tatianaSF.com

Category: Finance & Economics

  • The Surprising Rise of UnionPay in Global Payments

    The Surprising Rise of UnionPay in Global Payments

    UnionPay’s Growing Presence

    For many years, the global payment market has been dominated by two major players—Visa and Mastercard. They have established a duopoly, comfortably reigning over international transactions. However, things are changing rapidly with the aggressive rise of a third contender: UnionPay, the Chinese payment system. Last year alone, UnionPay processed an impressive 228 billion transactions worldwide, which has pushed it to second place in global payment systems. Interestingly, it even surpassed Visa and Mastercard in terms of total payment volume.

    UnionPay’s Stronghold in China

    This growth isn’t surprising, considering UnionPay’s monopoly over the enormous Chinese market. China’s population and economic influence provide a solid foundation for UnionPay to thrive. The fact that it dominates China’s domestic market explains its massive transaction volume. When Visa and Mastercard pulled out of Russia, UnionPay stepped in, further extending its reach in markets that needed an alternative payment solution. But here’s where things get interesting: how dominant is UnionPay outside China?

    The Global Reality: Not as Strong as It Appears

    Despite the significant numbers, UnionPay’s global reach outside of China is surprisingly limited. According to the latest research by Datos Insights, if we exclude China from the picture, UnionPay accounts for less than 1% of the global transaction volume. This revelation highlights an important reality—UnionPay’s dominance is heavily reliant on its Chinese customer base. Its growth, while impressive on paper, doesn’t have the same impact when compared globally without China in the equation.

    So, while UnionPay has made a huge splash in specific markets, its influence outside China remains minimal. In many parts of the world, Visa and Mastercard continue to dominate, leaving UnionPay in the shadows.

    What Does This Mean for the Future of UnionPay?

    The future of UnionPay’s global expansion is still unclear. While the company has undoubtedly made strides in markets like Russia, its reliance on China makes its global growth fragile. Essentially, UnionPay is a giant, but one that’s standing on a single clay foot—a metaphor used to describe how it’s strong in one area but fragile elsewhere.

    UnionPay has potential, but whether it can truly challenge the likes of Visa and Mastercard on the global stage remains to be seen. Its current growth strategy will need to focus on gaining more traction outside of China to compete effectively in a global market where consumers still prefer the established giants.

    Key Takeaway: Always Look at the Bigger Picture

    At first glance, UnionPay’s dominance seems undeniable. The sheer volume of transactions can be impressive, but looking closely at the details changes the perspective. In this case, while UnionPay leads in China, it’s clear that its global influence is still limited. The key lesson here? Always dig deeper into the numbers and avoid being swayed by large figures without context.

  • The Surprising Financial Fall of Telegram: Is the $30 Billion Valuation Just a Dream?

    The Surprising Financial Fall of Telegram: Is the $30 Billion Valuation Just a Dream?

    Understanding Telegram’s Financial Reality

    Recently, Telegram’s financial situation has come under scrutiny, revealing some eye-opening details that have led many to question the company’s future. For years, Telegram has been a beacon of innovation in the messaging app industry, often compared to giants like WhatsApp. However, the recent disclosure of its financial statements paints a different picture.

    According to the latest reports, Telegram has been operating at a loss, with a deficit of half a billion dollars over the last two years. This is a stark contrast to the optimistic valuations some have suggested, putting the company’s worth at around $30 billion. But when we dive deeper into the numbers, that valuation seems far from reality.

    The Revenue and Loss Dilemma

    Telegram’s revenue in 2023 was reported at $342 million, which, on the surface, seems like a decent figure. However, this is overshadowed by a net loss of $259 million, raising concerns about the company’s sustainability. One of the most telling signs of trouble is that a significant portion of Telegram’s revenue comes from its crypto-related ventures, particularly its integrated wallet and the sale of ‘collectibles.’

    In 2023, the company made $130 million from its crypto wallet and $100 million from selling these so-called collectibles. But what exactly are these collectibles? In simpler terms, these are premium usernames and custom phone numbers, sold in exchange for Telegram’s cryptocurrency, Toncoin. While this might sound innovative, it’s important to note that such revenues are highly speculative and risky, especially in the volatile world of crypto.

    The Creative Accounting Behind the Numbers

    One of the most concerning aspects of Telegram’s financial report is the creative accounting methods employed. For instance, the company recorded a gain of $85 million from the ‘revaluation of digital assets.’ This essentially means that Telegram decided to assign a value to its crypto assets, adding it to their income statement. However, such accounting practices are often seen as questionable because the actual worth of these digital assets is highly uncertain and can fluctuate wildly.

    Furthermore, Telegram lists $399 million worth of digital assets on its balance sheet, surpassing its cash reserves of $170 million. This heavy reliance on crypto assets raises red flags, especially considering the volatile nature of cryptocurrencies. It’s not just the figures that are concerning but the fact that these assets, which many might argue are overvalued, form a substantial part of Telegram’s reported wealth.

    Is Telegram’s $30 Billion Valuation Justified?

    Given these financial realities, it’s difficult to justify the $30 billion valuation that Telegram once boasted about. A more realistic valuation, considering the company’s actual revenue, losses, and the quality of its assets, might be closer to $2-3 billion. This valuation would be more in line with the company’s ‘honest’ revenue and its financial health.

    Moreover, the company is saddled with $2 billion in debt, further complicating its financial outlook. This debt is a significant burden, especially when the company’s revenues are not enough to cover its losses. The combination of these factors suggests that Telegram’s future might not be as bright as it once seemed.

    Final Thoughts

    While Telegram has been a trailblazer in the messaging app space, its financial statements reveal a company struggling to stay afloat. The reliance on speculative crypto assets and creative accounting raises questions about its long-term viability. As investors and users, it’s essential to look beyond the hype and focus on the hard numbers. The reality is that Telegram may not be worth anywhere near the $30 billion it once aimed for, and it’s crucial to keep this in mind as the company navigates its financial challenges.

    Read the article “Telegram’s Battle with Russian Authorities: From Blocked to Arrested”

  • Unleashing Potential: Why Founder-Run Companies Outshine in the Tech World

    Unleashing Potential: Why Founder-Run Companies Outshine in the Tech World

    As a tech enthusiast and an investor, I’ve always been fascinated by the dynamics of founder-run companies versus those managed by hired CEOs. This distinction is particularly stark in the tech sector, where the original vision and risk appetite of founders often drive long-term success. Let’s dive into why companies steered by their founders often outperform those operated by external management.

    The Unique Founder Impact

    Founders bring an irreplaceable blend of passion and intimate knowledge to their ventures. This combination is crucial in the tech industry, where understanding the nuances of the product and market can make or break a company. Studies from prestigious institutions like Harvard and Stanford have shown that companies with founders at the helm report better revenue figures and market capitalization than those led by hired CEOs. Founders are not necessarily smarter, but they are deeply aligned with the company’s long-term goals and are more willing to take significant risks.

    Research Insights on Founder Leadership

    Several research studies underscore the effectiveness of founder leadership:

    1. Harvard and Stanford Study (2012): Companies with founding CEOs show higher revenue and market cap compared to their counterparts.

    2. MIT Sloan Analysis (2013): Tech companies led by founders exhibit faster growth due to more radical innovations and strategies.

    3. Noam Wasserman’s Research (2016), Harvard Business School: Founders achieve higher early-stage success due to their vision and passion.

    4. University of Virginia Study (2017): S&P 500 companies under founding leaders report higher profitability and shareholder returns.

    The Need for Transition

    Despite the clear advantages, the growth trajectory of a booming business can sometimes necessitate a more structured approach to management. As companies evolve, the very innovation that spurred their initial growth can become a sideline to the day-to-day operational demands, leading to a potential shift from founder to professional CEO. This transition, though often necessary, can dilute the company’s original mission unless the new management preserves the founder’s vision.

    Real-World Examples of Founder Success

    Many of the largest tech companies continue to be led by their founders, proving the enduring value of founder leadership:

    – Meta (formerly Facebook): Mark Zuckerberg founded in 2004 and remains CEO.

    – Amazon: Founded by Jeff Bezos in 1994, who still influences as executive chairman.

    – Tesla and SpaceX: Elon Musk, a key figure since the early stages, directs both.

    – Palantir Technologies: Co-founder Alex Karp has been CEO since 2003.

    – Coinbase: Brian Armstrong, founder, has been CEO since 2012.

    – CrowdStrike: Founded by George Kurtz, Dimitri Alperovitch, and Gregg Marcinak in 2011, with Kurtz as the current CEO.

    – NVIDIA: Founded by Jensen Huang, Chris Malachowsky, and Curtis Priem in 1993, with Huang as CEO.

    Founder-run companies, especially in the technology sector, tend to maintain a strategic advantage by staying true to their original vision and adapting boldly to new challenges. While the role of a founder can transition over time, their enduring impact on the company’s direction and culture is undeniable. When I invest in tech stocks, one of my criteria is leadership; having a founder at the helm is a significant plus.

    Read more about 7 Master Essential Soft Skills for Non-American Tech Professionals

    Read additional resources

  • The Surprising Fall of Thrasio: A Tale of Business Pitfalls

    The Surprising Fall of Thrasio: A Tale of Business Pitfalls

    In the ever-evolving landscape of business, the rise and fall of companies serve as pivotal learning points. The story of Thrasio, once celebrated as a trailblazer in the e-commerce sector, provides a compelling case study on the critical nature of strategic management and the volatile nature of business growth.

    The Meteoric Rise

    Thrasio quickly became a household name by capitalizing on the Amazon FBA (Fulfillment by Amazon) opportunity. They streamlined the process of acquiring and optimizing small, successful Amazon businesses, boosting their operational efficiencies and scaling them to new heights. Their strategy was clear: buy, improve, and earn. This approach led to rapid growth, attracting significant investments and valuations soaring to billions.


    Challenges and Missteps

    However, the very strategies that propelled Thrasio to success also sowed the seeds of its challenges. The rapid pace of acquisitions led to integration issues. Each business, with its unique brand and operational nuances, presented complexities that Thrasio struggled to manage at scale. Furthermore, the competitive landscape evolved; as more players entered the space, the cost of acquisitions increased, thinning margins.


    The Downfall

    The downfall of Thrasio can be attributed to a combination of over-expansion and underestimation of operational challenges. As the market became saturated and profitability per acquisition diminished, the financial sustainability of Thrasio’s model came into question. This led to a downward spiral, affecting investor confidence and financial stability.


    Lessons Learned

    The Thrasio saga highlights several key lessons for business leaders:
    – Scalability vs. Sustainability: Rapid scale should not compromise the long-term sustainability of the business model.
    – Integration is Key: Effective integration of acquisitions is crucial to realizing their value.
    – Market Dynamics: Continuous reassessment of market conditions and business strategies is essential as external conditions evolve.

    Conclusion

    The rise and fall of Thrasio serve as a stark reminder of the delicate balance required in strategic business management. For entrepreneurs and business leaders, Thrasio’s story offers valuable insights into the potential pitfalls of rapid expansion and the importance of robust operational strategies in the pursuit of growth.

  • Escaping the Crypto Crackdown: Why Staying Abroad Could Be the Worst Decision for Russian Developers

    Is a crypto crackdown possible in the future?

    Disclaimer:

    This text is a translation of a post from a friend of a friend on Facebook.  

    I do not know this person and have no connection to them.  

    I do not use any cryptocurrencies and have no involvement with any operations or people related to cryptocurrencies or the company Telegram.  

    Here is the link to the original post:  

    https://m.facebook.com/story.php?story_fbid=pfbid02Vzp7EZhnabw6sSMKM4UkX76MSBAPxUmZpLUQGFqmD4r5icdSF49tKwuvAXmAYCsgl&id=100008746423932

    To my friends from Telegram. Urgently fly to Russia.

    1. In January 2023, Anatoly Legkodymov was arrested in the USA. He was involved with the BTC Banker bot in Telegram. At that time, it was the largest bot for crypto exchange. A few weeks later, the entire project team was arrested, including Pavel Lerner (the creator of Exmo and Utorg exchanges).The team has been in France all this time, waiting for trial. Nothing is happening, no information is coming through. I spoke with the girlfriend of one of the team members yesterday.The French court, prosecutor’s office, and Europol are not making any decisions. They are simply transmitting the charges from the USA. I have seen the charges. The lawyers are completely useless. In cases of this level, with interest from the USA, they have no influence.Only Anton Shkurenko managed to escape. He decided to stay in Moscow. Everyone who was outside Russia has been arrested.

    2. In December 2023, upon arriving in France, my friend was arrested. There is no information about this in the Russian media. Those in the crypto exchange community know him. The French authorities arrested others as well, people they believed to be connected. This included the pregnant wife of my arrested friend, who is a housewife. Since December, there has been no information. They are just sitting and waiting. They are in the same detention center as the BTC Banker people.Only the part of the team that was in Russia managed to escape. Naturally, they are no longer leaving Russia.

    3. Two years ago, my friends from Tornado Cash were arrested. Those who were abroad were arrested. Alexey was sentenced to 6 years in the EU. Roma, thank God, was placed under house arrest while waiting for trial in the USA. Waiting for trial is terrifying, the nerves burn terribly because of the uncertainty.In Tornado, only those who were in Russia escaped. They are doing fine.

    4. A month ago, a group of Russians, about 10 people, was arrested in the UAE. They were immediately extradited to the USA. There is no information about this in any media. The charges are for bypassing sanctions through crypto payments.

    The part of the team that was in Russia managed to escape.

    5. Vinnik and BTC-e. You know the story. It’s worth mentioning that the employees of the successor exchange, Wex, were also arrested abroad later on. I am 100% sure they were only released under very special conditions. Specifically, full cooperation. You could say they were lucky. Otherwise, they would be imprisoned for a long time.

    6. Roma Sterlingov. The creator of the Bitcoin Fog mixer. He was arrested in 2021. Roma wasn’t lucky—he didn’t get house arrest while waiting for trial. He waited three and a half years in a US prison. The jury trial was held very recently. He was given 30 years. The prosecution asked for 50 years. Ten days ago, Roman’s defense team filed a 37-page appeal against the sentence. But I think it’s already useless. I will write a link to the document on the justice department’s website in the comments.

    Summary

    Five out of the six tragedies above happened right in front of my eyes. I knew the members of the teams. Statistics show that staying outside Russia is the worst possible decision.

    In the worst-case scenario: In Russia, there are no long sentences for such crimes. And the comfort level of serving time in a settlement colony in Russia is comparable to Norwegian prisons.

    Practice shows that in Russia, they leave you alone. Especially now, when the world has become bipolar. And even before the split: remember Jan Marsalek. He is doing fine in Russia.

    There is no way to help Pavel anymore. His arrest is not the beginning of the process. It is the result of long-term work by a large number of specialists in the USA.

    I personally saw the charges in the above processes with my own eyes. They were not prepared by Interpol or Europol. They were prepared by the USA. France is simply a place of detention and waiting. The headquarters of Interpol is there. The local authorities and law enforcement agencies are simply relays for the USA.

    The chronology of other cases shows that after the first arrest, the arrest of the teams always follows without exception. Those team members who decided to urgently fly to Russia – their fate turned out well. Others who decided to defend themselves in the West – their fates turned out badly. I could give another five examples; they all follow the same pattern.

    Friends, your main goal now is to protect yourselves. Your time may be running out. Find an opportunity for an emergency move to your homeland. And don’t fool yourselves into thinking the UAE is a neutral zone.