Editor's note:
On the evening of August 24th local time, French TV station revealed that Telegram founder and CEO Pavel Durov was arrested at a French airport.
Subsequently, according to the report from the French news website TF1, Pavel Durov was detained by special agents of the French National Anti-Fraud Office. According to preliminary investigations, the French organization OFMIN, which is responsible for combating child sexual exploitation, issued a search warrant for him, and the arrest warrant is only valid within French territory.
TF1 predicts that Durov may meet with an investigating judge on Saturday night and may be charged on Sunday with "multiple crimes, including terrorism, drugs, conspiracy, fraud, money laundering, receiving stolen goods, child crime content… and possibly more."
An investigator from the French National Anti-Fraud Office (ONAF) stated: "Pavel Durov will ultimately be detained pending trial, that's for sure… He allowed countless crimes to occur on his platform without taking any measures to mitigate or cooperate in dealing with them."
Influenced by this news, TON briefly fell to 5.452 USDT and is now trading at 5.961 USDT, with a 24-hour decline of nearly 11%.
TON responded: "We assure everyone that the TON community is still strong and fully operational. As a community dedicated to freedom of speech and decentralization of power, in this challenging moment, we firmly support Pavel. Pavel has always been a faithful advocate of these values, and we believe that his efforts to promote an open and decentralized internet will continue to inspire millions. The TON community remains focused on our mission, and we will continue to work hard to uphold these principles globally. We encourage everyone to stay calm and united, and to continue building together in addressing this situation. Thank you for your ongoing support."
Odaily Star Daily previously translated a in-depth introduction of Telegram by Mario Gabriele, founder and editor-in-chief of The Generalist, in January 2022. On this occasion, it is necessary to once again review the past and present of this legendary social application for readers and provide additional reading: "TVL increased by 7 times, data review of TON's DeFi development in the second quarter" "Looking at the future growth potential of TON from a developer's perspective (with high-quality hackathon projects)" "Looking back at the Telegram Bot track that has been popular for a year, these five competition strategies allow representative players to break through".
Content Overview
Telegram is the fastest-growing application in the world, at least in some respects. According to a 2021 report, no major application has seen a greater increase in monthly active users than Telegram, which now has approximately 600 million users.
Telegram has built a narrative around its security, although it does encrypt messages, most of it is not truly encrypted and not completely private. However, this does not seem to have damaged the company's reputation, as it has done very well in terms of anti-location.
There are risks associated with using cryptocurrency. The 2018 ICO brought in $1.7 billion in funding for Telegram. Unfortunately, for founder Pavel Durov, the U.S. Securities and Exchange Commission deemed this financing to be an unregistered securities sale, resulting in a slowdown in Telegram's development and leading to unusual financial arrangements.
Competition is an effective way to attract talent, and few companies seem to have as many talented engineers as Telegram. Part of Telegram's success depends on talent, and the company often offers prizes for product improvements and hires the most talented participants.
Telegram still has not found a business model. Since 2017, Telegram has been exploring payment services and recently also attempted advertising. So far, neither has been very effective. From this perspective, Pavel Durov's team may look for inspiration from WeChat and other peers.
In October 2021, Telegram gained 70 million new users in 24 hours. The ubiquity of social media makes us numb to such large numbers, but in reality, 70 million is more than the populations of South Africa, France, and Thailand combined, and only slightly less than twice the population of Canada.
With such a comparison, perhaps you will find that Telegram is already a messaging application with a global scale.
Why did this happen? To be honest, a large part of the reason is that other social media platforms are "not up to par." Facebook's problems are increasing, and Instagram, Messenger, and Oculus are also unable to satisfy users. Perhaps in search of better social connections, or even a better, more humanized social media brand, users flocked to Telegram - a social application founded by the charismatic Russian entrepreneur Pavel Durov.
Telegram feels more like a denial of Mark Zuckerberg, which provides a good reputation for its narrative, but also hides other advantages. Yes, Telegram has established a reputation as an alternative that focuses more on privacy, but it is also a better messaging application. Although it may still lag behind WhatsApp in terms of inactive users - 2 billion vs. 600 million - Telegram empowers users with more power and skills.
Of course, Pavel Durov's business has also experienced setbacks, such as the poorly executed initial coin offering (ICO) that brought them $1.7 billion in funding, but the organization made no progress. Telegram would argue that the SEC is responsible for this failure. However, aside from all this, Telegram itself also has many problems, such as still not establishing a viable business model. For Telegram, meaningful revenue seems still out of reach even 10 years later.
It seems that Telegram is a complex, sometimes even unrealistic company, despite its excellent product, it still seems to be playing the role of a growing counter-attacker in comparison. In chess, the "Russian game" is an opening move, part of which is to imitate the opponent and try to counterattack. In many ways, Pavel Durov seems to have taken the same approach.
To realize its true potential, Telegram may have to change its game. As the company enters a new decade, it hopes to establish a reputation based on its own strengths. Supported by visionary executives and a talented technical team, Telegram not only has key elements comparable to WhatsApp, but can even make it pale in comparison. In today's article, we will discuss the past and future of Telegram, including the following:
Founding VKontakte. Before attempting to create a better WhatsApp, Pavel Durov created the Russian version of Facebook. While Zuckerberg's story is fascinating, Pavel Durov's story is more exciting.
Launching Telegram. After being ousted from his old company, Pavel Durov began to build Telegram. To develop this application, he had to deal with FBI interference and SEC brutality.
Unusual Financing. Pavel Durov used unconventional methods to finance Telegram, avoiding raising funds from venture capitalists. He not only paid most of the development costs himself, but also turned to ICOs and bond issuances.
Product Expertise. Telegram was founded after WhatsApp, but now it is clearly a leader in social media products. Telegram supports larger groups, more formats, and a range of different features.
Financial Troubles. Much of the company's reputation relies on its commitment to privacy. This makes an ad-based business model unsuitable. Telegram has tried promotions and other payment methods, but has not achieved breakthrough success.
Looking to the Future. However, we have reason to be optimistic about Telegram, as other messaging applications have found creative ways to monetize, especially WeChat in China and LINE in Japan.
Let's get started.
The Story of VK
The Roman poet Juvenal is not a name that is often quoted, but he has contributed a lot of trendy vocabulary to our media age, such as using "bread and circuses" to describe how to appease the masses, and using "black swan" and "watchman" to describe changes in the financial markets.
A spark can start a prairie fire
Ironically, Pavel Durov - this man born in 1984 - would come to be defined by seeking privacy in his life. Pavel Durov is the second son of Albina Durova and her husband Valery Semenovich Durov, a respected historian of Roman history who has studied the satirical works of the Roman poet Juvenal.
Although born in St. Petersburg, Pavel Durov spent most of his childhood in Turin, until his family returned to Russia when his father accepted a position as head of the Department of Linguistics at St. Petersburg University (SPbU).
There is no doubt that Pavel Durov was a smart child, but among his many brothers, he was not the most outstanding. His older brother Nikolai Durov, four years his senior, showed extraordinary mathematical abilities from an early age.
Nikolai Durov participated in the International Mathematical Olympiad in his teenage years and won several gold medals. He is now a talented computer scientist and passed on this interest to his younger brother Pavel Durov, who is extremely talented in building products. At the age of 11, Pavel Durov created a derivative of the game Tetris, and later he and his brother Nikolai Durov collaborated on a strategy game set in China called "Lao Unit."
Pavel Durov was not a "quiet" student, and certainly not the kind who sat at the front of the classroom to see the blackboard better and get good grades. Pavel Durov often told his teachers that they were incompetent, and seemed to enjoy showing off his exceptional intelligence, especially in the field of computers. Once, he changed the screensaver of the school computer to a photo of the teacher with the words "must die" next to it. Despite the instructor's attempts to lock Pavel Durov out of the computer system, he always seemed to find a way in. This quirky behavior was not only directed at the teachers; a classmate said that when talking to Pavel Durov, it was always difficult to tell if he was serious or mocking them.
Despite his interest in programming, Pavel Durov followed in his father's footsteps when he went to university, not only gaining admission to St. Petersburg State University, but also focusing on linguistics. To meet Russia's conscription requirements, Pavel Durov studied propaganda and the tactics advocated by Sun Tzu and Napoleon, and over time, he realized the importance of information control.
In addition to his studies, Pavel Durov also devoted himself to developing his own career, including launching the Durov.com blog, which became a platform for university students to upload papers and exchange ideas. However, Pavel Durov would often deliberately make provocative statements - such as praising Hitler. He later explained:
"Sometimes I had to stir up trouble. If users agree with your point of view, you feel like you're on top of the world, but this result will actually cause them to leave. If you argue with them, humiliate them, they will come back to prove they are right."
Due to his deep understanding of online social dynamics, Pavel Durov's website attracted over 2.7 million visitors, not only giving his ideas wide influence, but also proving invaluable when this up-and-coming entrepreneur considered his next move.
Chasing Facebook
In 2006, Slava Mirilashvili logged onto a Russian news website and was surprised to see his old classmate Pavel Durov, as his friend had been exposed for creating a popular online forum for university students. (As a note, we will refer to Slava Mirilashvili as "Slava" to distinguish him from his father, as his father was also involved in this story.)
Slava Mirilashvili witnessed the rise of Facebook up close. Of course, this social network had been founded in Boston two years earlier. But on Pavel Durov's forum, he saw the potential for a similar business targeting the Russian market. So, Slava Mirilashvili found Pavel Durov's address, and the two young men rekindled their friendship. The conversation quickly turned to the potential of the emerging social networking space, and some other friends and Lev Leviev, a graduate of McGill University, quickly joined in.
That summer, just a few months after graduating from St. Petersburg University, Pavel Durov registered a domain name: vkontakte.ru. As the story unfolds, the name VKontakte (meaning "contact") initially imitated Facebook (Facebook had dropped the 'the' from The Facebook when naming), so it was obviously cleaner.
To launch their project, the three needed funding. Fortunately, they had a ready source of funds: Slava Mirilashvili's father Mikhail Mirilashvili, a Georgian who had built a dazzling empire covering various businesses from real estate to oil, media, and gambling, and also owned the largest slot machine network in Europe.
At his son's behest, Mikhail Mirilashvili capitalized the VK company in exchange for 60% of the business. Although Pavel Durov only held 20% of the company's shares (the remaining 20% was divided between Slava and Lev Leviev), he received the majority of the voting rights, reflecting the startup's reliance on his vision (other sources indicate that the three recent graduates each received 20%, and Mikhail Mirilashvili held 40%).
With the money, VK began to enter the market. Like Facebook, VK initially targeted university students and developed campus by campus through invitations. Pavel Durov also encouraged registration through competitions: encouraging users to invite as many friends to register as possible. Whoever proved to be the best referrer would receive a new iPod, and this strategy alone helped VK gain thousands of early adopters.
Before long, the number of VK users exceeded six figures. And, just six months after the beta version was launched, VK became the second largest social network in Russia, with over 100,000 users. A year later, VK's user base surpassed 1 million and surpassed another local social media giant, Odnoklassniki.
Expanding the VK Network
The success of the VK company seemed to come from a combination of understanding the product and excellent technology.
From the start, Pavel Durov demonstrated foresight and pragmatism in the VK product. Early iterations borrowed heavily from Facebook, imitating the color palette and features of the American company. But soon, VK introduced other personalized features. For example, Pavel Durov preferred to use the personal profile page as the default setting for users. This was more suitable for the Russian market at the time.
In addition, VK supports the upload of video and audio files, including many copyrighted files. However, this feature sparked copyright disputes, and a Russian television company sued VK for copyright infringement. Furthermore, to enrich the product, VK also "imitated" Netflix or Spotify services, with many users spending hours each week watching videos on the site.
An early VK employee pointed out that even though VK's business was mature enough, Pavel Durov still ruled over product features with high expectations, stating, "Pavel sets a very high standard for product quality… the quality of the code, the quality of the final product, you have to meet this standard in any way." As VK matured, even small style decisions were often submitted to the CEO.
VK also excelled in technology, and as the company grew, the skyrocketing transaction volume gradually became a bigger challenge, especially when the website became a target for hackers. Fortunately, Pavel Durov had an ace up his sleeve: his brother Nikolai Durov. After obtaining a PhD in mathematics from St. Petersburg State University in 2005, Nikolai Durov continued to pursue a PhD in computer science (and mathematics) at the University of Bonn, during which he built a backend capable of handling millions of users and repelling attackers.
Money Madness
However, Pavel Durov's proficient technical abilities soon could not keep up with the growing demands. VK relatively early started monetizing, encouraging users to purchase in-app currency, send premium SMS, and play games. Starting in 2008, the company also attempted to place advertisements on the website, but Pavel Durov preferred to keep ads to a minimum to avoid affecting the user experience - "Customer first is the top priority, always."
Despite bringing in funds, the increasing demand for more servers meant the need for more funds. So, the new investor in VK, Yuri Milner, founder of DST Global, made an appearance.
Initially, taking Yuri Milner's investment was not a difficult decision for Pavel Durov's team - generally, venture capitalists would provide the most funds on the most favorable terms, while allowing VK to continue to operate according to its own wishes. 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 and had the option to acquire an additional 7.5% - clearly, they wanted more. One of Yuri Milner's deputies, Dmitry Grishin, was blunt at the time, stating, "We want to control this social network, or even better, acquire all of its shares. It is strategically correct, and we are having a conversation about it."
However, this conversation did not seem to last long. Despite Pavel Durov visiting MRG's office to discuss the acquisition, he gave the final answer on social media: posting a photo of a middle finger, with a caption stating that it was his "official" response to Dmitry Grishin, and calling MRG a "dump."
Although the language was strong, it did not stop 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 operated throughout Russia and other former Soviet countries.
Power Play
VK's influence gave it real power.
But by the end of 2011, this power had become a burden.
In December 2011, protests against unfair parliamentary elections swept through Russia. In response, the country's security agency FSB pressured VK to shut down seven opposition groups and hand over user information. In response, Pavel Durov posted a photo of a husky sticking out its tongue on Twitter, wearing a hoodie, as his way of letting the world and VK's users know that he would not succumb to pressure.
Shortly after, a special police force visited his apartment, but Pavel Durov refused to let them in. Surrounded, he decided to call his brother and tell him what was happening. As Pavel Durov later said, it was this moment that sparked the idea for him to create Telegram:
"I realized that I didn't have a secure way to communicate with him, and that's how Telegram started."
Notably, after the special police force withdrew, Pavel Durov's reputation actually improved, at least for the time being.
However, the pressure continued into the new year, ultimately leading to Nikolai Durov's decision to leave VK. The young Pavel Durov, squeezed by businessmen and bureaucrats, and having lost the support of his closest brother, began to behave more and more erratically.
For example, Pavel Durov once threw money out of the window of VK's office, reportedly having just given a large bonus to a company vice president, but the vice president replied that what was important to him was the mission, not money. Pavel Durov decided to challenge his vice president and suggested that he throw rubles onto the bustling Nevsky Avenue in St. Petersburg. Although the vice president agreed, Pavel Durov still felt that this was not grand enough, so he decided to take over. He made paper airplanes out of 5,000 ruble bills and threw them into the rapidly gathering crowd - Pavel Durov later called it "one of the most interesting moments in our company's history."
At the same time, MRG was still vying for control.
At the end of 2012, Alisher Usmanov, a tycoon who provided funding for Yuri Milner and MRG, stated that "specific negotiations" were underway.
The pressure continued into 2013, when VK was criticized by the Recording Industry Association of America (RIAA) for piracy, hindering the company's opportunity to go public on Western exchanges.
Two months later, Pavel Durov faced the most terrifying April.
On April 4, 2013, the Russian media Novaya Gazeta dropped a bombshell, pointing out that Durov and VK did not resist the FSB's advances, but actively encouraged resistance organizations. Although Pavel Durov often appeared as an idealist and was inspired by liberal tendencies, he was also a pragmatist. In the long run, he may have already decided to take action to protect VK's independence.
Around the same time, the police investigated Pavel Durov for allegedly driving a white Mercedes over a traffic warden's foot and fleeing the scene. Fearing retaliation, Pavel Durov chose to go into hiding, with some speculating that he fled to Italy, Switzerland, or Saint Kitts and Nevis. On April 16, 2013, investigators stormed VK's office and tore apart filing cabinets.
Wherever he was, Pavel Durov would call almost every day, hoping to confirm whether United Capital Partners (UCP) had purchased 48% of VK. At the time, he was unaware of this, although the news would prove to be true. Mirishvalis and Leviev eventually sold their shares to a company rumored to have government connections for $1.12 billion. In fact, many believed that UCP would not have been able to fund such a large-scale acquisition without supporters' help.
Perhaps feeling that his days at VK were numbered, Pavel Durov and his brother had already begun "quietly" building a new project - the free, secure messaging service known as Telegram, which had already accumulated a considerable user base and used a paper airplane as its symbol. By October 2013, Telegram had over 100,000 daily active users and had surpassed WhatsApp in certain features. Despite this appeal, Pavel Durov did not intend to profit from the project, envisioning it as a non-profit endeavor with development funding provided by their new holding company, Digital Fortress.
April Fools' Story
In January 2014, Pavel Durov sold the remaining VK shares to Ivan Tavrin, CEO of MegaFon. By then, Pavel Durov had already settled with Alisher Usmanov, as he was a partial owner of the mobile operator. It is speculated that Pavel Durov should have known what was coming next.
A few months later, Ivan Tavrin sold the shares he had purchased to MRG, giving the company control of VK. Ultimately, Russia's internet giant seized control of the country's largest social network.
Although Pavel Durov remained CEO, he began to grow dissatisfied with UCP and MRG. On April 1, 2014, he announced his resignation through his VK account. Many believed it was a (quite strange) April Fools' joke.
Was it a joke? Eight years later, it's still unclear. However, on April 3, 2014, Pavel Durov returned to social media and posted a meme of a dog's expression, claiming it had all been a prank. On April 21, he reported being fired, this time for mistakenly withdrawing his previous resignation.
Whatever the case, by the end of April 2014, Pavel Durov shared a final update: he would be devoting himself full-time to finding a new home for his team at Telegram. In a Facebook post, he wrote:
Which country or city do you think is best for us? Feel free to comment below at any time. To give you an idea of our preferences, we don't like bureaucracy, war, excessive regulation. We like freedom, a strong judiciary, free markets, neutrality, and civil rights.
The Story of Telegram
The story of Telegram mirrors that of VK.
Although the messaging app reached stratospheric heights in a short time, it also sparked controversy along the way. Since starting the project in 2012, Telegram's monthly active users had approached 600 million by 2021, making it the fastest-growing app on that basis. In the process, Pavel Durov had to fend off the "hunt" by the FBI and face harassment from the U.S. Securities and Exchange Commission.
A Rocky Start
When Pavel Durov left Russia, he did not leave empty-handed, as later reports indicated he left with approximately $300 million and 2,000 bitcoins - which, at today's prices, would be worth around $87 million. This funding enabled him to support the development of Telegram and invest in the Caribbean island of Saint Kitts and Nevis in exchange for citizenship. Together with his appointed CTO brother Nikolai Durov, they began developing Telegram.
Not everyone believed in the project's promise, as it was seen as a WhatsApp clone that brought little new to the table. However, in the early stages, Telegram's team did offer some innovations, such as a smoother interface, faster interactions, and allegedly more secure communication. This promise attracted users, and the company attracted 35 million users within months of its launch. After Facebook's acquisition of WhatsApp for $21.8 billion in early 2014, Telegram's counterposition became even stronger.
However, UCP was still causing trouble for Pavel Durov at the time. VK shareholders sued him for ownership of Telegram, claiming that Pavel Durov had spent the company's time and money developing Telegram. The dispute continued until 2014, when MRG purchased UCP's shares in VK, leading to the withdrawal of the lawsuit against Pavel Durov, and Telegram's development path was finally clear.
Continued Issues?
By 2016, Telegram had accumulated 100 million monthly active users (MAU) with "zero marketing budget." However, Telegram often found itself at the center of controversy. The app's privacy-focused features not only attracted security-conscious users but also drew in extremist organizations seeking to stay out of the public eye. Telegram worked to control the use of the app by militant groups and actively moderated illegal content.
Additionally, Telegram began to clash with U.S. government agencies. It was believed that Russian authorities had pressured mobile operators to intercept Telegram messages. Meanwhile, Pavel Durov also claimed that the FBI had tried to bribe him and his developers to introduce backdoors. As he stated, U.S. intelligence officials offered "tens of thousands of dollars" to a Telegram engineer, which, given Pavel Durov's claim that Telegram developers were mostly millionaires, was hardly an enticing proposal.
Despite these issues, Telegram continued to grow.
Another reason for this growth was Facebook - whenever the social network faltered or ran into trouble due to the misuse of user data, millions of people turned to Telegram. As noted, Telegram often served as a "counter to Facebook" tool, with Telegram's development benefiting from Facebook's poor performance. The same was true for other traditional social tools, such as when users of the Korean app Kakao Talk began turning to Telegram in 2014 and 2019.
As public opinion and media narratives turned against existing, ad-driven products, Telegram's business continued to rise. In this context, its only problem seemed to be: money.
Troubles with TON
By 2018, Telegram's user base had approached 2 billion, but a reliable revenue model had not yet been found. Although Pavel Durov still seemed to view his creation as a public good, generating revenue would enable it to be self-sustaining. Additionally, the windfall from VK that Pavel Durov had unexpectedly received would not last forever; reportedly, the company's costs had reached $70 million in 2017.
Despite Pavel Durov's aversion to placing ads on VK - which had once led to a sevenfold increase in Facebook's average revenue per user - he certainly knew it was the most effective way to profit from a social network. However, this script seemed less suitable for Telegram. Due to its focus on privacy and security, Telegram could not pass data to advertisers without violating its fundamental promises, meaning they had to consider other ways 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 supporting an in-app ecosystem. Pavel Durov claimed that the network would prove to be "far superior" to existing chains such as Bitcoin or Ethereum.
TON Plan supports payments and purchases, including those from third-party developers. Telegram raised $1.2 billion through an initial coin offering (ICO) to fund its development. Participants included Silicon Valley heavyweights such as Sequoia Capital, Benchmark, Kleiner Perkins, and Lightspeed. The financing provided some opportunities for rapid growth, at least in theory, if Telegram did not sell equity.
TON Whitepaper
At first glance, the token financing seemed like a brilliant strategic move, giving Telegram a war chest based on an idea. Anton Rozenberg, a Telegram executive and former VK engineer, later pointed out:
Everything in the financing seemed magical: Telegram managed to raise as much money for a virtual project as the company's valuation itself, if not more - with almost no commitments to investors and no equity loss.
One source indicated that Telegram's entry into the crypto field prompted subsequent efforts by Facebook. Like Libra (now called Diem), Telegram's crypto project also faced a tumultuous fate. Despite Telegram's growing user base, TON's development faced challenges. According to a former employee, Telegram told supporters that they had completed "90-95%" of the initial construction of TON in September of that year, indicating that the launch was just days away. In December of that year, they claimed that the release of their work was just days away. However, as the new year began, TON had yet to see the light of day.
In September 2019, Telegram released its experimental source code, and in October, the U.S. Securities and Exchange Commission came knocking.
The U.S. Securities and Exchange Commission determined that TON's token financing constituted the sale of unregistered securities, halting its development. Stephanie Avakian, co-director of the SEC's enforcement division, said:
The emergency action we took today is intended to prevent Telegram from flooding the U.S. markets with digital tokens unlawfully.
TON was delayed again, and after further issues, Pavel Durov surrendered.
In May 2020, Pavel Durov announced that he would abandon the project, attributing TON's demise to the U.S. Securities and Exchange Commission. The company had spent $405 million on development but had not released any viable product versions. To make matters worse, some investors began considering lawsuits, claiming that their funds had been misused, allocated to developing the Telegram messaging app rather than the TON network.
Ultimately, Telegram returned 72% of the funds to TON investors - a total of $1.2 billion - leaving many disappointed at not obtaining equity in Telegram. Non-U.S. investors had the option to convert their refunds into loans, bringing a 110% return on their initial investment after one year, allowing Pavel Durov to raise more funds quickly. Telegram also paid a $18.5 million fine to the U.S. Securities and Exchange Commission but did not "admit or deny the charges."
After separating from the project, Pavel Durov handed control of TON to the "community," and with the code being open-source, anyone could continue building on the project's architecture. Several derivative products quickly emerged, including "Free TON" and "Toncoin." "Toncoin" seemed to have established itself as the spiritual successor to the original and received Pavel Durov's endorsement at the end of 2021. Currently, the project is overseen by two independent developers, with nine other developers associated with Toncoin's Github, but sporadic based on contributions to various repositories. In contrast, Free Ton has been renamed Everscale and uses a different programming language than the original TON code.
Current Telegram employees discussed their views on TON, noting that the U.S. Securities and Exchange Commission had interfered with the core product's development and caused friction. Despite Pavel Durov's bold attempt, TON ultimately failed to address monetization and capitalization issues.
Unsettling Bonds
As of April 31, 2021, Telegram owed a massive $700 million. Once again, Telegram faced funding issues, and Pavel Durov admitted that he needed "several billion dollars annually" to run Telegram.
With over 500 million active users, Telegram had no shortage of suitors. Reports indicated that some Western venture capital firms had offered to purchase 5% to 10% of the business at a valuation of $30 billion, with some investment firms even raising the valuation to nearly $40 billion.
However, based on his previous experience founding VK, Pavel Durov knew the dangers of bringing in outside investors. After being ousted from the CEO position last time, he would not let it happen again.
Pavel Durov chose not to sell equity but turned to debt. In March 2021, Telegram issued $1 billion in bonds with an annual interest rate of 7-8%. More importantly, if Telegram conducted its first public offering within three years of the issuance, bondholders could convert the bonds into equity at a 10% discount to the listing price. If Telegram took longer to enter the public market, the discount would increase to 15-20%.
Bond buyers included Abu Dhabi's sovereign wealth fund Mubadala Investment, and as part of the acquisition, Pavel Durov pledged to expand Telegram's influence in the region, with plans to open another office in the UAE.
Surprisingly, this transaction involving Mubadala Investment also involved the Russian Direct Investment Fund (RDIF). Reportedly, in a secondary transaction, the Abu Dhabi company sold $20 million in bonds to RDIF. Mubadala Investment claimed that the transaction was part of creating a joint venture between sovereign wealth funds. A Telegram spokesperson expressed dissatisfaction:
The Russian Direct Investment Fund is not on the list of investors to whom we sold bonds, and we do not have an open attitude towards any transactions with that fund.
Nevertheless, RDIF now had the right to acquire equity at a price lower than Telegram's potential IPO. While this may have angered Pavel Durov, the fund's involvement also indicated that, in some ways, the Telegram CEO had prevailed.
New Heights
Shortly before Mark Zuckerberg announced Facebook's rebranding, the company experienced the widespread outage we have already discussed. Within a day, Facebook customers flocked to other social networks, with messaging app Signal reporting gaining "millions" of users, and Telegram announcing 70 million new users. This created a "record" for Pavel Durov's company and brought a significant boost to its goal of reaching 5 billion users by the beginning of this year.
While this was the most notable example of Telegram's progress, 2021 was an outstanding year for growth in general. Telegram was the fastest-growing major app last year, surpassing Instagram, Zoom, TikTok, Signal, and others. In 2022, Telegram hopes to surpass the milestone of 1 billion active users, but they may need to continue improving the product to achieve that goal.
Key to Telegram's Success: A Strong Product
If you take a quick glance at Telegram, you might think it's just another run-of-the-mill messaging app. But in reality, this app is much more interesting. Telegram is a powerful product that constantly pushes the limits of what messengers can and should do. While Telegram may have initially been just a clone of WhatsApp, it now shares many similarities with Twitter, Clubhouse, Reddit, Discord, and Slack, offering more than just a simple, smooth user communication 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 privacy levels.
While more technically inclined readers may glean more from the diagram below, the rest can know that "Part 1" is about "server-client encryption," meaning user data is stored on Telegram's servers. All "cloud chats" use this encryption scheme. Interestingly, Telegram's corporate structure is designed to add an extra layer of security here. Data from cloud chats is distributed across global servers managed by different legal entities. As Telegram explains, "several court orders from different jurisdictions" are needed to access company data.
"Secret chats" utilize more secure end-to-end encryption (E2EE), as shown in "Part 2" of MTProto. In E2EE, no one can decipher the data except the sender and receiver, not even Telegram can decrypt messages sent through this layer.
Telegram's approach in this regard has drawn criticism. In a recent Twitter post, Moxie Marlinspike, co-founder and former CEO of competing messaging service Signal, outlined his concerns about the product.
In Moxie Marlinspike's view, Telegram is no more secure than Facebook Messenger, stating:
"Telegram stores all of a user's contacts, groups, media, and every message you've ever sent or received in plaintext on their servers, and the app on your phone is just a 'view' into their server - that's where 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 do actually use e2ee (no groups, no sync, no sync)…"
FB Messenger also has an e2ee "secret chat" mode, with far fewer restrictions than Telegram's (and using a better e2ee protocol), but no one would consider FB Messenger an "encrypted messenger."
The way FB Messenger and Telegram are built is almost identical.
Moxie Marlinspike's work on building Signal complicates his argument, as does his product's ties to the CIA and other U.S. national security entities. Nonetheless, it highlights a core part of Pavel Durov's strategy. Like its founder, Telegram is both idealistic and pragmatic. Yes, it aims to provide a secure 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 for many; for example, messages would no longer sync across different devices.
A member of the Telegram team I spoke to explained that the most important thing for the company is to provide the best experience for users - for some, this may involve E2EE and disappearing chats, but for most, it won't. When comparing Telegram to Signal, the former VK employee succinctly said:
"Signal has too few users."
Chats
The core of Telegram's visible product is its chat feature. Available across devices, users can send messages to each other through a simple, intuitive interface. Interestingly, I found it to feel smoother, faster, and more vibrant than WhatsApp. Buttons behave as expected, and small features bring unexpected delight.
Specifically, Telegram's chat feature is robust. It supports various files with high size limits (doc, zip, mp3). Replies, mentions, and hashtags are integrated, and the in-app photo editing feature is surprisingly advanced.
As mentioned earlier, default chats are stored in the cloud so that users can view them when moving from their phone to a laptop and back. If you want privacy, you can start a "secret chat," which uses E2EE and can be set to automatically destroy messages after a period of time.
Group Chats
If users want to communicate with a wider audience, they can turn to "groups." Like other instant messaging apps, group chats serve various purposes, from family chats to business coordination. A recent article pointed out that Telegram groups are popular among students. Instead of emailing a teacher or texting a friend, students share questions and answers in ongoing chats, reminiscent of Discord.
In some countries, Telegram groups have also become an alternative to Slack. For example, one source noted that in Russia, many prefer Telegram over a Salesforce subsidiary, in part because it's entirely free. As we'll discuss later, this could provide a pathway to a reliable revenue model.
Telegram groups have a life of their own, as they are almost exceptionally powerful, like other parts of the app. Telegram supports up to 200,000 members; WhatsApp can only have up to 256. Telegram has built a set of sharing and management tools to handle these types of users, and group admins can create group links to share with the world and finely manage how members interact.
Channels
If Telegram's groups mimic Discord, "channels" are akin to a fax of Twitter or Reddit. Channels are not for conversation but are built for broadcasting, and there is no limit to the number of users. For example, some of Telegram's company channels have over 8 million participants.
There are popular meme, image, news, quote, and other channels. Over 400 million people view Telegram channels daily. Channel owners can view data on a per-message basis. If channel owners want to allow audience interaction, they can nest group discussions within the channel.
Audio and Video
After witnessing the explosive popularity trajectory of Clubhouse, Telegram accelerated the development of its audio features. In fact, Telegram has offered voice calling since its early development, but now Telegram's groups and channels can host "infinite" voice chats, with millions of people able to join, admins able to invite participants on stage, record their discussions, and share conversation links outside the app. Due to Telegram's already large user base, Telegram quickly surpassed Clubhouse in listening time. The company has followed a similar trajectory in video, from calls to group calls to pseudo-streaming. Telegram can now support up to 1,000 synchronized viewers and allows easy recording and viewing. We should expect further improvements. Telegram's blog states:
"We'll continue to raise the limit until everyone on Earth can join a group call and watch our celebrations (coming soon)."
Payments
While you may not have seen it, Telegram does support in-app payments, with a test version of this feature appearing in 2017, but limited to interactions with Telegram "bots." Through this interface, users can "do anything from ordering a pizza to calling a taxi, to changing winter tires when you're tired of winter."
How many people have done these things? Although its official blog updates emphasize that Telegram is now integrated with 15 different payment providers, including Stripe, the fact that the company has not celebrated any significant milestones suggests that the transaction volume is low. Over time, payments may become one of the most critical elements of the Telegram platform. While the company currently does not charge any commissions, it's easy to imagine a small-scale cut - providing firepower for Pavel Durov's team to continue building.
Other Details
In addition to Telegram's primary features, it has many secondary features that many people may not have discovered.
For example, Telegram protects you from having to display plaintext. When sending private text, you can choose to mark part or all of the text as hidden. To decipher it, the reader must explicitly click on it. (However, this feature may only be available in certain countries/regions.)
Another useful feature is "People Nearby." Although it is turned off by default for privacy reasons, anyone can find local groups and chats by activating this feature.
There are also some additional features, such as text recognition, a set of bots that can automatically send emails or start gaming experiences, and additional identity features. While these may seem unlikely to play a significant role in Telegram's future, these details cleverly enhance the product.
Telegram's Corporate Culture
There is little information about Telegram's culture, but we can still catch a glimpse of it through the way Telegram operates and its uniqueness.
Founder's Leadership
A friend at Amazon once told me that, like many other companies, the e-commerce giant organizes itself into "tiers." Entry-level engineers might be at level 4 or "L4," while VPs might be at L10. The highest level is L12, and there's only one member at L12, the founder: Jeff Bezos. (This always seemed a bit comical to me; why the need for an entirely new tier - inaccessible to others - to reinforce Jeff Bezos's supreme status?)
Telegram feels like this - in terms of control, Pavel Durov is unique. He not only brings funding to the company but also guides the company's vision. So, what kind of person is Pavel Durov?
As we mentioned, he seems to be a mercurial, contradictory figure, advocating for an ascetic lifestyle, free from vanity and the traps of wealth. While Pavel Durov claims to be an anti-traditionalist, he has been accused of colluding with the FSB, and his choices in financing also lean towards traditional methods. While Abu Dhabi is a modern city, the UAE is not a tolerant fortress. Of course, no country is perfect, especially the United States, but some of Pavel Durov's most important human and corporate decisions show not just a bit of ideological malleability.
In addition to this disconnect, Pavel Durov is also a highly intelligent programmer with a keen product sense. An employee called him a "visionary" who can recruit highly talented engineers and unite them towards a common goal, insisting on high standards of work and rapid delivery.
Another key figure is Telegram's Chief Technology Officer Nikolai Durov, who is primarily responsible for building and improving the core architecture. It is rumored that he single-handedly completed the entire MTProto and TON specifications; according to sources, the company's Android client was almost entirely created by him. Nikolai Durov is a quirky character. In a Medium post, a childhood friend recounted stories he had heard about him: Nikolai Durov was so focused on his work that he didn't notice a beetle in his cereal bowl and ended up eating it unknowingly.
A Telegram employee pointed out that Nikolai Durov seems very shy and does not often communicate in large groups, but they said that Pavel Durov shows extraordinary care for his brother because of the value Nikolai Durov brings, Pavel Durov provides him with everything he needs for success.
Product Delivery
As mentioned earlier, Telegram is known for rapid product delivery. Despite starting four years after WhatsApp, Telegram quickly caught up and then sprinted ahead in terms of features. Now, WhatsApp and FB Messenger lag behind Pavel Durov's Telegram, with some features even being introduced by Telegram years ago.
The ability to deliver product iterations so quickly is mainly due to Telegram's flat management structure - if Telegram's operations are similar to VK's, it means that the company has almost no managers, and they take a "small and agile" approach, with many decisions made by Pavel Durov alone.
Talent Acquisition
It is reported that Telegram excels in recruiting engineers. To some extent, 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 helps Telegram's image, saying:
"In Russia, Telegram is already a symbol."
This allows the company to pick elite developers from Russia. (According to some reports, Russian software engineers are the best in the world, and Russian developers win more international university programming competitions than any other country.)
Funding
While Telegram could opt for private financing, Pavel Durov may prefer to raise funds through an IPO. The company's target is reportedly to go public in 2023, a timing that may be inspired by bond issuance terms.
According to the Russian newspaper Vedomosti, Pavel Durov has started talking to investment banks and is looking for a suitable listing venue. Apparently, Pavel Durov is considering SPACs and direct listings, but he seems to lean towards the latter. While the New York Stock Exchange is a controversial destination, Asian exchanges are also in his consideration, including the Hong Kong Stock Exchange.
What would Telegram's valuation be if it went public today?
When WhatsApp was acquired in 2014, it reported 400 million active users, which means Facebook paid about $55 per user. Assuming Telegram's active users have surpassed 600 million, its valuation could reach $32.7 billion.
But the market has changed in the eight years since WhatsApp was acquired. Social media companies have further demonstrated their profit potential, fintech has permeated various products, and tech giants have gained prominence. Using the same per-user value to judge Telegram feels outdated.
We may need to turn to the private market for a better comparison. Last September, Discord raised $500 million at a valuation of $15 billion. At the time, the company reported 150 million active users, equivalent to $100 per user. By this measure, Telegram's value would be close to $60 billion, a figure that may better represent the company's worth.
Comparison with Competitors
Of course, the main difference between Telegram and Discord is revenue. Discord founder Jason Citron focuses on the chat business for gaming and has generated $130 million in revenue, growing at a compound annual growth rate of 126% over the past five years.
If Telegram were to make money, it certainly wouldn't be at that level.
Can Telegram go public without revenue? While investors today are more willing to underwrite rapidly growing social media companies compared to when Facebook first went public, they want to see signs of a commercial need. For this, Telegram needs to find a way to make a profit.
How Does Telegram Make Money?
Although having a hot product and market fit in some aspects, Telegram seems to be an impractical application in some ways and has not yet achieved product-model fit. Despite some experiments, Pavel Durov's team has not determined the final business model, and they need to constantly change and test advertising, subscriptions, and payment-based methods.
While Pavel Durov believes that advertising relying on user data is unethical, Telegram is willing to make money through "attention," such as -
Advertising
In October 2021, Pavel Durov announced that advertising would be allowed on Telegram but without relying on user data. Additionally, they will try to drive returns for advertisers by allowing them to target specific channels, and sponsoring businesses can choose to promote their products in channels specifically tailored to relevant topics, rather than targeting users within specific age ranges, geographic locations, and interest groups. So far, advertisers can only access channels with over 1,000 users, and the minimum budget must exceed $2 million. It is worth mentioning that Telegram hopes to eventually allocate a portion of the revenue to channel owners.
However, the question is, will this model work? This seems to be a tough battle. For advertisers, precise targeting has always been crucial, so this approach by Telegram may not satisfy advertisers, not to mention that Pavel Durov himself has never liked advertising, so it is hard to imagine him running a business funded by an advertising model happily.
Subscriptions
So where else can Telegram make money? Subscriptions may be another option and can take various forms. The company has proposed a "cheap" product that can remove the ads it is adding. Although not a particularly exciting proposal, it can open up user-sponsored options similar to Discord's "server boost" monetization.
If you have a bigger imagination, it's not hard to imagine subscription services being profitable through power users, especially those running large groups or channels. For example, premium features may be behind a paywall, but Telegram needs to be careful not to alienate creators. As Telegram has been used as an alternative to Slack in some parts of the world, it can introduce enterprise layers, although charging may eliminate its main appeal.
WhatsApp's "business" products seem to be moving in this direction, but it is not focused on internal communication but rather providing tools for companies to better serve their customers. This includes marketing and customer support tools. While Facebook gives away these features for free, Telegram may charge for them. Additionally, over time, Telegram may also seek to compete with companies like Hubspot and Intercom, providing lightweight alternatives for mobile-first businesses.
Payments
Profiting through payments feels like the most natural choice for Pavel Durov. Although this has not yet come into play for Telegram, it seems to have the conditions for success. Telegram not only has a large user base, but most of its strength comes from its users in regions with fewer bank accounts, including Armenia, Cambodia, Kazakhstan, Jordan, and Venezuela. Additionally, due to the unfortunate fate of TON, the company has genuine expertise in encryption that it can leverage. At the end of last year, Pavel Durov revealed that the app will support Toncoin payments. Perhaps this is the first step towards embedded encrypted transactions in social networks.
Telegram employees also emphasize that payments are a focus area, particularly noting the lack of a unified global payment system and comparing the current state of the field to WhatsApp's previous messaging disruption. Just as WhatsApp changed the game by bypassing telecom providers, Telegram can do the same by surpassing traditional payment processors or integrating with them. The result is equally simple: seamlessly sending data (in this case, money) anywhere on the planet, which may involve or involve stablecoins or other cryptocurrencies.
Facebook is chasing this with Diem, but Telegram may be in a better position. While consumers are very distrustful of Mark Zuckerberg's company, Telegram is known for its focus on privacy, which could be an advantage when it comes to the sensitive issue of money.
Implementing a payment strategy may make Telegram stronger than WhatsApp, making it one of the most influential companies in the world. Even if it cannot become a global social payment giant, just getting a piece of the market can help them establish themselves.
Reasons to Believe in Telegram
Although there has been no progress in revenue generation, for Telegram, they can build a great business on top of a messaging app. While Facebook has not figured out how to use WhatsApp, both WeChat and LINE have earned substantial revenue.
In terms of profitability, WeChat is top-notch. The Tencent subsidiary is more of an ecosystem than an app, offering services such as chat, payments, e-commerce, and games through a single interface, and the company makes money through advertising, payments, and purchases. Although it is difficult to separate WeChat's revenue from Tencent's other revenue, according to a report from January last year, WeChat processed $250 billion in transactions in a year, with most payments made through its "mini-programs" - essentially third-party apps built for the platform.
Encouragingly, WeChat did not start its "mini-programs" initiative until 2017 and now supports over a million such partners. From the perspective of active users, WeChat seems to be not far behind Telegram - the same report shows that WeChat currently has 1.2 billion monthly active users, about twice as many as Telegram.
Can Telegram find similar multifaceted success? The answer may not be easy, after all, WeChat benefits from massive market support and has a super-organization funding its development.
Another example is LINE, a Japanese company with approximately 160 million monthly active users, 84 million of whom are in its home country. With the combination of gaming, payments, and shopping, its revenue reached $1.5 billion in 2020. While in the long run, several billion dollars may not be enough to support Telegram's market value, it can lay a good foundation for them.
Regardless of the direction Telegram chooses, they need to act quickly at this time.
We should be glad for the existence of Telegram, although the app may not be as private as users imagine, it has raised the bar in terms of usability and depth of functionality.
Where is the future of Telegram and Pavel Durov? Perhaps time will tell. But one thing is certain - Pavel Durov still has a long way to go.
免责声明：本文章仅代表作者个人观点，不代表本平台的立场和观点。本文章仅供信息分享，不构成对任何人的任何投资建议。用户与作者之间的任何争议，与本平台无关。如网页中刊载的文章或图片涉及侵权，请提供相关的权利证明和身份证明发送邮件到support@aicoin.com，本平台相关工作人员将会进行核查。
