You wouldn’t think Yuri Milner was in a hurry. When I first interviewed him in London last January with Forbes’ San Francisco bureau chief Eric Savitz, it was clear that the Internet investor we’ve just ranked a billionaireliked to take his time in conversation. Biting into a crustless tuna sandwich, the former physicist would methodically chew it before answering a question about the way social networks were connecting the world. “When you have a few billion people connected with screens, not voice… screens are important,” he said in a Russian accent tinged with an American lilt. Chew, chew, chew. Zen-like pause. “You can transmit a thousand times more information.”
As we digested sandwiches he talked of digesting information, and was relaxed but guarded. Those who’ve interviewed Milner will attest he’s notoriously good at giving nothing away about his investments, or plans for the future. Last month I met him again, this time on his home territory in Moscow, and spent most of a day trying to figure out who the guy was and what he was doing. (Read the full story, “The Billionaire Who Friended The Web”) What I found was someone outwardly calm, but working like a maniac and extraordinarily focused. A guy who broke out of his cultural comfort zone to court Silicon Valley, after deciding two decades ago at Wharton to be a “bridge” between Russia and the United States.
Yuri Milner, 49, appeared out of nowhere in March 2009 when his Digital Sky Technologies bought a 2% stake in Facebook for $200 million. That stake’s grown to an estimated 10% and is worth roughly $5 billion. Milner has split it between investment fund DST Global and Russia’s biggest Internet firm Mail.ru Group. The firms also share stakes in Zynga and Groupon. Bloggers in the U.S. were suspicious of Milner at first, and some feared the Russians were trying to buy up their social network (DST Global is also primarily backed by billionaire oligarch Alisher Usmanov).
But Milner continues to boldly disrupt the status quo, recently offering an unprecedented $150,000 to every start-up in Silicon Valley incubator Y Combinator, and even more recently leading a $100 million funding round for music streaming service Spotify that values it at a reported $1 billion. More deals are on the horizon.
So what’s he like? One can tell a lot about someone from their desk. The ones at his home and the office are bare save for a phone and cables to connect a laptop. You get the feeling he doesn’t use them much. He’s got three secretaries working eight-hour shifts to accommodate his schedule. He didn’t even have to think about about decorating the office – wife Julia is an artist so he hangs up her paintings and photographs. At home it’s flat screen TVs hanging from every wall in every room but the bathroom, playing the likes of CNN, Bloomberg, Twitter feeds monitoring mentions of DST and (his one indulgence) the Discovery Channel. He sleeps four to five hours a night and travels most of the month. If he phones an investment manager at 2am with an idea, they better be ready to talk about it till 5. Despite the unruffled exterior, Milner works at a furious pace, and one is expected to keep up.
The second time I met Milner it was for lunch at the swanky Mamon restaurant on Goda Street, Moscow just a few minutes away from his office. I had taken the red-eye to Moscow to arrive at 5.30am that morning, and was still reeling from temperatures of 25 degrees below freezing – so cold that the insides of my nose froze. But the restaurant was warm and the beat from trendy electronica pulsed in the background. Milner showed up in a shiny zip-up sweater and slacks and jogged up the steps to meet me at the table, sat down, smiled, crossed his arms and actually appeared edgy. A few minutes later, the cool kicked in.
When I asked about a typical day in the life, Milner laughed. He told me about morning exercises, reviewing written reports from his young daughters, making calls from his car on the way to the office, and then trailed off. Turns out there is no typical day for Yuri Milner. Three weeks out of every month he’s on a plane or in a different time zone–San Francisco, China, London are popular destinations–talking to potential investments. The traveling really started two years ago, around the same time he bought the Facebook stake. To make sure he sees the family, he’ll often take his wife and one daughter with him. (He flies by commercial airline and occasionally chartered jet.)
I asked about his upbringing in Moscow, and he talked about being “neglected” by his sister, eight years his senior. “I wanted to be with her friends all the time and she wouldn’t let me,” he said, tongue in cheek, before slurping noodles from a bowl not two inches away from his nose. Milner upbringing is hardly a sob story. His mother was a doctor and his father a well-known academic who taught American management practices. This had another effect. Milner probably wouldn’t have had the gumption to study Stateside if dad’s connections hadn’t helped him become the Soviet Union’s first MBA student at Wharton. There was also early indoctrination on American culture–Milner’s father was known to invite friends to the house for slide shows of his trips to New York or LA.
Andrei Sakharov, the Russian physicist who helped develop the hydrogen bomb but later became a human rights campaigner was another big influence on Milner, who met him during a short-lived stint as a PhD student. Sakharov was always trying to look five to ten years ahead to predict how science would develop, and such it appears is Milner’s aim with the Internet.
After lunch we hopped into a black Mercedes for the five minute drive to the offices of DST Advisors (the management company name for DST Global) for a continuation of the interview and photo shoot. The large open-plan office dominated the second to the top floor of the glassy, Naberezhnaya Tower in Moscow’s main business district and offered commanding views of the capital. The place was pristine and bare of personal effects, the sole aberration being a poster of actor Matthew McConaughey on someone’s cubicle wall. Most of the side offices were empty, because there aren’t enough employees to fill the rented space at the moment. Milner has been hiring here and there (he just took on a new chief operating officer) but there were only about 15 mostly young, smartly-dressed people walking around the place. He wanted the average age of his office staff to be 25, he said, or half his.
The photo shoot took a while, and Milner seemed a little on edge as he made small talk with photographer Paul Eng about the art and craft of picture-taking. Suddenly he noticed I was on a laptop and asked what was happening in the world. No wonder he has those TV screens all over his house — he’s constantly hungry for information.
I went on to ask him about how he’d set up Digital Sky and got backing from Alisher Usmanov. Milner isn’t too comfortable discussing the latter topic, but eventually told me that he’d been introduced to the billionaire by a friend he’d known since the 1990s, a fellow internet investor. He pressed the point that his fundraising worked in cycles–in a downturn, he needed to look within Russia for investors, hence Usmanov coming on board at the height of the global liquidity crisis of 2008.
The sun was starting to set so we dashed off to catch an exhibition by Milner’s wife at the Moscow House of Photography and Contemporary Art. Julia Milner’s art installation, Click-I-Hope is essentially a web site that features the words “I hope” scrolling across the screen in different languages, and was borne from her childhood hopes for a better life in Siberia. The exhibit, a large touch screen for pressing “I hope,” reminded me of a futuristic prayer alter. Julia, 30, with blond hair and sporting a tweed designer outfit, was animated when talking about her work, but these days it’s taking a back seat as she looks after the family and Milner chases deals.
Milner and his wife spent about 40 minutes perusing a photo exhibition about Russia’s Yeltisin years and then it was time to head to their home for dinner. As we snaked through Moscow’s notorious traffic, I sought more information from the still-reticent investor. What were his favourite blogs? Milner has RSS feeds on a bunch of venture capitalists includingFred Wilson, Bill Gurley and Ben Horowitz, which he reads on his iPad at night.
He also reads Paul Graham’s Hacker News, and admires the Y Combinator founder for being able to “spot talent and nurture it. He’s so committed to young entrepreneurs,” Milner said, adding how in the start-up funder’s early years Graham had a whole wall of food devoted to feeding the start-up founders himself.
I asked what he thought about the way DST had been portrayed in the press and whether he’d done anything to deflect negative publicity about Usmanov in the Valley, which can seem like a closed circle of venture capital investors who all know each other. He insists he didn’t, and had focused instead on explaining DST’s strategy. Eventually, people started warming to Milner and he even got the folks at Accell Partners (one of Facebook’s early backers) to introduce him to Groupon.
DST Global’s investments till now have been “three out of three” in terms of their success rate. Did that put more pressure on him to secure another lucrative deal? “It should, right?” he said, raising an eyebrow and laughing. “I’m just focused on exploring new opportunities.”
With that we drove into the basement of his building and took the elevator up to his family’s penthouse apartment. I got a taste of the place from the hallway just outside the apartment–it was painted a very brave orange and purple. Then we entered and there was an explosion of color –more orange and purple, and green, marble floors, three fireplaces, huge windows looking over Moscow and giant flat screen televisions hanging from every wall–nine in the living area and three in the dining room. (Milner clearly has a thing about screens. And his wife decorated the apartment.)
We sat down at an enormous dining table surrounded by 14 high backed orange chairs for a buffet dinner prepared by a chef. The Milners don’t do that much entertaining, though they’d only been at penthouse for six months. Milner’s two daughters, aged four and five, were perfectly charming but sheepish when Milner tried to get them to speak English and talk about their chess lessons.
We tuck into a first course of salad and squash, followed by grilled salmon. Dessert was a selection of fruit and savoury pastries including unsweetened cheesecake. Julia “has a thing about sugar,” Milner said. Did she use Facebook much? “Not really,” she answered, to his dismay.
I asked if, given that Facebook had been valued as high as $70 billion in some quarters, Milner was wary of being caught in a social media bubble (not to mention fuelling one). He put down a fork, paused and said smoothly that he had a mathematical formula to keep abreast of such a thing. It involved looking at every Internet deal worth more than $100 million in a three-month period and measuring the growth of each firm’s income–if the firms in more than half the deals had a PE higher than their growth rate, it was a bubble. He has wiggle room here: ultimately the market needs to define what a bubble is, in the same way it’s defined a recession.
Milner had to excuse himself at that point (for probably the third time) to answer calls from San Francisco. With so much happening 11 time zones to the west in this business, Milner is busiest at night, dealmaking over his iPhone and keeping one eye on CNBC. His day was only just starting.