Josh Kushner, Jared’s brother, is an investor in many things—including, as of 2019, the Memphis Grizzlies. His firm, Thrive Capital led the investment round that made the now-famous Robinhood stock trading app a “unicorn,” as in a company worth more than a billion dollars.
The round led by Josh Kushner also featured Yuri Milner, of Digital Sky Technologies.
Below is an excerpt from a TrueHoop post published this morning:
As one of Silicon Valley’s most successful investors, a friend of Mark Zuckerberg’s, and the owner of Silicon Valley’s reportedly most expensive home, Yuri Milner has been the subject of several in-depth profiles in the pages of Forbes, WIRED, Business Insider, and others. He grew up in Russia where, after attending Wharton in the 1990s, he invested in all kinds of digital media companies with great success, most notably Mail.ru, which he also ran. There has been confusion about why, with whose money, and on what mission Milner stalked the CFO of Facebook with an attractive 2009 investment offer: all-cash, quick, at a very high valuation, without taking a seat on the board.
A chunk of Milner’s funding came from Prokhorov’s firm Renaissance Capital, Prokhorov’s bank run by former Nets executive Charlier. But now we know that, as reported in The Atlantic, DST’s “cash cow” was a Kremlin-connected man with a “fearsome reputation” named Alisher Usmanov. (Usmanov’s investments intersect with Prokhorov’s circle again and again—in MegaFon, Metalloinvest, and other firms.)
Incredible reporter Catherine Belton writes in Putin’s People about Roman Abramovich and Usmanov purchasing one of England’s most famous soccer teams in 2003. “The West hadn’t known then” she writes, that they “may have been acting on Kremlin orders.” The strategy: influence the West’s business elite with showy investments:
For one Russian tycoon, the process reminded him of an old Soviet anecdote from many years before. In those days, when the Soviet Union was careening towards bankruptcy, the KGB was preparing to send an agent to the US. The agent had thought up an attractive cover story for himself: he would arrive in America as a rich man, with a fleet of yachts and a prestigious mansion. The whole of US society would come to him. He’d told his KGB boss how effective this plan would be, and the chief wholeheartedly approved. But when it came to seeking approval from the KGB finance department, the concept had to be changed. The agent was told there was no money for such a scheme. Instead, he would have to head to the US as a homeless person without money.
“This was the situation,” the tycoon said. “And now the dream has come true. They have the big yachts and the private planes. And here they have their big houses. There is Chelsea Football Club. It’s not just Abramovich, but it’s a whole group that have descended into the West.”
Russian dissident Alexei Navalny—who was poisoned last year, but survived—made waves with a video digging into Usmanov’s business life. It has been viewed more than 1.5 million times.
In 2017, after the leak of secret financial dealings known as the Paradise Papers, Julia Ioffe connected a lot of dots in a must-read story in The Atlantic. Ioffe reports that Milner was widely seen as a “government guy.” An unnamed industry executive told her in 2010 that “they made Milner an offer he couldn’t refuse.” She explains:
DST made some legitimately lucrative investments for Usmanov. He reportedly made $1 billion on the $200 million he invested in Facebook. The Russian companies that DST invested his money in also did quite well, but that was only half the point. The other half was to give the Kremlin a way to control these new and very influential companies, to make sure there was a receptive person there when the Kremlin called with a demand.
“What is DST? DST is the main government internet company,” said one Russian tech executive, who wished to remain anonymous for fear of government reprisals, when I put this question to him in 2010. He was not the only one. In the tech community, another Russian executive told me at the time, “Usmanov”—and, by extension, DST—“is interpreted as a person who, on the Kremlin’s instructions, buys up various Russian [internet] properties.” Interviews with other prominent players in the booming Russian tech sector—local executives as well as Western investors—revealed that this was the near-unanimous understanding of DST’s role in the Russian tech marketplace; people’s equally unanimous reluctance to go on the record showed the sincerity of their belief.
There were also visits—of Kremlin-connected Russian elites to Silicon Valley, and Silicon Valley elites to Moscow. Here’s Facebook executive Simon Cross, on video in Russia in 2012, explaining how to mine the private information of Facebook users en masse. (Facebook data came to star in many controversies, especially the tale of Cambridge Analytica, a company the New York Times called “the Silicon Valley spy contractor.”)
All of which could leave one wondering who Yuri Milner works for, and whether or not there would be any reason not to take his investment money. At Wired, Erin Griffith wrote a story about how the Paradise Papers revelations and the idea DST may have invested with influence from the Kremlin, would affect business-as-usual in Silicon Valley.
One key insight came from Celtics investor (and Mitch McConnell’s brother-in-law) Jim Breyer. A “Facebook investor and former board member,” Griffith writes, “dodged questions on stage about Facebook’s relationship with its investors and whether the company was taking full responsibility for its role in Russian election interference. ‘The world has become so much more complex,’ he said, before complimenting Facebook’s leadership team and applauding its actions.”
Another quote came from arguably the key business partner for the NBA moving forward: Jason Robins, co-founder and CEO of DraftKings. “DST,” Robins says, “has been investing in technology startups for a long time. Everyone in Silicon Valley knows them as a premium venture-capital firm. The notion that they are investing for any purpose other than financial is far-fetched.”
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