SXSW: Facebook backer Yuri Milner advises investors to “go against the flow”
“It’s almost a theorem if you want to get disproportionate returns to go against flow,” advised Yuri Milner at a SXSW conference on Saturday.
“Otherwise returns will not be as high. If everybody thinks it’s a great idea, returns would be under pressure… It’s a positive indicator if you go against the flow–for not only investors but founders as well. You almost have to have it if you want to be disproportionately successful.”
Milner invested $200 million for a two per cent stake in Facebook in 2009, revealing that many people thought he was crazy.
However, he explained to Vanity Fair's Bethany McLean that with Facebook he saw that it was something different. Milner said: “There are a handful of companies and entrepreneurs really building something to the extent that it can change the world. I saw at the time that this was one of them.”
“It was clear to me that the monetization that others were worried about would really kick in at some point with Facebook,” he said. “I was confident Mark Zuckerberg was really focused on growing that as a business and putting customer satisfaction ahead of monetization.”
When asked what companies he could foresee being around in 100 years’ time, Milner predicted Google, Facebook and Wikipedia, due to the strong networks they had established.
Giving advice to anyone thinking of investing in a startup, he explained that he will only invest in founder-run companies, rather than companies that put in a new CEO.
He went on to say that the groundbreaking founders are fiercely competitive and uniquely driven.
He added: “Many people underestimate the kind of qualities that you need to have to be a successful founder. The level of sacrifice that one needs to take to be able to create something significant is almost universally underestimated.” Saying that it is “slightly inhuman” to be an entrepreneur.