12 ms·

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

by 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.
  - rdl 15y ago
    Is it that the top funds are packed with smart people, or there are smart people at the top of a lot of funds with lots of less-intelligent junior people? From what I've seen, the top funds (at least the smaller ones) are 75+% smart people (at partner level; I never met enough associates/principals to evaluate them); there are entire bad funds full of mainly dumb people from the top down. This is kind of different from operating entities, where even stupid-dominated organizations often have some great people hiding out, or even entire great teams.
    - chunkybacon 15y ago
      I think pg has a different definition of smart than you do. Think Chuck Norris smart and you'll be on the right track.
      - mathattack 15y ago
        Is this supposed to allude to, "Fred Wilson's doesn't want his companies to IPO, IPOs want to Fred Wilson" or something like that?
mathattack 15y ago
Based on subsequent valuations it would seem like Facebook, Groupon and others are doing very well. It only takes a few home runs to cover a lot of strikeouts and singles.
- 0x12 15y ago
  Only when you sell the stock. So the money to buy all that stock still had to come from somewhere. Macaroni somehow doesn't cut it.
  - mathattack 15y ago
    I was referencing where his returns came from, not his capital. That's another story which I haven't dug enough researching to figure out.
  - temphn 15y ago
    Right. We can bound this by getting the total market size of the macaroni business in Russia, and comparing to public investment numbers by Milner in other companies. Does the top down (revenue, profits) match the bottom up (sum of investments)? Unless he built the Russian Chef Boyardee, it strains the imagination to believe that macaroni was anything but a front for money laundering, from the Russian Mafia, Usmanov, or who knows where. Though I doubt YC companies are at risk of having their legs broken by Russian gangsters should they fail, because Milner is in the US and wants to play by American rules (though the US itself is rapidly moving towards the cynicism/crony capitalism/venture socialism of the Soviet bloc). Sort of like Michael Corleone becoming a pillar of the community, these sorts of transactions buy respectability. All that said, Americans shouldn't be too self satisfied. We'll probably realize in a few years that the $787B stimulus and the $9T Federal Reserve bailout ended up in the pockets of a few politically connected American oligarchs like George Kaiser, as the euphoria of 2009 Obama America was similar to the euphoria of 1992 Yeltsin Russia. Massive amounts of money flew around with little accountability and the hangover will be a bitch. Anyway, from a blackbox perspective Milner's presence is good for startups at all stages, as even if he is only a threat to invest his presence forces better terms from others. I think that is the pragmatic perspective: he is a feature of the landscape, so might as well benefit from him. (still, that macaroni calculation would be a damn interesting public spreadsheet. should be done anonymously of course...)
pg 15y ago
In what sense is he "successful?" Financially, in the same sense Mark Zuckerberg is.
- deleted 15y ago
  [deleted]
- vizzah 15y ago
  I though Zuckerberg's success is in the creation, not in the bank balance? Really, 'financial success' and life's success (for achieving something worthwhile for the history of this planet) must be two absolutely different achievements..
  - pg 15y ago
    That's why I qualified my answer by with "financially." That is the type of success mapgrep is asking about: his returns as an investor.
jbooth 15y ago
Huge sacks of money to throw around and huge cojones as well to make those bets, most of his investments had everyone saying "That's crazy!" at the time, yet they've paid off for him so far. Time will tell if they're successful or if he's making money off of a bigger fool, I guess, but he looks pretty good right now.
- 0x12 15y ago
  Criminals routinely invest lots of money in losing enterprises. This is called money laundering. They'll take a hit from 30 to 70% or even worse just to be able to get their money back in a way that they can spend it legitimately. They may not even care to win overall, as long as some of the bets pay off that's great. It will give influence and legitimacy. The hard part is always to find places that will take large amounts of money, no questions asked and that have a gambling element in it which could explain large returns in a plausible way, and in a way that will stay. That's why casinos are very popular, ditto with antique dealerships, the real estate sector and financial services such as banking. It's really not that much of a stretch of the imagination to use venture capital as another money laundering setup, essentially it has all the elements of a casino, large amounts of money go in, lots of it disappears and some relatively small bets pay off huge. Another reason for making 'silly bets' is to diversify whatever the cost, because being the owner of former state enterprises and a bunch of mines always has a risk of nationalization, silicon valley investments have returns in hard currency and on top of that are unlikely to ever be taken away at the whim of some ruler. http://en.wikipedia.org/wiki/Alisher_Usmanov http://en.wikipedia.org/wiki/Alisher_Usmanov has an interesting profile and if that's Milners main source of capital there are definitely some pointed questions that should be asked. This is not who you want to be indirectly involved with your startup, assuming that it is true and that this guy really is the power behind the investments Milner is making. Pecunia non olet but some money is better refused than accepted, 'success' on the back of stealing from the people of the former Soviet Union is not something to be proud of.
  - shareme 15y ago
    There are legal reasons why you do it as well..lets say you legally got out of paying high 45% corp tax rate by parking profits offshore in Europe. Than obviously you would re-invest those profits in Europe Social-Media start-ups as you would only have ot get a return of 70%. Prices of raw material inputs to energy, Metals, etc went from high to low and back again during Russia's past recent history and we are making unfounded assumptions in this thread that have very little to no basis in fact.
Hitchhiker 15y ago
http://www.youtube.com/watch?v=UgcxGFmYyPs http://www.youtube.com/watch?v=UgcxGFmYyPs

by mapgrep 15y ago

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.
- rdl 15y ago
  Is it that the top funds are packed with smart people, or there are smart people at the top of a lot of funds with lots of less-intelligent junior people? From what I've seen, the top funds (at least the smaller ones) are 75+% smart people (at partner level; I never met enough associates/principals to evaluate them); there are entire bad funds full of mainly dumb people from the top down. This is kind of different from operating entities, where even stupid-dominated organizations often have some great people hiding out, or even entire great teams.
  - chunkybacon 15y ago
    I think pg has a different definition of smart than you do. Think Chuck Norris smart and you'll be on the right track.
    - mathattack 15y ago
      Is this supposed to allude to, "Fred Wilson's doesn't want his companies to IPO, IPOs want to Fred Wilson" or something like that?

mathattack 15y ago

Based on subsequent valuations it would seem like Facebook, Groupon and others are doing very well. It only takes a few home runs to cover a lot of strikeouts and singles.

0x12 15y ago
Only when you sell the stock. So the money to buy all that stock still had to come from somewhere. Macaroni somehow doesn't cut it.
- mathattack 15y ago
  I was referencing where his returns came from, not his capital. That's another story which I haven't dug enough researching to figure out.
- temphn 15y ago
  Right. We can bound this by getting the total market size of the macaroni business in Russia, and comparing to public investment numbers by Milner in other companies. Does the top down (revenue, profits) match the bottom up (sum of investments)? Unless he built the Russian Chef Boyardee, it strains the imagination to believe that macaroni was anything but a front for money laundering, from the Russian Mafia, Usmanov, or who knows where. Though I doubt YC companies are at risk of having their legs broken by Russian gangsters should they fail, because Milner is in the US and wants to play by American rules (though the US itself is rapidly moving towards the cynicism/crony capitalism/venture socialism of the Soviet bloc). Sort of like Michael Corleone becoming a pillar of the community, these sorts of transactions buy respectability. All that said, Americans shouldn't be too self satisfied. We'll probably realize in a few years that the $787B stimulus and the $9T Federal Reserve bailout ended up in the pockets of a few politically connected American oligarchs like George Kaiser, as the euphoria of 2009 Obama America was similar to the euphoria of 1992 Yeltsin Russia. Massive amounts of money flew around with little accountability and the hangover will be a bitch. Anyway, from a blackbox perspective Milner's presence is good for startups at all stages, as even if he is only a threat to invest his presence forces better terms from others. I think that is the pragmatic perspective: he is a feature of the landscape, so might as well benefit from him. (still, that macaroni calculation would be a damn interesting public spreadsheet. should be done anonymously of course...)

pg 15y ago

In what sense is he "successful?" Financially, in the same sense Mark Zuckerberg is.

deleted 15y ago
[deleted]
vizzah 15y ago
I though Zuckerberg's success is in the creation, not in the bank balance? Really, 'financial success' and life's success (for achieving something worthwhile for the history of this planet) must be two absolutely different achievements..
- pg 15y ago
  That's why I qualified my answer by with "financially." That is the type of success mapgrep is asking about: his returns as an investor.

jbooth 15y ago

Huge sacks of money to throw around and huge cojones as well to make those bets, most of his investments had everyone saying "That's crazy!" at the time, yet they've paid off for him so far. Time will tell if they're successful or if he's making money off of a bigger fool, I guess, but he looks pretty good right now.

0x12 15y ago
Criminals routinely invest lots of money in losing enterprises. This is called money laundering. They'll take a hit from 30 to 70% or even worse just to be able to get their money back in a way that they can spend it legitimately. They may not even care to win overall, as long as some of the bets pay off that's great. It will give influence and legitimacy. The hard part is always to find places that will take large amounts of money, no questions asked and that have a gambling element in it which could explain large returns in a plausible way, and in a way that will stay. That's why casinos are very popular, ditto with antique dealerships, the real estate sector and financial services such as banking. It's really not that much of a stretch of the imagination to use venture capital as another money laundering setup, essentially it has all the elements of a casino, large amounts of money go in, lots of it disappears and some relatively small bets pay off huge. Another reason for making 'silly bets' is to diversify whatever the cost, because being the owner of former state enterprises and a bunch of mines always has a risk of nationalization, silicon valley investments have returns in hard currency and on top of that are unlikely to ever be taken away at the whim of some ruler. http://en.wikipedia.org/wiki/Alisher_Usmanov http://en.wikipedia.org/wiki/Alisher_Usmanov has an interesting profile and if that's Milners main source of capital there are definitely some pointed questions that should be asked. This is not who you want to be indirectly involved with your startup, assuming that it is true and that this guy really is the power behind the investments Milner is making. Pecunia non olet but some money is better refused than accepted, 'success' on the back of stealing from the people of the former Soviet Union is not something to be proud of.
- shareme 15y ago
  There are legal reasons why you do it as well..lets say you legally got out of paying high 45% corp tax rate by parking profits offshore in Europe. Than obviously you would re-invest those profits in Europe Social-Media start-ups as you would only have ot get a return of 70%. Prices of raw material inputs to energy, Metals, etc went from high to low and back again during Russia's past recent history and we are making unfounded assumptions in this thread that have very little to no basis in fact.

Hitchhiker 15y ago

http://www.youtube.com/watch?v=UgcxGFmYyPs http://www.youtube.com/watch?v=UgcxGFmYyPs