Yuri Milner: Remote will be the new normal

Yuri Milner  / Photo: Norbert von der Groeben Reuters , Reuters

The famed tech investor has donated $3 million to fight the virus in Israel and tells "Globes" about the trends and investment opportunities being created.

"There is a unique opportunity here to emphasize the importance of science," says Yuri Milner. "In ordinary times, people tend to forget how much we need scientists. Like after the 2001 terrorist attacks in New York, when the heroes were the firefighters and the policemen, when it's all over this time, our heroes will be the medical teams in the hospitals and intensive care units, together with the scientists."

Milner, one of the world's best-known tech investors, whose personal wealth is estimated at $3.8 billion, has announced, together with Julia, his wife, a $3 million donation to the efforts to combat the coronavirus in Israel. The donation will be split between the Magen David Adom (MDA) emergency medical services, Sourasky Medical Center (Ichilov Hospital), and Tel Aviv University. "Julia and I decided a few days ago that we wanted to do something in Israel. We saw that the number of patients was increasing, and within a few days, we organized the signing of the papers and transferred the money," he tells "Globes." "We wanted to make sure that this investment would be made in time."

Milner says that the donation to MDA will be used to buy 50-100 diagnostic and remote medicine kits. The donation to Sourasky Medical Center is focused on intensive care units (ICUs), and will be used, among other things, to buy more respirators. The donation to Tel Aviv University is focused on research for finding a drug and vaccine for the coronavirus. Milner says that the university will coordinate the allocation of some of the resources to other institutions, such as the Israel Institute of Technology (Technion), Hebrew University of Jerusalem, and the Weizmann Institute of Science.

Milner who has previously donated to Tel Aviv University and Sourasky Medical Center (he mentions that his late father received dedicated treatment there), says that he was helped by Shlomi Kofman, Israel's consul general in San Francisco, to organize the current donation swiftly. "This is the way to do this, given the urgency of the matter," he explains.

"Globes": Is there a message to other philanthropists here?

Milner: "This is the hope. It's probably the main reason that we're talking now - to send a message to others that if they are connected to goals that that can have a significant effect, the time to act is now. There was a sizeable donation by the Rothschild Foundation (which announced a NIS 50 million donation to hospitals a few days ago), and I hope that we'll see more donations in the coming days and weeks."

The future: Fewer trips and virtual education

Milner, 58, began working in technology in his native Russia in the 1990s, when he founded what became the largest Internet company in Russia, Mail.Ru, which held its IPO in London in 2010. Milner, who is also an Israeli citizen, and lived in Israel between 2005 and 2010, became one of the world's leading and most successful tech investors after the financial crisis through his investment company DST Global. His investments included Facebook, Twitter, Airbnb, Spotify, Alibaba, Xiaomi, WhatsApp, Snapchat, and many other companies. In 2017, "Forbes Magazine" described Milner as one of the 100 "greatest living business minds today."

Milner spoke to "Globes" from his Silicon Valley home, where closure has been in force for a week. Some of the experiences he describes are also familiar from Israel. For example, his daughters are studying by Zoom, "and I'm working as usual. The offices of DST Global are spread around the world - we have offices in Beijing, Hong Kong, Dubai, London, New York, and Silicon Valley. All of the offices are still working, although everybody is working from home."

As someone who travels a lot around the world and tries to spot technological trends, have you thought much about the day after the epidemic?

"Yes. I think that there will be permanent changes when we emerge from this, and some of the changes will be fundamental. For example, we'll probably travel less around the world, at least for business purposes, and not just because when you have been holding Zoom meetings and talks for several months, you understand the simplicity and effectiveness of this technology. Maybe it won't be 100%, like in face-to-face meetings, but it's close to 85%, and many people will think very carefully before getting on a plane to fly to a distant destination just to hold a few meetings. So I think there will be much more extensive adoption of remote meetings."

A similar trend, he says, can be seen in remote learning, "which I hope will now take its rightful place.

"Ecommerce will also get a substantial boost. We're being forced to do this more, including things that weren't so common, such as ordering food. We invested in several such companies, and we're seeing a significant rise in adoption of these services all over the world, and I think it will continue," Milner predicts.

Milner says that his investment in food delivery companies include some of the leading names in the sector: Meituan-Dianping in China, Deliveroo in Europe, DoorDash in the US and Rappi in South America.

What about shared travel companies in which you previously invested? According to reports, fewer people are using them because of the epidemic.

"There are fundamental changes in behavior that are taking place with no connection to the current crisis - changes that began before it, and will also continue. For example, less ownership and more renting of things. The Y generation and the ones after it will value ownership less, and use various services more. I think that this trend is deeper than the momentary situation. Yes, many of these companies are having a hard time now, but if they have enough capital, they'll see things become better when we get back to normal."

But Milner predicts that the normal situation that we return to will not be the same, saying, "We'll be more careful in general, and we'll probably go on wearing masks for a long time, like they're doing in Asia. One of the reasons that a larger proportion of people in Asia wears masks is that they were already wearing them before, although for different reasons, such as protection against air pollution. I hope that people wear masks, for example, when they have flu, in order to avoid infecting other people. Thinking about not infecting other people as a social value will force us to take more precautionary measures, such as staying at home more when you're sick. I hope that this change persists, and that it's for the better."

The present: Hoarding cash and thinking about survival

In his career as an entrepreneur and an investor, Milner has already been through two major crises: the bursting of the dot.com bubble in 2000/1 and the 2008 financial crisis. Actually, the investments in Facebook and Twitter, which put him on the global tech map, came after the crisis, when the markets suffered from a credit crunch (these investments, which were sold in 2013-2014, later became controversial because of the lack of full transparency about ties with government investment concerns in Russia).

As someone who has survived crises, what lessons can you suggest for entrepreneurs and investors?

"As an entrepreneur, I've seen two crises. I managed a company in 2001 and in 2008, and in both cases, I had to raise money in order to continue business activity, and I had to do it on pretty drastic and rather painful terms. In 2001, for example, the value of the company I managed went down 97%, so I had to raise money at a company valuation that was 97% lower than the previous valuation. But I had to do it in order to maintain activity. Even Facebook held a financing round at a lower valuation when we invested in 2009 - it was at a 30% discount on the preceding round.

"Entrepreneurs should think now about keeping cash, about survival strategies, about how they can streamline operations, how they can raise more capital. I made it through the crisis, and I eventually built a multi-billion-dollar business that became a public company. When you go through hard times, you have to be determined to optimize your business, and not be afraid of readjusting your expectations."

What is your lesson for investors?

"As an investor, we're spending a lot of time now talking with companies in our investment portfolio about how to survive the new situation. In my opinion, several investment rounds are taking place now in the world in which the existing investors feel responsible for supporting the companies in which they previously invested. Even if there are new investors, the existing investors are together providing a certain amount of capital in order to support their companies. I believe in building your brand name for the long term - if you're known as someone who supports your companies in hard times, it's much more likely that you'll be able to invest in the future in a new company that appreciates this behavior. We're all focusing on the same things. We think about how the world is going to change, and especially how we'll mange the situation in the coming weeks and months."

Amazon has already announced that it is hiring a thousand new employees. Is it possible that the crisis will further strengthen the large technological monopolies, each in its own field?

"In the end, the question is what is the best service for the customer. Every company, large or small, can provide the service that we need to help us solve the problem facing us. Various companies will have an opportunity. It's important to keep in mind that the 2001 crisis created a lot of new opportunities for startups, and the same thing happened in 2008. Spotify was launched in 2008, and Facebook was founded in the years after 2001. In view of these previous experiences, I think that the tools on the board are being reorganized a little differently. From my experience as an entrepreneur, I had an opportunity to build the business after the 2001 crisis, at a time when adoption of Internet services was accelerating for all sorts of reasons. I think of the world as an opportunity to innovate and redesign the old world."

Published by Globes, Israel business news - en.globes.co.il - on March 25, 2020

© Copyright of Globes Publisher Itonut (1983) Ltd. 2020

Yuri Milner  / Photo: Norbert von der Groeben Reuters , Reuters
Yuri Milner / Photo: Norbert von der Groeben Reuters , Reuters
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