One of the Problems With PKK Revealed Today

This morning Tenet Fintech (PKK.CN) (PKKFF) announced a partnership agreement to bring Chinese import/export businesses to China. This is good news. But it also reveals the major issue I have (and likely others in the past like Carol Penhale) with this business model. The news release states:

"Under the terms of the partnership agreement, SGT will be able to charge its clients a service fee related to the revenue that they generate from any foreign partnerships realized as a result of a connection made on Cubeler. Meanwhile, Tenet will benefit from the increased data the new SMEs will bring to the Cubeler Platform, including valuable import/export commercial data linked to all three countries."

The tone of this implies that the PARTNER can charge money for use of the Cubeler platform by its clients, but PKK does not. It merely gets this esoteric benefit of more data, which may or may not be monetized at some undefined point in the future.  

What kind of stupidity is that? It's not like the service is free. The clients are still being charged by the partner. So why doesn't PKK at least accept some cut? If the service fee is, for example, 5% from the partner, what difference will it make to clients if they get charged 5% or 6%, and PKK takes that 1%? It's not like there is going to be a whole wave of clients who will be okay with a 5% fee but balk at a 6% fee. Either the service on Cubeler is worth it to them at some small service fee or it isn't, even at 0% fee. 

This is the breakdown of logic that PKK management has when it gives away all these services for free in hopes of generating as much users and as much data as possible. Human nature is if you PAY for something, you will respect it. That's the idea behind charging tuition at colleges rather than attracting people who go to school for free and coast. Same thing behind any push to charge a flat user fee in the Canadian health care system, so someone doesn't go to the emergency room just for some sniffles.

An SME that is on the fence for any Cubeler offering might say "okay, I'll give it a shot" if it's free. Use it a few times then forget about it. An SME that is actually paying, even a small amount, will put more effort into seeking out maximum benefit on the platform. Data generated from free users is going to be of lower quality than data generated by paying users.

If you're Palantir, with over $7 billion in cash on your balance sheet, fine. Do something like this to gather as much data as possible. If you're a penny stock that has been actively killing your shareholders' portfolio with dilution, your NUMBER ONE priority is to generate as much cash flow as possible until you can pay your expenses and stop diluting shareholders. Even at the expense of some growth.

I have given up trying to reach this man but existing shareholders with larger positions than mine need to make their opinions heard on this.