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Facebook's Russian investor Yuri Milner talks strategy, not Twitter

Yurimilner Yuri Milner, a Russian financier famous in Silicon Valley for investing in Facebook, would not say whether he plans to invest in Twitter during an onstage interview with John Battelle at the Web 2.0 Summit in San Francisco Tuesday.

Milner's Digital Sky Technologies has been rumored to be interested in investing in Twitter. Twitter's last round of funding valued the San Francisco Internet sensation at $1 billion. A new round, if there is one, would certainly value Twitter at a lot more.

DST snapped up 2% of Facebook for $200 million in 2009, a stake he has increased to less than 10% since then. He also led a $180-million investment in social gaming company Zynga and a $135-million funding round in Groupon, a Chicago company that offers deals.

Milner did not talk about the value of his investments or when some of these companies might test the public waters. He did say he plans to make more big investments in social media companies, saying there are between 25 and 30 companies that fit his criteria: companies worth at least $1 billion in the social media space.

His strategy is to take large stakes in later-stage companies to give them more time to build out their vision before an initial public offering, he said. That investment model is now called "DST style" in Silicon Valley, which has seen a sharp rise in second-market stock trading in companies such as Facebook, which is now trading privately at $16 a share, giving it a stunning $41-billion valuation.

"Our goal is to come in and take the liquidity pressure off the table so companies can grow and develop their product for another year or two before they eventually go public," Milner said.

He also buys out employees' stock so they can have liquidity events of their own, something that he noted was not common a few years ago.

Milner takes a hands-off approach with his investments and rarely takes a seat on the board to avoid conflicts of interest. Still, Milner runs the largest social networking company in Russia, a competitor to Facebook. Mail.ru, of which he's chairman, raised about $1 billion in a public offering last week on the London Stock Exchange. Milner said Mail.ru, which offers e-mail, social networking and gaming sites, is the exception.

When asked if he offers advice to Facebook's Mark Zuckerberg, Groupon's Andrew Mason or Zynga's Mark Pincus, Milner replied: "Sometimes I get informal advice from them."

"Like, don't invest in Twitter?" conference host Battelle asked. "Sometimes," Milner replied, adding that their advice was "very valuable."

He also said he had seen "The Social Network" and liked it "a lot."

Milner, a theoretical physicist by training, said the film illustrates his personal belief that a potent combination of mathematical genius and computing power will lead to major advances in artificial intelligence.

"Facebook is at the forefront, he said. "It's the company that can fundamentally change the way information is being exchanged and processed. It can be the basis for artificial intelligence to develop over time," he said.

-- Jessica Guynn

Photo: Yuri Milner, CEO of Digital Sky Technologies, at the Web 2.0 Summit in San Francisco Tuesday. Credit: Tony Avelar/Bloomberg

 
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