Alterthefuturenow: Companies Making Money

'Tis the season... Argh.

The Senate Republicans have killed the bill that would provide support for Ground Zero workers who became chronically ill from the effects of their work in the rubble of the World Trade Center.

The workers, many of whom helped in the cleanup and rescue operations as volunteers, have now been twice betrayed by the government they tried to help.

The first time came at Ground Zero itself, when the Bush administration and Rudy Giuliani's City Hall assured them - and the world - that the air was safe to breathe.

Then-EPA chief Christine Whitman famously informed New Yorkers that "their air is safe to breathe and the water is safe to drink." Much later, EPA officials would concede that Whitman's statement only referred to outdoor air far from Ground Zero. And only to asbestos. And only to healthy adults - not children or the elderly. (EPA statements that were not sufficiently upbeat were revised by a White House panel.)

City Hall echoed these bogus claims and warned companies working at Ground Zero that any slowdown in the work could result in fines or termination. (A construction worker who asked Giuliani to give Ground Zero crews Christmas Day off was quickly rebuffed.)

You could understand why, in the crazed hours following the attack, rescuers were encouraged to do whatever they could, without regard to their own safety. But in the long days and weeks that followed, there was both the time and the public health information available to make safety precautions possible. In particular, everybody working anywhere near Ground Zero should have been required to wear respirators that would protect them from contaminants in the air.

The breathing apparatus was uncomfortable and slowed down work. People didn't like wearing all that bulky equipment and readily put it aside when their supervisors didn't insist. In their eagerness to get Wall Street - and the city - back to normal as soon as possible, virtually no one insisted.

I met some of the victims of that laissez-faire attitude when I was researching a book on the Giuliani administration and 9/11. Many of them were construction workers who had been eager to serve as part of the recovery operation. They worked around the clock, breathing in poison that would later corrode their insides, leaving them invalids, barely able to gasp for breath.

They seemed bewildered by what had happened to them. No one was celebrating them as heroes; they were all alone with their beleaguered families in their modest exurban homes, painfully making their way from bed to living room chair to bathroom to bed again in what was left of their continually narrowing lives.

Some of them joined a lawsuit that was recently settled, providing them with health care expenses and modest compensation for their lost livelihoods. (It's well worth asking why men and women who sacrificed so much were forced to sue to get their due.)

Other Ground Zero workers waited, either because their symptoms seemed manageable at first, or because they were in denial, or because they simply expected that the government would take care of them if the consequences of their public service became too great to handle.

They're the ones who were left holding the bag by Senate Republicans.

One of the messages of the death of the James Zadroga 9/11 Health and Compensation Act was that it makes sense to go to court. Not the message the trial-lawyer-averse Republicans might have wanted to send, but they sent it.

Another message is that New York bashing is back. One of the few bright spots in the post-attack landscape was the way the rest of the country rallied around our stricken city.

No more. We saw it during the campaign, when some Republicans tried to use the mosque controversy to make New York City a dirty word. Now it's official - the GOP line about the Zadroga bill was that it was too much money, and that too much of that money went to New York.

It was an uphill climb for the local legislators - particularly in recent months for Senator Kirsten Gillibrand, who labored heroically on this issue. But perhaps it was inevitable. The Senate Republicans have been killing bills all week - labor rights for firefighters, Social Security benefits for the elderly, a firewall against tax breaks for millionaires. You name it.

Thanks to the rule that requires 60 votes to get anything through the Senate, nothing moves without the support of at least two Republicans. The backers of the 9/11 bill thought they had two in Mark Kirk of Illinois and Olympia Snowe of Maine. The expectations about Kirk were reasonable, given the fact that as a member of the House he had voted for the bill earlier this year. Snowe, who's supposed to be a Republican moderate, had indicated support to a reporter earlier this week.

But both of them backed off, claiming they couldn't vote on anything until the Democrats passed the compromise tax bill President Obama worked out with their leadership.

In other words, they have to have proof that the Democrats are going into the tank on tax cuts for the rich before they'll help the men and women who ruined their health at Ground Zero.

The supporters of the bill are now hoping to attach it to that very tax giveaway. It's all too depressing for words.

Le Web 10 host Loic Le Meur just finished his on-stage interview with Alexander Tamas, Partner at one of the most watched technology investment firms on the planet, DST / Mail.ru Group.

That’s quite a presence you have: Groupon, Zynga, Facebook and … Twitter?

Not Twitter (smiles).

What is DST?

The firm originated in Russia, grew out of social networking company called Mail.ru, and at some point we started making international investments. Facebook was our first one.

How big is your stake in Facebook now?

It’s hard to say, we’ve made some straightforward investments and then we bought as many shares from early employees and investors as possible. We’ve definitely invested more than $500 million in total though.

So Facebook was your first investment – how did that come about?

Well, we owned and ran a social network in Russia, but the dynamics there were different, we were actually ahead of most social sites. Every single one of our countries became really big. So, we knew there was money in it, and we realized quickly that it was only a matter of time for Facebook to become really large worldwide.

Did you lead the Mail.ru Group IPO as well?

Yes, that was last month.

Is it the biggest tech IPO in Europe to date?

In the past few years, yes. The initial market valuation was about $6 billion, we’re now at roughly $8 billion.

So when’s the Facebook IPO planned?

I don’t have any comments on that (smiles).

Do you sit on the Facebook board?

No we actually don’t, but we obviously have good relationships with management and other board members. our perspective is that it’s entirely possible to be a major investor in a company without being on the board, as long as you have an open dialogue with the people in charge.

You got in late, what was Facebook’s valuation at the time?

We got in at a $6.5 billion valuation. It’s difficult to say what the valuation is now – although I can tell you the secondary market ones are based on limited information and generally not super accurate.

We haven’t purchased Facebook shares in quite some time though.

The Zynga investment came after Facebook?

Yes.

Why haven’t they been acquired yet?

If you’re a founder of company like Zynga, with fast growth and massive revenues, it only makes you wealthy on paper, right. So you used to have two choices: sell or take it public. Now, companies can get liquidity early on, so it takes the pressure of.

We invested $150 million in Zynga, but we didn’t disclose at what valuation.

So Groupon was almost sold …

I can’t comment on the rumors, but I can tell you that they’re going for it. They realize they have something special and there’s a lot of potential for Groupon to become a generation-defining company. They’re shooting for the stars.

By the way, I’m always amazed when people discuss valuations of private companies without actually knowing the financials. The truth is most people can’t say whether investments come cheap or expensive, as commentators. It all depends on how you measure growth, and most people tend to think linearly.

When we invested in Groupon, they sold 4 million groupons, a month later it was 25% more. The potential was obvious. They’ll hit 20 million groupons sold next week.

How does a startup get an investment deal out of DST? Is Twitter big enough, as an example?

It’s definitely an interesting company, but there are more. What we look at is that you have to be on a path to become a clear leader in your segment, companies that could theoretically go public today. We want to know all companies, but we focus our investments on those with long-term sustainability.

You know, we’re not an early-stage investor. We’re really small, with no people on the ground. So we can’t really help companies when they’re just getting started, apart from writing a check, and that’s not what we want. There are many more capable firms for that.

So startups should give you a call when they hit a $1 billion valuation?

Not really, we’ll also talk to you if you’re clearly on a path to becoming a $1 billion company down the line.

What about Foursquare?

There are lots of opportunities for them, they’re seeing good growth, so it could become a really interesting company for sure.

You’re (sort of) a European fund – why don’t you invest more here?

Groupon, Zynga and Facebook really just happened to be US companies, we look all over the world for companies. We tick boxes, and we can do that anywhere.

Many of the startups in Europe for some reason want to sell out early. That’s not what we’re looking for. There aren’t enough role models here, so less confidence.

Do you look at Asia, more specifically India, China and Japan?

It’s definitely a geography we’re looking at. We know a lot of the companies there already.

What’s your advice for young entrepreneurs?

Not many people have the opportunity to really change the world. If you have an urge to build something that could, don’t focus on the money, but the legacy you’ll leave behind.

It’s a once-in-a-lifetime opportunity to build a generation-defining company, so I applaud people for shooting for the stars. It’s a much more rewarding thing than doing it for the money.

I mean, look at Le Web, it’s not just about the money right, it’s also the community, helping out startups throughout Europe.

Loic: yes, we actually got a few offers, but we’re not looking at that right now.

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Thursday, December 9, 2010

Companies Making Money

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