Tuesday’s big news was that the Russian investment group Digital Sky Technologies purchased a 2% stake of preferred shares in the immensely popular social media platform Facebook.  But who is this group, and who’s behind it?  Other the company’s official website, you can expect the Financial Times to devote several pages to the story in tomorrow’s edition. 

According to the company site, DST was founded in 2005 by Yuri Milner and Gregory Finger, and was given a nice doorway into Goldman Sachs when they were joined by Alexander Tamas in 2008 (the FT piece acknowledges that GS helped provide the introduction between Milner and Facebook CEO Mark Zuckerman which eventually led to the deal).  DST’s most well known internet property is Mail.Ru (which is basically Russia’s version of Hotmail), as well as the employment portal Head Hunters.  They also run a site called Vkontakte.ru, which looks to many like an exact clone of Facebook.

Some brief digging around reveals interesting things about Russia’s hottest new internet entrepreneurs. 

An article from Nov. 29, 1990 in the Daily Pennsylvanian describes
Milner as the very first student from the Soviet Union to attend
Wharton Business School for an MBA, who was furthermore unique in the fact that he intended
to return to Russia to serve as a “bridge” between the emerging market
there and the West. Milner also earned a master’s degree in
theoretical physics from Moscow State University.  At the time of the interview, Milner
was realistic about the struggles that Gorbachev’s Russia might face in
the future:  “Day to day, they are living worse and worse. (…) They are very afraid of the winter because we had food
shortages even in autumn.“  How radically things would soon change…

Following Wharton, Milner moved on to work at the World Bank to help develop the Russian financial sector, and then later moved on to handle the first stock flotation in Russia in post-Soviet times (according to the DST site).  His name pops up quite a bit in the Russian business news over the past few years, especially back when he handled that first public offering in 1995 for a chocolate company, serving then as corporate officer for Alliance-Menatap (which was the banking arm of Khodorkovsky’s business group).  More than a few past articles documenting Mikhail Khodorkovsky’s rise also mention Milner’s name as one of his key financial executives.

Milner parted ways with Khodorkovsky and Mentap back before any of the political troubles (1999-2000?), and founded the internet investment group Netbridge, backed by the U.S. based New Century Holdings.  From there, it’s history.

It appears that Facebook’s new Russian partners are some of the most accomplished entrepreneurs out there in the tech sector, which gives more credibility to Zuckerman’s reiteration that the partnership was strategic, not financial.  As revealed by the Financial Times, however, one of DST’s biggest backers is the Russian billionaire and metals magnate Alisher Usmanov, who owns stakes in Kommersant and the football club Arsenal. The boys at the Central Asia blog Registan.net call Usmanov a “devourer of websites,” and all the bloggers out there covering this Facebook transaction would be wise to leave him out of it, considering what has happened to others.

Last 5 posts by Robert Amsterdam

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