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

#51

Post by rdl » Sat, Oct 22, 2011, 11:04 PM UTC

pg wrote: post #23

vaksel wrote: post #15

Earlier quoted context omitted.

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.

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.

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

#52

Post by chunkybacon » Sat, Oct 22, 2011, 11:10 PM UTC

tptacek wrote: post #48

pg wrote: post #45

Earlier quoted context omitted.

Money laundering = disguising the path money takes. These transactions are extremely traceable. It is equally ridiculous to propose the goal is to get money out of Russia. How does investing in startups make that any easier? If the money can get to a startup in the US, ipso facto it can get out of Russia, to any other investment. I would not be surprised to see such an obviously mistaken comment upvoted on reddit, bu…

Moreover, you "launder" the proceeds of a numbers racket or a heroin dealing ring. When you control over 1/10th of the metals industry in one of the world's largest industrialized nations, you don't "launder" the proceeds; you create banks to hold the money. The "money laundering" charge does a disservice to any legitimate qualms one might have about Oligarchy funds.

Exactly. The real question is whether it is a difference in type or a difference in scale. "Laundering" may be a dirty word used to make things untracable, but it is equally possible to do unseemly things so well that no one can call you to account. If so, you do not need to launder your money -- but the question remains as to whether or not what you are doing qualifies as a difference in type.

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

#53

Post by chunkybacon » Sat, Oct 22, 2011, 11:12 PM UTC

rdl wrote: post #51

pg wrote: post #23

Earlier quoted context omitted.

Actually only the top few are smart.

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 fr…

I think pg has a different definition of smart than you do. Think Chuck Norris smart and you'll be on the right track.

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

#54

Post by benrpeters » Sat, Oct 22, 2011, 11:17 PM UTC

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.

It seems that the author had to come up with those complicated theories b/c he couldn't get Milner to open up. The loan insight that he uncovers about the perception that led to investing in SV is that YM foresaw that social networks could generate huge margins from advertising. Well, that certainly was smart of him, but how did he get there and how did he pick the companies he did? He buys Mail.ru and then ... he buys facebook? One dinner with Goldman people in Moscow and voila!?! The article provides a decent biographical sketch but the author is left to speculate on all the whys. I wonder whether he asked tough questions and was simply rebuffed or whether YM provided access but laid strict ground rules. If so, the author should have let the readers know this.

That he would prefer to remain enigmatic rather than open up about his process means that he is at least partly responsible for the overly complicated theories about him. Maybe he has good reasons not to or maybe it reflects a different culture. But I find it more than a little ironic that someone so tight-lipped is a social network tycoon.

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

#55

Post by bootload » Sat, Oct 22, 2011, 11:19 PM UTC

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.

"... 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. ..."

Smart in Russia isn't unique.

Opportunity is the scarcity. Smart also doesn't fully explain the "new money" problem. Timing might. Instability in the 90's meant opportunity but opportunity only happens in Russia with influence, in Yuri's case, "Usmanov". Expert knowledge of western economics & Russian business could also explain the ability to conceive & create a western style business in emerging Russia of the late 90's. [0] For me though, it's the link with Usmanov that clouds the "new money" problem. [1] The article also mentions Milner's religion. Highlighting Milner's religion, then questioning his integrity could be viewed as a smear attempt.

[0] The investment could be explained knowing that Boris Zakharovich Milńer PhD (father) is member of the "Russian Academy of Sciences" ~ http://www.gbata.com/jgbat.html & member of "Russian Institute of Economics" ~ http://www.guu.ru/files/gbata/english_program.doc

[1] Bill Powell, Jessi Hempel, Fortune, "Who is Alisher Usmanov?" ~ http://tech.fortune.cnn.com/2010/10/04/who-is-alisher-usmano...

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

#56

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

pg wrote: post #27

DilipJ wrote: post #10

Earlier quoted context omitted.

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.

Actually, it would seem to be just as simple as he implies. VCs in the valley care only about money and don't give a hoot about morality. You haven't debated the fact that Milner is linked to the looting of state resources; you've simply said that anyone else would also take his money if they could.

Makes all you VCs and Angels in the Valley seem like dogs fighting over a doggie biscuit -- or in this case, the looted flesh and bones of the Russian people.

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

#57

Post by pg » Sat, Oct 22, 2011, 11:49 PM UTC

chunkybacon wrote: post #56

pg wrote: post #27

Earlier quoted context omitted.

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.

Actually, it would seem to be just as simple as he implies. VCs in the valley care only about money and don't give a hoot about morality. You haven't debated the fact that Milner is linked to the looting of state resources; you've simply said that anyone else would also take his money if they could. Makes all you VCs and Angels in the Valley seem like dogs fighting over a doggie biscuit -- or in this case, the looted…

Let me be more precise. When I said the situation was not as simple as his comment implied, I meant that even if Yuri's money was tainted in some way, it was being used as a counterweight to another bad thing.

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

#58

Post by 0x12 » Sun, Oct 23, 2011, 12:21 AM UTC

pg wrote: post #45

0x12 wrote: post #28

Earlier quoted context omitted.

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 a…

Money laundering = disguising the path money takes. These transactions are extremely traceable. It is equally ridiculous to propose the goal is to get money out of Russia. How does investing in startups make that any easier? If the money can get to a startup in the US, ipso facto it can get out of Russia, to any other investment. I would not be surprised to see such an obviously mistaken comment upvoted on reddit, bu…

> Money laundering = disguising the path money takes.

indeed.

> These transactions are extremely traceable.

Sure they are.

But the source of the original fortune behind all this is pretty murky and money laundering does not stop at the first stage.

Think of it as onion routing, going further and further into the legitimate world until those that handle the money have no way of proving or even knowing that the original source wasn't legit. It's all about provenance.

> It is equally ridiculous to propose the goal is to get money out of Russia.

Are you familiar with the name Berezovsky?

( http://en.wikipedia.org/wiki/Boris_Berezovsky_%28businessman... )

You can go down as fast as up in Russia, and it doesn't take all that much to cause a fall from grace.

Spreading your assets in multiple countries seems like a good idea in an environment that volatile.

> How does investing in startups make that any easier?

It's a great way to ensure yourself future income and influence, surely one or more of them will pay back big time.

> If the money can get to a startup in the US, ipso facto it can get out of Russia, to any other investment.

Sure, but that won't get you in on the ground floor of a bunch of companies that will likely be very important in the near future. The return on investment in terms of influence could be enormous, it's a risk worth taking.

Better than buying standard oil or microsoft for an equivalent amount of money.

And if it is monopoly money to them anyway, why not buy that nearly free lottery ticket?

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

#59

Post by Hitchhiker » Sun, Oct 23, 2011, 12:43 AM 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…

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

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

#60

Post by 0x12 » Sun, Oct 23, 2011, 12:44 AM UTC

tptacek wrote: post #48

pg wrote: post #45

Earlier quoted context omitted.

Money laundering = disguising the path money takes. These transactions are extremely traceable. It is equally ridiculous to propose the goal is to get money out of Russia. How does investing in startups make that any easier? If the money can get to a startup in the US, ipso facto it can get out of Russia, to any other investment. I would not be surprised to see such an obviously mistaken comment upvoted on reddit, bu…

Moreover, you "launder" the proceeds of a numbers racket or a heroin dealing ring. When you control over 1/10th of the metals industry in one of the world's largest industrialized nations, you don't "launder" the proceeds; you create banks to hold the money. The "money laundering" charge does a disservice to any legitimate qualms one might have about Oligarchy funds.

When Soviet Russia imploded in the former USSR and in lots of satellite states huge amounts of state owned real estate and means of production changed hands for peanuts.

It was probably the largest theft in our lifetime and whether you call eventually turning that into assets in western countries laundering or not is arguing semantics.

Ill gotten gains get converted into more diversified and more respectable assets.

Basically these men (and their predecessors) stole a country, the fact that that gives them access to mechanisms that ordinary criminals can not afford does not place them morally above them at all in my opinion.

This period is sometimes referred to as the rape of Russia, but that makes it sound like it is over, which is far from the truth.