Yet Another Value Podcast - Artem Fokin from Caro-Kann on Kaspi $KSPI

Episode Date: January 23, 2023

Artem Fokin, founder of Caro-Kann Capital, discusses the bull case for Kaspi (KSPI). Kaspi is the dominant fintech in Kazakhstan, and Artem breaks down how it's trading for a value price despite rapid growth and how its dominance will allow it to grow into new sectors of the Kazakhstan economy.   Kaspi IPO case study from HBS: https://www.hbs.edu/faculty/Pages/item.aspx?num=56825  Chapters  0:00 Intro  2:30 KSPI Overview  8:15 Discussing how ingrained in Kazakhstan Kaspi is  11:20 Sizing and breaking down the payments business  24:45 How Kaspi's data helps them with consumer loans  31:30 Kaspi as a "tax" on the Kazakhstan economy  36:30 Discussing management and Kaspi capital allocation  43:40 Run on the bank risk 48:20 Kazakhstan country / GDP risk  53:00 Why hasn't KSPI succeeded outside of Kazakhstan  1:00:30 How to think about valuing KSPI  1:08:00 Framing KSPI's local currency risk

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With me today, I'm happy to have for the second time. My friend, Arden Fokin, Arden is the founder and portfolio manager at Caracom Capital. Arndham, how's it going? Hi, Andrew. Nice to be back. Great having you back. Look, let me start this podcast, the way I start every podcast, just with a quick disclaimer. Nothing on this podcast is investing advice. People should consult their own financial advisor, do their own work. Today we're going to be talking about a company that is listed in London. It's the largest marketplace in Kazakhstan. It's a, you know, it's a, it's a reason market cap, but it's a pretty small cap company. If the combination of foreign listing, Kazakhstan company, small market cap size, doesn't just screen buyer beware and do your own work.

I honestly don't know what will. So please remember not investing advice to your own work. That out the way, the company we're going to talk about today is Caspi. The ticker there is KSPI. They trade in London. And Artem, I'll turn it over to you. You know, what is the elevator pitch for Caspi? Okay. So before we get into elevator pitch for Caspi, I want, to reiterate what Andrew just said. Caracan Capital LLC and all its affiliates have economic long position in Caspi shares and I'm biased. This is not investment advice. This is not recommendation to buy or sell any security including Caspi shares. So please do your own work, please consult you on financial advice, please consult your own lawyer. That's number one.

Number two, I want to thank you for having me over for the second time because I am deriving tremendous nine financial benefits from being here because of your recordings, I can memorialize the hairstyles that I have had over the last few years, because the last recording that we did about a year and a half ago, I think, I was in the middle towards the end of my COVID hair. So now I just want to make this appearance that I actually did get a haircut. so if anybody cared about the topic now they know artem made it to the hair to a barber shop with that i think we can wrap this call and just you know go home no look i i appreciate i sometimes i do the same thing i look and i'm like oh you know i'll look at an old podcast oh it looks like i was really letting

you go or the first podcast were like august of 2020 so i was very much with you with the poopy hair but no appreciate you coming on for the second time i absolutely hear you on that you know you are the only guest I have done the podcast from not in my apartment, I believe, because I was so excited to have you on for the first time. You're applying to Spain, I think, same day. Yep. I was so excited to have you on the first time. I did it from my brother-in-law's house right before we flew to Spain. Anyway, neither here nor there. Elevator pitch for Caspi. Okay, so this is how I think about Caspi. When I talk to some of my friends, this is how I explain it. I say, okay, imagine there is a country in the world and imagine that country has about 18 million

people population and imagine there is a company in that country and that company has three businesses business number one it's payments think about it as PayPal or Van Mo in the US or think about it as we chat pay or Ali pay in China and that business has is dominating the market. It's 65, 70, 75% market share in payments involving consumers depending how you count and slice the pie. There is a second business, which is marketplace. This is 3P marketplace. So it's not 1P. The company does not own inventory. And think about it as Amazon Marketplace, not Amazon 1P Commerce, but Amazon 3P commerce. Or similarly think about it as Alibaba in China. Similarly, this is the dominant or market place in the country.

And then there is the third business, which is unsecured consumer lending. A lot of that is by now, pay later, BMPL. So think about it as a firm in the US or Clarnarna or after pay. And the company, obviously, it's more difficult to dominate and tie vertical in consumer lending because there are so many different products. But inbound by now pay later this is a dominant player. So imagine that you got an opportunity to invest in a company that is dominating the space, growing revenue at call it 30% rate, and it's very, very dominant in the country. Normally, normally, we would be talking about this type of business, we would be debating what the right revenue multiple is, and obviously sometime in 2021 in the middle,

it will be one number, today it will be another number, a lot lower, just a spoiler alert, and we would be debating what normalized margins are because we don't really know, et cetera, et cetera. In this case, we actually do know the numbers, and you can get this company, so its financial profile, grown roughly, call it 30% a year, local currency, might be a little bit higher, and it has consolidated EBIT margins of roughly 55%, like 43, sorry, 53, 54, 55, and has net income margin. So, like, this is normal IFRS net income margins of around 42, 43, 44%. And this company, so it means that this company can trade on normal earnings,

not on revenue multiple and normalized earnings in 2035 or 2045 or 20505, so, but on normal earnings of this year. And this company today, based on the company guidance, which only fourth quarter remains outstanding, which will be reported in the next few weeks. So this guidance, I think, is very reasonable and achievable. It's trading probably around 12, 12 and a half times earnings. So that's the pitch in a nutshell. And then typically people will ask me, like, so what's like, where is the catch?

What is the catch? I was like, well, the catch is that the country. I didn't tell you the country typically. And you and you mentioned this to your listeners and viewers. I say the country is Kazakhstan. And that's why this company is priced price today this way. No, look, that's great. And I'm glad you said Alibaba because like the first thing when we started talking about this,

you look, they're very clear. They want to be a super app. And the first thing you talk about, especially in 2021, like the super app, Alibaba, like that's kind of the way it's thinking in your head. Alibabi is obviously a little bit of a different model, but that's kind of the way to think about it. Like, these guys are, and more than Alibaba, more than 10, more, these guys are like the dominant player in Kazakhstan, you know, when, when COVID hits, like the government is distributing payments, the COVID payments, the COVID stimulus, they're distributing it through Caspi.

Like, these guys are the way that you do anything if you're in, if you're in Kazakhstan. Correct, correct. So I, in my opinion, Alibaba is not the best comparison. I think Vichat is a lot better comparison because Vichard not only they have the gaming business and then they have their app which entire China uses also they have repay which is a very dominant way to send money to each other right I remember several years ago my wife was in China and she went to like local place kind of manicure type place and she left her bullet at home And she asks, the person who works there says, like, excuse me,

unfortunately, I've got my wallet, will be too much trouble for you to walk with me to my apartment. I leave, you know, not far away. And I will tip you very nicely for your trouble. I apologize. And the person looks at her and says, like, don't you have your phone? Like, of course I do. Like, just sell me money here, right?

It was like probably five, six years ago. Yep. And she was just sent money via we pay. So done, right? So that's number one in terms of comparisons. Number two, I like your example of how prevalent and important Caspi is for the life of local people of Kazakhstan, for the citizens of Kazakhstan. Another example, now, and it's a relatively new product feature, you can renew your driving license through Caspi app. That's one example.

Another example, you can register yourself as sole entrepreneur in a Caspi app. and I believe that you also can establish a company via Caspi app so that shows you what you can do and to show involvement on the payments business only on average a consumer of Caspi is doing 58 transactions a month using the Caspi payments app.

You think about it's like almost twice a day and people use it to send money I can, Andrew and I go in New York, I'm in New York, let's say, we go for dinner, and we generously picks up the check. I like, Andrew, Andrew, no, I will send you my half. So I send you, I send him my half. It will be via Caspi, for in Kazakhstan. And similarly, people use Caspi app to buy groceries.

They buy to buy something else. So it's tremendous, the app and the company plays tremendous positive role in the life of everyday consumer. there was an old art when i was researching this there was an old article that described it and they they said i mean it's along the lines you can renew your driver's license on there now they described it as caspi is the unofficial the unofficial national bank and national app for kazakhstan like that's how prevalent this thing is so we're talking about literally the dominant app in kuzkine i just want to dive a little bit further than that so uh actually let's start

here we've talked about hey this is trading 12 12 and a half you started this trading 12 and a half times, 2022 earnings. Again, like, 2022, they've already reported three Q's, three quarters of earnings. They raised guidance twice throughout the year. So it would be, it's not unheard of for someone to miss a Kupor guidance. It'd be kind of surprising, but, you know, 12 or 12 and a half is for the right thing. I, I just want to start by framing this. This is a $15 billion USD market cap company with about $2 billion in revenue. Can we, can you frame that? Because all the revenues from Kazakhstan, can you just frame that versus kind of the overall Kazakhstan economy?

So the way I think about it, it's a little bit differently. So I'm doing it more bottoms up. So first, let's start with payments. And in payments, there are two different types of payments. One is something that will not be generating commission revenue for cost people. For example, you and I go for dinner and pick up the check. I'm going to send you my half. It's similar to PayPal.

If I send you money via PayPal, because it's not commercial transaction, you just picked up the tab. It will be zero condition. So then there is a second block where it's called RTPV. So and like really generating total processing volume, that one generates a take rate for Caspi. And Caspi makes money on every transaction of that nature. Right now, roughly, and this is rough numbers, and remember, I'm rounding foreign currency, which fluctuates daily, etc.

But the way you think about it, on average, every consumer of Caspi today, and we're talking about roughly wealth million consumers. Yep. Out of, and just to make sure, the country as a whole has about 18 million citizens. Yep. So 12 million, and obviously some of those citizens. are very little, right, children or maybe very elderly who may not be very friendly with tech, like all those things. So keep this in mind, right? So, but, sorry, I misspoke. It's roughly around 10.7 million of active consumers right now on payments. So I spoke about, I spoke that. So it's 18

million. So this is the penetration. You can judge, you can form your own view about how many kids are there, which will not be consumers for a while, et cetera. So now, if you look at the revenue-generating process and volume per person, per active customer, is about $2.5,000 US dollars per year. If you look at the salaries of average Kazakhstan citizen, we're talking about, and which results roughly in their annual, you'll spend, we're talking about roughly 9.5,000. So in theory, all of that spend can move over time to Cuspi. In theory, I am not projecting that it will happen eventually because

there will be always some either other payment system or some level of cash usage, which, by the way, something to appreciate. In the U.S., you can live in New York, San Francisco, many other places, and you will not, and you can carry your wallet with 20 bucks in cash just in case, and you can have the same $20 bill for a year. In many countries in emerging markets, it's not that way. Credit card usage or debit card usage may be not as prevalent. As a result, you need to have cash. Otherwise, you will not get far away.

A driver will need you to pay him in a taxi, a cash, or local grocery store, a local cafeteria. So Caspi and Kazakhstan used to be a country with very high usage of cash for a long time, which is very reasonable. And when Caspi Payments app took off, that amount of cash used went down muscle. Yep. If you go to NBK, NBK's National Bank of Kazakhstan website for data for the entire country, for the entire industry, for all payments, you will see how fast local payments were growing,

We're talking about like 200, 300% growth for the last several years. And why is that? Is it like because all of a sudden people started getting more money? No, because cash was getting substituted. And CaspiPay was taken. So going back to sum up, roughly right now, 2.5,000 per year. It can go to as high as 9.6,000. People probably will never get there.

But over time, this is how I think about the trend, getting into that direction. Now, if you say, oh, I am bullish on the economy of Kazakhstan and that $9.6,000 per year would be rising, then the upper ceiling will be moving up. If you're bearish on Kazakhstan economy, then you may say, I think it will be dropping. So you make your own call here. So that's one element, how I think about payments. So then there is another angle you can look at payments. There are right now on the platform of Kaspi, there are about four.

450,000 merchants. Caspi said publicly that, I believe, the one colleague or two calls ago, that they think that the number all the time, and not too distant future, the way I'm thinking about two, three years, but that's my timeline, so don't impose it on the company. They could get to 600,000, 700,000 merchants.

That obviously extends the opportunity for Caspi to generate more transaction volume where they charge their takeaway. So now, there is another interesting element, how you can think about it. This is a new initiative. So the date on that initiative is very scarce because there is not that much to report so far. But Casp is also moving into B2B payments. Because historically, they've been either C2C, Andrew and I send each other 100 bucks if it was a very nice dinner.

or it will be B2C. I pay at a coffee shop or at a grocery store or somewhere else with my Caspian. Now they're moving to B2B. Now there are some B2B transactions in the country which Caspi will probably not serve. It's like, you know, Casmunei gas is a big local oil and gas company that may never use Caspi for its own B2B payments.

However, I think Caspi is very, naturally designing its products for wholesale. So think about the typical flow of goods in almost in any country. This is a manufacturer. Then there is a distributor. Then there is a retailer. Sometimes if manufacture is relatively small or a retailer is very, very big, then they will be manufactured directly relationship with the retailer. And Caspi can logically, capture both of those steps. In fact, they've already designed solution that is targeting distributors and manufacturers to deal with a lot of local merchants who are buying their products. So think about it, Coca-Cola or Pepsi coal or someone like that, selling goods to

distributors, and then those distributors are selling them to local merchants across entire Kazakhstan. So Caspi can capture both of those steps. And if you think about it, you take retail volume, then you say manufacturers and distributors make of their certain markup. You take those market mark up out. Your potential volume drops, but that would they can in theory serve. And if you capture both steps, first you go from manufacturer to distributor, then from distributed through the retailer, then you capture it twice. So that's how I think about payments. Doesn't help?

Yeah, no, that's great. And, you know, I think the other thing is you've probably, because you've got all the retailers linked up, like it does sound silly, but if you have multiple payment systems, it's tougher to manage your business. Like, you do think there'd have to be some poll in demand. I mean, I don't think we've seen it crazy amounts yet in the US, but you do think they'd have to be some demand from the retail. I was like, hey, if I can use CASTMe to both,

cast me to both take money from consumers and to pay my suppliers, like that that removes the headache of managing two payment systems. And, you know, it's free for me to take the payments from the consumers. Caspi probably as one of the largest companies in Kazakhstan, they can probably match your payment terms on the other places, make it pretty easy. Like it's just the benefits of scale, the benefits of that network affecting the benefit of already having your foot in the

door with the consumer. we've talked three. I know Caspi has a few other. Let me add another one. Let me add another benefit here because I agree with you very much about what you said. There is another benefit. Caspi is also experimenting with working capital financing products. Yep. You are a retailer. You are selling, you know, Procter and Gamble goods, Thai detergent. You're selling Nivera cosmetics products and Coca-Cola, et cetera, et cetera. Caspi and you accept all the payments via B2C Caspi. So Caspi knows how much money you're making on revenue life. Now you are starting to work with Caspi to pay for your goods that you're getting either from manufacturer or distributor.

You might have working capital needs. Caspi may extend you a loan because they see everything and then they will just subtract it from your revenue coming in when you make those sales. Caspi is learning right now about that product line. So in the next probable year, maybe two years we'll learn a lot more, maybe even faster. But that's another way to increase your stickiness of a customer from B2B perspective. And that's when I don't know how PayPal is done on it yet, but I mean, I know PayPal, Amazon, those guys, I know they've moved in there and I would have to imagine that they're going to have a lot of success where, hey, you're not a bank just underwriting Andrew Nardom's business of fun, right? Your Amazon, you see their daily revenue, their daily

working capital movements. Like, you can do a credit analysis of these guys. better than anyone else in the world and because you handle the payments and everything they do, you're going to be able to get your money out fast or know if the loan's at risk and know if it needs restructuring like way before anybody who's just like kind of checking the every quarter and covenants on that loan. Correct, 100%. The power of data and what data enables you to do is massive. And it has been massive in the feedback business and there is a potential for different

data set to play a massive difference in the in their B2B business all the time. So we've talked payments and marketplace. You just mentioned fintech. I don't know if you want to talk the fintech business as well or if you want to jump into some other areas. I'll talk about marketplace as well because we haven't actually covered much of marketplace. So marketplace has about 5.7 million active customers. Remember, on payments, it's approaching 11, 10.7, 10.9, et cetera. So what means is that not. every consumer that using Caspi app and presumably local to the product, to the experience, is on marketplaces. So we're right now talking about roughly low 50s penetration for marketplaces.

And over time, what it can be, well, probably it will never be 100%, because it will be over someone who will not use Caspi Marketplace, but can it approach 60, 70 over the next few years? I think so. So, but obviously it will be interesting to watch how it, evolves over time. So that's the only thing that I wanted to mention on the marketplace that is worth attention and worth highlighting up front. Perfect. Did you want to talk FinTech as well?

So yeah, so Fintech about 5 million lensing customers. And you can think about the average size of a BNP alone, call it $60,000. Obviously it fluctuates and roughly you can feel free to cut you to run your, on math, this is how I've estimated that. You need to keep in mind that on average, it's about 14, 15 loans per customer per year. So it means that you have, Arcema, if I were in Kazakhstan I was a customer, I may have several loans and my aggregate balance will be lower, will be higher. Caspi historically has had a very low default rates. And the reason for that is the amount of what the actually touched upon and stole my moment of my glorious moment to explain that is because

Caspi has a lot of data on a consumer when they underwrite. And this is one of the things that they explained. The worst scenario is when someone says, I want to buy a flat screen TV. I'm using flat screen TV as an example, which is something expensive. And they actually a fraudster. That consumer does, that bad actor has zero plans to actually ever pay that long. They want to get that TV, then take the TV, resell it on the black market, get the money and run away. That's the worst. Because another alternative when someone says, I'm buying this flat screen TV, I'm making my salary, in six months I'll pay down. And then three months later, they lose a job. It happens. Don't get me wrong. But that's a lot, but that's not as

bad because number one, they already got some of your money back. Number two, that's a genuine good person. They will probably can work with them on restructuring or give them holiday, wait until they get back to when they will get another job, etc. That's solvable. The first bad person, bad actor, not solvable. And because Caspi has a lot of data, they brought the bad actors, never paying, never making even the first purchase down tremendously. How do they do that. Number one, they can look at my or Andrews activity via payments. If I'm an active user, they know a lot more about me. The most likely brought is the person who, it's their first transaction and they're buying the TV, right? If you and I have two years worth of data,

we've done a bunch of stuff. Like you probably know, this is a real person. Maybe, as you said, maybe they could lose their job, things get worse, but they're probably not just buying this to go sell it on the black market and never pay back what they bought it for. Yes. And it gets even better than that. What a normal person does before buying a philiscan TV for, let's say, $1,000 or $800 or $2,000, you go and you do read a lot of product reviews. Where do you do that? You do it on Caspi Marketplace. And if you never, and you do it because it's important purchase. It's expensive for most people. So you probably spend quite some time browsing and figuring out whether LG is better than Samsung and this merchant has a discount, et cetera, et cetera. And if you've never done that, chances are you're

probably not a good, you may be a bad actor. So that's why the NPLs, their first payment default rate is a ridiculous low. Like, as of most recent reports and reported date, it's less than 1%. Like, this is like terrific, terrific numbers. So that what makes it very profitable while they charge good rates, but it's not obnoxiously high rates, but because they keep their default rates so low, that's why they can navigate as well. Perfect. Great. So I think that's a great overview of the different business lines here and everything. I wanted to dive in some risks, but is there anything else on, like, I know there's a lot here.

Again, this is the Super app. There's a lot we can talk about here, a lot of other opportunities. Anything else big you think we should talk about in these three segments or anything else? So I would think about the Super App strategy. You got consumers, you got an app, you got a product that delights your customers, and they love it. They want to be coming back.

once they keep coming back you want to layer more services and more products and because there is a habitual usage of an app people will be using your app for the new products and services and your customer acquisition cost will be should be very very low because all those in this case millions of people are already on your app and then the question is how quick you can layer up more services. And I will give you a couple of examples where Caspi is innovating recently. So example number one is Caspi Travel. Caspi Travel did not exist, call it two, two and a half years ago.

They literally started from zero. And then they said, we will be offering air tickets and train tickets, both domestically and if you want to fly to most popular destinations. And they've started with that. And within all it 18 months, they've become number one seller of air tickets and train tickets. So they built business virtually from zero to a pretty decent size within an incredibly short period of time. Recently, Kaspi management announced that they're offering travel packages. So think about this holiday package, whether you

get flight and hotel and then you go to Dubai or Thailand or whatever other wonderful country you want to visit, you buy that. So this is a new initiative and they're using similar playbook as they did for Caspic Travel. So that's one. Number two, another example, example number two is Caspi Grocery where they partnered up with local retailer. So think about it as a safe way or whole foods or something like. And it's called Magnum. And the company is doing grocery delivery and they're partnering. Like offline piece is mostly taken care by Magnum, who is a retailer. And the online customer acquisition, etc., is done by Caspi in the online world. So that's another example. It's still relatively early. They're only in a few

cities right now, but over time, I think it will grow. So that's speed of innovation and how fast you can scale from zero to something very sizable. And there is another important trend here. If you think about it, if you and I, or our counterparts in Kazakhstan, decide to do a startup and say, let's do travel app where people can buy tickets. We know very little about the market and we know very little about consumer behavior. Kaspi has tons of data about almost every single vertical of Kazakh economy, especially when it involves consumers. They may know less about B2B, but everything that involves B2C, they know tons.

As a result, if the Katsby goes into a new vertical, a new product, a new niche, most likely they've done very extensive analysis, and they have all the data in the world to make a very educated, decision, why and how they're going to succeed and how they're going to capture that market. So that's another thing that I would like to add. Yeah, no, look, I mean, I think you could just sum it up as this is, Casspy is a super app, right? Like, and if you're a super app, the end game for a super app is probably you are, I don't want to say tax, but you can kind of think of your attacks on the entire economy of every country

that you, that you dominate, that you dominated in, right? Like, eventually most of the economy, if you're a super successful super app, you can dominate the majority of everything that happens in that economy. Like there's really no reason you can't or can't be involved with every kind of transaction. You know, like Visa and MasterCard get a cut of every transaction in the United States, basically, but they don't have anything else really going for them. TASBian, the long run can be Visa and MasterCard plus Google, plus Expedia, plus booking, plus like everything else you can imagine. Yes, I agree with that. And that's exactly I think what's they're playing. most important piece there is keep customers happy and delighted. That's number one. On that

point, a couple of things anecdotally want to speak with consumers in Kazakhstan or out of Kazakhstan. I remember one conversation, like I asked a person like, oh, you know, this Caspi. The reaction was like, I love Caspi. We all love Caspi. It's amazing. What do you mean when I'm using, right? That's one example. And that person was even living probably half a year in Kazakhstan, half a year, outside of Kazakhstan. So that's kind of like just a story. And I had more conversations like this. That's number one.

Number two, on YouTube, you can actually find videos. And that's, to me, that's an example that your marketplace is really doing well. Yep. Where it will be, oh, how to become a merchant and start selling on something on Caspi, right? So that's two. And number three, you can, you can, you can, download Kaspi app while you're in the U.S. or any other country, assume, most likely, and you can browse the app.

And it's very nicely, very clean, designed app. It feels nice. And it's indeed has everything there. Like, oh, you're a new driving license. Tap here. Get your company registered. Tap here. Oh, you want to buy pro groceries.

You go here. You want to buy something else. You go there. So like all that stuff, very nicely designed in one. place. So number one, speed of innovation. Number two, and this is the gross drivers. And I think based on some of my conversations, I have a feeling that some people do not appreciate the magnitude of gross drivers for Caspi. Because this is what I've heard. Arkansas has 18 million people. So it's relatively modest from the population size perspective. Yep. This is not Indonesia,

for example, or Mexico or United States. And Caspi already has called it 10 million. million, 11 million, whatever the number is. How big you can get. You already almost exhausted the market. And that's partially true if you look only at potential active customers number. What way it's not true is number one, customer engagement. As we spoke about, there are still 5.7 out of 10.9 roughly is marketplace customers on payments. So there is still a lot of people, there are still a lot of people who are using Caspi for only one use case, but not for the others. So there is still tremendous opportunity there. That's number one. Number two, increasing number of merchants, which will lead, and remember I mentioned on marketplace merchants

would be, I already mentioned those numbers. So from kind of 450 to 600, 700, I believe, if correct the public records, I'm quoting for a moment right now. That's another gross driver. Number three, you can go B2B, which we discussed. And it's not like, in theory, they already announced that initiative. That's a massive expansion of your time. Innovations, new products such as grocery, travel, packages. That's a new thing.

There is a possibility, even though I'm not modeling that or not betting on that, there is a potential to expand in other economies in Central Asia. It may or not happen. I don't know. If it does, then we just, you know, increased out of time, depending on the country. Kyrgyzstan is small, Uzbekistan is bigger. But if that happens, it can be a very sizable increase in town.

So I think there are a lot of growth drivers. And once you build this roadshow cycle, it's on the company to mess it up for this cycle, stop churning. And as long as they do a good job, which they've been doing, you can have potential to keep churning that flavor. Perfect. So let, I want to come back to that international point in a second, especially when we're discussed risks, but I do think we need to talk real quickly about management here. And I think for anyone's listening, again, this is probably going to end up being more on the bull case, but there is a fantastic HBS article from 2019 when they were talking,

when they were, I think they were just getting, they had just gone public with HBS is like addressing their thoughts around going public. It's got a lot of background on management. So we can talk management. We can talk insider ownership. I think recently capital allocation really points to management. Like all these are going to be bull cases. We'll discuss risk in a second. But I do think we just need to address it and talk about it real quick because it's a super app. You know, it's capital light. You're relying on them to continue taking that tax. on the economy we talked about. So it's pretty important to keep innovating.

Okay, happy to talk about management and capital location and side ownership. One thing when I say capital like, I just want to clarify. Marketplace is capital like. Payments, yep. In that, you're using your own balance to extend those lines. Right? So now, if you ask me about the mix, very recently, revenue, sorry, very recently earnings from marketplace and payments combined.

became bigger, more than 50%, and became larger than earnings from the company's fintech business. So capital-light earnings are growing faster than call it capital heavy for the lack of the better world earnings. And by the way, company also provides very good segment disclosure, which is not always the case for many countries which have several business segments where you can actually go and do a lot of analysis on your own. I'm looking at their three presentation and at the back, it's really nice. They just break out cleanly, hey, here's the payments income statement, here's the marketplace income statement, here's the FinTech income statement, here's the, it's really nice. And to make things even better, if a particular

initiative gets enough traction that management starts believing that it's important for investors to understand what we're doing, they will break it down for you over time. For example, when Caspi Travel started, it was tiny, so they just mentioned, we're doing Caspi Travel, it's an initiative, we're experimenting, we're learning, we have big vision. And then once it became sizable, wait a second, we'll put it separately as a revenue and will show you so that you will know what we're doing there. So disclosures, honestly, it's, there is a most, many US companies, most US companies will not have as detailed disclosures as Caspidus. Okay, now let's go back to shareholders, since you asked that and that's very, very important. So biggest shareholders,

as of September 30th are private equity firm that owned this company for a very, very, very long time called Baring Vastov. They own about 28 and a half percent of the shares outstanding. Chairman of the board, which is Lakhim, owns 24.26. CEO Mikhail Lamtadze owns about 23.42%. So that's the, so if you look at them combined, we're talking about low, oh, sorry, one other thing, are the members of the management team own about 3%. Yep. So which means that your free flow is roughly 20.5%, 20.5, which is not that big. And it's listed in London. You can look up IDV. Now, management said on two calls ago, management said that they are thinking about NASDA

uplifting. To me, the way I interpret this is the following. It's difficult for me to imagine a scenario where Kaspe actually needs money for itself. And we'll talk about capital location in a second why I don't think they need money for themselves on the balance sheet, which means that probably some of the insiders will offer, even the company warned it to do Nasdaq listing as they say publicly. In that case, it probably will be coming through a secondary sale. One of the shareholders, or maybe a combination of them, will offer some of the shares to the public. But in Kvastok probably is the most logical party

to do so because they've been in this investment probably for 15 years by now. That's a long time for private equity firms. And it clearly has been a very successful investment. for them. And at some point, it's logical for private equity firm to exit. That makes just tons of sense as how big firms are structure. I think they're probably the most logical seller, whether are the insiders such as chairman of the board, which is Lov Kim, or Mikhail Lamta, the CEO, whether they will participate or not. I don't know. Maybe they don't know, who knows. But that's potentially can be another catalyst. Because my observation is this. Someone like C-Lumatico Mercado Libre or Paxiguro or Stonecore, they are very much on top of mind for many US investors.

While my observation, Caspi is not as much. And I would argue that even more attractive as those companies. Kazakhstan is a smaller country than let's say Indonesia or in Africa, but pretty much. Hey, Artem, I think we were losing you for one second there. I believe what you were saying, it looks, I think it was the internet on your side. We'll try and edit this out or maybe I'll just get lazy and leave it in. But I believe what you were saying was, look, you compare this to see a couple of these other guys. They've got similar business models. They're probably more dominant in Kazakhstan. But because they're London listed, because they're smaller, they don't

really get the same attention from a lot of people who might be interested in them. They relist to the US. The shares get a little more liquid if somebody, if one of the PE firms or some insiders offered some shares. And all of a sudden, they might have a whole new investor base who's doing the work you've done in saying, hey, you know, 12 times PE, dominant position, super app, growing 30% year over year. Like, it's a pretty nice combo. Correct. It's pretty much what I said when we're over level connections, my connection slowed a little bit, in my opinion, any investor, any American-based investor who likes Mercado Libre or likes C-Limited or Paxiguro or any of those platform-type companies around the world, outside of the

US, especially if it's an emerging market, and they either looked at them or maybe they looked at them and actually bought them and they own them, I think any of those investors would be interested in research and analyzing Caspi, whether they will decide that it's. a great buy and they should buy it or what they will decide it's not a great buy and they will do nothing. I don't know. It's up to them. Everybody does their own analysis. But at least I think they would look. And my experience so far is that most people never looked at Caspi and many people never even heard of it. Let me, I want to talk upside in a couple things in a second, but I want to start talking about the risks because we're starting to run a little long and I want to make

sure we address at least some of the risks in this investment. And the risk I want to start with is, again, it kind of turns into a bull case at this point. But the first thing I thought when I looked at this company and not to hit everyone over the head too hard with numbers is I looked at oh, you know, this is this has a fintech component. They do a lot of B to be lending. I thought B to C lending. I thought lending to consumers in emerging markets, small dollar loans, like that is balance sheet intensive. That does have blow up risk. And you know, I looked at the consolidated to balance sheet. And I said, okay, they've got four and a half billion. I can't remember the, it's KZT is the domination, four and a half billion of assets supported by 3.3 billion of customer

accounts, you know, 2.8 billion of loans out to customers. There is run on the bank risk there was my initial thought. So I want to ask you, like, can you talk a little bit about the risk of funding to customers? Actually, we probably addressed it with data, but I think the run on the bank risk and how they've responded to a historical run on the bank's risk. I think that's really interesting both for thinking about the downside and for thinking about the kind of NPS score and everything that the customer has. Yes. Okay, so that's a good question. So if you, and to be clear, I am not on a commission by Harvard Business School. So they are not paying me for to advertise their cases. But if you go on HBS and buy Caspi HBS case and you read about it and you read it,

and read it, by the way, it's a great treat to learn about the company's evolution and management and characters involved and as well as Kazakh economy, you will also learn that run of the bank or risk of run of the bank actually happened in the past, where, you know, rumors would appear that some Caspi has problems and C.L. ran away from the country. It was a story like this. and then they would record a video where C.L. Michael Lam Cubs will be posing, I think, with a very fresh, you know, like, he was newspaper. It was literally a hostage, it was like a hostage photo where it was him with that day's newspaper and they posted it and they put it in newspapers and said, hey, look, he hasn't, because the rumor was he took all the money and run off. They were like, hey, look, he hasn't like, it's a proof of life photo, right? He's here. He's right here. Yeah, yeah. So it happened, right? And it happened several years ago. And I think at this point in time, the customer affinity is a lot stronger than it used to be because there is more data points of your interactions. So I think the reputation is a lot stronger. And the risk of a run on the bank is a lot smaller. Is it zero? Probably not. But it's a lot lower than it used to be. That's number one. Number two.

two, Caspi is a very important part of the Kazakh economy. So I believe, if necessary, NBK and because the government can always help Caspi out, not help in the sense, oh, you roll a bunch of bad loans, we will help you out. No, but in the sense that they will act, make it necessary steps to stay in the Fed window if they had a liquidity crisis basically. Exactly. So that's the second point that I think. Third, and this is less about trend on the bank, it's more about the earnings. What if there are plenty of bad loans, even though we have data that shows that it's not the case.

The way you think about it, you can say, okay, if a bunch of earnings from their fintech businesses low quality, okay, wipe out half of them, or pick the number that you want to reduce it by, and then you will be left with more than half of their run rate earnings from two capitalized businesses and whatever earnings you want to assign to give Caspi credit for in their fintech business right you can do that so if it was purely by now pay later product i think it will be a lot less interesting so in this case i think the diversity street that the diversity of revenue and income streams as a natural hedge against low or poor quality of loans and again i want to highlight it we haven't seen it so far whatsoever let me you know we're 50 minutes in here

we've talked about this is look that all basically all the revenue all their earnings all income is from, uh, is from Kazakhstan, right? So I think we do have to talk just Kazakhstan as an overall country risk. You know, I'm just looking at, uh, I just put up Kazakhstan GDP. And I'm just looking at, you know, what Google gives me. And Kazakhstan's GDP goes from 115 US billion in 2009 to it peaks at like 240 billion in 2013, drops to a 137 billion in 2016. Today it's up to 200 billion. So that is, I mean, doubling your economy and then cutting into a third in a five-year period. I mean, this is wild, wild GDP type stuff. But, you know, I just want to ask, how do you think about the Kazakhstan, country, GDP risk, outlook, all of that?

Okay, so few things. So number one, Kaspi makes money in Kazakh local currency called Kangen. Andrew and I are U.S. dollar denominated investors. And as a U.S. dollar denominated investor, anybody does not want this outcome. You buy something that is worth 110G, which is $510,000, which is $1, and then 10G, you make a lot of money. It goes up, it doubles. It's 1,000 10G in that right now. You're very excited. But because foreign currency, also.

depreciated by 50%. Now all of a sudden, you're like, oops, you actually didn't make any money in USD. So you have that truth. And you need to think about what you're either broad view on Kazakh tangier currency. And you can look at historical, you know, at historical effects rates. I will share how I think about that. And remember, I'm not a macro guy. I do not have a very strong view on Kazakh macro. But the way I think about this is the following. If the company's growing earnings, I will use numbers a little bit wrong just to illustrate the point, 30%. And you do it for two or three years. And then in year four, foreign currency experiences 30% depreciation against US dollar. But in local currency, it's still growing 30%. You will just stay invested

for one extra year in order for you to get to the same point where you want. So that's point number one. Point number two. So that's only Kazakh, on Kazakhstan for local currency. Number two, oil and gas play an important role in Kazakh economy. It's similar to Saudi Arabia, probably, or similar to United Arab. Emirates. The share may be smaller, but it's still a very important source of revenue coming into the country, and it's a big export. But if you own anything, in my opinion, this is my

opinion, if you own something in Kazakhstan, you are to a certain extent long oil. How much you can try to run all sort of regressions and correlations and form your own view, but there is this element that you need to keep in mind. So if you are a very oil-heavy investor and all of a sudden you decide to invest in Kazakh marketplace, remember, some of your exposure, you'll already have a new portfolio in a way, very indirectly, right?

If you are an energy investor, you may feel, okay, I'm okay with that having that risk. And remember, this is not your core bet, because I would suspect that if oil goes down, Caspi will have a lot of idiosyncratic factors working in its favor, and it should still power through and do well. But if oil goes up, let's say to a hundred again, it's probably good for Kazakhstan economy and probably good for custody because people have more money to spend and send each other

and buy goods and buy services and travel international. So keep this in mind. That's the second point. Third point, Kazakhstan is a country which would be classified as an emerging market or fancy a market. and all risks of invest in overseas in emerging markets or frontier markets are present in this case. So you need to think about those for yourself when you are doing your research. As we said, it's the unofficial, you know, other people than us have described it as the unofficial national bank, national app of Kazakhstan. That's great if Kazakhstan's growing.

That's great if there's probably political stability, but emerging market and frontier risk. like if you if that frontier risk plays out and you're the unofficial national app of Kazakhstan like you're probably going to get pretty hit pretty hard with that frontier risk not a guarantee nothing on this podcast is a guarantee not a guarantee but you know you can imagine frontier risk in terms of that you can imagine frontier risk is even if that went fine you can imagine frontier risk in terms of the currency just evolving the economy to buy just all sorts of risks there so yeah let me one more thing so international expansion, right? I listen to the Q3 call. They say, hey, we've got a great team. Obviously,

we've talked about people, I'll include a link to the HBS notes in the, in the show notes. They've got a great management team. They say they've got a great team overall. They're saying international expansion, we're going to do it when the time's right. But, you know, I go, if I went back four years ago, I could see them talking about international expansion. It's just, it's taken some time and they haven't really had any traction there. You know, is this just, hey, it always takes a little time for bread to bake or is it hey you know they they dominate their national they dominate in Kazakhstan but it's really hard to get this stuff going they're just not going to be able it's too late they're not going to be able to chicken or egg in any other

market only time will tell if if another country and pick any country in the region already had a player that is similar in scale and service and customer value proposition and NPS score and customer happiness to Kaspi, I would say yes, that country is too late to go and try to get into. Alternatively, if another country does not have such a predominant player, which has a superab strategy and combines so many wonderful things, then Kaspi probably can go there and succeed, but only time will tell whether they will go into other markets or not. I am not including any international expansion into my thesis. If it happens, I will need to substantially update my model and my calculations.

Yep. I have two last questions I want to go through. Just the first capital allocation, and especially the dividend policy, because I emailed you over the weekend, so you know, But I think when an investor first looks at this, they're going to see a dividend that's going up and down over time. And they're going to say, hey, what's going on with capital allocation? They do some share buybacks here. Obviously, I'll let you discuss it, but share buybacks are somewhat limited by liquidity. But you see the buybacks. You see dividends going up and down. And we're not used to companies doing dividends up and down, even if I think that's actually the right way to do dividends, neither here nor there. But just want to talk it to turn it over to you on the

capital allocation explain what's going on there. Sure. So on capital allocation front, the company has said that our goal is to return to shareholders roughly 50% of our nettinger. It can be done via dividends, which they've done, or it can be done by backs, which they've also done. Shai buybacks have been fairly limited. And remember, this is a company that has been public for a couple of years. So we are not talking about company that has been public for 20 years, right? So it's relatively new phenomenon. So far, they've done one shy buyback that they finished and completed. And they've announced a second one. They are presumably going through right now.

If I'm not mistaken, and this is from memory, I can be awful little bit. I think the first buyback was for 100 million. And I think second one was also for the same number. I think it was like 40 and 60 combined to 100 and the most recent was 100, but I defer to you. It doesn't really matter either way, but yeah. It doesn't change. Remember, this is roughly more like 12, 13 billion market cap company. So point is that it's a small portion of buyback. It is, but 12 billion market cap, so 25% float.

So we're talking two and a half, three billion float, right? So you take out 200 million, like it's actually a pretty meaningful and pretty quick amount of the float. but you're not going to charter style buyback 12% for your share. This is not John Malone a buyback style, to be clear. And part of that is a limitation, as Andrew alluded to, because of the float is fairly limited. Again, remember, the float of the company is about 20.5%.

I would suspect that a good chunk of that is owned by investors with a very long-term horizon, who may not be selling. their shares. Because when you think about it, and there are plenty of this type of loan only funds that will be, we're doing emerging markets, or we are doing X, Y, Z. And they have billions and billions in assets under management. And in my opinion, for them, Kaspi is a fantastic investment to have. And it's a pretty stable money. They're not going to be trading a quarterly results. But this is not a poor hedge fund that doesn't.

which means that those shares are not really tradable. They're not easily tradable. They're not easily accessible. So Kaspi doing buyback, even at a relatively small scale, I think it's already, in my opinion, is a big testament to management thinking and their right frameworks about capital allocation. I agree.

Look, if your shares are undervalued and you've got excess capital, why not buyback shares? The fact that they say, we're going to return 50% of net income to shareholders, and then they said, hey, shares are undervalued. Yes, we've got a flow problem, but why not switch some of it from the dividend to buybacks? Shows an insider mentality, shows a smart. Let's talk about that, though. Valuation.

Last thing I want to end on. Dividence. So some money will be going to, so depending on which foreign currency you're going to use, whether you're going to be using average for the year or average for each quarter, depending on your preferences, then there is the way how IFRS and GAAP prescribe you to do it. And obviously, there is common sense, and those two may or may not contradict each other or not. So think about this way. The company will, is probably about to generate 1.1, 1.2 billion in net income in 2022.

Depends on which effects rate you're going to use, and depending on whether you think they will hit guidance, you'll do slightly better or slightly worse. So if you think about it, okay, half of that can be more, by the way, right? Can be more because on the one of the last earnings calls, someone asked about dividends, and the team said, like, look, this is what we said publicly, but if you look at our run rate, we're actually going a little bit above 50%. So, but we said at least 50%. Well, so let's stick to 50%.

Then we're talking, call it 550, 600 million of returnable capital. Can be buyback, can be dividends. If, let's say, they do 100 million buyback, and again, check those disclosures because both Andrew and I right now are blinking on the exact magnitude of that buyback. let's call it a hundred to keep things simple, then we're talking about 450 or 500 million of potential dividends. And this is roughly on 12 and a half, 13 billion market to have companies depending on the day. So that's your that's your potential dividend yield. And if management

sticks to the same policy, and if earnings will be rising, then you do that the distributable income will rise as well. Perfect. So let's just go, that was great. Let's just talk real quickly. They're buying back shares. Obviously, they're buying back shares because they see value in shares. You have a position as we disclosed at the start.

Obviously, you have a position because you see value in shares. How should people think about rough valuation for this company, right? You've got a company trading at 12 times price to earnings, growing 30% per year. If I ignored emerging market, you put those together and people will be going crazy for it. But then you had emerging market, a lot of the balance sheet is in customer loans. And I think people might be saying, I have no freaking clue. I'll have to think about multiple valuation, all of this for this company. So how are you thinking about that?

Look, first of all, this is obviously very personal to every investor, right, how they approach this. So the way I would share a framework, I don't want to share exact numbers. But I want to say frameworks, how I think about it. and then you listeners can say that's interesting framework, let me apply it, or say this is a very bad framework, and they will not apply. So think about how revenue and how earnings will be growing in the next several years. And you have, and we went through gross drivers already, so you know what those growth drivers can be.

Then you think about their margins. despite they already extraordinary high, they have been slowly expanding them even more. So think about your margin outlook for the next several years. Tax it at a rate,

that's all public information, and then we'll get you in that earnings, not income. Think about how it will be, how fast or how slow it will be growing in your example. And then you need to think, about the period and the gross durability.

Like how much time will lapse when Caspi will become GDP grower or GDP plus 2% growl. So I have a lot more, and it's easier for me to talk about what multiple should be once you reach a certain level of maturity. And remember, you're investing in Kazakhstan. and you can look up where local bonds of Kazakh government trade. I've got, I just put up the local bonds. I was going to make a comment on that.

I'm a little jealous you beat me to it, to be honest with you. Okay, so like next time, next time. When I have another haircut, I'll come again talk about another company. So if you look, this is a approach that is similar, what corporate finance will prescribe you. you take sovereign borrowing rate, and ideally try to make it around 10 years. And Kazakhstan government, based on my data, the bonds that are local currency, remember, this is not used the currency, this is local currency bonds that I expired in 233, which is conveniently about 11 years out from now, with the caveat.

There is a call in 2028 that may or not the exercise we don't know. they yield is about 10.7%. So that's what your sovereign borrowing rate is. And then you think about the cap structure of Caspi. And this is what it gets actually very, very interesting, right? Because you can say, okay, so they got sovereign rate. Then if they were borrowing money, you add a couple of percentage points or whatever you need to add. because most likely, sovereign nation in its local currency is a lot more credit worthier than any

company, regardless of how great it is. By the way, there are exceptions in the history, but let's not go there. And then you say, okay, but there is also equity risk premium, so you need to incorporate that. And then you will end up with some sort of weighted average cost of capital according to corporate finance textbooks. This is why it gets interesting. Kaspi has also flowed because there are various customer departments. and some of them are interest bearing, which are attractive source of funding, and there is also flowed coming for payments, which is effectively zero interest funding source. And then it's up to you to decide. That's why people say evaluation is more up than a science. Then it's up to you to

decide how you want to dice it and slice it, and what you think is the right discount rate for Caspi earnings stream should be, even at maturity, right? But I think the more trick, the trickier part is actually to get to that level and how long that growth runway will last. If it's three years, it's less attractive because you need to apply that normalized multiple to mature earnings in, let's say, 2026. If you think that the growth runway is five years or 10 years, that's a very different story.

So that's my frameworks. No, look, that's where I'll say. The only thing I would, and look, I'm doing this on the fly, so I could be wrong. The only thing I would add there is I actually think you undersold the Kazakhstan yield. So I'm looking, as you said, those 2033 bonds have a near-term call. I'm looking at Bloomberg. Those are like 3.5% yield to call.

The only bonds I can find that aren't callable actually go out to 2045. And those are trading at a 6% yield to worst. And that's out to 2045. U.S. government 20-year bonds trade for about 3. I mean, if you had told me before this pod that Kazakhstan 20-year government bonds traded two to two and a half percent inside of U.S. bonds, I would have said, no way. Like my mental model would have just been Kazakhstan's bonds are 10 percent or something, but it seems like it's even better.

And obviously a lower risk premium on the government bonds when you've got something that, you know, is 100 percent Kazakhstan should call for a higher equity multiple. I could be out of turn there. Obviously, I'm just kind of glancing at Bloomberg, but that's what I'm looking at. Everything else you said, I think, makes tons of sense. So it would actually be a little bit better. Andrew, which bond, 2045? 2045, yeah.

What yield? 6%. Okay, you're looking at international bonds. You're looking at a U.S. denominated bonds. You need to, in my opinion, in my opinion, and the way corporate finance typically teaches that at the local currency government bonds. Gotcha, gotcha, gotcha, yeah.

not sovereign. But then as you said, you want to match the underlying currency of the sovereign bond and currency of your interest payments with the currency that Kaspi makes money in. Well, look, this is why I'm not a lawyer. They say a lawyer should never ask the question that they don't have the answer to.

I'm a podcaster and I'm just out here throwing Bloomberg numbers just off the cuff of the thing. But again, and as you mentioned, like, look, they do have that interesting trade that so many people have talked about, in U.S. small banks recently where they have customer deposits from if you've got, think about your Venmo account, you probably have a couple hundred dollars sitting around there. Venmo is not paying you interest on that.

If the Fed is paying Venmo or bank, 3%, 4%, that's all net interest margin. Same with Caspi, right? If they've got a lot of your B2B and stuff, they're probably not paying. They've got this great source of deposits that they don't have to pay interest on. They can go to the Fed or under rising interest rates, rising inflation should be a beneficiary of that type of stuff there. Anyway, we have covered a lot. One last thing that is important when we talk about risks.

Based on my observations over the years, the most common way for an emerging market company to get into trouble is to have mismatch between its earning stream and its liability stream. In other words, you're a local company in Argentina, in Brazil, Mexico, Kazakhstan. dollar denominated bonds. And you make money in local currency because you deal with local consumers. You're not an export of oil or metals or copper. You're a local company. You're a grocery store chain. And you make money in local currency, Mexican passive, for example. And then you decide that borrowing Mexican passive will cost you 12%. But if you borrow in USD, it's only six. And say, that's a great idea. You borrow it six. Then something happens in your local economy and a local currency goes down substantially versus US dollar.

your local earnings may be same or even higher, but in U.S.D, instead of making $100, you're now making $60. And all of a sudden, your, for example, debt to EBIDA used to be two times, which is manageable, and now over a sudden it's five times or six times. And it's even, because the debt that you took that was 100 Mexican pesos, if the pesos go down 40, now it's worth 140 Mexican pesos. So earnings down and the liability is up. It's just an awful mismatch. Yep. Exactly. So it's a horrible mismatch. So that's the most common way, by my observations, how we can get into trouble as a company from an emerging market. Caspi does not borrow in USD almost never. So as a result, if foreign currency, Tangay depreciates substantially, you may take a hit as a US dollar denominated investor, we already covered that. But in my opinion, there is no existential risk here. We're like, oh my God, the worst happen. So that's not the case.

They're very thoughtful about it, and they clearly think very clearly, pun intended. So they have thought about it very carefully how to design their capital structure to avoid that type of situation. Perfect. We've covered a lot, but I just want to give you anything else that we didn't get to cover here that you think we should have touched on, whether it's on the risk side, the upside side, anything else investors should be thinking about. One thing that I would say at the end is this. regardless whether you have interest in research in a company in Kazakhstan as a potential investment or potential idea or not, regardless of that, I think Caspi story is so uniquely fascinating and what a very ambitious, talented, driven management team can do, that's honestly, I think

even if you say, like, I will never invest in anything outside of the US. And that's a legitimate approach. because it's your investing portfolio, I would say still read about Kazakhstan because it's such an interesting, sorry, read about Caspi, because it's such an interesting story. And not only on strategy and super app and what we can learn from that and apply to other markets and other countries, but also how management team drove innovation and how they drove culture. And on culture, I want to mention two things. My sense is that Caspi culture is not a bank culture, based on my research. It's more of a tech company culture. There are quotes from the CEO, like, I can't remember where it was, but somebody says, oh, Caspi, the bank, and he'd be like,

we are not a bank. We are a technology-driven innovator. And obviously, that's a classic thing for J.P. Morgan and all those people say, we're not a bank anymore. but TASPi, it's kind of hard to argue it when they're, you know, watching travel verticals and all this type of stuff. Exactly. So that's number one. So culture is unique. Number two, they, based on my research, companies attract in tons of young, talented, smart, well-educated people in Kazakhstan. So this is like not your, you know, like traditional banker type people.

This is like a young full of energy people who are coming to do cool things in a cool company in their company. in their country. And I think, again, similar, when I say, when I say, I think it's based on my research, right? And it doesn't mean that I'm right at my conclusion. That's why I say, I think. The company is one of the most desirable employers for young people in Kazakhstan,

because it has a cool vibe. It has a great culture, right? So that's something to keep in mind. I'll just encourage everybody to read the HBS case. There are some other materials on the Internet that you can find and enjoy reading. It's just fascinating thought, in my opinion. Also, there are several videos of CEO,

Mikhail Lamtazze, on YouTube. They're done in Russian, but you probably can get YouTube to translate them for you. I don't know how good translation will be, but you know, you can listen. It's interesting perspective or coming from his CEO and just see his behavior, what he does, etc. And similar, download an app, like play with it.

You don't need to buy anything. To be clear, I have not tried to renew my California driving license using Casperia. I'm not sure that it will work, but you can definitely get an app and just play with it and see the passion feel and see whether you like it or not. Perfect, perfect. Cool. Well, Artem, this has been great.

I'm going to, why don't we wrap it up there? Thanks for coming on for the second time. I'll include a link to the HBS case study in the notes and in a link to Artem's very, very thinly used Twitter account in the notes as well. But Artem, thanks so much for coming on. I think I made one tweet or maybe two tweets in my entire life. Thinly used Twitter account. Thanks so much for coming on for the second time.

Looking forward to the third time, and we will chat soon. Sounds good. Thank you, Andrew. A quick disclaimer. Nothing on this podcast should be considered an investment advice. Guests or the hosts may have positions in any of the stocks mentioned during this podcast. Please do your own work and consult a financial advisor. Thanks.