DST Global founder Milner: How to win half of China’s Internet?

2022-06-24 0 By

Speaking of venture capital, many people know little about DST Global.It’s not that we’re ignorant, but that it seems to have been deliberately avoiding attention.Since its 2009 investment in Facebook, DST Global has established itself as one of venture capital’s top predators, albeit in a low-key way.But it manages tens of billions of dollars and invests in hundreds of companies around the world.For 12 years, its portfolio has been almost enviable, with Alibaba, JD.com, Meituan and ByteDance — not to mention Facebook, Twitter, Airbnb, Snap and Spotify — showing its ability to predict trends and pick winners.Look for early Insights. Open up DST Global’s website and the page is just one paragraph long.DST Global seems to be a maverick, not a quiet one, but that has not stopped it becoming one of the world’s largest and most influential venture-capital firms.In 2021, Hong Kong-based DST Global was the second most active investor among large unicorns valued at more than $10 billion, making 55 investments in 24 large companies, according to Crunchbase News analysis, behind Sequoia Capital and Tiger Global.The venture capital landscape continues to evolve, and after DST invested in Facebook, there have been concerns about whether DST could keep up.And it shows no signs of slowing down.While DST once seemed to limit itself partly to the consumer Internet, it is now involved in fintech and subtly changing how it continues to ride the next wave of technology.To that end, DST appears to be building something of an in-house research team, with many of the recent additions coming from equity research backgrounds — a pool of analysts rarely tapped by venture funds — dedicated to reporting on emerging trends and markets.Time will tell exactly which of DST’s investments will pay off, given that they have taken place almost everywhere in America, Latin America, China, India and Europe.Online social networking seems to be a part of life now, but back then it was very uncertain.And DST had an insight into the monetisation potential of the Internet through social networks long before existing venture capital firms.Not only has it built its position on Facebook, but it has the confidence to invest in almost every major social media player since its inception, including Twitter, Bytedance, WhatsApp, Snap, Momo and Clubhouse, as well as affiliates like Zynga.Just as DST recognized The power of social media early, it was quick to see The disruptive potential of e-commerce, and The percentage of online purchases convinced it would multiply.Groupon is arguably DST’s first foray into the space, although the company is known for its focus on pushing online customers into offline experiences.But more successful investments followed, and DST once again built a lucrative portfolio that includes JD.com, Alibaba, Zalando, Flipkart, Boxed, Wish and Meituan.Not only that, but its bet on Airbnb signals an understanding of the changing dynamics of the workforce as it recognises the viability of the sharing economy, and DST has gone on to invest in companies including Didi, Alto Pharmacy, Swiggy and Ofo.”Early and right” is the core philosophy guiding DST’s investments. It may seem simple, but only a deep understanding of where the world is going and which businesses will thrive will help it get right early.Yuri Milner was a key part of the idea’s execution, and as founder, his attitude set the tone for a high-powered team and kept DST Global “energized.”When asked about DST’s portfolio, Mr Milner pointed out that, by his count, there were only two losses.This may seem implausible, but by maximizing its early insights and further increasing the number of opportunities, it turns out to be new opportunities for DST.Mr Milner cites the failure to fund Uber and Pall Duo, but DST has boosted its portfolio through Didi, Ola and Ofo. In the case of Pall Duo duo, DST has responded by taking a stake in Indonesia’s equivalent, Super.This approach not only allows DST to compound benefits more quickly, but also provides insurance against venture firms’ biggest fear: missing out on a runway winner.DST uses this approach again and again, from Nubank to Revolut, from Robinhood to Ajaib.Just as Mr Milner’s extraordinary mastery of eastern European social media players has attracted Mr Zuckerberg, DST’s lessons from AUTO1 Group, Autolot, and the next online car retailer, such as Cars24 and Kavak, could now sway Mr Zuckerberg.It goes back to the beginning, when Milner, then an unknown Russian entrepreneur, gained Mark Zuckerberg’s confidence.In the interview, Mr. Milner recalled that Mr. Zuckerberg wanted to make sure he consolidated control of the company.In this case, Mr Milner accepted a higher valuation and less control in exchange for the chance to acquire secondary shares.In the years that followed, DST continued to use this approach to capture opportunities.In 2011, he launched Start Fund, a derivative investment vehicle with SV Angel, to make capital injections easier. Although it has only been running for two years, Start Fund has invested in dozens of high-potential startups.More importantly for Milner, he created one of the world’s most efficient accelerator indexes at a cost of about $10 million.At the same time, he assembled his own team and cemented his reputation as a venture capital manager.Yuri Milner, it seems, is not a master of charm.The interview portrayed him as taciturn and expressionless.But for a tech founder, that candor and operational experience gives him credibility to offer advice.Above all, DST is focused on communicating to founders how to achieve extraordinary scale, focusing only on the true standouts of the business, and Mr Milner has made it clear that DST is on the founders’ side and trusts them to chart a path forward.Not only was this crucial to Mr Zuckerberg’s persuasion, it also became part of DST’s business card.Back before he founded DST, Yuri Milner was a physicist, but in a Russian interview published in 2021, he recalled a high school teacher who tried to dissuade him from pursuing physics as a career because he didn’t think he would get much out of it.However, milner went on to study theoretical physics after high school and earned a doctorate, but Milner learned the truth about the “cruel” teacher’s assessment.Since then, Milner has described his decision to apply to Wharton as “perfect timing” to immerse himself in business knowledge.Back in Russia, freed from his job at Menatep bank, Mr Milner dabble in private equity and bought macaroni maker Extra M.The real revelation came in an article by Mary Meeker, a Morgan Stanley analyst, in which the now legendary investor described the rise of websites such as eBay, Amazon and Geocities, outlining the potential of the new industry to transform the US and Europe.DST and Mail.ru formed a larger conglomerate based on the experience of NetBridge and Port.ru.While Eastern Europe has lagged behind the US in adopting many Internet services, its social media scene is in some ways more mature.Milner and his team sit in the front row and watch players like Odnoklassniki increase revenue through advertising and other services, observing how efficiently those products translate into revenue.This proves a multi-billion dollar insight.Conclusion In the investment game, humans do not have the ability to predict the future, “which is why investing is so difficult”.But time has proved that in the hit-driven world of VENTURE capital, DST never seems to miss.Perhaps, for Milner, the teacher who dissuaded him from continuing his physics studies had the earliest insight, and the best investment was always in himself.Article source: American Stock Research Society, aims to help Chinese investors understand the world, focusing on the report of American technology stocks and Chinese concept stocks, friends interested in American stocks pay attention to us