How Russian Tycoon Yuri Milner Bought His Way Into Silicon Valley • Hacker News Board

Re: How Russian Tycoon Yuri Milner Bought His Way Into Silicon Valley

#21

Post by 0x12 » Sat, Oct 22, 2011, 7:01 PM UTC

vizzah wrote: post #14

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.

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.

Re: How Russian Tycoon Yuri Milner Bought His Way Into Silicon Valley

#22

Post by pg » Sat, Oct 22, 2011, 7:13 PM UTC

mapgrep wrote: post #13

pg wrote: post #9

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.

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 t…

In what sense is he "successful?"

Financially, in the same sense Mark Zuckerberg is.

Re: How Russian Tycoon Yuri Milner Bought His Way Into Silicon Valley

#23

Post by pg » Sat, Oct 22, 2011, 7:19 PM UTC

vaksel wrote: post #15

mapgrep wrote: post #13

Earlier quoted context omitted.

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 t…

yeah it's not like VC world is full of idiots, most of those guys tend to be smart.

Actually only the top few are smart.

Re: How Russian Tycoon Yuri Milner Bought His Way Into Silicon Valley

#24

Post by mathattack » Sat, Oct 22, 2011, 7:28 PM UTC

0x12 wrote: post #20

mathattack wrote: post #19

Earlier quoted context omitted.

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.

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.

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.

Re: How Russian Tycoon Yuri Milner Bought His Way Into Silicon Valley

#25

Post by temphn » Sat, Oct 22, 2011, 8:01 PM UTC

0x12 wrote: post #20

mathattack wrote: post #19

Earlier quoted context omitted.

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.

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.

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...)

Re: How Russian Tycoon Yuri Milner Bought His Way Into Silicon Valley

#26

Post by jbooth » Sat, Oct 22, 2011, 8:04 PM UTC

mapgrep wrote: post #13

pg wrote: post #9

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.

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 t…

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.

Re: How Russian Tycoon Yuri Milner Bought His Way Into Silicon Valley

#27

Post by pg » Sat, Oct 22, 2011, 8:11 PM UTC

DilipJ wrote: post #10

0x12 wrote: post #4

Earlier quoted context omitted.

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?

The Valley doesn't care about a person's ethnicity, as long as they generated their wealth through legitimate means. Milner, on the other hand, is nothing more than a frontman for Alisher Usmanov, who basically accrued everything through wholescale theft of state resources. Basically, Milner is a crook, and if there was any justice in the world he and Usmanov would be in jail for what they have done. But there isn't,…

VCs are not so high minded that they're offended by who his LPs are, believe me. The reason VCs don't like Yuri is that he is disturbing the cosy world they formerly inhabited by offering more founder friendly terms.

So morally the situation is not as simple as your comment implies.

Re: How Russian Tycoon Yuri Milner Bought His Way Into Silicon Valley

#28

Post by 0x12 » Sat, Oct 22, 2011, 8:17 PM UTC

jbooth wrote: post #26

mapgrep wrote: post #13

Earlier quoted context omitted.

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 t…

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.

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 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.

Re: How Russian Tycoon Yuri Milner Bought His Way Into Silicon Valley

#29

Post by [deleted] » Sat, Oct 22, 2011, 8:31 PM UTC

pg wrote: post #22

mapgrep wrote: post #13

Earlier quoted context omitted.

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 t…

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

[deleted]

Re: How Russian Tycoon Yuri Milner Bought His Way Into Silicon Valley

#30

Post by vizzah » Sat, Oct 22, 2011, 8:45 PM UTC

pg wrote: post #22

mapgrep wrote: post #13

Earlier quoted context omitted.

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 t…

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

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..