I've wanted to cover Milner ever since I first came across him in Sebastian Mallaby's excellent book, The Power Law, where Mallaby introduces Milner with the following:
"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 a plane ticket, flew to San Francisco, and more or less doorstepped the CFO.
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 US investors thought was crazy, becoming one of Mark Zuckerberg's most trusted friends and advisors, and then going on to make huge and very successful investments in Spotify, Zynga, and Revolut, to name just a few. Along the way, Milner navigates his way through the oligarch-infested pools of Russian business, 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 the Kremlin, and has come out the other side still riding high with a personal fortune of $8.7 billion. It's a cracking story—enjoy.
Yuri Milner was born in Moscow in November 1961. His father was an economist who 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 enrolled at Moscow State University to study theoretical physics, graduated in 1985, and was working in a lab while also working on his PhD, earning the equivalent of just $5 a month, but never finished it because times were changing at this point in Russia.
Mikhail Gorbachev, the Russian leader, was pushing through economic reforms that deregulated the Soviet economy, so you're seeing the emergence of private enterprise.
And Milner 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 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 just loved business. In Sebastian Mallaby's book, The Power Law, he writes the following of Milner: "He was romantically pro-capitalist. The 1980s takeover artists—Henry Kravis, Ronald Perelman, and Michael Milken—were his heroes."
So in 1990, with the help of his father's academic contacts, he enrolled at Wharton, apparently becoming the first non-emigrant Soviet citizen ever admitted to a top US business school. But he dropped out in 1992, just before completing his MBA—he felt that he'd mastered the language and had learnt what he needed, and so took a job as a Russian banking specialist at the World Bank in Washington, D.C.
But while he worked in Washington, Russia, now under Boris Yeltsin's chaotic privatization drive, was giving young entrepreneurs, as well as well-connected Kremlin insiders and shady gangsters, opportunities that created billionaires almost overnight. Milner was looking at all of this change and felt like he was missing out, and so in 1995 he flew back to Moscow.
Through his Russian banking contacts, he was introduced to Mikhail Khodorkovsky—now, he is very interesting. Some of you will be familiar with him—he was the guy who would go on to found Yukos, 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—he ended up being sent to prison for 10 years, doing hard labour, before eventually being released in 2013—a fascinating story that I will cover.
Anyway, back in 1995, Khodorkovsky made Milner the CEO of a brokerage firm that he owned.
And straight away, Milner made his mark by leading Russia's first attempted hostile takeover of Red October—the country's largest and most iconic confectionery brand. It was a bold, very aggressive, American-style raid that shocked Moscow. And while the bid ultimately failed, Milner impressed Khodorkovsky, and he very quickly rose through the ranks of a bank that Khodorkovsky controlled, becoming Deputy Chairman and head of the entire investment division.
Then came 1998. Russian banks were sitting on a mountain of risky government debt. And in August of that year, the government defaulted, the ruble collapsed, Khodorkovsky's bank went down, and Milner was out of a job.
But by this stage, Milner had saved some money, he had contacts, and he is a very smart operator.
Even though the economy was in turmoil, as we all know, this can sometimes be the best time to find great opportunities—good companies that can be bought for very little money—and so Milner and a group of investors bought a macaroni factory. Yeah... unglamorous, but it was a great business to be in, because millions of cash-strapped citizens were living on cheap pasta.
So we're now in 1999. In much the same way that back in 1995, when he was watching the Russian privatization boom from Washington, feeling like he was missing out, by 1999 he's sitting in Moscow watching the massive internet explosion that had been building in the US.
Milner's favorite analyst at the time was Mary Meeker at Morgan Stanley—she was one of the true rock star analysts of that era. And again, for our younger listeners—yes, back in the dot-com boom, Wall Street analysts like Mary Meeker and Henry Blodget actually became genuine celebrities in their own right. And Meeker's favorite internet companies were Amazon, eBay, and Yahoo.
Milner saw a massive opportunity: in late 1999, he partnered with a US private equity fund that focused heavily on Russia. They put in $3 million, while Milner and a partner each put in $750,000, to found NetBridge, and it invested in Russian clones of eBay, Yahoo, and Amazon.
But then—and I must have said the following line in at least six other episodes—then came March 2000, the dot-com bubble burst.
NetBridge was burning through its cash. There wasn't a hope in hell that it was going to be able to raise any more funds—they had the sites, but they weren't getting the traffic.
Milner was in a bind, but he found a way out by merging his business with Mail.ru. Mail.ru was the number one email service in Russia, and because dial-up was an expensive luxury, users didn't surf the web—they logged on, checked their free Mail.ru inbox, and logged off. So Mail.ru had the users, but it was also burning through cash because they had no strategy to monetise all of that traffic.
So Milner, by merging the two companies, took Mail.ru's massive daily email traffic and funneled it straight into his e-commerce clones—and it worked.
By 2003, the company had stabilized and was basically dominating the whole Russian web. Milner steps down as CEO. He married contemporary artist Julia Bochkova in 2004—they went on to have two daughters.
But he wasn't retiring. He was quietly working to take control, because as a result of the 2001 merger with Mail.ru, Milner's stake had been heavily diluted.
So in 2005, Milner raised around $250 million from the likes of Goldman Sachs and Tiger Global, launched DST (Digital Sky Technologies), and takes full control of Mail.ru.
By the start of 2008, DST was in a position of total dominance in Russia—their web properties accounted for over 70 percent of all page views across the entire Russian-speaking internet, pulling in roughly $150 million a year in revenue, and DST was valued at around $2 billion.
And so Milner is now setting his sights on Silicon Valley, and specifically Facebook—he has been studying it very carefully, and he sees a big opportunity where others don't.
But to implement his plan, he needs deeper pockets, and because we're now in 2008, there's the global credit crisis, so the banks and VCs have literally shut up shop—there's no money to be raised.
So Milner puts in a call to Alisher Usmanov.
In a famous 2010 interview with Forbes, Usmanov recalled Milner calling him up out of the blue and asking: "Do you know this company Facebook?" Usmanov replied: "No... but my nephews know it."
And so Milner lays out his plan, and Usmanov invests an unknown but widely reported multi-million dollar sum for a 35% stake in DST.
Now, getting Usmanov involved would turn out to be very controversial, and I'll get into that later, but very quickly, to give you an idea of who Usmanov is: he's an Uzbek-Russian who, in the '80s, had spent time in jail for fraud and corruption—he was eventually exonerated for this, but by the time you get to the '90s and 2000s, he has become one of Russia's wealthiest industrialists, with interests in metals, mining, and timber, and of course, like any oligarch who wants to thrive and survive, he has very close ties to the Kremlin.
So let's look at where Facebook was at this time: we're now in 2009, and Facebook's user growth had grown significantly over the previous four years. But more users means more servers, and servers cost serious money, so Zuckerberg desperately needed cash to keep up with the growth.
The global financial crisis was in full swing, and as mentioned, venture capital in Silicon Valley had dried up—now, that didn't mean that Zuckerberg couldn't raise money, he could, but in a depressed market, the valuation was going to be pushed down.
Milner already had a pitch for Facebook before the crash, but the 2008 financial crisis was a massive lucky break—with Usmanov's investment, he now has money at a time when there isn't a lot going around, and so the timing is very opportunistic.
As per the passage that I quoted from Sebastian Mallaby's book at the start of this episode, Milner calls Facebook directly and gets talking to the company's CFO. But getting a cold call from a Russian investor, even at a time when you're looking for investment, isn't exactly the way to raise money. So the CFO bluntly tells Milner that he's not interested.
Regardless, Milner books a flight and shows up unannounced at Facebook's headquarters at eleven the next morning and forces a meeting with the CFO.
And it's at this meeting that Milner shows that he's bringing more than just money to the table—he's bringing expertise, a very good strategy backed up by his own experiences and mountains of research that he's undertaken.
For context, Facebook had just passed the 200 million users mark, and many in the tech sector were predicting that the site had plateaued, reached its saturation point.
But Milner's own experience with social media, together with studies he'd done on similar businesses across multiple countries, had led him to believe that the saturation theory was just wrong—he believed that Facebook was still in just the early stages of growth. He was right, and he shared all of this data with the Facebook CFO.
But on top of this, he was also able to show that Facebook wasn't monetising its users in the same way that their contemporaries in other countries were—now, this was mainly because Facebook had been so well funded up to this stage, to the tune of about $500 million, that it wasn't under as much pressure as similar sites in other countries, where they had to start generating revenue much quicker, and as a result, they were far better at it. For example, Facebook's equivalent in Russia, which Milner was invested in, generated five times as much revenue per user than Facebook—this was through not just display ads, which Facebook was using, but also through a mixture of virtual goods, micro-transactions, and, of course, online games.
So when Milner walks Facebook's CFO through all of this, he's hooked, and immediately sets up a meeting between Milner and Zuckerberg.
In terms of his style, Milner is very quietly spoken, no big show, very calm and collected, and this style, combined with all of the expertise, wins Zuckerberg over.
And then Milner curries even more favor by offering two things:
First, of course, money—Milner offers Zuckerberg $200 million for just a 1.96% stake, valuing the company at ten billion dollars.
Most Silicon Valley venture capital firms thought Facebook was worth about half that.
Marc Andreessen, the Netscape founder, who I've done an episode on, and who was on Facebook's board, was telling other VCs they needed to increase their offers. They ignored him.
According to Andreessen, the other VCs were calling it "crazy Russian money" and "dumb money."
But the money and the valuation wasn't even the biggest part of what Milner was offering.
The second thing Milner did, or rather didn't do, is he didn't ask for a board seat or for any voting rights.
Now, this might not sound like a big deal today, but back then it was almost unheard of. VCs and investors expected influence. They wanted a seat at the table. They wanted a say in how the company was run.
Everything Milner was offering Zuckerberg—the strategies, the expertise, the money at a high valuation, with no strings attached—well, you can see why Zuckerberg was all in.
Now, I know many of us might be thinking—why would Facebook even consider taking money from a Russian investor who had Alisher Usmanov as a 35% shareholder.
You have to look at the geopolitical backdrop of 2009. This was the era of the Obama administration's "Russian Reset."
Dmitry Medvedev was President of Russia—because the Russian constitution stopped Putin from running for a third consecutive term—and Medvedev was doing a very good job of convincing politicians and the western media that he was this modern tech reformer. Washington was actually encouraging business ties between American tech companies and Russian investors.
Facebook did their due diligence, and look—Usmanov definitely had a shady past, but so did pretty much every Russian oligarch who survived the '90s. Given the political climate that I just mentioned, the pragmatic view was that if you wanted to open up trade with Russia, you had to overlook how that money was originally made—otherwise, if you held every oligarch to account, no business would ever get done.
And at the time, 2009, Usmanov owned a chunk of Arsenal Football Club, owned landmark UK estates like Beechwood House in London, and he was also named President of the International Fencing Federation.
Ultimately, Facebook accepted DST money, and by 2011, DST had put in about $1 billion in total, holding close to 10% of the company.
Milner's expertise helped Facebook big time, because just after he invested, in June 2009, Zynga launched FarmVille on Facebook.
The game blew up instantly, giving Facebook a multi-hundred-million-dollar cash machine outside of traditional advertising.
Within just 18 months of Milner's investment, Facebook's valuation went from $10 billion to $50 billion, user numbers had gone up to 600 million, revenue jumped from $770 million to $2 billion. Now, just to be clear—all of this growth wasn't just down to Milner, there were lots of other growth strategies—but it's fair to say that he played an important role.
And the Facebook investment—it secured Milner's reputation in Silicon Valley. But more importantly, Milner became a trusted advisor and close personal friend to Mark Zuckerberg and to other startup founders. As The Times of London put it: "His shrewdest move was to become the founders' friend and be prepared to risk huge sums of money while taking a back seat."
So what is he actually like? Well, here's a quote from a Forbes article from 2011: "He's notoriously good at giving nothing away about his investments, or plans for the future. 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."
Now, on the back of his Facebook success, Milner puts $200 million into Zynga just as it's about to take off on Facebook, and gets a 3.5 times ROI when it floats. He invests in Groupon, and while that has now tanked, he put in $135 million and got a 10x return. And also a $380 million investment into Twitter, and walked away with a $700 million profit when it floated.
With all of the success that he's having, he now had heavyweight funds like Silver Lake, Fidelity, and Kleiner Perkins all lining up to invest in his funds.
And this is significant, because it means he no longer has to rely on Russian-backed money—so from 2011 onwards, he actually stopped taking Russian investment.
And with these new backers, Milner continues his run of successful investments, including Spotify—he puts up $100 million for a 10% stake and later cashes out with a 25 times ROI—and takes a 5% stake in Alibaba and gets a 6 times ROI.
And of course, the crowning moment happens on May 18, 2012: the Facebook IPO.
Valued at $104 billion in the largest tech flotation in American history up to that point, Milner sold off a combined chunk of stock for $2.5 billion, while still holding onto a sizable number of shares that he quietly sold over the following years for even more money.
On the back of all of these successes, Milner's profile is really high—he's been written about in so many publications—but he's a very private guy—we don't get to find out a lot about him outside of business, but we do know that his wife and children travel with him a lot of the time, and there's also this little nugget from a Times profile in 2011: "To keep his two children on their toes, he insists they send him a five-line text message every day telling him what they have been up to. He worries that people will think less and less for themselves if they can simply turn to the internet for information."
So it's fair to say that by 2012, Milner had made it in America—he's worth well over a billion, and he'd just spent $100 million on a 25,500-square-foot French chateau-style mansion. At the time, it was the highest price ever paid for a single American home.
As with every tech billionaire, he gets involved in philanthropy—together with Zuckerberg, Sergey Brin, and others, he launches the Breakthrough Prize, awards for theoretical physicists, mathematicians, and life scientists—8 winners every year, each winner gets $3 million, with a total of $24 million. And this quickly becomes known as "The Oscars of Science"—and I kid you not, this is like the Oscars, just with a lot, lot more money in the room—go onto YouTube and type in "2025 Breakthrough Prize Ceremony."
Then he teamed up with Stephen Hawking, and Zuckerberg again, putting $100 million into Breakthrough Listen—a massive effort to find alien life—as outlined by Milner when he wrote: "With cooperation and commitment, the present century will be the time when we graduate to the galactic scale, seek other forms of life, and so know more deeply who we are."
So everything was going swimmingly for Milner—until November 2017.
That's when the Paradise Papers are published—a massive leak of over thirteen million confidential offshore financial documents.
And the headlines were explosive. The files revealed that Russia's state-controlled VTB Bank had directly funded DST's Twitter stake, while a financial arm of state energy giant Gazprom had funneled hundreds of millions in loans through offshore shell companies to back DST's one-billion-dollar position in Facebook.
Now, remember the timing here. This story broke in late 2017—just a year after the 2016 US election, right as Washington was hyper-focused on Russian social media disinformation campaigns.
At first glance, it did look like the Kremlin had quietly bankrolled Milner's entire ascent to the top of Silicon Valley as part of some master plan, and he was being grouped in with all sorts of shady oligarchs.
It sounded like a Hollywood spy thriller, and it posed a real threat to Milner's business future, to his ability to work within Silicon Valley and even America.
But if you actually look at the cold, hard facts, the narrative that was being put out there wasn't as straightforward as it seemed. Milner also wrote an open letter to counteract the allegations, and I'm taking Milner's side on this one, purely because the timeline and the facts back him up.
First of all, when the DST investments were made in Facebook, Twitter, and other tech companies, between 2009 and 2011, taking Russian capital wasn't a crime. Remember, I already mentioned that this was the era of the "Russian Reset," when Washington and European governments were actively encouraging commercial ties with Russia.
Second—and this is the killer point—if the Kremlin's goal was some slow-burn, Bond-villain plot to secretly control Facebook or manipulate Twitter, doing it through Milner was an absolute disaster of a strategy.
Why? Because Milner completely sold out of both Facebook and Twitter between 2012 and 2014, well before the Russian troll farms started interfering in the 2016 US election.
A third point—look at how Milner structured those deals from day one: zero board seats, zero voting rights, and zero operational control.
And then a final, fourth point: as soon as Milner had built his reputation and proved he could raise capital globally, he cut the cord with Russia completely. DST didn't take any Russian money from 2011 onwards.
So why were the likes of Gazprom and VTB investing in DST? Well, for the same reason that 99.99% of people and institutions invest—to get a return—but maybe with a bit of a corrupt twist, because according to western intelligence, VTB Bank is now widely seen as, and I quote, "a slush fund for Putin."
So when DST sold their stakes in Facebook and Twitter, VTB Bank got hundreds of millions of clean, Western-audited US dollars returned straight to their balance sheets. So, in my humble opinion, the Russian money wasn't an espionage operation; it was a very lucrative financial investment, and some of that money was then most likely used to enrich Putin and some of his oligarchs, but given all of the points that I've already made, especially the political context of that time, I don't think Milner has any case to answer to here.
Obviously, this whole affair caused a lot of turbulence for Milner, but he had spent years building genuine, rock-solid relationships with Silicon Valley's elite, and he was able to show, backed up by the facts, that he had no personal ties to Putin—he'd never even met Putin—and so he was able to continue to raise funds and make some very astute investments. He invested $250 million in Revolut in 2018 at just a $1.7 billion valuation—today Revolut is valued at $116 billion, so a 67 times ROI. He put $250 million into DoorDash, also in 2018, at a $4 billion valuation, and it IPO'd in 2020 at $72 billion. And there are many more like this, helping him build a personal fortune worth $8.7 billion.
His Russian background again put him in the spotlight when Putin invaded Ukraine in 2022, and Milner had to defend himself all over again.
As he said in one interview: "I cannot go back and change history. I cannot change the fact I was born in Russia. I cannot change the fact we had some Russian funds."
He followed this up with a tweet where he wrote: "My family and I left Russia for good in 2014, after the Russian annexation of Crimea. And this summer, we officially completed the process of renouncing our Russian citizenship."
The lazy, predictable narrative around Milner is so obvious and prejudiced—he's a Russian-born billionaire, so he must be a villain or stooge. He's a billionaire Silicon Valley tech investor—he must be bad.
And look, I've come down kind of heavy on many billionaires that I've covered, because like everyone, they're flawed, but they're also powerful, which should make us very wary of their motives and question their positions on certain matters.
With Milner, I don't buy the Hollywood spy thriller narrative. What I see is a very smart, pragmatic operator who keeps his powder dry—he saw a massive window of opportunity in Facebook initially, backed it with a huge investment that others in Silicon Valley ridiculed at the time, and he played the game better than most.
So kudos to Milner, and he makes for a great business story. And that brings us to listener emails—this one comes from Emer, who'd love me to do an episode on Dr. Ruja Ignatova, the Crypto Queen—that's a fantastic suggestion, Emer, and thanks so much for listening.
And remember, if you have any comments, any corrections, or any story you'd like me to cover, email me at: info@gbspod.com.
All the best, folks.