content overview

Odaily Translator |

content overview

1. Telegram is the fastest growing app in the world, at least, by some measures. According to a 2021 report, no major app has seen more monthly active user growth than Telegram, which now has around 600 million users.

2. Telegram has built a narrative around its security, and while it does encrypt messages, most of them are not really encrypted nor fully private. Still, it doesn't appear to be damaging to the company's reputation, which has done an excellent job of counter-positioning.

3. There are risks in using cryptocurrencies. The 2018 ICO brought in $1.7 billion in funding for Telegram. Unfortunately for founder Pavel Durov, the SEC deemed the financing an unregistered sale of securities, which slowed Telegram's growth and prompted an unusual financial agreement.

4. Competitions are an effective way to attract talent, and few companies seem to have as many talented engineers as Telegram. Part of Telegram's success is talent, and the company often offers prizes for product improvements and hires the most talented entrants.

5. Telegram still hasn't found a business model. Telegram has been exploring payment services since 2017 and recently experimented with advertising. So far, neither has had better results. From this perspective, Pavel Durov's team may look to WeChat and other peers for inspiration.

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In October 2021, Telegram gained 70 million new users in a 24-hour period. The ubiquity of social media has desensitized us to numbers like these, but in reality, 70 million is more than the populations of South Africa, France and Thailand, and just shy of twice the population of Canada.

With such a comparison, perhaps you can see that Telegram is already a messaging application with a global scale.

Why is this happening? To be honest, a large part of the reason is that other social media "doesn't work". Facebook has more and more problems, and Instagram, Messenger, and Oculus are not keeping users happy. Perhaps in search of a better network of people, or even a better, more human social media brand, users flocked to Telegram — the startup founded by the charismatic Russian entrepreneur Pavel Durov. social applications.

Telegram feels more like a repudiation of Mark Zuckerberg, which lends its narrative some serious buzz but overshadows other strengths. Yes, Telegram has established a reputation as a more privacy-conscious alternative, but it's also a better messaging app. While it may still lag behind WhatsApp in terms of inactive users -- 2 billion vs. 600 million -- Telegram empowers and finesses its users.

Of course, Pavel Durov's business has had setbacks, such as a botched initial coin offering (ICO) that brought them $1.7 billion in funding, but the organization didn't make any headway. Telegram would argue that the SEC was responsible for the failure. However, despite all of this, Telegram itself has many problems. For example, it still has not established a viable business model. For Telegram, meaningful revenue still seems out of reach 10 years later.

It seems that Telegram is a complex and sometimes unrealistic company that, despite its product excellence, still seems to be playing a counterattack that thrives on comparison. In chess, the "Russian game" is an opening move characterized in part by imitating the opponent and attempting to counter. In many ways, Pavel Durov seems to be taking the same approach.

To realize its true potential, Telegram may have to change its game. As the company enters a new decade, it's looking more to build a reputation on its own merits. Backed by visionary executives and a talented tech team, Telegram has the key ingredients to not only rival WhatsApp, but even eclipse it. In today's article, we will discuss the past and future of Telegram, including the following:

1. Establish VKontakte. Before trying to build a better WhatsApp, Pavel Durov created Russia's version of Facebook. As fascinating as Zuckerberg's story is, Pavel Durov's is even more exciting.

2. Start Telegram. After Pavel Durov was ousted from his old company, he set out to build Telegram. To grow the app, he had to deal with the FBI's intervention and the SEC's tyranny.

3. Unusual financing. Pavel Durov took an unorthodox approach to financing Telegram to avoid raising money from venture capitalists. Not only did he pay most of the development costs himself, but he also turned to ICOs and bond offerings.

4. Be good at products. Telegram was created after WhatsApp, but now, it is clearly the leader in social media products. Telegram supports larger groups, more formats and a range of different features.

5. Financial troubles. Much of the company's reputation rests on its commitment to privacy. This makes an advertising-based business model unsuitable. Telegram has experimented with promotions and other payment methods without groundbreaking success.

secondary title

let's start.

VK's story

The Roman poet Juvenal is not a name that is often quoted, but he has contributed a lot of buzzwords to our media age, such as "bread and circus" for how to appease the crowd, "black swan" and "watcher" Describe changes in financial markets.

A single spark can start a prairie fire

The irony is that Pavel Durov - the man born in 1984 - lived a life defined by the search for privacy. Pavel Durov is the second son of Albina Durov and her husband Valery Semenovich Durov, a Respected Roman historian who studied the satires of the Roman poet Juvenal.

Although born in St. Petersburg, Pavel Durov spent most of his childhood in Turin and would not return to Russia until his family accepted the post of head of the Linguistics Department at St. Petersburg University (SPbU) in Valery.

There is no doubt that Pavel Durov was a bright boy, but he was not the best of his brothers. His older brother, Nikolai Durov, who was four years older than Pavel Durov, showed even more remarkable mathematical abilities from an early age.

Nikolai Durov participated in the International Mathematical Olympiad as a teenager and won several gold medals, he is now a talented computer scientist and has passed this interest on to his younger brother who is extremely talented in building products - Pavel Durov . At the age of 11, Pavel Durov created a Tetris spin-off, and he later teamed up with his brother Nikolai Durov on Lao Unit, a strategy game set in China.

Pavel Durov was not a "settled" student, much less one who sat at the front of the class to better see the blackboard and get good grades. Pavel Durov often told teachers they were incompetent, and seemed happy to show off his superior intelligence, especially in computing. At one point, he changed the screensaver of the school computer to a photo of a teacher with the words "must die" next to it. Despite repeated attempts by the instructor to lock Pavel Durov out of the computer system, he always seemed to find a way in. This erratic behavior wasn't just placed on the teacher, a classmate said that when he spoke to Pavel Durov, he never seemed to be sure if he was serious or mocking him.

Despite his interest in programming, Pavel Durov followed in his father's footsteps at university, where he not only entered St. Petersburg State University, but also focused on linguistics. To meet Russian conscription requirements, Pavel Durov studied propaganda, learned the tactics espoused by both Sun Tzu and Napoleon, and over time realized the importance of control over information.

In addition to his studies, Pavel Durov has worked on his own business, including launching the Durov.com blog, which has become a platform for university students to upload papers and exchange ideas. However, Pavel Durov would often make deliberately inflammatory statements - for example praising Hitler. He later explained:

"Sometimes I have to fan the flames, if users agree with you, you feel like you're on top of the world, but the result is what drives them away. If you argue with them, humiliate them, they'll come back and prove they're right .”

Thanks to a deep understanding of online social dynamics, Pavel Durov's website has attracted more than 2.7 million visitors, not only giving his ideas widespread reach, but also as a budding entrepreneur contemplates his next move. Insights will prove invaluable.

chasing facebook

In 2006, Slava Mirilashvili logged onto a Russian news site and was surprised to see his old classmate Pavel Durov, after his friend was exposed for creating a popular online forum for college students. (As an illustration, we refer to Slava Mirilashvili as "Slava" to distinguish him from his father, who is also involved in the story.)

Slava Mirilashvili has seen Facebook's rise up close. Of course, the social network started two years ago in Boston. But on Pavel Durov's forum, he saw the possibility of a similar business for the Russian market. So Slava Mirilashvili found Pavel Durov's address and the two young men resumed their friendship. The conversation quickly turned to the potential of the emerging social networking space, and was quickly joined by some other friends and McGill graduate Lev Leviev.

That summer, a few months after graduating from St. Petersburg University, Pavel Durov registered a domain name: vkontakte.ru. As the story goes, the name VKontakte (meaning "touch") was originally a copy of Facebook (which dropped the 'the' from The Facebook) so it's clearly cleaner.

In order to start their project, the trio needed funding. Fortunately, they had a ready source of capital: Slava Mirilashvili's father, Mikhail Mirilashvili, a Georgian who built a dizzying empire spanning businesses from real estate to oil, media to gambling, and owned Europe's largest slot machine network.

At the behest of his son, Mikhail Mirilashvili capitalized the VK company in exchange for 60% of the business. Although Pavel Durov owns only 20% of the company (the remaining 20% ​​is split between Slava and Lev Leviev), he received a majority of the voting power, reflecting the startup's reliance on his vision (also in other sources Sources indicate that three recent graduates each received 20%, with Mikhail Mirilashvili holding 40%).

With money, VK began to enter the market. Like Facebook, VK initially targeted college students and grew campus-by-campus by invitation. Pavel Durov also encourages registration with a contest: users are encouraged to get as many friends as possible to register. Whoever proved the best reference got a new iPod, and this strategy alone helped VK gain thousands of early adopters.

It didn't take long for VK's user base to break through six figures. And, just six months after its beta launch, VK has become the second largest social network in Russia with more than 100,000 users. A year later, VK surpassed 1 million users and overtook another local social media giant, Odnoklassniki.

Expand VK network scale

VK's success seems to come from a combination of product knowledge and technical excellence.

From the very beginning, Pavel Durov demonstrated the vision and pragmatism of VK products. Early iterations borrowed heavily from Facebook, mimicking the American company's color palette and functionality. But soon, VK rolled out other personalization features. For example, Pavel Durov favors the profile page as user default. This may have been more suitable for the Russian market at the time.

Additionally, VK supports video and audio file uploads, including many copyrighted files. However, this function caused a copyright dispute, and a Russian TV company sued it for infringement. In addition, in order to enrich the product, VK also "imitates" Netflix or Spotify services, and many users spend hours watching videos on the site every week.

An early VK employee pointed out that even though the VK business was mature enough, Pavel Durov still ruled product features with high expectations, saying: "Pavel has set high standards for product quality...the quality of the code , the quality of the end product, you have to meet that standard by any means.” As VK matured, even small stylistic decisions would often come up to the CEO.

VK also excelled in terms of technology, and skyrocketing transaction volumes gradually became an increasing challenge as the company grew, especially when the site became the target of hackers. Thankfully, Pavel Durov has an ace up his sleeve: his older brother, Nikolai Durov. After receiving his PhD in Mathematics from St Petersburg State University in 2005, Nikolai Durov went on to do a PhD in Computer Science (and Mathematics) at the University of Bonn, during which time he built a backend capable of handling millions of users and defending against attackers .

money mania

Soon, however, Pavel Durov's technical prowess couldn't keep up with the growing demand. VK started monetizing relatively early, encouraging users to buy in-app currency, send premium text messages, and play games. Starting in 2008, the company also experimented with advertising on the site, but Pavel Durov prefers to keep it to a minimum so as not to affect the user experience — “The customer comes first, always.”

Despite bringing in money, the growing need for more servers means more money is needed. Thus, Yuri Milner, the founder of DST Global, VK's new investor, appeared on the stage.

At first, taking away Yuri Milner's investment was not a difficult decision for Pavel Durov's team - generally, venture capitalists will provide the most money on the best terms, while letting VK continue to operate as it wants . But over time, DST Global's Russian assets were bundled into Mail.ru Group (MRG). By early 2011, MRG held 32.5% of the shares, with an option to hold a further 7.5% - clearly, they wanted more. Managing Director Dmitry Grishin, one of Yuri Milner's deputies, was blunt at the time, saying, "It is strategically right for us to take control of the social network, or even better, acquire all of its shares. , we are having conversations about it.”

However, the conversation doesn't appear to have lasted long. Although Pavel Durov reportedly visited MRG's offices to discuss the acquisition, he gave the final answer on social media: Posting a photo of the middle finger with a caption saying it was his "official" response to Dmitry Grishin , and called the MRG a "garbage dump".

Despite the strong language, they did not prevent MRG from exercising its option to increase its stake to 40% and value VK at $1.5 billion. At the time, the social network had 125 million user accounts and operations throughout Russia and other former Soviet countries.

Game of Thrones

VK's clout gives it real power.

But by the end of 2011, that power had turned into a liability.

In December 2011, protests over unfair parliamentary elections swept Russia. In response, the country's security agency, the FSB, pressured VK to shut down seven opposition groups and pass on user information. In response, Pavel Durov tweeted a photo of a husky in a hoodie with his tongue sticking out, his way of letting the world and VK's users know that he won't give in to pressure.

Shortly after, a SWAT team visited his apartment, although Pavel Durov refused to let them in. Surrounded, he decided to call his brother and tell him what had happened. As Pavel Durov later said, it was this moment that inspired him to start Telegram:

"I realized I had no secure way of communicating with him, and that's how Telegram started."

It’s worth noting that Pavel Durov’s reputation has been boosted after the SWAT team retreated, at least for now.

However the pressure continued into the new year and eventually led to Nikolai Durov's decision to leave VK. Squeezed by businessmen and bureaucrats and without the support of his closest brother, young Pavel Durov began to behave more and more erratically.

For example, Pavel Durov once threw money out of the office window of VK. He is said to have just given a large bonus to one of the company's vice presidents, but the president replied that it was the mission that mattered to him. Instead of money, Pavel Durov decided to challenge his vice president and suggested that he throw rubles on St. Petersburg's bustling Nevsky Prospekt. Although the vice president agreed, Pavel Durov still decided that this was not flashy enough, so he decided to take over. He made paper airplanes out of 5,000 ruble notes and threw them into the fast-gathering crowd—Pavel Durov later called it "our company history". One of the funniest moments ever."

Meanwhile, MRG is still fighting for control.

In late 2012, Alisher Usmanov, the tycoon who financed Yuri Milner and MRG, said "concrete negotiations" were underway.

The pressure continued into 2013, when VK came under fire from the Recording Industry Association of America (RIAA) for piracy, thwarting the company's chances of making public filings on Western exchanges.

Two months later, the most frightening April came to Pavel Durov.

On April 4, 2013, Russian media Novaya Gazeta dropped a bombshell stating that Durov and VK were not resisting the FSB's advances, but actively abetting the resistance. While Pavel Durov often seems like an idealist inspired by liberal tendencies, he is also a pragmatist. In the long run, he may have decided to act to protect VK's independence.

Around the same time, police investigated Pavel Durov for a suspected hit-and-run after driving a white Mercedes over the foot of a traffic warden. Fearing reprisals, Pavel Durov fled, and some believe he absconded to Italy, Switzerland or St. Kitts and Nevis. On April 16, 2013, investigators stormed VK's office and tore up filing cabinets.

No matter where he is, Pavel Durov makes a phone call almost every day, hoping to confirm that United Capital Partners (UCP) has bought 48% of VK. Little did he know at the time, though the news would prove to be true, Mirishvalis and Leviev eventually sold their stake to a company rumored to have government ties for $1.12 billion. In fact, many believe UCP would not have been able to finance such a large acquisition without the help of its backers.

Perhaps feeling that their time at VK would not last long, Pavel Durov and his brother had already started to "low-key" build a new project - this free and secure messaging service was Telegram, with a paper airplane as a symbol, which had accumulated quite a large user base. As of October 2013, Telegram had more than 100,000 daily active users and surpassed WhatsApp in some features. Despite this appeal, Pavel Durov does not intend to use the project for profit, but envisions it as a not-for-profit project, with development financed by their new holding company, Digital Fortress.

April Fool's Day Story

In January 2014, Pavel Durov sold the remaining VK stake to MegaFon CEO Ivan Tavrin. By then, Pavel Durov had settled with Alisher Usmanov because he was part owner of the mobile operator. Presumably, Pavel Durov knew what was going to happen next.

A few months later, Ivan Tavrin sold his purchased stake to MRG, giving the company control of VK. Eventually, Russia's internet giants snatched up the country's largest social network.

Although Pavel Durov is still CEO, he has started to feel dissatisfied with UCP and MRG. On April 1, 2014, he announced his resignation through his VK account. Many thought it was a (rather weird) April Fool's joke.

Are you kidding me? Eight years on, it's still unclear. But on April 3, 2014, Pavel Durov returned to social media and posted a dog meme, claiming it had been a prank all along. On April 21, he reported being fired again, this time because he had mistakenly withdrawn his earlier resignation application.

Whatever the case may be, at the end of April 2014, Pavel Durov shared a final update: he will be working full-time on Telegram to find a new home for his team. In a Facebook post, he wrote:

secondary title

The Telegram Story

Telegram's story parodied VK.

Although the messaging app has reached stratospheric heights in a short time, it has also attracted controversy along the way. Since working on the project in 2012, Telegram has approached 600 million monthly active users and is the fastest growing app on that basis in 2021. In the process, Pavel Durov had to fend off the FBI's "hunting" and face the "difficulties" of the US Securities and Exchange Commission.

Started in the wind and rain

When Pavel Durov left Russia, he wasn't hurt by the money, and later reports suggested he left with around $300 million and 2,000 bitcoins — worth roughly $87 million at today's prices. Dollar. Those funds gave him enough to fund Telegram's growth and invest in the Caribbean island of St. Kitts and Nevis in exchange for citizenship. Together with their brother Nikolai Durov who was appointed CTO, they started developing Telegram.

In fact, not everyone is convinced by the project's promises, since it's a WhatsApp clone that brings little new. Still, in its early stages, Telegram's team differentiated itself with innovations such as a smoother interface, faster interactions and supposedly more secure communications. The promise attracted users, and the company racked up 35 million subscribers within a few months of launch. Telegram's counter-stance became stronger after Facebook bought WhatsApp for $21.8 billion in early 2014.

However, the UCP was still causing problems for Pavel Durov at the time. VK shareholders are suing over his ownership of Telegram, claiming that Pavel Durov spent the company's time and money developing Telegram. The disagreement lasted until 2014 and ended when MRG bought UCP's stake in VK, the lawsuit against Pavel Durov was dropped, and Telegram's path was finally cleared.

Problems?

By 2016, Telegram had amassed 100 million monthly active users (MAU) with "zero marketing budget." Still, Telegram has often found itself at the center of controversy, but the problem is that the app's privacy-focused features have attracted not only security-conscious users but also extremist groups looking to stay out of the public eye. Telegram works hard to control jihadist groups using the app and adequately moderate illegal content.

In addition, Telegram also began to clash with US government agencies. At one point, Russian police are believed to have pressured mobile operators to block Telegram messages. At the same time, Pavel Durov also claimed that the FBI tried to bribe him and his developers to introduce the backdoor. As he puts it, US intelligence officials offered "tens of thousands of dollars" to a Telegram engineer, a "small sum" hardly an enticing proposition given Pavel Durov's claim that Telegram developers are mostly millionaires.

Despite these problems, Telegram has continued to grow.

Another reason for this growth is Facebook, where millions of people turn to Telegram whenever the Facebook social network malfunctions or bogs down due to misuse of user data. As we've noted, Telegram has often served as a "anti-Facebook" tool, and the worse Facebook does, the better Telegram does. Of course, the same is true of Telegram's relationship with other traditional social tools. For example, in 2014 and 2019, users of the Korean app Kakao Talk also began to switch to Telegram.

Telegram continued to rise as public opinion and the media narrative turned against the existing, ad-driven offering.In this case, it seems to have only one problem: money.

TON of trouble

By 2018, Telegram had close to 200 million users but had yet to find a reliable form of monetization. Although Pavel Durov still seems to view his creation as a public good, generating income will allow it to be self-sustaining. Plus, Pavel Durov's windfall from VK won't last forever; costs to the company have reportedly hit $70 million in 2017.

While Pavel Durov is famously averse to advertising on VK -- which at one point boosted Facebook's average revenue per user sevenfold -- he certainly knew it was the most effective way to monetize the social network. However, this script does not seem to be suitable for Telegram. Because of its focus on privacy and security, Telegram's inability to pass data on to advertisers without violating its basic promises meant they had to look elsewhere for how to make money.

Fortunately, starting in 2018, early Bitcoin investors gradually turned to broader social networks.

In January 2018, Telegram announced the launch of the "Telegram Open Network" (TON), a new blockchain enabling in-app ecosystems that Pavel Durov claimed would prove "far superior" to existing technologies such as Bitcoin or Ethereum. There are chains.

TON plans to support payments and purchases, including from third-party developers. Telegram raised $1.2 billion in an initial coin offering (ICO) to fund its construction. Participants include big names in Silicon Valley, such as Sequoia Capital, Benchmark, Kleiner Perkins, and Lightspeed. If Telegram didn't sell the stake, at least the thinking at the time was that the funding offered some opportunity for rapid growth.

TON white paper

Funding through tokens might seem like a masterful strategic move at first glance, giving Telegram a trove of idea-based warfare. Anton Rozenberg, a Telegram executive and former VK engineer, later noted:

Everything in the fundraising seemed magical: Telegram managed to raise as much, if not more, on a virtual project than the company itself was valued at — with virtually no commitments to investors and no loss of equity.

Telegram's entry into the encryption space prompted a follow-up effort by Facebook, one of the sources said. Like Libra (now known as Diem), Telegram's crypto project suffered from the same ill-fated fate. Despite the growing number of Telegram users, the development of TON has struggled. According to another former employee, Telegram told supporters that they completed most of TON's initial build "90-95%" in September of that year, indicating that the launch was still days away. In December of that year, they said they were only days away from unveiling their work. However, after the start of the new year, TON has not yet seen the light of day.

In September 2019, Telegram released its experimental source code, and in October, the US Securities and Exchange Commission came to the door.

The SEC determined that the TON token fundraise constituted a sale of unregulated securities, halting its development, said Stephanie Avakian, co-head of the SEC’s Division of Enforcement:

The urgent action we are taking today is to prevent Telegram from illegally selling digital tokens into the US market.

TON was delayed again, and after further questions, Pavel Durov surrendered.

In May 2020, Pavel Durov announced that he was abandoning the project and blamed the SEC for TON's death. The company spent $405 million on development without releasing any viable product versions. Frustratingly, some investors are starting to consider filing lawsuits, claiming their funds were misused and allocated to developing the Telegram messaging app instead of the TON network.

In the end, Telegram returned 72% of the funds to TON investors — a total of $1.2 billion, and many were frustrated with not getting a stake in Telegram. Non-US investors have the option to convert their refunds into loans, yielding a 110% return on their initial investment after one year, allowing Pavel Durov to quickly raise more capital. Telegram also paid an $18.5 million fine to the SEC, but did not "admit or deny the allegations."

After being separated from the project, Pavel Durov handed over the control of TON to the "community". Since the code is open source, anyone can continue to build on the project's architecture, so several Derivatives, including "Free TON" and "Toncoin". “Toncoin” seems to have established itself as the original’s spiritual successor, with Pavel Durov’s endorsement at the end of 2021, and the project is currently helmed by two independent developers, with another nine developers linked to Toncoin’s Github, But based on code contributions to various repositories, "Toncoin" development appears to be sporadic. In contrast, Free Ton is currently rebranded as Everscale and uses a different programming language than the original TON code.

Current Telegram employees spoke out about TON, noting that the SEC interfered with the development of the core product and caused friction. Despite Pavel Durov's bold attempts, TON ultimately failed to address monetization and capitalization issues.

uneasy bond

As of April 31, 2021, Telegram owes a whopping $700 million. Once again, Telegram ran into funding problems, with Pavel Durov admitting that he needs "hundreds of millions of dollars a year" to run Telegram.

With more than 500 million active users, Telegram has no shortage of suitors. It is reported that some Western venture capital firms have offered to buy 5% to 10% of the business at a valuation of US$30 billion, and some investment firms have even raised the valuation to nearly US$40 billion.

However, from his previous experience in founding VK companies, Pavel Durov understood the dangers of bringing in outside investors. After being shuffled from the CEO job last time, he will not let this happen again.

Instead of selling equity, Pavel Durov turned to debt. In March 2021, Telegram issued a $1 billion bond with an annual interest rate of 7-8%. What's more, if Telegram IPOs within three years of its offering, buyers can swap the bonds for equity at a 10% discount to the listing price. If Telegram takes longer to hit the public market, the discount will steepen to 15-20%.

Abu Dhabi's sovereign wealth fund Mubadala Investment is among the bond buyers, and as part of the acquisition, Pavel Durov has pledged to expand Telegram's presence in the region and is expected to open another office in the UAE.

Surprisingly, the Mubadala Investment deal involved the Russian Direct Investment Fund (RDIF). In a secondary transaction, the Abu Dhabi company reportedly sold $2 million in bonds to RDIF. Mubadala Investment claimed that the deal was part of the creation of a joint venture between the sovereign wealth funds. Telegram took issue with a spokesperson:

The Russian Direct Investment Fund is not on our list of investors for whom we sell bonds, and we are not open to any transactions with that fund.

Nonetheless, RDIF now has the option to acquire a stake at a discount to Telegram's potential IPO price. While this may have angered Pavel Durov, the fund's involvement also suggests that, in some respects, the Telegram CEO has won.

new heights

Shortly before Mark Zuckerberg announced Facebook's name change, the company experienced the massive outage we've already discussed. Within a day, Facebook customers flocked to other social networks, with messaging app Signal reporting "millions" of users and Telegram announcing 70 million new users. This set a "record" for Pavel Durov's company and a meaningful boost to the 5 billion users it had earlier this year.

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The key to Telegram's success: a strong product

If you take a quick glance at Telegram, you might think it's just another undifferentiated messaging app. But actually, this app is much more interesting. Telegram is a powerful product that continues to push the limits of what the messenger can and should do. While Telegram may have started out as a WhatsApp clone, it now has many similarities to Twitter, Clubhouse, Reddit, Discord, and Slack than just a simple, slick user interface.

MTProto protocol

Telegram relies on a custom protocol called "MTProto" designed by Nikolai Durov to provide security while maintaining performance. Specifically, the MTProto protocol utilizes two encryption schemes with different levels of privacy.

While more technical readers may be able to parse more from the diagram below, the rest can be learned by knowing that "Part 1" is "server-client encryption," which means user data is stored in Telegram's servers. All Cloud Chats use this encryption scheme. By the way, Telegram's corporate structure is designed to add an extra layer of security here. Data from Cloud Chat is distributed on servers around the world, managed by different legal entities. As Telegram explained, "several court orders from different jurisdictions" were required to protect company data.

Secret Chat utilizes more secure end-to-end encryption (E2EE), as shown in "Part 2" of MTProto. In E2EE, no one but the sender and receiver can decipher the data, not even Telegram can decrypt messages sent through this layer.

Telegram has drawn criticism for its approach in this regard. In a recent Twitter thread, Moxie Marlinspike, co-founder and former CEO of rival messaging service Signal, outlined his problems with the product.

According to Moxie Marlinspike, Telegram is no more secure than Facebook Messenger, saying:

"Telegram stores all of a user's contacts, groups, media, and every message you've ever sent or received on its servers in clear text. The app on a user's phone is just a "view" on their server, and the data actually exists Almost everything you see in the app, Telegram sees too... Confusingly, Telegram does allow you to create very limited "secret chats" that nominally do use e2ee (no groups, Sync, No Sync)..."

FB Messenger also has an e2ee "secret chat" mode, and it's much less restrictive than Telegram (and also uses a better e2ee protocol), but no one would consider FB Messenger an "encrypted messenger".

FB Messenger and Telegram are built almost identically.

Moxie Marlinspike's work building Signal complicates his argument, as do his product's ties to the CIA and other US national security entities. Still, it highlights a central part of Pavel Durov's strategy. Like its founder, Telegram is both idealistic and pragmatic. Yes, it wants to provide a safe experience for those who need it, but not at the expense of the majority of users. While having true E2EE might create a more private experience, it would make Telegram less useful to many people; messages would no longer sync across devices, for example.

A member of the Telegram team I spoke with explained that, above all else, the company wants to give users the best possible experience — for some this might involve E2EE and disappearing chats, but for most Humanly, it doesn't. When comparing Telegram to Signal, the former VK employee discussed earlier put it succinctly:

chat

chat

At the heart of Telegram's visible offering is its chat feature. Available across devices, users can message each other through a simple, intuitive interface. Interestingly, I found it felt smoother, faster and more alive than WhatsApp. Buttons do what you'd expect them to, and small functions create unexpected delights.

More specifically, Telegram's chat features are powerful. It supports various files (doc, zip, mp3) with high size limit. Replies, mentions, and hashtags are baked into the mix, and in-app photo editing is surprisingly advanced.

group chat

group chat

If users want to communicate with a wider group of people, they can turn to "groups". Like other instant messaging apps, group chats are used for different purposes, from family chats to business coordination. A recent article noted that Telegram groups are wildly popular among students. Instead of emailing a teacher or texting a friend all at once, students share questions and answers in an ongoing chat that's reminiscent of Discord.

In some countries, Telegram groups have also become Slack alternatives. In Russia, for example, many people prefer Telegram to the Salesforce subsidiary — in part because it's completely free, one source noted. As we'll discuss later, this could provide a path to a solid profit model.

Telegram groups have a life of their own because, like the rest of the app, these names are almost incredibly powerful. Telegram supports up to 200,000 members; WhatsApp only has a limit of 256. Telegram has built a suite of sharing and management tools to manage these types of users, group admins can create group links to share with the world, and fine-grain manage how members are allowed to interact.

channel

If Telegram's groups are akin to Discord, "channels" are a sort of Twitter or Reddit facsimile. Channels are not conversations, but are built for broadcasting and have no upper limit on the number of users. For example, some corporate channels on Telegram have more than 8 million participants.

There are channels for popular memes, pictures, news, quotes and more. Over 400 million people watch Telegram channels every day. Channel owners can view the data item by item. If channel owners want to allow viewers to chat, they can nest breakout sessions within the channel.

audio and video

After witnessing the pandemic trajectory of Clubhouse, Telegram accelerated its audio feature development. In fact, Telegram provided voice calls in the early days of development, but now Telegram groups and channels can host "unlimited" voice chats, millions of people can join, administrators can invite participants on stage, record their , and share links to conversations outside of the app. Due to Telegram's already large user base, Telegram quickly surpassed Clubhouse in terms of listening time. The company is following a similar trajectory with video, moving from calls to group calls to pseudo-streaming. Telegram can now support up to 1,000 simultaneous viewers and allows easy recording and viewing. We should expect further improvements. Telegram's blog writes:

to pay

to pay

While you may not have seen it, Telegram does support in-app payments, a beta version of which first appeared in 2017, but limited to interactions with Telegram "bots." Through the interface, users can "do everything from ordering pizza to hailing a cab to changing winter tires when winter tires".

other details

other details

In addition to Telegram's main function, it has many secondary functions, many of which may go undiscovered.

For example, Telegram protects you from having to reveal plaintext. When sending a private text, you can select some or all of the text and mark it as hidden. To decipher it, the reader must explicitly click on it. (This feature may only be available in certain countries, though.)

Another useful feature is People Nearby. While off by default for privacy reasons, anyone can find local groups and chats by activating the feature.

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Telegram's Corporate Culture

There is very little information about Telegram's culture, but we can still glimpse its culture through how it works and what makes it unique.

Founder Leadership

A friend at Amazon once told me that, like many other companies, the e-commerce giant organizes itself into "hierarchies." An entry-level engineer might be Level 4 or "L4," while a VP might be L10. The highest level is L12, and L12 has only one member, the founder: Jeff Bezos. (Which always feels a little comical; why would it need a whole new class—inaccessible to everyone else—to reinforce Jeff Bezos' supremacy?)

Telegram feels like this - Pavel Durov is unique in terms of control. He not only brings capital to the company, but also guides the company's vision. So, who is Pavel Durov?

As we mentioned, he seems to be a mercurial, contradictory character who embraces an ascetic lifestyle and escapes the traps of vanity and wealth. Although Pavel Durov is a self-proclaimed iconoclastic, he is accused of colluding with the FSB and has chosen to favor conventional means in terms of financing. While Abu Dhabi is a modern city, the UAE is no bastion of tolerance. Of course, no country is perfect, least of all America, but some of Pavel Durov's most important human and corporate decisions show more than a little ideological malleability.

Adding to this disconnect, Pavel Durov is also a highly intelligent programmer with a keen product sense. One employee described him as a "visionary" who was able to recruit extremely talented engineers and unite them around a common goal, insisting on high standards of work and delivering quickly.

Another core figure is Telegram's chief technology officer Nikolai Durov, who is mainly responsible for building and improving the core architecture. It is said that he completed the entire MTProto and TON specifications alone; according to sources, the company's Android client is also almost entirely He created it alone. Nikolai Durov is an eccentric character. In a Medium post, a childhood friend recounts a story he's heard about him: Nikolai Durov was so focused on his work that he didn't notice a beetle dropped in his cereal bowl and ended up not knowing I didn't feel like I ate it up.

A Telegram employee pointed out that Nikolai Durov seemed shy and didn't often communicate in large groups, but they said that Pavel Durov showed extraordinary care for his brother, because what Nikolai Durov brought was of great value, so Pavel Durov will give him all the tools he needs to be successful.

product delivery

As mentioned earlier, Telegram is known for fast product delivery. Despite only getting off the ground four years after WhatsApp, Telegram quickly caught up and then sprinted ahead from a functionality standpoint. Now, both WhatsApp and FB Messenger are behind Pavel Durov's Telegram, and some features were even introduced by Telegram a few years ago.

The reason why product iterations can be completed in such a fast way is mainly due to the flat management structure of Telegram - if Telegram operates in a similar way to VK, it means that the company has almost no managers. "Many decisions were made by Pavel Durov alone.

talent mining

According to reports, Telegram has done an excellent job of hiring engineers. In part, this is thanks to Pavel Durov's reputation. In Russia, he is seen as a symbol of a generation of entrepreneurs and technological progress. A source explained how this helped Telegram's image, saying:

"In Russia, Telegram is already a symbol."

funds

funds

While Telegram has the option of private financing, Pavel Durov may prefer to raise money through an IPO. The company is reportedly aiming to go public in 2023, a timing that may have been inspired by the terms of the bond offering.

According to a report in Russian newspaper Vedomosti, Pavel Durov has started talks with investment banks and is looking for a suitable listing location. Apparently, Pavel Durov is considering SPACs and direct listings, but he seems to prefer the latter. While the New York Stock Exchange is a controversial destination, Asian exchanges are also on his radar, including the Hong Kong Stock Exchange.

What valuation would Telegram get if it went public today?

When it was acquired in 2014, WhatsApp reported 400 million active users, meaning Facebook was paying about $55 per user. Assuming Telegram has more than 600 million active users, it could be valued at $32.7 billion.

But in the eight years since WhatsApp was snapped up, the market has changed. Social media companies have further demonstrated their earning potential, fintech has infiltrated various products, and tech giants have gained prominence. Judging Telegram by the same value per user feels outdated.

We may need to turn to the private market for a better comparison. Last September, Discord raised $500 million at a $15 billion valuation. At the time, the company reported 150 million active users, which equated to $100 per user. According to this measure,Telegram would be worth closer to $60 billion, a figure that feels like a better proxy for the company's worth.

competitor comparison

Of course, the main difference between Telegram and Discord is revenue. Discord founder Jason Citron's focus on chat for games has earned him $130 million in revenue, a figure that has grown at a compound annual growth rate of 126% over the past five years.

If Telegram is going to make money, it's certainly not on that order of magnitude.

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How does Telegram make money?

Despite a red-hot product-market fit, in some ways Telegram appears to be an impractical application, and product-model fit has yet to be achieved. Despite some experiments, Pavel Durov's team has yet to settle on the final business model, which needs to be constantly changing, testing advertising, subscription and payment-based approaches.

Although Pavel Durov believes that advertising that relies on user data is immoral, Telegram is willing to make money through "attention", such as-

advertise

In October 2021, Pavel Durov announced that promotions will be allowed on Telegram, but will not rely on user data. Additionally, they will also attempt to drive returns to advertisers by allowing advertisers to target specific channels, sponsors can choose to promote their wares in channels dedicated to relevant topics, rather than pinpointing specific age ranges, geographies and expressions Users within an interest group. Until now, advertisers could only access channels with more than 1,000 subscribers and had to have a minimum budget of more than $2 million. It's worth mentioning that, in time, Telegram wants to try to distribute some of the revenue to channel owners.

subscription

subscription

So where else can Telegram make money? Subscriptions might be another option and can come in many different forms. The company has come up with an "inexpensive" product that removes the ads it's adding. While not a particularly exciting proposition, it could open up user sponsorships of "server boosts" similar to Discord monetization.

If you stretch your imagination a bit, it's not hard to imagine subscription services monetizing power users, especially those who run large groups or channels. For example, premium features may be behind a paywall, but Telegram needs to be careful not to alienate creators. Since Telegram is already used as an alternative to Slack in some parts of the world, it could introduce an enterprise layer, although the fees would likely remove its main appeal.

to pay

to pay

Paying out profits felt like the most natural choice for Pavel Durov. While this hasn't worked out for Telegram yet, it appears the conditions are in place for success. Not only does Telegram have a huge user base, but most of its strength comes from the fact that most of its users come from regions with less bank accounts, including Armenia, Cambodia, Kazakhstan, Jordan, and Venezuela. Plus, thanks to its unfortunate encounter with TON, the company has real crypto expertise that it could put to good use. Late last year, Pavel Durov revealed that the app will support Toncoin payments. Perhaps this is the first step towards social network-embedded encrypted transactions.

Telegram employees also highlighted payments as an area of ​​focus, in particular, noting the lack of a unified global payment system, comparing the status quo in this area to WhatsApp's previous messaging. Just as WhatsApp changed the game by bypassing telecom providers, Telegram could do the same by going beyond or integrating with traditional payment processors. The result is equally simple: seamlessly sending data (money in this case) anywhere on the planet, potentially utilizing or involving stablecoins or other cryptocurrencies.

Facebook is catching up to this with Diem, but Telegram may be in a better position. While consumers deeply distrust Mark Zuckerberg's company, Telegram has a reputation for privacy, which could be an advantage when it comes to the sensitive issue of money.

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Reasons to trust Telegram

While it hasn't made headway yet in terms of revenue generation, for Telegram, they could build a great business on top of the messaging app. While Facebook hasn't figured out how to use WhatsApp, both WeChat and LINE are raking in significant revenue.

In terms of profitability, WeChat is top-notch. The Tencent subsidiary is more of an ecosystem than an app, offering chat, payments, e-commerce, games and more through a single interface, and the company makes money through advertising, payments and purchases. While it's difficult to separate WeChat's revenue from Tencent's other revenues, according to a report last January, WeChat processed $250 billion in transactions in a single year, with payments mostly through its "mini-programs"—essentially are third-party applications built for the platform.

Encouragingly, WeChat didn't start the "Mini Program" program until 2017, and currently supports more than 1 million such partners. In terms of active users, WeChat doesn't appear to be far behind Telegram — the same report shows that WeChat currently has 1.2 billion monthly active users, roughly double that of Telegram.

Could Telegram find similar multifaceted success? The answer may not be easy, after all WeChat benefits from a huge market support and has a super organization to fund its development.

Another example is LINE, a Japanese company with about 160 million monthly active users, 84 million of them in its home country. Its revenue hit $1.5 billion in 2020, thanks to a combination of gaming, payments, and shopping. While billions of dollars isn't enough to support Telegram's market cap in the long run, it could give them a great foundation.

Whatever direction Telegram chooses, for now they need to move quickly.

We should be happy that Telegram exists, and while the app may not be as private as users might think, it raises the bar in terms of usability and depth of features.

Where is the future for Telegram and Pavel Durov? Maybe time will tell. But one thing is for sure - Pavel Durov still has a long way to go.