Thread by @blmohr

1/ [Thread]
Russian investors, Facebook Connect and Groupon’s sprint to a $1 billion valuation

2/ Two years ago, Russian oligarch Leonid Boguslavsky and Michael Angelakis invested $250 million in Groupon. Angelakis is the Chairman of the Board at the Federal Reserve Bank of Philadelphia and the former CFO of Comcast.
bit.ly/2M2qY6d

3/ That same month, Groupon sold its Groupon Russian subsidiary to Boguslavsky “without receiving any proceeds” from the sale.
bit.ly/2wz7K3c

4/ Groupon Russia was worth -$1.6 million at the time.

5/ Boguslavsky renamed it Frendi and later merged it with Biglion.ru, Groupon Russia’s main competitor that Boguslavsky’s investment firm ru-Net Holdings was heavily invested in.
kommersant.ru/doc/3262580

6/ He’s an original investor in Yandex, Russia’s version of Google’s search. He’s also the Independent Director of the Supervisory Board at Sberbank, Russia’s largest lending bank that’s half owned by the Central Bank of Russia.
bit.ly/2ov6rOf

7/ It was placed under U.S. sanctions in 2014 and 2018. Boguslavsky was put on the list of 210 prominent Russians with close relations to Vladimir Putin.
bit.ly/2wGjosn

8/ Dmitry Alimov was a managing partner at ru-Net. He graduated summa cum laude from Univ. of Missouri — St. Louis and got his MBA from Harvard Business School. He’s a former executive at TNT and Gazprom and currently the VP of Sputnik Technology Ventures.
bloom.bg/2CmztJQ

9/ He previously worked for Russian oligarch Leonard Blavatnik at Access Industries. He “originated and executed” ru-Net’s investment in Biglion.ru.

10/ To gain entry into the Russian marketplace, Groupon bought Darberry.ru, a Groupon copycat website that had only been in existence for six months. At the time, the Russian market was flooded with dozens of Groupon imitators.
bit.ly/2Mr5jK9

11/ Groupon bought Darberry.ru for $50 million and renamed it Groupon Russia. In two years, it had 21 sales offices that offered deals in 70 cities across Russia.
klub-skidok.ru/blog/2010-07-0…

12/ The five co-founders stayed on for nearly a year before receiving buyouts in 2011. Each continue to play a role in Russia’s tech community.

13/ Viktor Lysenko and Oleg Kozyrev left Groupon Russia and co-founded Rocketbank, a mobile app that provides financial tools to Russian consumers. In 2016, it was acquired by Otkritie, formerly Russia’s largest private bank.
tcrn.ch/2PuorDM

14/ Otkritie was the middleman used by Rosneft when it shorted the rouble to raise funds so it could pay on its $18 billion debt that was about to mature.
on.ft.com/2qrtN9w

15/ Eventually, Otkritie took on so much bad debt, the Central Bank of Russia had to buy up 75% of the bank to save it from collapsing. It became the sole owner of the bank last year.
reut.rs/2wRuZ8K

16/ Interestingly, Rocketbank like Darberry.ru, received its seed funding from U.S.-based investment firms. e.ventures provided initial funding for Darberry and Runa Capital invested $2 million in Rocketbank.
bit.ly/2NvkPo0

17/ Runa Capital is an early stage venture capital firm based in San Francisco. It was founded by Serguei Beloussov, Ilya Zubarev and Dmitry Chikhachev, three classmates from the Moscow Institute of Physics and Technology (Phystech).

18/ Andre Bliznyuk, the former head of Goldman Sachs Russia/CIS Equity Capital Markets Group, became a partner in 2011.
bloom.bg/2O1ZQ8Y

19/ A year before Elena Masolova helped start Darberry, she co-founded Pixonic, a video game maker headquartered in Moscow. Its “War Robots” game has so far generated almost $200 million in revenue.

20/ It was acquired by Mail.ru Group for $30 Million in 2016. That year, it quadrupled its budget for paid user acquisition on Facebook and Google.
bit.ly/2QdK4K2

21/ Masolova currently runs TokenStars, “the first blockchain project to tokenize celebrities.”
tokenstars.com

22/ Alexey Chernyak is a mentor at the Moscow-based Founder Institute, a tech incubator that has launched 3,100 companies in more than 200 cities on six continents. He’s also the founder of BlockchainFounder.ru, an incubator for blockchain technology.
fi.co/s/moscow

23/ Vadim Dmitrievich Fedotov is not a founder but was the CEO of Groupon Russia and its Ukrainian subsidiaries. (His grandmother was the chief radio director of the All-Russian State Television and Radio Broadcasting Company for 30 years.)

24/ He’s now managing director of digital entities for Gazprom Media Holding and chairman of its Digital Committee.
bloom.bg/2KMmoIw

25/ Groupon’s investment in Russia was during a period when the startup was pursuing a rapid worldwide expansion. At the time, it was the fastest growing company ever.

26/ The expansion couldn’t have happened without the involvement of Russian billionaire Yuri Milner’s Digital Sky Technologies (DST).

27/ Ru oligarch Alisher Usmanov is heavily invested in DST. While he was director at Gazprom Investholding, the investment arm of Gazprom, it invested at least $900M in Facebook through offshore intermediaries and DST. In 2009, he invested $200M in Fb.
bit.ly/2iwgBuL

28/ Gazprom Investholding is known to be an entity "used for politically important and strategically important deals for the Kremlin." Usmanov has invested more than $1 billion in DST.

29/ In 2010, less than a year after DST partnered to invest $300 million in Facebook and Zynga, Milner led a $135 million investment in Groupon. (He’d already previously partnered to invest $30 million in Groupon through his SV Angel Fund.)

30/ A week before, Tencent Holdings, China’s largest gaming and social media company, announced it had established a partnership with DST and invested $300 million in the company.bit.ly/2M9byx8

31/ At the time, Groupon co-founders Andrew Mason, Eric Lefkofsky and Brad Keywell were considering a new round of funding. So Lefkofsky mentioned it in a brief call with Milner and the next day he showed up in Chicago. The deal was done a few hours later.
bit.ly/2w7AWxf

32/ Groupon immediately began an aggressive international expansion. Within six months, it moved into 80 more markets in the U.S., Europe, Latin America and Canada.
bit.ly/2Pi6fOu

33/ By the end of 2010, it had moved into 35 countries and grown its subscriber base by 2,500% to 50 million. It ultimately operated in more than 49 countries in 500 cities.
bit.ly/2w4ALCy

34/ Google offered $6 billion for Groupon, but the company rejected the offer claiming it wanted to remain independent.
bit.ly/2P1tn2T

35/ In September, DST changed its name to Mail.ru Group. In December, Milner took Mail.ru public. It raised $912 million on a $5.71 billion valuation.
reut.rs/2NnZMU3

36/ At that point, it owned 2.4% of Facebook, 5.1% of Groupon and 1.5% of Zynga. Each one had a valuation of at least $1 billion.

37/ A month after its IPO, DST was part of another investor pool that raised $950 million for Groupon, giving it a valuation of $3.8 billion.
bit.ly/2LH8TdG

38/ Groupon’s relationship with Mail.Ru grew closer as it announced it would be partnering with Russian website Odnoklassniki.ru, a Facebook copycat, to sell Groupon deals in Russia.

39/ Mail.ru owns the website. Ilya Shirokov was the vice-president of Mail.Ru and the head of Odnoklassniki.ru.
bit.ly/2w4dpxb

40/ At the time, Mail.ru serviced about eight out of every ten emails sent in Russia. Groupon had an exclusive in-body email advertising campaign with Mail.ru.
on.ft.com/2nOF2X5

41/ W/ its IPO coming up in Nov. 2011, Groupon decided it needed greater access to users’ personal information. It sent an email to its 83M subscribers that it would be expanding its privacy policy to include the collection of additional user data.
wapo.st/2MkyU7L

42/ It said it would expand the categories of “personal information” it collects and shares with affiliated companies, service providers, business partners, advertisers and merchants.
bit.ly/2KZIVln

43/ The shared user data includes contact information, email address, phone, postal address, mobile location, social media website account names and relationship information, including lifestyle and demographic information.

44/ Groupon admits that once it shares the user data with a third party, it no longer controls that data and how it is secured.
cbsn.ws/2PhAsNN

45/ “We encourage Groupon Merchants and business partners to adopt and post privacy policies. However, the use of your Personal Information by such parties is governed by the privacy policies of such parties and is not subject to our control.”

46/ It said it would also be accessing Facebook Connect to review a user’s social interactions. This was perhaps always in Milner’s plans. His vision was for Facebook to be the "universal identity system for everyone on the Internet."

47/ "Facebook Connect is basically your passport — your online passport. The government issues passports. Now you have somebody else worldwide who is issuing passports for people…But who says issuing passports is government’s job? This will be global citizenship," Milner said.

48/ Zuckerberg announced Facebook Connect’s single sign-on at its Palo Alto headquarters at the end of 2010. Mihir Shah, VP, GM of Groupon Mobile, appeared on stage to show how smoothly a user’s Facebook credentials could be entered to access Groupon.
cnet.co/2N7vVMm

49/ He also showed how Groupons app used geolocation to provide mobile users with deals local to wherever they were.

50/ The next speaker was Justin Cinicolo, the GM of mobile for Zynga, who showed off its Live Poker app that users could now access even faster because of its single sign-on capabilities. Zynga was the 2nd major U.S. startup DST invested in, sandwiched by Facebook and Groupon.

51/ Zynga & Groupon were 2 of the 1st mobile apps to integrate w/ Facebook’s single sign-on. All 3 had fairly generous guidelines for the user data it felt it was legally allowed to share or sell. And none guaranteed keeping the data secure once it was transferred to a 3rd party.

52/ As single sign-on became more widely used, Milner’s DST & other Ru banks like VTB were dropping billion$ into more established businesses like Twitter, Lending Club, Airbnb, Spotify & Alibaba. Fb Connect now works on at least 15,000 "partnered" sites.
bit.ly/2LXpGJz

53/ After Facebook’s sharing of user data with Cambridge Analytica came to light and the U.S. Congress began to investigate, Facebook was asked for responses to a series of questions by the U.S. House Energy and Commerce Committee.
bit.ly/2PCaTGp

54/ As part of its written response, it admitted to providing developers an extended period of up to six months to re-work its code in order to meet Facebook’s new, stricter API data sharing rules.
bit.ly/2ucaClb

55/ Mail.ru was one of the companies given additional time. Facebook has admitted that since 2009, Mail.ru had ran hundreds of apps on its old API, which allowed app developers to collect users’ and their friend’s data.

56/ It also admitted it gave at least 60 phone and other device makers access to large amounts of user data.
nyti.ms/2kPiAvP

57/ Groupon has made a number of other deals with Russian investors through the years.

58/ In 2012, it bought Hyperpublic, a developer of public information databases that are made available to developers. Previous seed investors in Hyperpublic include Thrive Capital, the investment firm run by Josh Kushner, and Milner’s SV Angel.
tcrn.ch/2MWxOj2

59/ Groupon co-founders Lefkofsky and Keywell also run Lightbank, a Chicago-based venture-capital firm. Lightbank and Milner have invested in several of the same startups:

60/ GetGoing, a website to help leisure travelers discover new getaways and Onswipe, software that enables publishers to bring their content to the mobile web. Kushner’s Thrive Capital is also an investor in OnSwipe.
bit.ly/2wqXaKH

61/ Lefkofsky also co-founded Tempus, a startup that uses data analytics to improve cancer treatment. It’s valued at $2B. He also provided initial funding for InnerWorkings, a print mgmnt provider. Brian McCormack is listed as the owner of the company.
for.tn/1vHvMzv

62/ McCormack is also the chairperson of the Garry McCarthy For Mayor committee. He’s donated $59,300 to McCarthy’s campaign so far. McCarthy is the frmr Superintendent of the Chicago Police Dept. (CPD) that was hired & fired by Chicago Mayor Rahm Emanuel.
bit.ly/2Ln30SQ

63/ One of McCarthy’s first campaign donations was $5,600 from Rudy Giuliani. He’s admitted that he and Giuliani have a special relationship after the experiences they shared during the 9/11 attack.
bit.ly/2xRlwRX

64/ Giuliani recently endorsed McCarthy for Chicago Mayor.
trib.in/2wQzpgf

65/ He claims to be a Democrat but two DOJ civil rights investigations into his policing tactics suggest otherwise.

66/ The DOJ investigation reported a pattern by the Newark Police Dept. of illegal stops and arrests, a disproportionate number of African Americans being arrested (75%), victim intimidation and use of excessive force.
bit.ly/2PqYpSa

67/ The DOJ’s investigation into McCarthy’s Chicago policing tactics didn’t fare much better for him.
bit.ly/2Jk7HAD

68/ "Civilian and officer witnesses, and even the accused officers are frequently not interviewed during an investigation. The questioning of officers is often cursory, and aimed at eliciting favorable statements justifying the officers’ actions, rather than seeking the truth."

69/ McCarthy was fired in 2016 after the Laquan McDonald killing by CPD Officer Jason Van Dyke. W/in months, he started his security firm, GFM-Strategies & signed a contract w/ Richard Simon, a frmr police Sgt. who now runs United Security Services Inc.
trib.in/2LO7pTI

70/ Simon has known ties to the Mob. He used to work for Ben Stein, Chicago’s “King of Janitors.” Stein was a convicted felon and known mob associate. After he died, Simon took over his security companies.
bit.ly/2sXosHK

71/ He now runs security and cleaning companies with thousands of employees working at convention centers, airports, hotels and hospitals.

72/ His United Service Cos. used to handle the security and cleaning work at Rivers Casino. Two years ago, the casino was fined $1.65 million for, in part, its ties to Simon. McCarthy’s firm is located in the same building as Simon’s company headquarters.
bit.ly/2MXUbok

73/ A company related to Lefkofsky, the original investor in Groupon, donated $100,000 to Chicago Mayor Rahm Emanuel’s political campaign.
trib.in/2F6cm1Y

74/ Lefkofsky was appointed by Emanuel to the board of directors of World Business Chicago (WBC), a public-private partnership between Chicago and the business community to encourage investments in the city.

75/ Chicago Sister Cities International (CSCI), started under former Chicago Mayor Richard M. Daley, is an organization that allowed Chicago to reach out to other cities to develop business deals that would benefit each city. It’s now a division of the WBC.

76/ In 1997, Daley signed its first CSCI international agreement with Moscow Mayor Yuri Luzhkov. Through the years, the two cities have had numerous events to celebrate our cultures and work business deals.
bit.ly/2sKjfmB

77/ In 2014, a delegation of WBC and CSCI members visited Moscow to “promote Chicago as a desirable location for Russian businesses and strengthen Chicago’s sister city ties with Moscow.”
bit.ly/2mhmyOt

78/ Sergey Kislyak, Russian spy and spy recruiter, has visited the city on numerous occasions to attend and/or speak at CSCI events in an effort to foster social and business deals between Chicago and Moscow.

79/ Here he is in 2009 at the Executives’ Club of Chicago to give a speech about “trade and commerce, the political relationship between the U.S. and Russia, and arts and culture.”

https://twitter.com/blmohr/status/1020412644849745920

80/ This was the same year Milner first invested in Groupon.

You can also read this on Medium.
medium.com/@brianmohr/rus…

Related story:

https://twitter.com/blmohr/status/1020407574598995970