Russian casts net wide

Yuri Milner likes to keep out of the limelight, unlike many of his entrepreneurial countrymen, but by building an internet investment empire he is making waves.

When you search for Yuri Milner on Facebook, you will struggle to find a mention of him.
This could be regarded as a little odd. After all, the Russian tycoon is steadily building an empire by investing in the internet, owning a stake in the ubiquitous social networking site.
Key in a similar request for Mark Zuckerberg, Facebook's founder, however, and you will be inundated with personal information, such as his favourite baseball team, the New York Yankees, and favourite music acts, in his case Lady Gaga and Nirvana.
But then, Mr Milner is not your typical computer geek. One of the internet's fastest-rising movers and shakers, he prefers to do business out of the public eye.
Unlike the oil and gas mogul Roman Abramovich, who owns Chelsea football club, and the gold baron Mikhail Prokhorov, who bought the NBA basketball team New Jersey Nets last May for US$250 million (Dh918m), Mr Milner loves his privacy.
Despite owning significant chunks of the hottest sites in the world, such as Groupon and Zynga, he rarely gives interviews and has spoken in public at just a handful of media-related conferences. His company's website simply displays the name, Digital Sky Technology (DST), and a generic e-mail address.
His next public appearance is not until March, when he is due to speak as the co-chairman of the Abu Dhabi Media Summit. There he is expected to explain the rationale behind his partnership with Goldman Sachs to buy a US$500 million (Dh1.83 billion) stake in Facebook that values the social networking site at a whopping $50bn.
"His strategy is to invest in companies that look like winners," says Colin Gillis, a senior technology analyst at BGC Financial in New York. "On the one hand, the strategy is to be ahead of public markets, and on the other hand, he's not necessarily picking them at their infancy."
The investment in Facebook capped a remarkable year for Mr Milner and DST, the investment company that he co-founded in 2005. Last year, DST took a $135m stake in the group buying website Groupon, a start-up that Google tried but failed to acquire for $6bn, while Mr Milner floated mail.ru, his Russian internet company, in London for almost $1bn.
Since moving into the internet business, he has proved formidable. The son of an economist and a doctor, Mr Milner studied theoretical physics at Moscow State University in 1985 and became the first Russian graduate of the Wharton Business School MBA programme in 1992.
After working in the private-equity business for several years, he became aware of the lack of Russian online companies compared with the booming number in the US.
He invested $700,000 to create Russian versions of Yahoo, eBay and Amazon. A year later, not one of them was successful.
But Mr Milner's cloud had a silver lining, and he merged his remaining assets in 2002 with mail.ru, a floundering e-mail site. He immediately fired 80 per cent of the staff, and within two years, the company managed to break even. Today, it is the most popular website in Russia.
"It was free and based on advertising, but there was no advertising, so it was just free," Mr Milner recalled at a technology conference last year.
As mail.ru grew, Mr Milner took stakes in a number of other Russian web business such as vkontakte.ru, the country's largest social networking site, odnoklassniki.ru, a site that reconnects former schoolmates, and HeadHunter, or hh.ru, a recruitment site.
"These companies were already there and were slowly growing. Yuri was actually instrumental of consolidating certain assets under the Mail.ru Group," says Edward Shenderovich, the managing director of Kite Ventures, an internet investment company based in London that owns LiveJournal and a stake in sup.com, one of Russia's largest online media properties.
"But, at the same time, if you're successful in your home country, you have the possibility to extend [globally] and he did," says Mr Shenderovich.
Mr Milner finally joined the Silicon Valley elite when he hopped on a plane to Palo Alto to meet Mr Zuckerberg, eventually investing $200m for an almost 2 per cent stake in the site.
His knack for buying into established web properties continued with a $180m investment in Zynga, a social gaming company that is valued at as much as Electronic Arts' $5.2bn. He also snapped up ICQ, the instant messaging service that has since faded in popularity.
"A lot of mid to later-stage companies in the US marketplaces are not offered on favourable terms by the founders and management, and he's injected a level of competition into these high-quality deals," Mr Gillis says.
Despite his growing presence in internet companies, Mr Milner says he is not an oligarch.
"An oligarch is someone who can influence people and rule and have power," he said last year. "I am a servant. I am trying to align my interests and those of my investors to them."
In doing so, he spends his time searching for the next big website and keeps a watchful eye on about 50 companies for about a year before deciding to invest.
Twitter, the popular micro-blogging platform, is rumoured to be his next target.
"DST spearheaded certain things in the internet business, such as being the first to buy common stock directly from employees, moves that gave them a great name in the business," Mr Shenderovich says.
"But now they constantly need to innovate because the market is becoming increasingly competitive."
 
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