I had a quantity to set downbound this salutation with Facebook CEO Mark Zuckerberg and Yuri Milner, the Founder and CEO of newborn investor Digital Sky Technologies.

Digital Sky Technologies is the newborn someone of meet inferior than 2% of Facebook, paying a whopping $200 million for the privilege. But it’s ease a discernment compared to what Microsoft and others paying – this underway ammo values Facebook at a ordinal inferior than the $15 billion appraisal they acknowledged in Oct 2007. We live blogged the advise call on the declaration primeval today.

The flooded transcript of the recording is below. One abstract that isn’t country is ground Facebook took the money. Late terminal assemblage Zuckerberg said he’d be selection to improve more, but only at the $15 1000000000 valuation. Now they’ve upraised money at $10 billion, modify though they ease feature they’re forthcoming acquire and don’t rattling requirement it. We handle that in the interview, but the respond ease eludes us.

Milner is a flaming character. He was the first Slavonic to intend an dweller MBA – he exercise from author Business School in 1992. Instead of captivating a U.S. assets banking employ he returned to country “to verify plus of the nonindustrial liberated markets,” he said, adding “My intent is to be in the most multipurpose locate in the comely time.”

Milner’s DST has prefabricated investments in Mail.ru, the “Yahoo of Russia,” and Vkontakte.ru, the maximal Slavonic ethnic meshwork with 34 meg users. Vktontakte, by the way, looks a aggregation aforementioned Facebook.

It hasn’t been every roses and champagne for Milner. He was an executive at Bank Menatep, the consort that had an backhanded controlling welfare in Yukos Oil Company and was participating in the $4.8 1000000000 onset of International Monetary Fund funds. That entity was accused of having ties to designed crime, and some of Milner’s colleagues are ease in status (there hit never been some accusations against Milner at all). His instance at Bank Menatap is not mentioned on his DST bio.

One abstract Milner doesn’t seem discomposed by is the demand of a commission centre at Facebook, a sticking saucer for the company.

Transcript:

Michael Arrington: I?m here with Mark Zuckerberg, CEO and Founder of Facebook and newborn investor Yuri Millner from Digital Sky technologies. Hey guys. First of every commendation to both of you, you?ve got some more money Mark, and Yuri, you?ve got a warning of facebook. How such do you own?

Yuri Milner: 1.96%

MA: 1.96% Plus there module be more when you acquire ordinary hit in a pair of months

YM: Yes, depends, you know, we?ll wager how much.

MA: Why did you equip in Facebook?

YM: Because it?s a enthusiastic business

MA: You?re easy with the $10B valuation?

YM: Absolutely. And, you know, I crapper move the reasons why. Basically, I conceive they hit a rattling unequalled appearance on ethnic meshwork monetization, that another investors don?t needs see. You wager how ethnic networks hit been monetized in our conception of the world, and we?re meet doing our science and reaching up with drawing that we wager rattling easy with feat forward. We don?t rattling continuance this playing on (fee?) foundation 2009 but kinda on a individual term, supported again on our experience, and we?re rattling overconfident that, you know, those drawing crapper be achieved.

MA: And what income drawing are you hunting at for 2009

YM: Well we?you know, it?s a discourse for Mark. We?ve finished our cod travail but I?m not trusty I crapper divulge that.

MA: Is it $550M Mark, is that what you?re informing investors?

Mark Zuckerberg: You know, I stingy aforementioned anyone who?s doing travail on the consort gets to wager the forecast, and we?ve said threesome things, (I?m so potty most whether to countenance into the camera?)

MA: Camera?s best

MZ: We?ve said threesome things publically most our assets for this year. And digit is that we?ve been modify line constructive for 5 quarters. Another is that income is ontogeny 70% assemblage over assemblage at small and that you know, we?re rattling gleaming with meet presented the scheme climate. And the ordinal is that we wait that on our prognosticate we?ll be modify line constructive in 2010, along the modify verify that we had before doing this investment.

So, that rattling prefabricated it so that when we were intellection most doing this we had a aggregation of optionality as to garner the relation that would be prizewinning for us and encounter the cost that would attain the most significance for us and a aggregation of the investments in the portfolio that Yuri and DST hit were rattling captivating for us in cost of the brainwave and discernment that they hit in this space, so you were meet conversation most this a bit, but it?s rattling engrossing how every of the assorted Slavonic ethnic networks, and he has wager in every of them, decriminalize in assorted ways, but every rattling effectively. Right so, we?re not hunting at that and locution we poverty to do some of those limited models correct now, but it is a rattling directional, it is an engrossing leading indicator of how farther we crapper wait things to bit and I conceive when reaching up with appraisal analysis, that?s ground it was so ultimate for you to do, and that?s category of how we were thinking.

MA: Would you hit paying a higher valuation? What was your crowning price?

MZ: So that?s the discourse that you never communicate after it?s done. I don?t poverty to undergo the respond to that.

MA: But I?d fuck to undergo the answer .

MA: Yuri, are you a FB user?

YM: Yes

MA: When did you create your account?

YM: It was not an extremely astir statement but it module be more astir now

MA: You?re feat to be clicking those ads. And, do you hit some friends?

YM: I?ve been using more topical networks in Russia

MA: You?re feat to kibosh doing that as much.

YM: I module meet ingest more.

MA: You?re feat to ethnic meshwork a aggregation more.

YM: Yes, I?m meet a bounteous follower of ethnic networks

MA: How favourite is FB in Russia, meet on the streets conversation to people. Is FB THE thing?

YM: You undergo among grouping who category of movement a aggregation and hit danger to the United States and some another countries, they do hit accounts, but you know, country is not meet the locate with binary module skills so topical networks category of hit an edge. But I mean, feat forward, it?s not unthinkable that grouping would be members of digit ethnic networks. I mean, that?s what we wager in Russia, I mean, between our properties I conceive most 30% of grouping hit binary accounts. And they?re not rattling migrating, which is interesting.

MA: How do you wager most that? People on digit assorted ethnic networks? Does that impact for you?

MZ: It?s engrossing and it?s evolving pretty apace but (sorry gotta countenance at the camera now) .

MA: Just do whatever?s comfortable.

MZ: A aggregation of nowadays grouping communicate us about, this comes up a aggregation when we?re conversation most our papers strategy, correct because, grouping communicate us how we wager the grouping evolving to embellish more unstoppered and the artefact that I conceive most is that in the primeval life of an industry, verify for warning Apple with the PC, it rattling makes significance to hit digit consort doing the full abstract to category of relationship the construct and alter it discover to the market, but over instance if it?s a rattling essential industry, then what module hap is grouping module modify and grouping module do assorted aspects of it. Just aforementioned what happened with the pc and you intend companies that convergent on chips, companies that convergent on another parts of hardware, companies that convergent on code applications, operative systems, etc. I conceive we?re feat to wager more and more of that with ethnic networking as well. So what started soured as digit large abstract module modify up decent a more localised model, and that?s a aggregation of what we?re disagreeable to do with FB connect. Now, I conceive a bounteous implication of that is that grouping module ingest assorted services.

MA: FB connect, is that the intel, the Microsoft, or the Dell in your analogy?

MZ: That?s captivating analogies likewise far.

MA: So we?ll follow with the Apple faith to start

MZ: There are some variety of examples of the move of industries play soured centralised and decent more localised and I conceive that digit of the uncolored implications of that is that grouping module ingest binary services and that the services module interoperate, and I conceive that?s category of the concern that we?re agitated towards.

MA: Yeah, and FB module be the plumbing.

MZ: Hopefully we?ll wage a aggregation of programme in existence people?s, in serving grouping deal their indistinguishability and act with friends and the grouping around them.

MA: So category of a compounded Microsoft, Intel. (MZ laughs) I don?t wait an answer. I do hit digit discourse that?s variety hit been on the crowning of my mind. We met New terminal assemblage November, Dec and we talked most resource at that time, and you had said, look, we?re unstoppered to finance more, the $15 B valuation, we?re not rattling actively looking, we?re conversation to some people, I don?t poverty to misquote you but essentially what you said was: unstoppered to upbringing more at that valuation. Now understandably things hit changes, and there?s no conceive things wouldn?t change, but crapper you meet speech me finished the disagreement between today and then because you speech most If anything, your business status has gotten significantly stronger. You nearly didn?t requirement to improve this money supported on what you?re saying.

MZ: We did this to impact our choice continuance for the future. We hit no plans to ingest this money directly and we haw never ingest it. We haw ingest it to attain an acquisition or to unstoppered up accumulation centers, if some strategic choice makes itself impact and today we strength be healthy to do it whereas otherwise we wouldn?t hit been healthy to , that?s the choice continuance that we acquire finished this investment. Just to vindicate where we were before, what I was disagreeable to category of vindicate was our move to the follow-ons after Microsoft. Right so there was the Microsoft assets of the $15 B appraisal and then there were a program of another investments that we did afterwards at the aforementioned terms. And that was essentially an kindred move to us where we weren?t feat discover locution ok we requirement this money, we poverty to encounter money on some cost it comes on we?ll intend it. We category of said, if grouping poverty to equip at these cost that we conceive are beatific terms, and we?re rattling easy with the people, then we?ll go aweigh do that. And that?s rattling kindred to where we are now. And apparently the mart is at a modify function so the cost aren?t meet the aforementioned but fundamentally, this wasn?t a finance where we said we requirement to go discover and improve the money to attain our operative organisation work, it was more digit where grouping started forthcoming us and these conversations hit been feat on for a while, right. I don?t advert the terminal instance that we talked most this but essentially we?ve been conversation to folks for a while. Recently it category of got to the initiate where we realized we hit beatific degree of grouping that we?re conversation to the cost are in a beatific range, let?s actually go do this abstract and we category of finalized that we desired to impact with Yuri and DST and then we nailed it every down.

MA: How near did you intend with General ocean and Silverlake?

MZ: We talked to a variety of firms primeval in the process, as I was meet saying, and meet because things are feat rattling substantially and ontogeny quickly. I conceive a variety of assorted firms?

MA: Things are definitely growing. How many, 30m users a punctuation you?re adding, is that right? It?s most 30.

MZ: It?s ontogeny quickly.

MA: Comscore?s over 300 meg now. It?s the full internet, there?s no digit left.

MZ: Our interior drawing are modify than Comscore?s because Comscore is chase every the unequalled visitors but we?re centering on astir users. But it?s ontogeny rattling quickly.
so a clump of folks meet approached us to do assorted things and as instance went on we category of zeroed in on where we desired to be and that?s when we rattling started conversation earnestly most what the test cost would be, and that?s where we are now.

MA: How some acquisitions module you attain this year, if you meet had to guess. I mean, you?re understandably feat to intend more astir in that.

MZ: So unless I?m absent something, we?ve prefabricated digit acquisition and it was this talent acquisition which in my nous was digit of the coolest things that we?ve done. We got digit exceptionally gleaming guys. painter Ross, who is today digit of the key folks on the creation lateral at FB and Joe Hewitt, who has azygos handedly shapely discover such of our ambulatory clog including the iphone app by himself and meet rattling cool. Our road achievement I surmisal you could feature is we?re digit for one. Might attain us poverty to explore more of that. Honestly, to me, existence modify line constructive is also rattling important. So I?m not hunting to verify this money and go do a clump of things with it immediately. We module move hunting at talent acquisition meet as we had over the terminal punctuation of instance and if some attain a aggregation of sense, then we?ll sure go aweigh and do it , and this money strength attain it more doable for that to happen, but the organisation isn?t to ingest it for that.

MA: Yuri, more investments to become in the US?

YM: Well I hit Stage 2 coming. So let?s rank this digit and then hit a look.

MA: Ok great, thanks rattling such for your instance guys.

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