Yuri Milner’s Eastern Promises

Yuri Milner
Theodore Schleifer
March 1, 2022

What is Yuri Milner thinking? That’s the question I posed last week to Milner’s spokesman, after Russia launched a full-scale invasion of Ukraine, and then again on Monday, after Western governments responded with crippling sanctions. Milner, after all, is easily among Silicon Valley’s most prominent Russians, having made billions of dollars as the force behind DST Global, the venture firm that placed historic bets on Facebook and Twitter, among other Bay Area landmarks. But it was Milner’s embattled friends that put him on my mind: The Russian provenance of DST’s early capital was supplied in large part by Alisher Usmanov, a Russian oligarch who made his fortune in metal and mining before teaming up with Milner in 2008.

The partnership worked out pretty well, for both of them. The Facebook investment in particular turned Yuri into Silicon Valley royalty, with first-name-only status on par with Jack or Sheryl, enabling him to drop $100 million in 2011 for the 25,000-square foot Chateau Loire in Palo Alto, setting a record at the time for the most expensive single-family home. Once a year, he plays M.C. alongside Mark Zuckerberg at the Breakthrough Prize award show, the closest thing this town has to the Met Gala. 

But the last few days have made clear that shaking the past isn’t so easy. On Monday, the European Union added Usmanov to its list of sanctioned Russian oligarchs, as part of the West’s attempt to isolate and punish Vladimir Putin and his allies. And so there is no gotcha when I ask: What does Milner think about the invasion of Ukraine? It may be a tough question, given his fiduciary ties to both Russia and the U.S. But I can assure you that it’s a question that others in Silicon Valley are asking this week, too.

To Yuri, who was born in Russia but later adopted Israeli citizenship, the storyline surely reeks of xenophobia and nativism—there is a categorical difference between an investor of Russian descent and an investor working on behalf of the Russian government. Milner, in his view, is merely the former. There are skeptics, though. In 2017, the Times published an investigative report tracing DST Global’s investment capital, through a labyrinth of shell companies, back to Russian entities including the state-controlled bank VTB and Gazprom, the Russian energy company. Milner rebutted the report’s insinuations as “guilt by association.” “Only a worldview that sees my nationality as inherently suspicious could find such a fairy-tale compelling,” he wrote. “Investments can be made on business merits only. Even by a Russian.”

But last week’s economic sanctions, and the broader war in Ukraine, are a reminder that foreign capital can come with political costs. Is the Russian government, which helped to bankroll Milner’s U.S. investment career, at fault? Are the sanctions against Usmanov, Milner’s former patron, unfair? Milner, for now, is staying quiet on those sorts of questions. When asked, a spokesman provided some helpful context on the current state of DST’s limited partners, or the people on whose behalf DST invests. Despite the early backing from Russian state interests in the aftermath of the financial crisis, the DST cap table is no longer as Russian as you may think: The firm has raised no cash from Russian institutions since 2011, and “did not raise capital from Russian LPs (including Mr. Usmanov) since 2012.” The firm says, therefore, “there is no capital from Russia in the last six funds,” and that, in total, 97 percent of the money “raised over the course of the past 12 years from international institutions and private investors.”

That’s all fine and well—the Russian state investments were years ago—but also sort of irrelevant to the question at hand. What does Yuri think? I asked again, surely belaboring the point. But at a time when there is such unanimity in the Western response toward Russia and its oligarchs, and a time when more entrepreneurs than ever are asking about the foreign entanglements involving their investors, it’s a much-whispered question, and one that I imagine Milner will have to answer at some point.

S.B.F.’s $20 Million Offensive

One question I wasn’t able to answer in my recent column about Sam Bankman-Fried was just how much of his multi-billion dollar fortune he is spending on politics these days. S.B.F., as he is now known, is waging a personal lobbying offensive to prevent the next pandemic. Meanwhile, the crypto king-cum-Democratic megadonor is one of the hottest commodities in progressive politics right now, with nonprofits, operatives and donor-advisers all thirsting after his business or patronage. 

So I asked S.B.F. himself, last week, to estimate just how much he has spent to date on his crusade to beef up America’s defenses against future pandemics. The answer, he told me, is about $20 million. 

That’s honestly a little more than I expected, but it includes an increasingly dizzying number of different ventures and investments: His donations to Guarding Against Pandemics, the political advocacy shop run by his brother Gabe; the $5 million that his L.L.C. dedicated to a California ballot initiative this fall; and the heretofore undisclosed amount he has siphoned off to Protect Our Future, the allied super PAC spending at least $10 million to boost anti-pandemic Democratic candidates in primaries this year. 

The combined sum is pretty extraordinary for a personal lobbying effort. And that doesn’t even include the gusher of money S.B.F. is directing toward other, nonpartisan philanthropic projects that also came into focus this week. On Monday, Bankman-Fried announced new details about the philanthropic arm of his crypto company. FTX’s Future Fund, which is being funded primarily with Bankman-Fried’s own digital assets, will distribute $100 million to $1 billion this year to a variety of effective altruist and related causes. Bankman-Fried and his brother also pulled back the curtain on their family’s personal foundation, disclosing that they recently gave $5 million to ProPublica to fund reporting on “biosecurity and public health preparedness.” If it feels like S.B.F.’s money is suddenly everywhere, you’re not alone. Cheat-sheets are in the mail.

While I had S.B.F.’s ear, I also asked him the question that has been preoccupying the donor-adviser class: Who are you going to hire to do your politics? There has been a feverish, borderline desperate crusade over the last several months to get S.B.F.’s attention and, of course, the associated salary and prestige. S.B.F.’s current stable of political advisers is lean and informal, basically just Gabe and Mike Sadowsky. “We’re considering hiring a bit more, but feel pretty good with the current set of advisors,” S.B.F. told me last week. (That doesn’t include his crypto team at FTX that handles policy work for the company.)

Still, the level of Bankman-Fried’s ambition means he needs more staff. Shortly after connecting with him, I received an interesting tip about some goings-on in the Bahamas, where S.B.F. set up shop earlier this year, in part for the friendlier regulatory regime. Apparently S.B.F. recently summoned about 15 nonprofit advisers and consultants to the Caribbean to mull his next philanthropic moves and how someone with a $25 billion net worth might be smart to spend his resources. Sam told me the conclave was informal—this was not Davos or Bilderberg—and one of “a few gatherings in the last few weeks to talk about the foundation in general.” Nor was it a secret bake-off to become his political sherpa, despite gossip to that effect. But it was an instance where the rumors spoke to a larger truth: People are downright obsessed with him these days.

The View From the Valley’s Wealth Managers

Some of my favorite people in this town are wealth managers, in large part because, unlike many in Silicon Valley, they don’t bullshit when it comes to talking plainly about money. Sure, they have their own euphemisms—“legacy preservation” or “intergenerational planning” or frankly, “wealth management” itself—but these financial advisers to the ultra-rich are some of the few straight-shooters. And by a quirk of scheduling, it just so happened that I was slated to grab coffee with three of them late last week. I walked away with two headlines from those conversations.

The first is obvious, but merits reflection: It is a hell of a time to be in Silicon Valley wealth management! The post-Covid melt up in public and private markets has made every asset allocator look like a genius. For a few months in early 2020, at the onset of the pandemic, it seemed for a moment that the ultra-rich were about to become less ultra rich. But no. “Covid has been great for the industry,” as one of those advisers put it to me rather bluntly. Clients are happy, asset management firms are raking in revenue, and the only challenge is hiring in a still-tough labor market to achieve the scale that they want. 

Yes, the Nasdaq is down as of late, and perhaps the long-awaited correction is arriving, and the party is about to end. But in the broader context of Covid, the only fools are the U.H.N.W. clients who dumped assets in March 2020 in fits of panic—there is, of course, no way to recoup that loss. But basically every client who listened to the guy they hired is richer today than they were two years ago when the pandemic began.

The other takeaway from these conversations was just how amazingly lucky the ultra-rich have gotten when it has come to Joe Biden. Tech executives and their advisers had basically resigned themselves to almost-certain tax increases after Biden was declared the victor in November 2020; estate attorneys went to work that holiday season by maximizing the amount eligible for estate-tax exemption, believing that Biden would reduce it; and then last year, as the rich fretted about a capital-gains rate as high as 43 percent, and maybe even an Elizabeth Warren-style wealth tax, the ultra-rich accelerated plans for stock sales to lock in gains at a lower rate, or even moved their domicile to lower-tax states like Texas and Florida. 

And then, thanks in part to Senator Joe Manchin, who gave the thumbs-down to Biden’s Build Back Better agenda, nothing happened. To capital gains. To the Qualified Small Business Stock tax exemption. To the trusts known as GRATs. To anything. Some wealth managers don’t regret the moves they made or the time they invested—it’s their job, after all, to prepare clients for every likely eventuality, and it seemed bankable that some tax somewhere would go up under a fully-Democratic Washington. Other wealth managers still think some redistribution is inevitable at some point in the Biden presidency. But for now, all those hours that wealth managers spent on the phone or on Zoom, advising or consoling their clients, was all for naught.