Squaring the circle, the duty of setting up with a ruler and a compass a sq. that has an space equal to that of a given circle, is a type of nice unsolvable mathematical issues.
Telegram now has half a billion energetic customers worldwide, and its creator, Pavel Durov, is a very good and extremely motivated one who appears able to fixing just about any downside. Since its launch in August 2013, Telegram has loved regular development, funded completely by its founder, who left his earlier creation, the Russian social community VK, with $300 million in his pocket.
Briefly, every little thing signifies that Telegram is doing very nicely: when its most direct competitor, WhatsApp, reached an analogous variety of energetic customers worldwide, it acquired a takeover supply from Fb estimated at some $19 billion. If we contemplate that determine as an applicable comparable for valuation functions, then the multiplier for its founders can be extraordinarily optimistic.
However the details counsel we’re speaking about a lot greater valuations: the corporate has simply raised $1 billion by the sale of convertible bonds to buyers corresponding to Mubadala and Abu Dhabi CP by way of pre-IPO convertible bonds in preparation for an eventual IPO, and a few of the bids it rejected beforehand put its worth at round $30 billion or $40 billion. However Durov, after being abruptly fired from VK and studying about it by media, has little interest in promoting Telegram or in entering into mattress with an investor that will, in some unspecified time in the future, pose him related issues to people who finally led him to flee his homeland.
What is evident is that the problem of monetizing an on the spot messaging software, irrespective of what number of 5 hundred million customers it has and rising, is just not simple, as Fb is aware of nicely from its efforts to attempt to earn a living from WhatsApp, which has prompted some customers to hunt refuge in Telegram.
What are the choices? Logically, promoting, administration of information generated by customers, and cost of a price. And within the case of on the spot messaging, earlier expertise appears to point that none of those are notably simple. Promoting, as a result of nobody appears to suppose that this system they use to speak to their associates or household is an appropriate place to come across publicity. Knowledge administration, as a result of customers rightly really feel they’re being spied on. And subscriptions… we when WhatsApp, a few years in the past, tried to cost customers in some international locations as little as 89 euro cents: okay, these have been totally different instances, however let’s not overlook one factor: on the spot messaging is a extremely aggressive setting, there are a lot of choices, and though they’re very topic to community economies — you don’t go to an on the spot messaging platform except your pals and acquaintances are there — switching is just not an impossibility.
What does Pavel Durov intend to do with Telegram? Sq. the circle. However how do you flip an on the spot messaging app that you simply’ve been funding your self for seven years, even with half a billion energetic customers, into one thing that makes cash with out turning off its customers?
After the failure of his try to launch a cryptocurrency in 2018 because of the lawsuit filed by the US SEC, Durov appears to be attempting to mix the items he has at his disposal in a means that is smart: promoting sure, however not on customers’ personal chats, and as an alternative by giant uneven channels, the place it might be extra acceptable given the parallels with mass media. Any promoting, furthermore, can be respectful and with the potential of opting out, though Durov believes that will probably be accepted as a means to supply sustainability to those data channels.
Will promoting be primarily based on customers’ information? No, as a result of that may stop Telegram from distancing itself from its essential competitor, WhatsApp, and would join with the atavistic fears of a lot of its customers, who more and more are fleeing platforms the place they really feel their privateness is threatened.
Lastly, cost. And on this case, removed from proposing pay-per-use, the concept appears to be to turn out to be a platform for content material creators, the place they may have the ability to monetize their creations by acquiring funds from their followers within the type of donations or subscriptions, a mechanism that the platform may give generate revenue by commissions.
A “sure however no” by which Durov appears to have issues fairly clear, and in an setting by which he has demonstrated a outstanding facility to observe a roadmap and generate an affordable high quality product. If he succeeds, it might be, in impact, squaring the circle: with the ability to get it proper the place many others have failed or have been rejected en masse by their customers.
Let’s see if it really works.