telegram-business-model

How Does Telegram Make Money? Telegram Business Model In A Nutshell

Telegram is a messaging app that has grown in popularity since its launch in 2013. It doesn’t make money yet, even though it acquired over a billion dollars as of 2019, through two ICOs (initial coin offerings).

Let’s look at the Telegram founding story and why it’s so interesting.

Telegram founding story

Brothers Nikolai and Pavel Durov didn’t have an easy life as entrepreneurs. Indeed, although they had launched a successful startup in Russia (their country of origin), they had to sell it and fly out from the country eventually. 

Indeed, back in the early 2000s as Facebook was becoming popular, Pavel Durov heard about this social network idea. He got inspired and together with the brother, they launched in 2006, VK (formerly VKontakte). The social media app became wildly popular in Russia and Europe. 

Yet as popularity grew and the company valuation skyrocketed, in 2014 Pavel Durov had to sell the company (at the time it had become the most popular social media in Russia).

As reported by techcrunch,com back then, “Durov had to sell his 12 percent stake to Ivan Tavrin, the CEO of major Russian mobile operator Megafon. The telco’s second-largest shareholder is Alisher Usmanov, one of Russia’s most powerful oligarchs, a man who has long been lobbying to take over VK.”

Pavel Durov commented it on a VK post, back in 2014:

pavel-durov-post-vk

Source: vk.com/durov

Judging by the news, as a result of my public refusal last week today, I was fired from the post of general director of VKontakte. Interestingly, the shareholders did not have the courage to do it right, and I find out about my mysterious dismissal from the press...Thus, today VKontakte goes under the full control of Igor Sechin and Alisher Usmanov. Probably, in the Russian conditions, something similar was inevitable, but I am glad that we held out for 7 and a half years. We had a lot of time. And part of what has been done is no longer reversed.

It was time to start another company. This time focused on privacy: Telegram.

Telegram explosive growth

When Pavel Durov launched Telegram back in 2013, it reached explosive growth in an incredibly short time frame. As Durov pointed out on his VK account:

Source: vk.com/durov

Telegram reached a billion messages a day 15 months after launch. VKontakte to achieve the same mark took 6 and a half years.

50 million active Telegram users are evenly distributed across continents. Among the most active countries are Spain, Brazil, South Korea, Mexico, Germany, Malaysia, Singapore, India, Saudi Arabia, Italy, and the USA. Russia's share in the Telegram is about 1%.

Only a few apps that would eventually become extremely popular (Facebook, Instagram, and YouTube) had enjoyed such hypergrowth, in the last decade.

As of 2019, Telegram has acquired over a billion dollars through two ICO offerings. Its growth exploded even further when in March 2019, WhatsApp and other Facebook products experienced an outage, and users flocked in the millions to Telegram.

How is Telegram different from WhatsApp?

As pointed out on the Telegram website, “thanks to its multi-data center infrastructure and encryption, Telegram is faster and way more secure.”

Also, Telegram is free, and as Durov pointed out several times, it will stay open (Durov noted the company wasn’t going to monetize it with ads, nor subscription fees, forever.)

How does Telegram make money?

Telegram doesn’t make money, or at least it doesn’t generate revenues, as of 2019. Durov pointed out on a blog post that he “believes in fast and secure messaging that is also 100% free.”

On the same blog, post, Telegram notes that if it were to run out of money, it might introduce “non-essential paid options” to supplement developers’ salaries.

Will Telegram make money with ads in the future?

It probably won’t until Durov is in charge. As explained in a recent post:

For us, your private data is sacred. We never use your data to target ads. We never disclose your data to third parties. We store only what is absolutely necessary for Telegram to work.

What features make Telegram different from any other app?

It’s not a single feature that makes Telegram different. Instead, it is the culture it built, together wit ha set of features that make Telegram unique. Below an overview of some of Telegram’s features highlighted on Telegram’s website:

  • Unified history Edit your messages after posting, delete them so that they disappear for everyone.

  • Cross-platform availability Access your messages anytime, from any number of your mobile or desktop devices.

  • Instant search Find the message you’re looking for, even among millions. Filter by sender to make searching easier.

  • Replies, mentions, hashtags Easily trace a conversation and keep communication efficient, no matter the group size.

  • Smart notifications Mute the group to get notifications only when people mention you or reply to your messages.

  • Pinned messages You can pin any message to be displayed at the top of the chat screen. All members will get a notification — even if they muted ordinary messages from your group.

  • Moderation tools Appoint administrators that can mass-delete messages, control membership, and pin important messages. Define their admin privileges with granular precision.

  • File sharing Send and receive files of any type, up to 1,5 GB in size each, access them instantly on your other devices.

  • Public groups Get a short link for your group and make it public, like t.me/publictestgroup. This way, anybody can view the group’s entire chat history and join to post messages.

  • Customization via bots Create custom tools for any specific needs using our Bot API and Inline Bots.

Key takeaways

  • Paul Durov founded a social media company (VK) that would become the most popular in Russia. He then had to sell it back to a private company owned by a Russian oligarch, and he understood the time was right to leave Russia
  • He then founded Telegram, an app chat, focused on privacy through encrypted messages, ad-free service, and free from any subscriptions. Telegram hyper grew that in 18 months had accumulated the growth of what it had taken six years VK to achieve
  • Telegram doesn’t generate revenues, but as of 2019, it collected over a billion through two ICOs (initial coin offerings)
  • According to Durov, the company will never make money via ads, or subscriptions. If the company needs money to pay for its developers, it will supplement it with non-essential paid options (probably add-on features to the app?)
  • The company experienced further grown further in March of 2019 when Facebook products experienced an outage which brought millions of users to flock to Telegram
  • Telegram, as it doesn’t generate revenues yet has still to figure out a commercially viable business model. Even though the company might stay as a non-profit, it will still need income to supplement its growth and infrastructure

Other business models case studies:

Key resources:

Published by

Gennaro Cuofano

Gennaro is the creator of FourWeekMBA which he brought to reach over half a million business students, professionals, and entrepreneurs in the last year | Gennaro is also Head of Business Development at a tech startup, he helped grow at double-digit rate and become profitable | Gennaro is an International MBA with emphasis on Corporate Finance | Subscribe to the FourWeekMBA Newsletter | Or Get in touch with Gennaro here

Leave a Reply