The Valley doesn't care about a person's ethnicity, as long as they generated their wealth through legitimate means.
Milner, on the other hand, is nothing more than a frontman for Alisher Usmanov, who basically accrued everything through wholescale theft of state resources.
Basically, Milner is a crook, and if there was any justice in the world he and Usmanov would be in jail for what they have done. But there isn't, and there are people in the Valley who are willing to overlook ethics if you have enough money. The fact that Milner is now working with YC is a sad testament to that fact.
VCs are not so high minded that they're offended by who his LPs are, believe me. The reason VCs don't like Yuri is that he is disturbing the cosy world they formerly inhabited by offering more founder friendly terms.
So morally the situation is not as simple as your comment implies.
Actually, it would seem to be just as simple as he implies. VCs in the valley care only about money and don't give a hoot about morality. You haven't debated the fact that Milner is linked to the looting of state resources; you've simply said that anyone else would also take his money if they could.
Makes all you VCs and Angels in the Valley seem like dogs fighting over a doggie biscuit -- or in this case, the looted flesh and bones of the Russian people.
Let me be more precise. When I said the situation was not as simple as his comment implied, I meant that even if Yuri's money was tainted in some way, it was being used as a counterweight to another bad thing.
"The reason VCs don't like Yuri is that he is disturbing the cosy world they formerly inhabited by offering more founder friendly terms."
I greatly respect and admire you pg, and god knows you're far more intelligent than I am, but surely you can't be so naive as to think that Milner is doing what he is doing out of some altruism for founders?
He is spending outlandish amounts on startups for the same reason Abramovich spends hundreds of millions on yachts, why the Sultan of Brunei spends millions on cars, and why the Saudi princes spend millions on trips to the Riviera. Because he never worked hard for the money, and so he doesn't care about throwing it around.
When a man works hard, he is loathe to spend it carelessly, because he knows the sacrifice in time and effort it took to acquire the money. In the words of the great Milton Friedman: "Nobody spends somebody else's money as carefully as he spends his own". This applies not only to government officials but to the criminal element as well, from hoodlums to ponzi schemers and everything in between.
People like Milner and others associated with Russian oligarchs spend lavishly because the money they have came with no sacrifice on their part. The sacrifice came from all those miners working in subzero temperatures in the Kazakh steppe for kopeks a day, their bodies broken down prematurely, with the share of wealth that was promised to them stolen away. And instead of those who betrayed them being brought to justice, they instead depart to the West where they are greeted with applause by those who mistake cunningness with intelligence.
...surely you can't be so naive as to think that Milner is doing what he is doing out of some altruism for founders?
pg didn't say or imply that. If you read what he's written about investing (e.g., http://paulgraham.com/future.html, http://paulgraham.com/control.html), you'll see there's a much simpler explanation: pg thinks being founder-friendly is a good (i.e., profitable) investment strategy.
>Because he never worked hard for the money
This is simply not true, most of these people work hard, risk and sacrifice a lot to get their money. There is a cultural tradition in Russia to spend a lot if you can afford it.
(In this particular case it an investment strategy, so your theory doesn't apply either).
From reading this post, I am surprised that this story is not on top of the Hacker News....anyway, i agree 100% with what the above comment says....PG and Hacker News sold out and sold their Souls to Yuri and all the corrupt Souls that Digital Sky Technologies (DST) is associated with. Good Going Paul.
I would be hard pressed to not believe it. From my own experience.
I don't know Yuri - you do.
He may as well be the only honest Russian oligarch (or a front for the only honest Russian oligarch).
But what GP posted is the state of affairs everywhere in eastern block and by far the norm.
Thus you must understand if people think less of you because of your associates. It is an prejudice but a well founded one.
In the end it won't matter anyway. But this is the way things work. I believe I read somewhere that yourself are of Russian ancestry? If so I believe you should be familiar with long tradition of tyranny of the few in Russia.
<People like Milner and others associated with
Russian oligarchs spend lavishly because the
money they have came with no sacrifice on
their part. The sacrifice came from all those
miners working in subzero temperatures in the
Kazakh steppe for kopeks a day, their bodies broken down prematurely, with the share of
wealth that was promised to them stolen away.
And instead of those who betrayed them being
brought to justice, they instead depart to the
West where they are greeted with applause by
those who mistake cunningness with intelligence>
Pg it~s time yo returm the $$$$ back you sold you sole and sold out
Nuff Said
You seem to be implying that breaking up the VC cartel in Silicon valley with money that was potentially stolen from russian peasants maybe OK. I understand that Ycombinator companies need their $150K, but this seems contrary to Valley values. Or maybe you meant something else?
“Founder unfriendly conditions” do not compare to the way oligarchs operate and the consequences of their actions.
Much of the authenticity that comes through in your essays is based on being truly committed to the things you talk about. They are often controversial and authoritative (in a good way), but the possible discrepancy between what you say and what you do could easily undermine that authenticity.
Saying that other VCs do not care where their money comes from, does not make sense here. They are not judged as authorities on topics you write about.
Do you disagree with any of these points?
- You can use the profits from investing tainted money for further investments, but the money still stinks.
- The money that came from DST's partners is tainted.
Usmanov holds the largest stake in Milner's Digital Sky fund.
It's probably going to be hard to get a bead on Usmanov. He's a CIS state extractive industry billionaire with close ties to Gazprom, itself an instrument of the security state. That's unsettling. But then, it creates a huge incentive for people to villify him.
A significant percentage of oligarchs from the former USSR carry a very bad reputation because the means through which they became rich are often suspect and shrouded in secrecy, which is understandable given the lawlessness of the 1990s in that region, and which to some extent continues to this day. Russia since the collapse of the USSR has been a lot like certain parts of the U.S. were during the time of the Prohibition -- giving orders to physically terminate rivals is or was daily business.
After finding out more about Milner, I am now more convinced that he is not at all the "robber baron" Al Capone type, but a genuine businessman who is both lucky and smart.
Wrote this just to explain the possible reasons behind the initial worry, being myself from the former USSR. I think this also explains why Milner cares about establishing a reputation in the Silicon Valley as opposed to being completely aloof to what other people think.
When part of what makes you "smart" is the hands you choose to shake, and the most lucrative hands are also the ones buying all the television stations and running the shadow government...
Al Capone wasn't a robber baron. He was a criminal entrepreneur. The robber barons have universities, foundations, and financial institutions named after them. The distinction between mobsters and robber barons is germane.
You have a disappointing perspective on what makes friendships "correct", but that might just be because I believe we have an immortal soul.
And yes, when the TV stations are bought by companies that are effectively instruments of the state: that's a bad thing. The ruling party shouldn't buy TV stations.
Your beef isn't with me, though. Re-read this thread. I'm hardly the most cynical person here. I can sum my take on it up this way: I'd like to believe I wouldn't accept Milner money, even if I needed it; at the same time, people I consider friends have accepted it, and I don't think less of them for it.
If by "friends" you mean people that you can use/be-used to find your way to "financial" success you obviously have a different/distorted take on the term "friendship".
Who do you seek out? Birds of a feather with whom to weep about your own misfortune? The stupid ones whom you can easily brainwash for fun and profit? The ugly ones next to whom you look sexier than by yourself? The weak ones whom you can rule over? The quiet ones over whom your voice is heard? The short ones over whom you can tower over? Perhaps you seek out neither of the above, but I knew a few too many people who did, and incidentally those people were also the first ones to criticize me for being closed and overly choosy with whom I talk to.
As you can probably tell, I have little patience for mediocrity and "beta" strategies.
How about reaching for power and glory without seeing people around you as mere objects with favorable and unfavorable attributes?
Reaching for power with integrity has its own set of rewards. Credibility for one.
People with attitudes like yours are destined to be used and discarded. Because a man of true power knows not to trust such and also knows that using the same standards on people that they use themselves is not amoral.
Superficial achievements are worthless to me. Therefore I believe that only integrity, wit, boldness and favor of Fortune will breed true glory.
Where did I say that I am being superficial? I am a bit hardened by life, but I do not at all see myself as superficial. I simply learned my lessons. I didn't use to be picky with whom I hang out, and then one day it came to me that my closest friend of six years is the most loathsome person I ever met, and, moreover, that he had been friends with me solely because he knew that I am not picky with people, thus he felt comfortable around me. So the "deep" strategy you are recommending (not judging books by their cover and taking tome to know people) hasn't exactly worked out.
First of all, an attempt at a correction to one of the motives of the article. I think Milner's jewish background has nothing to do with his success. His family, while Jewish, had and still have a complete worldview that only a member of the russain intelligentsia can have. It is such a bizarre and wonderful world-view and way of life that it defies my abilities to explain — being delicate among a world of merciless brutality. The cultural class of Russia really are a class apart.
I suspect that the influence of growing up surrounded by cultured Russians, as few of them as they were in Soviet Times is why he always stands a little bit disconnected from the crowd.
The air of Russian culture is gentle but always restless.
Russia is a land of big crowds but the intelligent among that people always desire to be a little bit aloof, if not in solitude.
Xenophobia is an unreasonable fear of outsiders. The VC community should rationally dislike him because he is driving down the risk adjusted rate of return for VC investment, and backed by an endless supply of funds that traditional VCs have no access to. Of course, startup founders and tech employees should embrace him for the same reason.
As for his character, I don't think he is picked on anymore than Donald Trump. I reserve the right to make jokes about both of them.
And from what I've seen of it SiliconValley is not much prone to that. So why is it different with Milner?