Yuri Milner: From Russia With Billions

**Caemin** (0:09)
Good morning, folks, and welcome to today's episode called Yuri Milner from Russia with Billions. Now, I've wanted to cover Milner ever since I first came across him in Sebastian Mallaby's excellent book, The Power Law. I've mentioned it before, and Mallaby introduces Milner in the book as follows.
At the start of 2009, the CFO at Facebook took a call from Moscow. A soft Russian voice announced that he wanted to invest in Facebook. The caller had a gentle but insistent style. He had a slight build, a nose bent to his right, and an oval face crowned by a smooth dome. He wanted to meet in person. Facebook did not accept capital from just anyone. The CFO told Milner bluntly, Don't come all the way here just to see me.
Milner booked the plane tickets, flew to San Francisco, and more or less door stepped the CFO. So this is the story of how this small, quietly spoken Russian goes from earning just $5 a month to reaching the very peak of Silicon Valley. Investing in Facebook at a valuation that other US investors thought was crazy. Becoming one of Mark Zuckerberg's most trusted friends and advisors. And then going on to make huge and really, really successful investments in Spotify, Zynga, Revolut, to name just a few. And along the way, Milner, he has to navigate his way through the, I suppose you'd call it the oligarch infested pools of Russian business. And he survives all of the political and media backlash that comes from the revelation that much of his early money came from entities closely linked to Kremlin. And he has come out on the other side and is still riding high with a personal fortune of $8.7 billion.
This is a cracking story. Enjoy.
So Yuri Milner, born in Moscow, 1961, his father was an economist and he wrote dozens of books on American management systems, while his mother was a doctor who worked in a state-run lab. So a very intellectual, academic upbringing. Milner enrols at the Moscow State University, studies theoretical physics, graduates in 1985, and was working in a lab while also working on his PhD. And he was earning the equivalent of just $5 a month. But he never finished the PhD because times, they were changing in Russia at that time. Because Mikhail Gorbachev, the Russian leader, he was pushing through economic reforms that deregulated the Soviet economy. So you're seeing the emergence of private enterprise. And Milner, he seized the opportunity. He started selling personal computers. He was making good money, about 40 times his lab salary. But his father saw it as, I suppose you'd call it a betrayal of the family's intellectual legacy. So Milner went looking for something that would make his father happy, while also following his own passion for business. Because Milner loved business. In Mallaby's book, he writes the following of Milner. He was romantically pro-capitalist. The 1980s takeover artists, Henry Milken, Ronald Perlman and Michael Milken were his heroes. So, in 1990, with the help from his father's academic contacts, he enrolled at Wharton University and apparently he was the first non-emigrant Soviet citizen ever to be admitted into a top US business school at that time. But he dropped out in 1992, just before completing his MBA, because he'd felt that he'd mastered the language, he'd learned what he needed and so he took a job as a Russian banking specialist at the World Bank in Washington DC.
But while he was working in Washington, Russia, which is now under Boris Elson's chaotic privatization drive, it was giving young entrepreneurs, as well of course, connected Kremlin insiders and very shady gangsters, opportunities that created billionaires practically overnight. And Milner was looking at all of this change and felt like he was missing out. And so in 1995, he flies back to Moscow. And through his Russian banking contacts, he was introduced to Mikhail Kordagovsky. Now, Kordagovsky is a very interesting figure. Some of you will be familiar with him. He was the guy who had gone to found Ukus, one of the largest oil and gas companies in Russia. He became Russia's wealthiest person, but he very unwisely went up against Putin politically. And in a dictatorship, that's just a big no-no. And he ended up being sent to prison for 10 years, doing hard labor before eventually being released in 2013 His is a fascinating story and I will cover it. Anyway, back to 1995 Khodorkovsky makes Milner the CEO at a brokerage firm that he owned. And straight away, Milner made his mark by leading Russia's very first attempted hostile takeover of Red October. This was the country's largest and most iconic confectionery brand. So, it was bold, very aggressive and American style raid that shocked Moscow's business community. And while the bid ultimately failed, Milner impressed Khodorkovsky and he very quickly rode through the ranks of a bank that Khodorkovsky controlled, becoming deputy chairman and head of the entire investment division.