This interview will be featured as a two part series with audio clips and full transcripts.
Part One: Rising to the Challenge
Shortcuts:
In the Beginning… (read transcript [7]) (listen [7])
Kiva’s Challenges (read transcript [8]) (listen [8])
Premal’s Inspiration (read transcript [9]) (listen) [9]
Kiva’s Business Model (read transcript [10]) (listen [10])
Defining Success at the Entrepreneur Level (read transcript [11]) (listen [11])
Who lends? (read transcript [12]) (listen [12])
Bearing the Risk (read transcript [13]) (listen [13])
Average Loan Size (read transcript [14]) (listen [14])
Generation X, Y & Z (read transcript [15]) (listen [15])
Outreach Strategy (read transcript [16]) (listen [16])
Jessica (Flannery) [17] and I knew every business person on the website for the first month because she worked in the village in Uganda where we were working. And that created lots of great stories.
For instance, one of our lenders lent to a woman who was a fishmonger in Tororo, Uganda and the two way communication that is available on the website resulted in the lender buying the fishmonger’s daughter a wheelchair because she had some problem with her legs and couldn’t walk.
So it’s really a situation where this loan that occurs, it’s sticky. When you loan someone money, you are waiting to get paid back. So it’s a sustained connection, and it can create more of a connection than donating. Great things can happen when people connect, so we are really excited about that.
Going forward, we believe that facilitating connections is going to be our “bread and butter” so we are trying to create software, a platform which will continuously create those synergies without us getting much involved. We don’t want to create the connection or manage the connections, we want to facilitate them and then get out of the way.
So, you can kind of equate this to a virtual bulletin board in the community that has something that is extremely familiar to them (photos of themselves and their friends) in a relatively new tool (the computer). I think that beyond the cross border connections, perhaps there are secondary things that Kiva is just beginning to learn about itself. It’s almost become a MySpace [18] or Facebook [19] in that local community, because of the lack of anything else that exists like that, so it’s just neat to see it unfold.
Wikipedia [20] that have come to light. I think of open source projects like Mozilla [21]. And I think of Ebay and how they have created a self regulating platform that allows two complete strangers to trade with each other in a trusted environment. So, from a company standpoint there a lot of great companies that have really innovated building trust over the internet and letting people connect.
And one of my favorite things I hear Matt say is that we are connecting people over loans. But the loan is sometimes secondary in some ways and the primary thing is the real connection about what it is like to be, for example, a goat herder in Uganda. The focus isn’t necessarily on the desolate poverty aspect of that situation, so much as the entrepreneurial bond, something that anyone can empathize with. So that to me is what Kiva can bring and I think that we can follow the innovation of other companies that are out there.
Finally, a little over a year ago, I attended the WRI Base of the Economic Pyramid Conference [21] in San Francisco and met a ton of social entrepreneurs and folks in the development and microfinance industry. These are the folks who helped Kiva grow, in the first 6 months, from 1 country to 10 countries, by just relying on that trusted network, a committed band of people who are working and connected over the internet. Its just amazing having folks, like the folks I met at the WRI Conference, helping to expand our bottlenecks and understand our challenges, so those are important connections for me as well.
Daily Kos [22]—these big mega blogs about social activism—they are really popular with our users.
read transcript [23]) (listen [23])
“Steamrolling” the Partner Process (read transcript [24]) (listen [24])
What We Are Looking for in a Partner (read transcript [25]) (listen [25])
MFI Interest Rates (read transcript [26]) (listen [26])
Just the Facts: Kiva’s Business Case (read transcript [27]) (listen [27])
Connecting Entrepreneurs and New Technology (read transcript [28]) (listen [28])
Additional Services to Partners (read transcript [29]) (listen [29])
Kiva as a Model (read transcript [30]) (listen [30])
Other Peer to Peer Investment Groups (read transcript [31]) (listen [31])
Creating “An Open Platform” (read transcript [32]) (listen [32])
Zopa [33] (UK) and Prosper [34] (US) which are great companies and are engaging people in lending in their own respective countries on a for-profit basis. They are not necessarily focused on alleviating poverty, but Kiva sees themselves very much in the mold of those two companies, being that we are peer to peer. Unlike them, we are international and we are driven primarily by a social mission, although they both consider themselves socially beneficial as well.
NB: Do they create a return on investment for their investors?
MF: They both have a return on investment; they both offer interest rates. And, when I started Kiva, just as an aside, I was trying to offer interest rates. I was actually getting the interest at first and not passing it on, but I stopped that. Now there is no interest that we get from our partners, but we are trying to offer interest to our lenders. There is no philosophical decision not to do so; the only reason that we haven’t done that is because of regulatory concerns, which we hope to overcome later this year, so that we can offer a profit for our lenders.
PS: I think the greatest misconceptions about Kiva are when we are working internally underneath the hood here in the office, we think, “How do we create this open platform?” So, a lender should come and be able to make an informed choice and they should be able to understand the microfinance partners and information about them as well. But in addition to understanding that, they should understand the blogging frequency, which our MFI partners should be able to set (maybe it’s very frequent, or if they want to keep their administrative costs low, maybe it’s very infrequent). They should one day be able to earn a non-zero interest rate and finally they should be able to understand the risk of their loan. And those variables go into what a lender would have to weigh when selecting from one business on the site to another.