific brand of xenophobia, and as the amounts of money we're talking about go up --- perhaps past Yuri Milner --- it's a brand of xenophobia that may get less and less irrational. They don't call it "Russian money" or "Milner money" or "Soviet money" or any other epithet. They call it "Russian mafia money".
dustineichler 15y ago
The story angle is wrong. Why would someone like him care if he bought into anything, when he can buy everything. It reads like an insecure fable which I doubt.
deleted 15y ago
[deleted]
pg 15y ago
If there's one mistake this story makes, it's in trying to come up with complicated theories about why Yuri does well. He's simply smart. That's what DST has in common with Andreessen Horowitz, though they have little else in common.
- mapgrep 15y ago
  Come now, Paul. Yes, Yuri is smart. But he also has huge sacks of money to throw around, most of which comes from oligarch Alisher Usmanov. Wolff confirms here for the first time (I believe) that "Milner has created a separate fund to invest in international—and especially American—Internet companies, with Usmanov taking the biggest stake." And we've yet to see any sort of track record for the piles of money Milner throws around, at least the big new money he is spending in America. In what sense is he "successful?" It's kind of sad, to me at least, the extent to which a sort of amorality has really taken hold in Silicon Valley. It's nice that he's helped your investments out, Paul, but where does Yuri's money come from? Have you looked into him and Usmanov? I mean, the sad thing about Yuri Milner to me isn't that he's an ostentatious outsider, it's that he fits in so darn well in Silicon Valley. I wish this was the sort of place that looked completely alien to someone from Moscow or Wall Street. Every year, it seems that's less and less the case, at least in terms of culture.
  - vaksel 15y ago
    yeah it's not like VC world is full of idiots, most of those guys tend to be smart.
    - staunch 15y ago
      Judged by their returns, all but the top tier of VCs (of which Milner is now a part) are idiots.
    - pg 15y ago
      Actually only the top few are smart.
      - 15y ago
vizzah 15y ago
The wealth in hands of all these xUSSR oligarchs (Usmanov etc) was once a social wealth of all Soviet people. It is nice to see this wealth is now being converted 'back to social'. Our Facebook accounts are supposedly worth $100+ already, so it seems like a very clever plot to pay these money back to where they belong. Let's hope Mark will provide payouts for those choosing to close their accounts.
- 0x12 15y ago
  The former owners of this wealth are likely not on facebook but for the most part on vkontakte.ru and mail.ru, which they apparently also own.
- pwang 15y ago
  > so it seems like a very clever plot to pay these money back to where they belong Um... you seriously believe this?
  - vizzah 15y ago
    of course it was sarcastic, how could a sane person believe in that? you scare me with such question.
krookoo 15y ago
Sounds like money laundering.
budu3 15y ago
I wonder if it is possible for a YC startup to take Andreessen-Horowitz $50000 investment and pass on Milner's investment.
- 0x12 15y ago
  Sure it is. But nobody did.
adlep 15y ago
pg is extremely naive if he thinks the this guy's money is not tainted. Actually, it does not take a genius to figure this out. IT IT IMPOSSIBLE to make that kind of money in Russia by playing according to the rules.
yonasb 15y ago
The man is making people's dreams come true and taking chances on young and hungry entrepreneurs, legally. Some of you make it sound as if he's a murderer. Leave him alone and let him and all the companies he's funding be great.
alexro 15y ago
Why not anybody thought that what Milner does is he paves the road to even more money coming from legit and not-so-legit investments from Russian oligarchs. Once Milner gets settled in the SV and proves his operations are successful, then Russian money will start flowing in in amounts that's hard to comprehend. Why is this desirable for oligarchs? Simple: businesses in Russia are profoundly insecure - remember Khodorkovsky? So, Milner will find a great amount of willing investors among the second-tier oligarchs once he's ready to start doing money heavy lifting. And when you pave the road that will go "pay-to-pass" you can spend few unnecessarily billions.

197 points by razin 15y ago

"It is his outsiderness that seems most irritating and even alarming" - that's the main issue that people seem to be having with Yuri. If he was American, he would be yet another success story, flashier than the others, but still competent enough to have made it big. As much as I admire the Silicon Valley investors who live in a normal house and drive a normal car, it's Milner's choice to go all out and get some expensive stuff if he wants - I suspect growing up in Russia, they didn't have access to any kind of luxury items when the Union collapsed, so the desire to get all the big houses, yachts and expensive cars is understandable. By the way, I like it how he bought Mail.ru when it was cheap - it was certainly a smart investment (it's now the biggest mail service in Runet, not only Russia itself), at a time when most of them thought the fancy American invention, the Internet, went belly up.

guard-of-terra 15y ago
Given the background of Milner described in the article, I'd argue he doesn't care about material comfort and luxury. At all. Like Perelman - who lives with his mother in the middle of St. Peterburg, sees a lot of opera and is happy with that. His 100M home is probably just another investment. He had bought a part of California state, tiny but pretty impressive one. He can also live in his investment which is a bonus.
- adlep 15y ago
  His mother and father were relatively hi ranked Soviet officials. He had it "made" in SU. Also, the guy bought a 100 million dollar house. YES, he cares about the material comfort and luxury. If you don't, you live in a regular apartment or a sub- million dollar mansion.
  - guard-of-terra 15y ago
    You named the reason why I think he doesn't care. He had everything he needed and it didn't cost them money. The only you could buy with money in USSR is some pompious things. Items. In USA, you buy better education, better health care, better neighbours, different social circle, better leisure, better future - you buy all that with money. You didn't buy these with money in USSR. His parents had all this because of their status, not because of their high wages. You could only put your money in useless and overpriced things. If you don't care, you can live anywhere. Might as well invest in some expensive property.
    - JanezStupar 15y ago
      You obviously have no idea about how SU or any other Warsaw Pact country worked.
      - guard-of-terra 15y ago
        That's ad hominem, and a pretty funny one at that.
        JanezStupar 15y ago
        Indeed it is. Upon my realization that I should try harder to disqualify you, Edit timer has already passed. So I will offer my clarification here. This notion, that somehow in Eastern Block everybody had their basic needs covered in an egalitarian fashion while in Western Capitalism, to get any kind of (fair?) treatment one better be lined with cash is sorely mistaken. In reality Eastern Block was very much as your average 1% > 99% scenario. The ruling elite (Cream of various Party organization and their relatives) had it all (doctors, money, travel, education,...). If an unprivileged person wanted some of the services that were reserved for the Party elite - one would have to pay bribes all the way to destination. Average folk didn't get any meaningful service level on security, education, health,... So basically the only difference between East and West is/was that in West you don't have as high probability of being imprisoned/killed/have property confiscated while trying to go about doing business. Furthermore in regards to Yuri - his parents were obviously well liked by the regime (high, excellent positions) which enabled them lucrative careers and lifestyles. In Soviet Russia - you didn't get to travel round the world and do business - unless Regime could be certain that you can be trusted (e.g. are a part of the system). p.s.: For reference check Northern Korea, whats going on there was pretty much the golden standard for socialist regimes.
0x12 15y ago
If his 'outsiderness' is so irritating and alarming that's just nicely dressed up xenophobia. And from what I've seen of it SiliconValley is not much prone to that. So why is it different with Milner?
- antimarketing 15y ago
  First of all, an attempt at a correction to one of the motives of the article. I think Milner's jewish background has nothing to do with his success. His family, while Jewish, had and still have a complete worldview that only a member of the russain intelligentsia can have. It is such a bizarre and wonderful world-view and way of life that it defies my abilities to explain — being delicate among a world of merciless brutality. The cultural class of Russia really are a class apart. I suspect that the influence of growing up surrounded by cultured Russians, as few of them as they were in Soviet Times is why he always stands a little bit disconnected from the crowd. The air of Russian culture is gentle but always restless. Russia is a land of big crowds but the intelligent among that people always desire to be a little bit aloof, if not in solitude.
- bluekeybox 15y ago
  A significant percentage of oligarchs from the former USSR carry a very bad reputation because the means through which they became rich are often suspect and shrouded in secrecy, which is understandable given the lawlessness of the 1990s in that region, and which to some extent continues to this day. Russia since the collapse of the USSR has been a lot like certain parts of the U.S. were during the time of the Prohibition -- giving orders to physically terminate rivals is or was daily business. After finding out more about Milner, I am now more convinced that he is not at all the "robber baron" Al Capone type, but a genuine businessman who is both lucky and smart. Wrote this just to explain the possible reasons behind the initial worry, being myself from the former USSR. I think this also explains why Milner cares about establishing a reputation in the Silicon Valley as opposed to being completely aloof to what other people think.
  - tptacek 15y ago
    When part of what makes you "smart" is the hands you choose to shake, and the most lucrative hands are also the ones buying all the television stations and running the shadow government... Al Capone wasn't a robber baron. He was a criminal entrepreneur. The robber barons have universities, foundations, and financial institutions named after them. The distinction between mobsters and robber barons is germane.
tptacek 15y ago
No. The issue is that to most of the social class that makes up the Valley, every high net worth individuals from a CIS state is "Russian Mafia". If that's xenophobia, fair enough, but it's a specific brand of xenophobia, and as the amounts of money we're talking about go up --- perhaps past Yuri Milner --- it's a brand of xenophobia that may get less and less irrational. They don't call it "Russian money" or "Milner money" or "Soviet money" or any other epithet. They call it "Russian mafia money".

dustineichler 15y ago

The story angle is wrong. Why would someone like him care if he bought into anything, when he can buy everything. It reads like an insecure fable which I doubt.

deleted 15y ago

[deleted]

pg 15y ago

If there's one mistake this story makes, it's in trying to come up with complicated theories about why Yuri does well. He's simply smart. That's what DST has in common with Andreessen Horowitz, though they have little else in common.

mapgrep 15y ago
Come now, Paul. Yes, Yuri is smart. But he also has huge sacks of money to throw around, most of which comes from oligarch Alisher Usmanov. Wolff confirms here for the first time (I believe) that "Milner has created a separate fund to invest in international—and especially American—Internet companies, with Usmanov taking the biggest stake." And we've yet to see any sort of track record for the piles of money Milner throws around, at least the big new money he is spending in America. In what sense is he "successful?" It's kind of sad, to me at least, the extent to which a sort of amorality has really taken hold in Silicon Valley. It's nice that he's helped your investments out, Paul, but where does Yuri's money come from? Have you looked into him and Usmanov? I mean, the sad thing about Yuri Milner to me isn't that he's an ostentatious outsider, it's that he fits in so darn well in Silicon Valley. I wish this was the sort of place that looked completely alien to someone from Moscow or Wall Street. Every year, it seems that's less and less the case, at least in terms of culture.
- vaksel 15y ago
  yeah it's not like VC world is full of idiots, most of those guys tend to be smart.
  - staunch 15y ago
    Judged by their returns, all but the top tier of VCs (of which Milner is now a part) are idiots.
  - pg 15y ago
    Actually only the top few are smart.
    - 15y ago

vizzah 15y ago

The wealth in hands of all these xUSSR oligarchs (Usmanov etc) was once a social wealth of all Soviet people. It is nice to see this wealth is now being converted 'back to social'. Our Facebook accounts are supposedly worth $100+ already, so it seems like a very clever plot to pay these money back to where they belong. Let's hope Mark will provide payouts for those choosing to close their accounts.

0x12 15y ago
The former owners of this wealth are likely not on facebook but for the most part on vkontakte.ru and mail.ru, which they apparently also own.
pwang 15y ago
> so it seems like a very clever plot to pay these money back to where they belong Um... you seriously believe this?
- vizzah 15y ago
  of course it was sarcastic, how could a sane person believe in that? you scare me with such question.

krookoo 15y ago

Sounds like money laundering.

budu3 15y ago

I wonder if it is possible for a YC startup to take Andreessen-Horowitz $50000 investment and pass on Milner's investment.

0x12 15y ago
Sure it is. But nobody did.

adlep 15y ago

pg is extremely naive if he thinks the this guy's money is not tainted. Actually, it does not take a genius to figure this out. IT IT IMPOSSIBLE to make that kind of money in Russia by playing according to the rules.

yonasb 15y ago

The man is making people's dreams come true and taking chances on young and hungry entrepreneurs, legally. Some of you make it sound as if he's a murderer. Leave him alone and let him and all the companies he's funding be great.

alexro 15y ago

Why not anybody thought that what Milner does is he paves the road to even more money coming from legit and not-so-legit investments from Russian oligarchs. Once Milner gets settled in the SV and proves his operations are successful, then Russian money will start flowing in in amounts that's hard to comprehend. Why is this desirable for oligarchs? Simple: businesses in Russia are profoundly insecure - remember Khodorkovsky? So, Milner will find a great amount of willing investors among the second-tier oligarchs once he's ready to start doing money heavy lifting. And when you pave the road that will go "pay-to-pass" you can spend few unnecessarily billions.