The Kiva Chronicles

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2007-02-06T13:15:00.000-08:00

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Tax Status Revisited

2007-01-30T10:06:00.000-08:00

A big theme of the journey through Kiva has centered around the decision of organizational type. Jess and I started out right away thinking it would be formed as a nonprofit. One of the first things she did was to look for an attorney to incorporate us as a 501c3. It took over a year from start to finish to get 501c3 status and it was a serious pain.

This summer was kind of rough in this regard. It was taking forever to hear back from the IRS. We sent a letter to them to expedite the process but didn't hear back for months. Kiva was crawling along at $1-$2K in loans and 25 new users a day. We weren't making traction very fast.

There are a lot of debates in social entrepreneurship around the topic of whether to become a 501c3 or become a for-profit. It's my impression that prevailing winds within the field suggest the for-profit model whenever possible. "It's hard to scale a non-profit" , I would hear a lot. Or, "you can access so much more capital" if you convert to a for-profit model.

That was just my experience with people in the social sector. However, It contrasts sharply with what I heard from the financiers of the tech world, Premal and I spent a fair amount of time in the offices of Sand Hill Road...especially last summer. In general, the VCs we talked to wanted to consider ideas that had a decent shot at a 10x return on their investment. When we ran models of trying to eke a 10x return out of Kiva's model, it never felt quite right.

We also briefly looked for "patient capital" investors but turned up very little. There just not a lot of that patient capital out there knocking down doors. This new, but limited, class of investment is arguably harder to access than donations.

I've had the luxury of working closely with three experienced angel investors on the board. This fall I was at a breaking point. At our October board meeting, we were down to $15K in cash reserves with a monthly burn rate of about $15K. Fundraising was getting pretty urgent and wasn't sure if we could hit payroll. I ran the for-profit idea past the investors . Unanimously, the board shot down the for-profit idea. One board member asked us to call him if we were about to hit zero so he could liquidate some of his assets.

Right after that, the Frontline PBS show happened. Combined with a new model around optional lender fees, we became cash-flow positive the next month. We now have much more predictable income and are financially stable. We never had to call for a liquidity event.

I'm not religiously tied to the nonprofit structure. It's working for us now, and has several advantages. Prominent among these is user good will and branding. I consider Kiva to be a public property owned by it's users. This feel would be harder, but not impossible, to pull off if we were a for-profit. There is a level of trust we gain as a nonprofit that would be harder to gain as a for-profit. Equally important are variable cost savings because of donated services. Right now, PayPal has donated free transaction processing to us, which means we aren't charged the usual 3% off of every transaction. Our model would be much more difficult to pull off without PayPal's partnership.

For anyone deciding between the two, my main thought is to be fiercely practical -- not religious -- about the org type you choose. These are tax-structures, not religions, you are choosing between. Each can be maximized in it's own way if you just focus on getting work done.

Scarcity Mentality

2007-01-16T09:34:00.000-08:00

I'm having a slight identity crisis and it involves scarcity.

For the past two years I've operated in an environment where scarcity was the rule. We had a really small budget and stretched it so wide. We used open source methodologies, we had no IT person, no travel budget, no QA testing, no paid accountant, used furniture, little insurance, no computer budget, no server administrator, low budget hosting, a CEO who writes code, etc, etc. Most of all, we had no free time and all became workaholics. I'd venture to say I saw the sunrise 100 times last year.

Scarcity, while we might complain about it, can become a badge of honor as well. In the nonprofit world, I see that all the time. Nonprofits often compete in terms of their overhead ratios. Most every nonprofit out there advertises to it's funders how it likes to keep overhead low so that the majority of funds it raises goes to constituents. Kiva is not all that different. Last year we raised $2M in loans through our website and spent about $200K on our own staff (aka overhead). Thus, we can advertise that our overhead was no more than 10% of the total funds sent to our consituents. That's golden in the fundraising world.

This kind of competition, while it seems logical to the public, can also be destructive. For instance, is it a good thing that Kiva had no QA testing process last year? Sure, we spent less on dreadful *overhead*, but at what cost? A buggier website?

I've definitely thrived on the narrative that Kiva, despite a lack of resources, has overcome enormous challenges and made a positive impact on the lives of thousands. That's a very motivating story. The question is, how will things change once we have more resources? Is there a way to maintain a similar motivation in an adequately- funded organization? Also, can we break the destructive scarcity mentality?

In the last post, I asked everyone how much loan volume they would predict for Kiva in 2007. THANK YOU for all of the comments. Since I spend all my time building an organization, I don't have time to blog a ton right now or respond to all the comments. I read them all and they guide my thinking. I really appreciate the sense of community that is evolving on this blog.

Olana, Premal and I have put together a budget to present to the board. We set the big goal next year at $10M in loans, but have contingincies in place for smaller and larger amounts. This means our overhead budget will go to about $1M for the year. IMHO, this is enough to adequately staff and resource our org for a $10M year. We need to get approval from the board. Pending that, we will be hiring soon....

Seasonal?

2007-01-02T02:10:00.000-08:00

Our site has been branded around small loans, with a primarily African focus. We started in Uganda with $300 - $500 loans which seemed large at the time. In that part of the world, a $500 loan is a usually a second stage loan given to somebody that has already proven some ability to repay a micro-loan in the past. When the first round of Ugandan loans was posted up, we wondered how users would react.

If you look at our site at this very moment, for the most part, you will see a pretty different story. Most of the loans currently listed are $1000 and up....with a heavy focus on Eastern Europe. Why is this? You ask. It's not because our partners in Africa, South America and elsewhere aren't posting up smaller loans.

Instead, what is happening is that our partners in these parts of the world are posting quite a few smaller loans every day. It's just that these loans are the first to be funded and moved to the "raised" section of the site. Thus, what you see on the site usually are the loans that take the longest to be funded.

This points to an interesting phenomenon: users prefer small loans. Also, users seem to prefer African loans above all. Thus, when a partner posts up a an African, female, agricultural entrepreneur, this entrepreneur gets funded sometimes in minutes. On the contrary, an Eastern European retail store or taxi driver will sometimes take weeks to be funded. Every loan is getting funded, just a drastically different rates.

Another, more important phenomenon, has happened to us: a pretty drastic surge in business. I wrote that, while in Toronto, I watched our user base and our loan volume double. We crossed the $1 million mark in November. The trend has only accelerated: we crossed $2 million last week. We have amazing lenders. This has caused growing pains for those of us writing software, for our partners posting loan opportunities, and for the rest of our staff which has been tirelessly working to sign up more partners and conduct due diligence. It's a cliche around here: these are all good problems to have.

Check out this chart of our traffic and loan volume. If you have a sec, let me know what you think. How much of this growth is seasonal? If you were me, how much loan volume would you predict for '07?

Carl's Big Adventure: The Next Episode

2006-12-19T03:08:00.000-08:00

Back in January, I told the story of how my TiVo colleague Carl Haynes packed up for Uganda to start the Kiva Africa software dev operation. Carl's a prolific engineer and a pioneer in the Java language.

"Tune in", I said, "this should be fascinating".

Tuning in has been hard to do. He arrived in March and spent two months or so really revving on the Kiva partner interface -- making it much easier for our partner MFIs to post businesses from the field. We had a loose agreement about what he would do and it was going great.

At about June, his work really dropped off. Silly visions of Kurtz ran through my head. I remember a series of late night calls trying to ascertain what he was up to.

There are a lot of challenges to coding from Uganda. 1) It's literally impossible to get anything better than dial up speeds from that country. 2) You have electricity only every other day given the power crisis in Uganda which shows no sign of letting up. Fuel is expensive and often generators are all you've got.

Less predictible, however, are the social distractions. Following his blog this whole time, it's pretty obvious what really happened here. Carl fell in love. With Moses' sister in law no less!

Last thursday night, I got a surprise call. Carl was in San Francisco outside of our office. He entered the office with a simple announcement: He and Susan got married.

Congratulations my friend. Will you move your budding family back to the Bay Area?

http://www.carlandsusangetmarried.com/

I'm convinced

2006-12-05T02:28:00.000-08:00

If you're an entrepreneur, you should sound more confident than you are. If you're a social entrepreneur, you should be more inspirational than you feel. If you are an introverted social entrepreneur, you will face even more problems.

I struggled with depression for much of my young adult life. Sitting close behind a great optimism for other people lied a cloud of pessimism directed inward. In my short career in the corporate world, this pessimism would hang over me for weeks at a time. I would come home from work just wondering how I was going to escape the meaningless cycle I seemed to have fallen into.

There's a big difference between ideas and beliefs. The last two years we've been battling in the world of ideas and slowly changing minds. Lately I've suprised myself. I've actually started to believe these ideas. Last week I was speaking and I noticed the tenor of my voice modulating between dispassionate and passionate, intellectual and emotional, bound and released. I stopped thinking for a while and just let myself go. The time flew by.

At the moment, Kiva is financially self sufficient. We are doing about $20K in loans each day, and getting just under 10 percent in optional lender fees. Our users are proving that personal lending can be carried out in a financially sustainable way. Because we have an amazing group of lenders, the urgency of daily fundraising has been alleviated. This means that we are free to carve out our own destiny and build the product that we all desire. Together, we can assemble a resource that will be a public good for generations to come. I can't tell you how excited that makes me feel.

Again, we owe this all to our users. Thanks to you as I leave work tonight and head home for a rare and wonderful sleep.

A letter from Kenya

2006-11-29T02:17:00.000-08:00

We get amazing emails all the time, but this one stood out.

Hi KIVA.

My name is _____ from Canada. My sister told me about KIVA
and the good work you are doing. She lives in _____ and she is a new
lender to KIVA.
I am a Veterinary Doctor and I have always desired to make a
contribution in improving dairy farming in developing Countries.
I am currently on Holiday in Kenya. I visited the Masaai Mara games
reserve that has just been declared the new 7th Wonder of the World.
It's an amazing experience.
I then visited Lake Nakuru National Park that is reputed to be the
World largest birds' sanctuary. Its while in Nakuru that my sister
alerted me about a Nakuru based KIVA partner called Ebony. I visited
your Website and I was able to get Ebony's contact details. I asked
the Management of the hotel where I am staying to help me contact
Ebony. Surprisingly they knew Ebony very well. They contacted the
organization, which immediately dispatched a vehicle to pick me up
from the hotel. I wanted to visit small-scale dairy farmers and I
suspended my Holiday.
I was taken to their offices where I met Irene, Marion, William and
other staff. They were amazed that I came to know them through KIVA
and that I suspended my holiday to visit them. Irene took me through
what Ebony does. She then took me to a group of young people affected
by HIV/AIDS. They were making some beautiful necklaces made from beads
and timber waste. I was shocked by the poverty around them. I met
people who had not had a meal for two days and people who cannot
afford to take their children to school. These things sound
unbelievable to us in Canada but I came face to face with real poverty
and the effects of HIV to children in Africa.
However I was moved by the determination and creativity of these poor
people to overcome poverty. I realised just how my US $ 25 can make a
difference between life and death to so many people in Africa!
I learnt that Ebony has assisted the youths to secure contracts to
supply their beautiful products to tourist hotels and that their
request for funding would soon be posted on KIVA's site. (I could not
wait. I made a donation of US $ 2000 to help the group buy more
supplies).
I was then handed over to James who drove me to my dream destination.
I was taken to Donduri an agricultural area where I met peasant dairy
farmers. Here I came face to face with rural poverty in Africa.
Dilapidated schools with no classrooms, inadequate resources with one
teacher handling over 100 pupils, impassable roads, pregnant women
walking for miles to the nearest health clinic, lack of crucial drugs
at the clinics and massive unemployment among youths.
These problems co-exist side by side with rich but unexploited
agricultural potentiality.
The place is fertile, dairy farming does extremely well and the market
for milk is very huge here. I was surprised by the amount of technical
knowledge on animal husbandly these rural people posses. They have
looked after their dairy cows very well.
The biggest problem I noted was the quality of the cows. They are not
able to access quality artificial insemination and good animal breeds
are expensive here. Again they don't earn full value of their produce
because they sell all their milk in raw form.
No processing is done at all. The farm sizes are very small and many
are forced to practice what is called zero grazing.
I was excited to learn that Ebony has begun addressing the problem of
quality breeds and that a number of these farmers are already posted
on KIVA's site wanting to purchase quality dairy cows. It was
wonderful to meet some of the farmers currently featured on KIVA's
site.
I am resuming my holiday and I am headed to the coastal city of
Mombassa before flying back to Canada.
The visit to Ebony was an eye opener to my sister and me. I came face
to face with the poverty problem KIVA is addressing and I saw the
practical impact of a KIVA loan to the poor rural households in
developing countries. I am now a KIVA devotee and
I will mobilize my friends to help fund more Kenya people through
KIVA. Thank you very much for what you are doing. I will share some
Ebony photos when I am back. KIVA YOU ARE ON A MISSION FROM GOD!

_______

Something out of Nothing

2006-11-29T02:09:00.000-08:00

If they made baseball cards for social entrepreneurs, I'd want a Jordan rookie.

I haven't really written much about our trip to East Africa in October for the Frontline taping. That's probably because it's pretty difficult to describe what the time meant for me and impo'ssible to capture the vibrancy of the people I met. This post will probably suffer because of that, but I'm giving it a shot anyway.

Something I have loved since starting this job is being connected to a greater community of entrepreneurs. Christina Jordan, who runs Life in Africa (LiA) , made a lasting impression on me and what I'm trying to accomplish with Kiva.

As I mentioned before, LiA is a cooperative owned by mostly women who produce crafts and run small businesses -- like Grace's Peanut Butter Factory. They make business decisions by consensus and loan applications are approved by the community at large. This leads to lively town meetings where applicants are evaluated in front of everyone and dirty laundry is often aired. Because of the community feel, stepping into LiA grounds is somewhat utopian. You can viscerally feel the energy when walking in -- both our entrance and departure were accompanied with Acholi song and dance. I became a stiff drummer in a circle of not so stiff women.

There was a lot of down time during the taping, so were able to catch up with Christina. One thing I detected from her is a maverick, anti-establishment, yet capitalist attitude. As far as I can tell, LiA has received little or no funding from foundations. Instead, they have built a self-sustaining community and turned a profit from selling crafts made from paper, plastic bags and drinking straws. In some of the most desolate areas on earth LiA has started to build something permanent..."out of nothing" she pointed out. Hearing her say that in a prideful way was a call to action for me.

Many of us, when starting an organization, can fall into the permission trap. There are a series of steps you can traditionally take to get a social enterprise, or any venture, off the ground. There are seminars, conferences, incubators, fellowships and foundations. This leads to trap that is easy to fall into: the process of asking for permission to be an entrepreneur can be inherently anti-entrepreneurial.

At the dawn of Kiva, most of this process didn't work for me. Instead, choosing to build every day has been my saving grace. The road has been bumpy, but it's much more rewarding to focus on building than to worry what various committees of people are thinking of your business at any given time. I have tried to focus every day on what we can control and double down on that -- and let the rest play out with the passage of time.

Toronto

2006-11-14T21:34:00.000-08:00

I was in Toronto last weekend at my friend Andy Federle's wedding. It was an Anglican ceremony and I sang counter-tenor in latin with a small choir made of mostly Mennonites.

It's been a long time since I sang for anyone other than myself. I showed up on Thursday, went to the bachelor Party that night, woke up the next day and practiced my part the whole afternoon. All the while I was running to the Internet cafe on Yonge street in order to make some sanity out of the activity on Kiva.org. My head was constantly running through the numbers.

While I was practicing, praying, partying and freezing in Toronto, everything nearly doubled. We had 6,000 users before Toronto. Now, we have we have about 12,000. We had done $500K in loans before Toronto. We'll soon be at $1 million. It took us two weeks to almost double the progress we had made in one year. So it goes life on the Internet...

I was battling through sheet music and Canadian micro-brews; everyone at the office was battling our server woes. I returned to a group of people who had given it their all and gotten us back online.

Everything looked beautiful from Toronto. Few there could sympathize with my story and it wasn't worth it to try and explain. So I quit talking about it and just enjoyed the moment. I went to bed in a bunk at a Bible College downtown...knowing this for sure: Kiva had hit a new plateau.

Frontline Fallout

2006-11-02T05:04:00.000-08:00

The last day has been the best and worst of times for us at Kiva. We have experienced an outpouring of support from the American public an order of magnitude greater than ever before....and we couldn't handle it. I'll never forget Halloween 2006.

The day began with a furious push to get more businesses on our site. Our partners all over the world worked overtime to fill our site with loan applications from hundreds of entrepreneurs. We weren't going to run out of businesses this time. Premal and Chelsa did an incredible job at mobilizing our partners to get their businesses posted. Our partners proved that quick scale was possible.

6:00 PM

The show was beginning to air in NYC and all over the East Coast. Many of us were in costumes -- Premal as Chilly Willy and Jeremy as a Greg Bradyish seventies swinger. We projected the site on a huge whiteboard in our office along with the accompanying server statistics that were being updated realtime. Jeremy, in his curly afro and unbuttoned shirt, dictated to the staff on how our server was responding. All was going well at first. The site was getting increased traffic but was working well.

6:35 PM

Suddenly, everything stopped. The site froze and even the server statistics stopped being reported. The NYC viewers decided to hit the site all at once. Our little server didn't stand a chance. It wasn't even close. It's been down ever since. We uploaded a static HTML page asking for patience and offering an email address. Serving up this one static page is maxing out the CPU on the server. This really took the fun out of an otherwise joyous evening.

This is obvious. Kiva failed to take advantage of an incredible opportunity for us and more importantly for the entrepreneurs we serve.

We are now working with a new company who are experts in scaling web applications fast. They are advising us on how to handle high transaction volume and site traffic. If all goes well, we'll be back online tomorrow.

To everyone involved: Kiva Staff, Board, Partners, Entrepreneurs and Lenders. Please accept my apology. Looking back, I didn't do everything I could to prepare Kiva for this event. We couldn't handle the tidal wave of support, but we will.

The stupidest thing I ever said

2006-10-30T20:59:00.000-08:00

'I sit in front of a tidal wave of money,' said Flannery.

That was me, in a January 17 quote on CNN showing the naivete of a first-time entrepreneur. I still get made fun of for saying that. I can hear Premal laughing right now.

Usually I complain that life goes by too fast. This year might have been the longest of my life. It feels like its been a decade since I was talking to that CNN reporter -- pretending to know what I was saying. Since then I've continuously see-sawed between overestimating and underestimating this business. I've counted every minute of every day and I've slept half as much. (maybe that's why it seems so much longer).

All bets are off tomorrow. We'll be on Frontline PBS at 9 PM in most locations. You will probably be out trick or treating. That sounds more fun than watching TV -- although Frontline is an amazing show.

Children in East Africa will be eating pumpkins. Children in the USA will be smashing them. Hopefully every child here gets a chance at one. We wouldn't want them to go to waste going into peoples' stomachs...

Gnite.

Kenya's Bush

2006-10-18T20:01:00.000-07:00

I love East Africa. I can't tell you how many nice people I met during my time there. It's been almost two weeks since I've been back. At first, it was quite deflating (both digestively and emotionally) to be home. I'm recovered now.

Kenya is alive with heated politics -- almost always tribal.

I spent my fair share of time there arbitrating friendly arguments -- like this one pictured here between Jedidah, Collins and Rowland. Collins was my host in Nairobi and runs EPS Progam. Rowland is my long time friend and a staff member of Village Enterprise Fund. Between them, they represent 3 tribes: Kikuyu, Luo and Luyha. What were they arguing about? Bush.

A week before I arrived, there was a discussion between Bush and President Kikwete of Tanzania where Bush reportedly referred to Kenya as "unstable". Later, it came out that Bush had simply lumped Kenya in with general political instability on the Horn of Africa. This kind of thing, as you can imagine, was not received so well. In no way do Kenyan's think of themselves in the same political category as Sudan and Somalia. Bush was asked to apologize but never did.

A casual mention in a diplomatic setting can have huge ramifications in a place like Kenya. Instantly, the mention was injected into local tribal politics. The Kikuyu, who are largely held to be the ruling class of Kenya, were highly offended. Since Kikuyu basically run Kenya, they took this as a slap in the face. Other tribes of less political clout manipulated the Bush remark to their own polical gain -- using it against the Kikuyu leadership. Some believe Bush knows more than they do and that Kenya is just one big assassination from complete unrest. Who knows? One thing is for sure, there is a heck of a lot of resentment in that country between those tribes in power and those cast aside.

Meanwhile, our government has been funding a privatized anti-warlord military campaign using American corporate solidiers. This is an interesting way of circumventing UN agreements. I wonder what it is like to work for a company like that...

Quick from WEEC

2006-10-06T23:58:00.000-07:00

I'm still here in Nairobi, writing from an airport as usual.

On Thursday I visited WEEC (Women's Economic Empowerment Consort). WEEC (pronounced "wick") is a small/medium sized MFI working just outside of Nairobi near the town of Kiserian. Interestingly, they are positioned just in between the wealthy estates of Nairobi's elite and the plains of the hunter-gathering Masai tribespeople. WEEC employs group-lending methodology to finance businesses started by groups of Masai Women. The groups are usually around 5 women. Some interesting factoids below:

The WEEC office serves as a gathering/training ground for these groups of Masai women. The Masai live in small clusters separated by great distances. They travel to the WEEC office which can be about 25K away from their homes. WEEC asks the women to self-select into a group and then develop a revolving credit scheme. Revolving credit schemes entail that one member deposits cash into the group so that another can borrow. This creates cohesiveness. Groups successful at revolving then go on to become borrowers from WEEC itself.

WEEC has been posting each group member as an individual business on Kiva.org. This is slightly misleading because, in truth, the group is responsible to repay -- not the individual. In the future, hopefully Kiva can better support group lending though our software.

I sat for tea with WEEC management. We had a wonderful and lengthy discussion. WEEC is run by Jedidah Waigwa who is incredibly sharp. Jedidah is a Kikuyu women who gave up a lucrative job many years ago to start WEEC about 4 years ago (?). Since that time WEEC has receivecd several intl awards including one from CGAP. She has taken WEEC a long way fast.

I asked an open-ended question. "What is the effect of Kiva on WEEC?" Here is what I heard in no particular order:

1) Kiva has caused them to emphasize the internet much more in their daily lives. They only have one computer which has poor connectivity. The kiva site is easy to use, but they struggle with keeping a consistent connection. The internet doesn't work well in Kenya!

2) Because of Kiva they have served significantly more clients. Their portfolio has grown significantly. This was a wonderful validation for us at Kiva!

3) Outside of Kiva, they borrow at 18% in commercial loans fromthe local bank (standard chartered). Kiva capital is coming in at 0% currently from our lender base which consists of people. The effect of this is cost savings which has gone into hiring a new staff member.

We reflected that people have different cost structures than banks and can loan on different terms. Look for nonzero rates on Kiva hopefully later this year.

4) A surprise: The credit officers at WEEC find their jobs more enjoyable with Kiva because the personal side of our site gives them a reason to be more involved in the lives of the masai women. The officers feel sort of like journalists or social workers. Kiva has caused them to be closer to their clients and they feel like this will eventually result in higher repayment rates. Let's wait and see...

Got to go get on a flight soon.

Some pictures

2006-09-30T10:12:00.000-07:00

I'm writing from a Kampala internet cafe. It get's dark around 7 PM and the only lights are from those businesses with generators. Creates a noisy and rather eary feel to the city. It's a great, bustling place.

I've been taking pictures all day from my phone and sending them to myself from MMS. Most of these are from our Kampala partner -- "Life in Africa"-- which is run by Christina Jordan. They are a cooperative of mostly women who make all the loan decisions as a community. They also create crafts from recycled material (bracelets, baskets and such). The day ended with a traditional Acholi dance and I got to be the drummer. This made it on the Frontline tape to my potential embarrassment.

I'm now ending my week with Clark and Josia from Frontline World. We had a real fun time travelling around Uganda and stepping into the lives of several business people along the way. Jess left too, so now I'm on my own for a week and will be going to Kenya tomorrow.

Here's a bunch of cell photos:

Kampala

2006-09-27T08:10:00.000-07:00

I'm 24 hours into my stay in Uganda. Jess is asleep at the "Life in Africa" offices and I'm blogging from an internet Cafe just outside of the Acholi Quarter.

The Acholi Quarter is a settlement of Acholi tribe people -- most of whom have been displaced by the LRA war in the north. Supposedly, the war is now ending and people are hoping the peace will hold.

Next to me is Grace Ayaa who runs a peanut butter factory in the settlement. She's blogging right now on our site about her factory and writing back in forth with Kiva lenders. All of this is being filmed by the "frontline" crew. Its a pretty disruptive scene.

It's been a great day. I love it here! People are so fun to be around. They are also very free about talking about their problems -- of which there are many. It can be overwhelming to listen to the stories and not internalize everything.

Today we visited a film house which will be the first movie cinema posted on Kiva.org ...

Going to Africa

2006-09-19T02:16:00.000-07:00

Now I'm the last one in the office. We need to close the windows after dark in a neighborhood like this. Of course, I'm tired, but there is some cool stuff to write about:

We've been tailed by a camera crew for the last week -- Frontline PBS reporters, producers, editors and such. If you care, they will be airing a segment on us on Halloween. While your kids are trick or treating, if you have some time, watch Kiva at work.

The most pertinent part of this latest development is an impending trip to Uganda. We are leaving on Sunday and I'll be gone two weeks. Jess will be home after one week and I'm staying two so I can make a trip to Kenya.

So we will be in Africa soon. This will be my first time in 2 years. Africa, during this time, has been connected to me through a series of late night phone calls, text and photographs on our website. It has all seemed a little surreal. Hopefully I can recapture a little bit of the reality behind it all.

501(c)3

2006-09-04T21:54:00.000-07:00

A couple weeks ago, Kiva received word from the IRS that we are a 501(c)3. This gesture came via a form letter from their branch offices in Cincinnati. A simple letter capped off a journey started by Jessica two years ago. Congratulations Jess.

Flash back to the summer of 2004. Jessica and I, fresh back from Uganda, would walk the streets of Noe Valley every night talking about our dream for Kiva. Jess, the first leader of Kiva, was spending every day writing and calling law firms in the Bay Area looking for support. We realized that building Kiva was, in many ways, a legal effort. We knew how to build software; we knew people that needed loans. However, there was a cloud of legal uncertainty hovering over this idea. The outstanding questions threatened to be a nonstarter for our project. We needed lawyers to take up our case. A picture of an entrepreneurial legal team formed in my mind, and we prayed for that eventuality.

Jess went into the bar association, setting up meetings with anyone that would talk to her. She called over 30 firms in San Francisco. We got a lot of feedback: "You can just lend money on the internet to people overseas" , "Why don't you go work for Grameen bank, aren't they already doing this?" and "The SEC will shut you down!" Visions of men in suits at the door colored my dreams.

At the end of our rope, the phone rang. It was a lawyer about our age, Kiran Jain, at Bingham McCutcheon who said she would help. She, along with a team of attorneys, became the missing piece we imagined. We embarked upon the process of filling out forms, and waiting. Two years later, her work has born fruit in a stamp of approval from the government.

As we found out, it takes a long time to hear back from the IRS. Hurricane Katrina caused a rush of applications for charities in the US and the IRS motioned to prioritize these over other applications. For nearly a year, our app was stuck in a pile of papers somewhere in Cincinnati. Kiva's offline fundraising efforts were handcuffed. We discovered that no foundation will talk to a "prospective 501(c)3 ". In August, the IRS sent us a list of questions. By that time, we were ready with a list of succinct answers. The legal uncertainties of p2p lending of this sort had been lessened and the IRS sealed us with approval.

This story follows a familiar theme in this blog: dreaming, waiting and overcoming. Overcoming only happens when people mobilize around a dream and go out of their way to help in a big way. The waiting can be agonizing.

Now, we are starting a new process, maybe even more difficult -- institutional fundraising. Last week we made our first big foundation pitch to the Hewlett Foundation. Like everything else in building an organization, this will take time, determination, and the ability to dream. Will keep you posted.

Where am I?

2006-08-23T01:10:00.000-07:00

Where am I?

Global X put it well to me today -- the clock is ticking. It's been almost a month since my last post on this blog. SocialEdge is one of the most dynamic sources of changing content about the field of Social Entrepreneurship on the web. For over 30 days, my blog has been an eyesore on a great site. My apologies to SocialEdge.

Right now I'm back to my hilltop cabin retreat outside of Palo Alto. For the last two weeks, I've been hammering away on the underbelly of Kiva.org...sleeping in SF. The site is going through some major changes, but only about 50 people can see them. Where have I been?

LAST TWO WEEKS
A major percentage of the web development of Kiva goes towards the partner interface. This is the site that our partner microfinance institutions see when they login. They see tools that allow them to upload businesses, record payment information, and journal entries. It's a goal of our staff to make this interface as easy to use as possible. One day, we hope that it can seemlessly blend with MFI accounting systems. This is a lofty goal and we are drafting the great work of Grameen and the MiFos project for inspiration.

EARLY AUGUST
I spent two weeks at Santa Clara's "Global Social Business Incubator". This was essentially Social Entrepreneurship boot camp. I was grouped with Entrepreneurs from Kenya, Ghana, Phillipines, Nepal, Canada, Madagascar, India and more. For the first time since we started, I felt part of a community of Social Entrepreneurs. Maybe that chip on my shoulder has faded completely....

I can't say enough about Santa Clara and the GSBI. Wow. For two weeks I received constant personalized mentorship from great minds and was inspired by the examples shared by my colleagues. What a gift. We really answered some fundamental questions about our business and I have a growing sense of inspiration about how these 'blended value' businesses can really scale. We live in an exciting time.

LATER THIS WEEK
I'm going to Seattle to be with my lovely wife Jessica. Jessica is finishing her internship at Amazon and we are then driving back home to CA. Thursday we are going to the esteemed Unitus to share our experiences with them. Unitus was one of the first places we visited after we received inspiration for Kiva in Africa. Geoff Davis and his team provided excellent feedback that has informed our first two years. Our Thursday meeting will be a landmark reunion of that early meeting.

OH YEAH
We are 501c3 now. It's been a 9 month journey. Much thanks to Kiran and Ben at Bingham McCutcheon for taking us this far.

IntoContext II

2006-07-25T02:47:00.000-07:00

This week was an acceleration of everything Kiva.

It started with a mention in the WSJ (thanks to GOOD Magazine) and hastened with a feature story in BusinessWeek. The BW article created a new level of public interest in Kiva from finance-oriented peoples. A brickload of emails were sent, and Fiona is catching up with those as I write this. Meanwhile, record loan dollars are flying through Kiva to working entrepreneurs in the developing world.

These articles, and the ensuing reaction, proved that the path is not too great between paper and web. These articles were read in living rooms, airplanes and bathrooms. Apparently, a great number actually got up from their seat, went to a computer and made a loan. It is turning out to be a record setting week and it's great to be all together in one place to watch it happen.

Perhaps a more amazing thing happened, however. Cale and Jon presented their findings to Kiva and Microsoft. For those of you who don't remember everything ever written in this blog, Cale and Jon, funded by Microsoft, spent June in East Africa studying the microfinance institutions (MFIs) there who work with Kiva. They came back with tons of video, pictures and observations. The focus of their research was MFIs and how they work with Kiva. In what ways does working with Kiva help them? In what ways is it hard?

One large point is that they are generally enthusiastic about what Kiva is doing for them, and see Kiva as having the potential to really helping them grow. Kiva, as compared to other sources of capital, is very attractive financially. Kiva provides debt at much better rates than are available for most MFIs in that part of the world.

A more subtle point centers around the characters and personalities that work for MFIs like those they visited. In their findings, there are 3 main characters in an MFI in relation to Kiva: The Director, the Credit Officer and the Techie. The Director of an MFI is in charge of operations, is very connected to the outside world, and is looking out for the health of the organization. The Credit Officer (CO) is the person who actually visits the loan recipients every day and is extremely connected to the community. Thus, the CO spends less time in the office and more time in the field. The Techie is the computer expert of the organization and often plays a consulting role. For Kiva to succeed in truly helping grow MFIs, it must be intimately familiar with these personalities.

One role that particularly fascinated Cale and Jon was that of the CO. The CO spends most of her time traveling back and forth between three places: Home, the Field, and the Office. Often times these places are separated by marathon lengths, and often the only mode of transport is bicycle. One cycle of work involves a trajectory from home to client to office and back home. This commute can take days. Kiva introduces more work because all data needs to be recorded on a computer, which is only found at the office. Once at the office, getting online is a chore that can take hours and hours. Interestingly enough, the COs almost always had cellphones that worked in the most remote areas.

The big idea here is to use cellphones to record journal and payment data straight to the Kiva website. This has the potential to cut out one leg of the the marathon cycle. The technology already exists and is in use. Cale and Jon are headed back in August for the final leg of their research. The plan is to outfit them with camera phones so COs can make the first Kiva updates from the field. Jeremy had already put the code in place so that the Kiva website can receive text messages and update the site instantaneously. It's an idea that could greatly ease the workload of our partners. There are a bunch of difficulties to overcome, but it's definitely worth trying.

If you are interested in helping Cale and Jon, we are looking for phones. You know anyone that works for a cell phone company? Are you able to donate to this next leg of their project so that they can bring more phones with them? If so, let me know, or write to contactus@kiva.org .

NPR II

2006-07-17T16:08:00.000-07:00

A couple highlights from today:

1) Kiva was on NPR in Seattle
2) The website crashed.

We are very psyched about (1) although (2) had somewhat of a negating effect on (1). We get huge spikes in traffic when we get press like that and sometimes our web hosting company is not ready for it.

Despite that, this was a thoroughly eventful morning. I am up in Seattle with Jessica -- who is an MBA intern with Amazon for much of the summer. We are staying right near Pike Place Market. Last Thursday I got the call from NPR up here. It just so happened I was in town.

It was quite humbling when I learned that I was sharing air time with Alex Counts (Head of Grameen Foundation USA) and Dr. Raj Shah (Director of Financial Services and Agriculture for the Gates Foundation). Dr. Shah was in studio and Alex was calling in.

Compared with my last experience on NPR, this was a much longer discussion. In addition, the conversation was live and the subject wasn't simply Kiva -- it was microfinance in general. I did my best to contribute when I felt I had something unique to add while deferring often to Alex and Raj on most points.

Some high level themes of the call:

-- The American public and press is skeptical about the high interest rates of microfinance
-- Microfinance practictioners at all levels have to constantly justify these rates
-- One problem Grameen and Gates are addressing is the high cost of capital to an MFIs
-- The commercialization of MF is a primary topic everywhere you go these days

One thing I'd like to note is that Kiva is contributing to lowering the cost of capital faced by MFIs. Our lenders loan at 0% today. In the future, we may offer slightly higher interest rates to our lenders. Still, we have the opportunity to seriously reduce the rates that MFIs get money -- which hovers around 10%. Some of our partners currently borrow at 18%! (outside of Kiva)

Here's a more detailed paraphrase of the call:

1) There are pitfalls to credit. Is it always a good thing for poor people?

Alex Counts:
-- The only alternatives are to starve or to work for yourself. Most businesses
are very undercapitalized. Many are extremely happy to take $60-$70 and expand.

2) How can $60 - $70 make a big difference?

Alex Counts:
-- Chicken business example : a loan helps a small chicken farmer scale up. Many women end up having a poultry farm years later with hundreds of chickens.
-- Scaling up can help a woman send her child to school

3) How in the past would a poor woman in
-- Manila money lender example: Loan sharks often charge 20% interest per day

4) How has the work of Dr. Yunus led to the Grameen Foundation USA?

Alex Counts:
-- About 10 years ago there was a Microcredit Summit. Alex was living in Bangladesh and was tasked with founding the GFUSA in the USA. GFUSA is tasked with taking the Bangladesh experience to other places in the world.

5) Is it right that the Gates Foundation is looking into supporting microfinance?

Raj Shah:
-- We realized that traditional MFIs are very important but not alone. Commercial and public banks are getting involved as well. These provide credit, savings and insurance products as well.
-- Over time we will need a broad range of distribution channels.

6) Tell us about some of the successes of MF over the world?

Raj Shah:
-- Impressed by the stories in Bangladesh.
-- Data shows that almost 5% of clients every year move out of poverty.
-- In Malawi, OI Malawi offers finger print smart cards for safe savings plans. Alternatives are predatory and way too expensive.

7) Are they really paying 20%-30% interest rates? That sounds like a lot?

Raj Shah:
-- The alternative is informal lending which is several hundred percent annualized. 20% might seem high but it is much better than the alternatives.

8) Are these the interest rates that Grameen Foundation USA is charging?

Alex Counts:
-- When organizations scale, the rates come down significantly
-- Hopefully rates for rural MF can be as good or better than the rates commercial businessmen get in cities.
-- Technology can help reduce rates. Grameen has a tech center in Seattle which can help reduce the rates.

9) Kiva actually connects people in this country

Matt Flannery:
-- Kiva is the first website that allows a first world lender to loan to an entrepreneur in an impoverished region.

10) I'm doing this to help someone?

Matt Flannery:
-- Most users do it for charitable reasons, but we would love to allow lenders to make a return eventually.
-- Kiva Beta started in Uganda, all of our family and friends got repaid. Kiva chose 0% interest rates because of potential regulation.

11) People don't do it to make a return?

Matt Flannery:
-- Tells the story of posting businesses on the internet from Uganda
-- We chose 0% because of regulatory concerns
-- Kiva desires to offer a return on it's loans in the future.

12) It's also commercial banks. Are they seeing this as a business opportunity?

Raj Shah:
-- I think so. In some cases you can make enough money for this to be a
commercially viable business. In many cases the banks are partnering with MFIs.

13) Does Grameen want to put themselves out of business?

Alex Counts:
-- Vision is the poor woman has multiple options to get credit.
-- CitiBank is the largest bank in the world and is getting into this sector and
partnering with traditional MFIs. The banks have a lot of money and the MFIs have a rural network. These very sophisticated partnerships are not putting MFIs out of business but they are leveraging.

14) Caller: Everywhere they tell us 20% loans are bad. I think these rates are outrageous?

Alex Counts:
-- The rates are coming progressively down.
-- If you ask the poor, they prefer having this option. Having more options is better.

15) Matt, it sounds like you at Kiva are experiencing high repayment rates too?

Matt Flannery:
-- The high repayment rates are nothing new. Grameen has demonstrated high repayment rates for years.

Alex Counts:
-- Grameen is trying to educate the wholesale lenders that the poor can repay,
-- Grameen wants to reduce the wholesale cost of capital.

Raj Shah:
-- Cost of capital and cost of labor are two huge costs
-- Both of these are coming down. Citibank is lending to BRAC at 11%,
-- Equity Bank in Kenya uses mobile units to go to the poor and provide them
with banking by using jeeps.

16) Is MF Central to alleviating poverty?

Matt Flannery:
-- It is a key part of the toolbox to alleviating poverty, not the only piece.

Alex Counts:
-- Cited Grameen Study which shows great hope for MF in reducing poverty.
-- Most clients in all studies showed huge improvements in escaping poverty.
-- The body of research is quite encouraging.

17) Raj, how big a part does MF play?

Raj Shah:
-- It clearly plays a big part. Moving someone from extreme poverty to moderate poverty is huge.
-- 9/10 times, clients pay school fees with the modest profits they make. It can make a huge impact for future generations.
-- It's an important too but it is not the only tool.

18) Is there a zero sum here. Does money to MF take away from money that goes as donations to other development programs?

Matt Flannery:
-- MF is a sustainable form of helping. It is a contribution that is more leveraged and can help entrepreneurs into perpetuity.

Alex Counts:
-- One of the big problems is the health situation in developing countries. Pure health projects will often get someone healthy. However, if they are still poor they will soon fall into sickness again. If they have a sustained income, they can lift their standard of living so they don't get unhealthy as often.

19) Does MF just ease the pain, but not solve poverty?

Raj Shah:
-- This is right. It helps about 1/3 of people move out of poverty. At the end of the day, we think about how you help the most people with a set of financial services.
-- We don't talk much about the precarious life of a poor household. Households might have to choose between saving a life, paying school fees or returning a loan.

Alex Counts:
-- Listeners should remember that a shift from extreme poverty to moderate poverty is a huge life change. It means being able to not have to make choices about which 2 members of a family will eat. Or of which child of three can go to school.

20) Caller: How do I use my money to help MF? Kiva is 0% interest...

Matt Flannery:
-- There was no easy way to invest. There are a couple options for larger amounts: Calvert and Accion.
-- Kiva is different because it is lower amounts
-- Kiva is working to provide a return soon.

21) Is the GFUSA only offer donation options?

Alex Counts:
-- Yes, currently that's the only instrument.
-- Last year, with Citibank, GFUSA started a pledge program for loan guarantees. They are turning $30 million in pledges to $180 in loans from Citibank. 6-1 leverage.

22) The size of the Gates Foundation is huge. Will Gates be investing more in MF?

Raj Shah:
-- Deutsche Bank and Blue Orchard offer debt instruments at lower interest rates.
-- There will be more organizations like this over time.
-- The Gates Foundation is looking at doing a range of things. Goal is to reach a high proportion of those households that make $2 or less per day. Gates has started to make a number of new grants and investments. We are fortunate to work with Accion , Grameen and Calvert

23) How much will Gates spend on MF?

Raj Shah:
-- We don't have that specified yet.

24) What other services does MF provide to the poor?

Raj Shah:
-- Savings products. Malawi smartcard example. Saving is important to build assets in a meaningful way. Clients value savings tremendously.
-- Insurance is very important. Much poverty is attributed to illness and health costs.

25) Alex, what are some other products in MF that are not loans?

Alex Counts:
-- Insurance is important to dealing with risks. Just an hour ago we evacuated an operation from Beirut. It's very difficult to hedge risks as a poor woman.
-- Life insurance is important. Death is a constant companion. People don't want to leave debt to the family, thus insurance helps them insure against that.
-- Businesses in a box. The cellphone business in Bangladesh is something we are trying to scale

26) Matt, other examples?

Matt Flannery:
-- MFIs can serve as trainers. They can provide information about how to run your business. For example, if you are fish seller you can get training on inventory management from the MFI on how to store fish so they don't perish.

27) Caller: What are UNDP and World Bank doing for MF?

Raj Shah:
-- They are doing two things. 1) Projects that provide technical assistance like CGAP 2) Investing in MF. Most development banks provide capital to places like Deutsche Bank and Blue Orchard.
-- World Bank has brought a lot of technical expertise on things like crop insurance and drought insurance.
-- Gates would like to see these orgs get much more involved in regulatory issues,

Alex Counts:
-- It's mixed. We have tried to lobby the World Bank to allocate 2% of the budget to MF but it remains at 1%.
-- Often the government creates banks that give free loans and distort the markets.

28) Matt, is competition good?

Matt Flannery:
-- In general, it's a great thing.
-- There is a worry about distorting markets when donating to an MFI and is something to watch out for,

First Day

2006-07-11T04:45:00.000-07:00

Chelsa said it best. Today was like Christmas.

We moved into our new office. For most, walking in was like walking into a livingroom on Christmas day with all the presents. For me, it was a little different, I woke up under the tree.

I spent most of the night tagging and categorizing the businesses we have funded so that we can group them intelligently. That was one thing we forgot to do last winter -- have our partners categorize businesses as they post. Now, we have to go back and do it ourselves. Lot's of gruntwork. Kiva is on the verge of funding our 500th business; that's a Christmas in and of itself.

One thing we are doing now is writing our job descriptions, purchasing health insurance, and becoming protected against workplace injury. I was doing research on the job description for CEOs. I looked up a bunch -- they were all very hands off and high level. I knew they didn't really apply.

Then, I found one that said it right. "If you are in a startup , you do everything." That's just about right. We all do everything. Yesterday I assembled six desks.

Good night.

Matt

Temptation of an Entrepreneur

2006-06-28T21:03:00.000-07:00

-- The Temptation of an Entrepreneur (it's all about me)
-- The Salvation of an Entrepreneur (it's so much greater than me)

Entrepreneurialism can be incredibly isolating. On my worst days, it is me against the world. It's Matt versus the naysayers. It's Kiva versus the competitors. It's me against anyone who doesn't see the world as I see it. It's the biggest trap.

Your challenge as an Entrepreneur comes in tapping into that which is transcendent, that which is infinite about a particular enterprise you might be undertaking. At the end of a day, at the end of a particular lifetime, what can you take with you?

Me, I'm trying to help get Kiva off the ground. Kiva is just an organization with a fixed set of employees, an office, customers and constituents. We have a business today, a plan to make revenue, existing operations, customer service and more. It's very measured and finite.

The best organizations are ones that are able to convince the world that they tap into something lasting. The people that work for these organizations believe that they are working for a cause greater than themselves. They recognize that they merely act on behalf of a force that existed before them and will exist long after their particular organization operates no more.

On the best days I feel I am participating in something so much larger than myself. The force behind it sustains me even when there is no tangible external positive feedback. This helps me progress past the daily set of disappointments we are all bound to face.

When I am weak, when I get beat down, I can react out of defensiveness. I defend Kiva as if I were defending me. I feel personally at risk, and others can sense the precariousness of the situation. When I am strong, I lay the whole thing down at the feet of something greater. There is incredible rest, and power, in not defending.

I'm not much for advice. The best advice I've ever gotten is vague at best. If you are trying to do something new, trying to be an entrepreneur, I'll offer one vague and simple idea:

It's not about you. Access something greater and you may have a good business.

The End of the Beginning (nah, probably not)

2006-06-26T09:27:00.000-07:00

Next week, if all goes as planned, Kiva will be moving into our new office in the Mission. We're in a great big brick building across the street from the Atlas Cafe, which is my favorite cafe in SF. For a long time now, I've been going to bluegrass night there every Thursday. It's a great idea to have a standing appointment with good friends at a cafe with bluegrass playing in the background. I highly suggest it. If you want, stop by this week and check it out.

It's probably not a coincidence that Kiva's office happens to be across the street from the CEO's favorite cafe. That said, off all the places we viewed, it's by far the best. Big open spaces, wood floors, big windows-- perfect for collaboration. One thing about this place inside -- it's all wood. The walls, ceilings, floors, doors and halls -- wood wood wood. It very much feels like a finnish sauna.

Kiva is about two years old now. Is this the end of the beginning? I don't believe so. Beginnings can be long. Companies take a long time to build. What you see at Kiva today is just a small flavor of what is possible in an unfolding space of ideas. We had a vision a while ago for what it would look like, and have tried our hardest to catch up to that. However, the harder we try, the bigger the idea becomes and the further behind we get. For two years now, I have felt constantly, urgently, behind.

There's a tendency to believe that, "If I only get this done, then we will have really accomplished something." Or "then I can rest easy." Nope, this has been pretty far from my experience. The truth is, work causes work. The more work I do, the more work I create for myself and this goes for everyone on our team. Now that we have had a small amount of success and made a small social impact in the areas we work, we are more motivated than ever. We also feel more behind than ever.

This is a meandering blog. I'm in the Minneapolis airport right now, just returning from a Pittsburgh PA wedding with Jessica.

Some great things are happening with Kiva in Africa this week. First, I believe the power outage situation in Uganda is improving. Carl, from (www.carlsbigadventure.com), has been working for quite sometime in a 50% power environment. What this means, essentially, is that he spends one day charging his laptop battery and writing code. The next day, there is no power, so he can only write code for a few hours. He has power only every other day. I notice this in his irregular checkin patterns. The other day, he checked in a few files with a note -- "Sorry for the typos, it's hard to see with no power." He spends the rest of the time working on a thatched roof house in his back yard.

Also, Kiva is sending two interns to East Africa as well this week -- Katie Camillus and Nick Easley. Katie and Nick are college students who have each received fellowships to work with Kiva. This is very exciting stuff and they will be blogging about Kiva businesses on our site all over Africa. They will be writing journals right to the site. Also, they will have a blog of their own about their experience : http://kivareports.blogspot.com/ .

Gotta go catch my flight now.

Summer Plans

2006-06-19T16:27:00.000-07:00

We've spent the spring in a scramble to make the Kiva organization more robust. People have joined on, offices have been rented, documents have been authored and processes created. Thousands of lines of code are checked in. Thankfully, some (private donor) funds have been raised to finance this whole thing. During this time, our business on the web has grown steadily since hitting an inflection point in the press last January.

This brings me to a question: What is the next inflection point for Kiva?

From November - March, we had a disequilibrium problem: too many lenders and not enough businesses on the site. Krista, who helped us with PR last fall, worked herself out of a job. Since getting in the WSJ in January, we haven't sought any attention in the press. Running out of businesses meant that getting press was a bad thing at the time. Since then, Krista has had her head down on PR projects for other firms while we took time to build an organization that can handle wide attention. Now, the the disequilibrium has been remedied. Our partnership relationships can produce much more business inventory. The staff of many of these partners are well acquainted with using our software: posting journals, payments and profiles to the site. For many of these MFIs (microfinance institutions), Kiva has become an important aspect of fundraising. Most of our partners are eager to post more profiles to the site. Thus, we have a new disequlibrium: more borrowers than lenders.

I have had a few great mentors in this whole process -- one of them is Bob King. Bob is a veteran Silicon Valley venture capitalist who runs his own firm -- Peninsula Capital. Bob has invested in several startups. Jessica and I met Bob in Africa when he was visiting some projects he had helped fund through Village Enterprise Fund. Last summer we began meeting frequently to discuss how to grow Kiva to the next level. One piece of great advice he had: always be prepared for 10x growth. At any point in running a business, you should have a plan in place for that business growing to ten times its current size. You should be able enact the plan fast enough to accommodate a fast rate of growth as well. We experienced 10x growth last winter and we weren't really ready. I'm not saying it will happen again soon, but if it does, I want to be ready this time.

So the summer plan is to be ready for growth, and see if we can make it happen. A few things are likely to happen this summer. I wonder if any of them will cause major growth?

-- Interest rates on the site (lenders can make a small profit)
-- Feature story in a major magazine
-- Upgrades to the website ( social features , groups , referrals, search )

Can Kiva have TWO major inflection points in one year?

Kiva Banner

2006-06-13T21:48:00.000-07:00

I'm just testing the Kiva Banners (below) Jeremy made last week....Any suggestions?

Angel's Bike Race

2006-06-11T18:05:00.000-07:00

Kiva has one partner in Europe : REDC Bulgaria. REDC is a small NGO affiliated with a number of American Peace Corps volunteers. In October '05, right after we sent out our first and only Kiva Press Release, I started getting emails from Greg Kelly, a Peace Corp Volunteer (PVC) working out there. He was one of the people that helped me envision that Kiva's model could be extended to other places in the world. It took about four months to get to the place where we could list Bulgarian loans on our site. Now, 7 months later, they are publishing some of the richest content to Kiva.org.

Check this out, how much fun does this look?

That's a photo from a Bike Race held by Angel Asenov Isaev who received a loan from Kiva lenders back in March. Angel applied for the loan so that he could start his own bike repair shop in his Roma (gypsy) neighborhood. A couple month's later, he had this race with two age brackets : 12 and under and 20 and under. Angel, this was genius. A bike repair shop holding a bike race. That's got to be good for business.

In other news:

-- It looks like Kiva will be moving into an office -- in the Mission -- on July 1st.

-- Check out this interview of Krista, Premal and I on NextBillion.net . It's probably one of the most in depth discussions of our business model on the net.

-- You can now list Kiva businesses on *your* site with Kiva Banners

Office Space

2006-06-05T14:44:00.000-07:00

When I worked at TiVo, most of us referred to our company offices as "cubes" . A fine few, however, called them "cells". A good friend, who sat right across from me, refused to call me a coworker. Instead, we were all her "cellmates".

A great thing about TiVo was that we all had TV's at our desks...each with about 1000 channels. I set up my TiVo to record the movie "Office Space". You'd be surprised. With a TiVo, you can watch the movie every single day. For a long time, I did. It was interesting watching the fictional "Office Space" (on TV) when the real thing was playing out right before my eyes (in reality).

References to "Office Space" -- the ultimate in corporate lampoon movies -- were commonplace amongst my friends at TiVo. Many people feel as if they are slaves to corporations. Sometimes, on the worst days of my previous career, I felt like there was no escape. Now, a recent escapee of the corporate lifestyle, I must say that I can sympathize with my captors.

To recap, late last year, I quit my job to take this idea as far as it could go. Several people, to my surprise, then did the same and have been running alongside. But with 11 staff members plus a great set of interns and advisors, I'm quickly realizing that we need to institute the same processes and structure that I so enjoyed leaving behind at TiVo.

This has been one of the biggest challenges for me at Kiva, but I feel really good about the direction we're heading. Two weeks ago, we were fortunate to be joined by an expert in scaling operations during rapid growth -- Olana Hirsch Khan. Olana joins us as COO and will help us insure that Kiva has the structures, processes and resources in place to undergo the kind of growth we anticipate. Jessica and I met Olana and her husband Zain in February. It was clear that they, like so many others, just wanted to help. In the end, what we needed most was Olana's expertise. We are incredibly fortunate now to be working with her everyday. Olana joins us from Google where she has built the international sales team for the past 6 years. Thank you Olana.

Now, the next thing for us is to find our own "Office Space." It will be interesting to create infrastructure while avoiding burdensome processes (i.e. TPS Reports). To this end, we just made a bid on a place in San Francisco. We just missed getting it and now we are trolling craigslist and looking for good ideas. Any suggestions? (We're looking in the Mission or SoMa).

I don't know if you have ever been in an organization without an office, but let me tell you, it's hard. I used to loathe going to an office. Now, I would die for anything that was even slightly institutional. It's interesting what you miss and what you don't.

Having no office puts us at a disadvantage. Minor miscommunications become larger disconnects. Disconnects fester. The festering makes us inefficient. We would be getting so much more done, and having more fun, if we were together everyday. I can't wait.

Airport Again

2006-05-26T15:43:00.000-07:00

I'mat the airport again, headed for a family reunion in Oregon. NOt much to write now.

I spent the week talking to legal teams, accountants andventure capitalists in San Francisco. I met a ton of smart people and Kiva is gaining access to some of the smartest people in these spaces. I'm really thankful.

I'm also thankful to all the people who read and comment on this blog. The last round of comments really helped us make some critical product decisions.

I will write more early next week.

Thanks

Matt

"Southern Nights" Orchestra

2006-05-22T01:08:00.000-07:00

Two weeks ago I spent 6 days in New York with Premal. We were out there for two main reasons: to interview for a fellowship and to make contacts in NYC. I ended up meeting a bunch of people I would have never expected.

One great gift that Kiva has brought is a network of great people in places all over the world. Our user base of early adopters is made up of incredibly engaged people who just want to help. A cool thing we have been able to do is speak at small house parties hosted by such people.

We were at one such party in the West Village just off of Washington Square Park in Manhattan. I was telling the story of how Kiva began to a room of down-to-earth, but incredibly influential members of the media. These were producers of popular television shows, editors of key magazines, and even an assistant to an unnamed former US President. I told the story of how Kiva began in Uganda, how we were moved by the stories of a few entrepreneurs who had emerged from total poverty because of starting a business. Because of this, Kiva began by starting 7 businesses in Tororo Uganda. These included a goat herder, fish monger, fruit seller and more.

Then, after the storytelling, it was time to demo the user experience. I brought up the site on the projector. The first thing I saw was this:

An then this:

And then two others just like these.

Wow. These were businesses listed on our site right next to the rest. They had been listed that night -- uploaded straight from Bulgaria. A few things stuck out. These were the first music businesses on Kiva. There were four, listed side-by-side, all members of a band called "Southern Nights". They were actually applying for funds to help finance their first record, buy uniforms, pay for a tour, and more. Never in my wildest dreams did I anticipate raising money for a band's travel costs through Kiva.org.

I quickly made a point of scrolling right past them to focus on a few others further down. I wasn't sure what to think of these businesses and I wasn't exactly sure this was the kind of thing the NYC crowd had in mind.

I've been to Bulgaria. I know how much poverty exists there, especially among the Roma (gypsie) people. I also know that the Roma have a huge musical tradition and have often supported themselves through street performance. The coast of the Black sea is full of that (poverty and music).

That said, they look wildy out of place on the site. I wonder what we should do. Outlaw certain genres of businesses? Guide our partners to only post people who appear (to Americans) to look very poor? What would you do if you were trying to create an open lending platform for the sake of poverty alleviation?

Premal was staying in midtown, myself in Brooklyn. We ended the night with our first big fight, about this very issue, yelling as we walked to the subway. Clearly, the stress of getting this off the ground had gotten the worst of me...

Into Context

2006-05-15T14:30:00.000-07:00

It's jaw dropping to see a movie like this:

Damn! I don't know if I can explain how a snippet like that makes me feel. It's something like getting a scribbled note back from a forgotten carrier pigeon launched long ago...

The people using the site in that video come from a different world. In this video, not only are they being taught to use the Kiva website, they are being taught to use a computer. Before they learn how to type in their email address as their username, they need to be taught what an email address IS. Before you teach them how to upload a picture, they will need to hold a camera for the very first time. The video illustrates the incredible distance we live from most people in rural Uganda. It also shows how such people are just a few short steps from being totally connected to this world.

Let's put this stunning piece in context. It comes from Cale Thompson and Jon Rodriguez -- two Microsoft-funded researchers part of Microsoft's "Digital Inclusion" program. Cale and Jon come from a design background and are based out of Holland. Late last year, we began collaborating on how they could help improve how Kiva is working with partners in Africa. Next thing I knew they were awarded a grant and were buying tickets to Kampala. Moses picked them up and they are venturing around East Africa watching people use Kiva. Their question is of the most open-minded sort, and it will be fascinating to see what they learn. Suggestions might range from better use of mobile technology, to website design improvements, to simple training changes.

Watching this video hammers home the challenges we face in scaling our business. Facing the challenge is worth it, and luckily we are not facing it alone anymore. We have players like Cale, Jon, Microsoft and more to help us with these mountains.

Now go read Cale and Jon's Blog from the beginning.

A Chip on My Shoulder

2006-05-08T17:24:00.000-07:00

I am somewhere in the process of making the transition from donut shop code-warrior to CEO. It won't be a seemless transition, so my colleagues will hopefully concede me a few stutter steps. The last 2 years were a slow, incremental birthing of a vision Jess and I first had in Africa. Every few weeks, another piece of the organization steadily came together. It was like we were coloring in the lines of a silhouette we saw long ago. Doing it alone was isolating and inefficient. However, having intimate knowledge of every corner of a web site and an organization is hard to give up.

The core feature set of Kiva 2.0 is live on the web and looking fantastic. Less frequently do I stay up until sunrise -- just in time to release a new feature. A few times lately, I have instead awoken to see the amazing work of Kiva's dev team. To see so many people now contributing is a joy.

For instance: partner pages, like this one. That's an important aspect of where we are going, and how we view ourselves. Kiva is creating an open market for international, person to person, micro-lending online for the sake of alleviating poverty. Our (MFI) partners post the profiles of their client entrepreneurs directly to the site (sort of like auctions), and people like you and I can loan to them. Important agents on the site are the MFIs. They, as well as their clients, are in the process of developing online reputations with Kiva. The reputation will be a factor of their payback rate, content quality, content frequency and more. Lenders like you and I can decide where to place loans based on these reputations.

I am a broken record on this blog: Kiva can scale. I can't stress that enough. If you are someone out there in the micro-finance industry and you don't believe me, write me a note and we can talk. A few months ago, Kiva was being scrutinized by a major influencer in Silicon Valley. This influencer asked me: Can you scale? I said "yes". The influencer then proceeded to interview a host of pundits and experts from the most respected American MF-related organizations. Emails were flying around about Kiva. As they do, alot of these emails ended up in my inbox, even if they weren't written to me. What did they say? Among other things, they said "Kiva can't scale"! Many also questioned my inexperience. If only people talked to me before the were so quick to judge...

Why can we scale? The primary reason is that it makes financial sense to work with Kiva. MFIs pay, on average somewhere in the range of 8-18% interest on debt they receive from local and international sources. This is a large part of the reason that clients (poor borrowers) pay in the range of about 30% on their individual loans. Kiva is, right now, providing them with debt at 0% (with help from PayPal who has agreed to give us free payment processing). In the near future we will allow our partners to choose to get their debt at non-zero rates. Partners will be able to choose the rate of return they want to send to the lender. Kiva won't dictate these things and is merely a connector.

Some MFI experts might argue that posting pictures, payments and journal entries is unwieldy and unrealistic to expect. How can an MFI, some with 100,000s of clients, plug into a system like that? There are many ways to respond, and I will write more of them down later. A key thing to note is that there IS an extra cost for most to work with Kiva. Sure, it costs something to post up a picture and other info online. However, I would argue that, for many, this cost is MUCH less than the cost of accepting traditional, commercial debt.

Case Study: One of our partners pays its loan officer $10 per Kiva post. An average Kiva loan is around $600 or so. That $10, then, is less than 2% of the total loan. For them, Kiva costs them 1.5 - 2% per loan. That is something that, at scale, can significantly improve their business model. Ultimately, savings like that go to help a microfinance institution grow and serve more of the poor.

Do I sound like I have a chip on my shoulder? Probably, and I should let it go soon. I wonder how I can do that...

Unintended Consequence

2006-05-01T14:21:00.000-07:00

I'm writing from JFK airport. It's 70 degrees in NYC now and I am still chained to a laptop. Working for Kiva can sometime be a very isolating experience. There is this huge desire to connect with the borrowers/lenders/friends who come to our site. However, in the end, I am simply staring at a titanium and plastic object most hours of most days.

A few months into launching Kiva Beta, we were working with only 1 partner in one area of Uganda -- Tororo. Jessica and I realized, after a year of research, that it would be hard to get traction working with established microfinance institutions. We had this business plan that painted a grand vision of a great future. It talked about how Kiva would drive low cost debt capital to microfinance institutions (MFIs) world-wide, who were very undercapitalized. One thing we realized early was that there was a lot of investment capital being thrown at a very small number of MFIs. Something like 5% of MFIs were taking in about 100% of all investments in microfinance. Thus, a large part of our mission would be to attract the softer, p2p debt to smaller, developing institutions. These are the orgs that can not attract true commercial debt capital. So our plan was to find these orgs and to have them list their businesses on our site.

However, as two people in an apartment, doing this in our spare time, it wasn't easy convincing even the smaller orgs to list their businesses on our site. Basically, we had no reputation and no money to offer them. We had only the plan that we would list their businesses and attract debt through "viral marketing." It was an uphill battle calling organizations from all over the world. Finally, we just decided to start by listing the businesses found by our friend in Africa -- Moses. Moses, working with VEF, found 7 businesses and posted them to our site. They were funded fast and then we just waited around to see what would happen.

Lots of great stuff happened, some of it intentional, some of it unexpected. One "unintended consequence" was this "virtual bulletin board" effect of Kiva in Tororo. Tororo has at least one internet cafe, and its surprisingly accessible even to people of very modest means. At that time, Kiva had no office in Uganda. Moses would go to the internet cafe every day and work there, posting journals and businesses to Kiva.org. To him, it definitely became his office. Right from the beginning, a problem he began having was that the loan recipients would come to the cafe to watch him post repayment info and blogs about them. They would also look over his shoulder and keep track on the other businesses on the site. Kiva.org was showing publically something that is otherwise very private in Africa -- personal financial info. Kiva.org was becoming a place where people could monitor the progress of other people in Tororo.

I think that, in general, the loan recipients felt immortalized and proud of being on the internet. It's unclear to what extent they felt added pressure to pay back their loans. Who knows whether this is a positive or negative side effect of doing microfinance on the web. The most interesting possibility is that a system like Kiva actually contributes to the "reputational collateral" aspect of microfinance. In a world where you have no physical collateral, all you have to lose is your reputation. The internet increases the stakes because it can make your payback/default public for the world to see.

This is a rather cheesy graphic from a recent Kiva powerpoint presentation:

Last November, when Kiva hit the blogosphere, I read so many entries saying how Kiva was a "Web 2.0 App?". For me, my first reaction was bewilderment. What is a web 2.0 app anyway? Does that mean you have AJAX? Tagging? Social networking? In no way did we think about web 2.0 when designing the site. However, I read recently that a characteristic of web 2.0 is "creating network effects through an architecture of participation." Are we doing that? Who knows...who cares!

Titans of 2 Spaces

2006-04-24T12:34:00.000-07:00

We went on an amazing trip to LA last week. Jeremy, Fiona and I took route 99 all the way home through cloud after cloud of cow smell. The agricultural central valley is stunning on a sunny day.

Premal is a tireless people person. The more people he talks to, the more energy he has. A 2-day conference on Microfinance last week was fuel for his fire.

A scene:

Premal and I are in the conference lobby, between panels, tracking the daily volume on Kiva.org. The new website has more than doubled the conversion rate on our site and we are scrambling once again to get our partners to post more businesses on the site. It is a puzzle to match supply to demand on the internet, and now we are doing about $3000 per day. This speaks to the power of usability and design on the (double) bottom line.

So we are sitting there and we hear a voice over the wall of the lobby computer cubicle. A Bangledeshi accent gives it away: It's Dr. Mohammed Yunus, the founder of the Grameen Bank and future Nobel Laureate. We have an amazing confluence: Dr. Yunus and the internet in one place. Awkwardly, we stood up and peered over the cubicle wall.

"Dr. Yunus, do you mind taking a look at our website really quick?" Premal asked.

We go to walk him through the site and we can now say that Dr. Yunus has used Kiva.org. Too bad we stopped just short of making a loan. Dr. Yunus is, at very least, a huge reason why we started Kiva in the first place. Over 2 years ago we saw him speak at Stanford about how he started Grameen. Pretty soon after that, Jess quit her job and went to Africa. 2 years after that, I quit mine. I told him the story and he listened intently in the same way that he probably listens to everyone he meets.

Here's Fiona, Premal and I with Dr. Yunus:

Later that night:

We had a meeting with another pioneer: Tom Anderson of MySpace.com . My friend Sundeep Ahuja is a Product Manager at MySpace and was able to introduce us to Tom -- who has about 70 million friends (73493129 today to be exact). Tom has, from time to time, promoted certain causes on his MySpace profile. He mentioned that last week he linked to NPR and crashed the site for a day. Will he promote Kiva? Maybe, he said, but we all agree that wouldn't be the best idea at the moment. If he can crash the NPR server, I can only fear what would happen to ours.

The ending comment here may be obvious: Is Kiva really bringing together microfinance and social networking? I think so, at least in some respects. The virtual bulletin board of Tororo, Uganda might be the first example of this. More on that later this week...

Announcements

2006-04-12T20:28:00.000-07:00

This is a blog entry which doesn't highlight how tired I am. Why? For once, in a long while, I'm not. I'm relieved. Jeremy and I are on the verge of completing a software project which began in mid January and took slightly longer than we anticipated. We, along with Carl, essentially rewrote the Kiva web application. The code that will be up there on Monday will be a complete replacement of last year's code. We didn't add a ton of new user facing features to this release, instead we concentrated on the partner interface. As of Monday, our partners will be able to directly post businesses to the site, thus creating a much more distributed work dynamic.

Outside of this, there is a lot to report.

First, we just signed up and posted a new partner CREDIT, which is an MFI based in Cambodia that works in the World Relief network. We are honored to be in partnership. Our businesses section, today, displays 5 Cambodian entrepreneurs needing loans. The pictures they sent are some of the best I've seen on our site. Our first foray into Asia!

Second, Carl arrived in Uganda on Monday. I was sleeping on Jeremy's floor, in the middle of a 72 hour coding spree, and was awoken by Moses at the ungodly hour of 9 AM. Moses started the call like any Moses call, with a sequence of pleasantries and formal greetings characteristic of an East African orator. I responded to his speech with sleepy grunts. Then, he really surprised me by passing the phone to carl, who had just flown in. They were calling me from Moses' cell from the Kampala airport. It was quite disorienting to hear Carl and Moses on the same line. My worlds have truly collided.

Third, Premal Shah, from Paypal has formally joined Kiva as President. Premal and I will make a two person leadership team while Jessica calls the shots from behind the scenes as a student at the Stanford GSB. All three of us are now on the board. There is a long story as to how Premal ended up as the President of Kiva and it will come out piece by piece in blog entries to come. All I can say now is that having Premal at Kiva instantly boosted it's future hopes by an order of magnitude. If Kiva was a stock, it would have doubled with that announcement. Thank you Premal, you are a godsend to Kiva and an amazing partner to have on this journey.

Last, thank you Jessica for putting up with me over the last three months. For the most part, I was gone from the house -- spread across internet cafes and donut shops all over the Bay Area. I needed your support and you gave it to me. Thanks. I'm gonna go to bed early tonite.

Anniversary

2006-04-04T00:16:00.000-07:00

I'm tired. I've been up all hours getting ready to rollout a new software release. Such nights take me through a progression of Mission Neighborhood cafes. If it gets really bad, all the cafes close and I find myself at Happy Donut, where I watch the police filter in and out. The other night, I learned that the police don't necessarily have to pay for coffee at a San Francisco Donut shop. I watched a kind policeman come in, smile widely at me, pour himself some coffee, and leave. Yee, the kind owner of the shop, didn't look twice. I guess there is some unspoken agreement.

Saturday morning, I awoke to this nice message from Moses. Moses rightly marked April 1st as the one year anniversary of Kiva's first loan. Since that time, we've started almost 200 businesses and Moses has been interviewd by the BBC, NPR and others. I was too tired to note this great occurence, but he did:

Dear Matt and Jessica,
I count it as a complete blessings to three of us seeing Kiva in existance to day.
Today is Kiva's first anniversary on active loan to businesses in Uganda. We started the first seven businesses on the 1st of April 2005. I thank God for all what we went through, for at the begining Kiva seemed in the eyes of people as Moses- Matt game.
I kept on writting very interesting Journals that impressed people all over the world. Some of your friends were making comments on my writings and some would say that you were lucky to have meet Moses because he is the only faithful African we have seen so far.
I know that people struggled to believe that Kiva would succeed in her operations. Through our joint prayers and hard work, today Kiva family has expanded beyond Moses-Matt idiology. Other trusted Africans have joined the race of development through Kiva loan scheme.
My brother and Sister when I see all these things happening, it humbles me very much before God.
I know that we still have a long way to go to make Kiva's vision stand strong even during the time of storms.
I count my self very previleged to be as part of the founders of Kiva. I will leave to love and support Kiva.
Tomorrow Im planing for thanks giving prayers for Kiva in the church. Our church has stood with all of us in prayers for Kiva success. During your time of consultation with the lawyers and even the _____ meetings, they prayed for us.
Let us all rejoice for what God is doing to Kiva through us.
Yours in Christs Love,
Moses.

In Costa Rica

2006-03-23T21:53:00.000-08:00

Jessica and I are taking our first real vacation since our honeymoon over two years ago. We will be in Costa Rica until the 31st. It will be interesting to see how much I can keep my mind off of Kiva for an entire week. Will write more when I get back!

Do as You Go (2)

2006-03-21T07:59:00.000-08:00

I wrote an email that started like this:

Hi Mom and Dad,

I'm writing in unusual circumstances. I find myself in my little cottage listening to sweet music and going on night walks. Jessica is at a "women in management" retreat and I just returned from the city sailing all day. We ventured out past the golden gate, me and tim and kevin. How sublime, but just a little scary. We rode the waves of a 7 (17?) ton tanker.

On my mind now is Kiva. I haven't talked to you all week because it has been an incredible week. We sent out a press release and two newsletters and 7 blogs talked about us. We have possible (but improbable) opportunities to be featured in the Economist and BBC. Tons of new members and 7 businesses newly funded. I'm getting emails from all over the world. I feel elated and for the first time I have a deep peace about Kiva and am accepting that we are onto something....

It's simply too embarrassing to continue on posting a letter to my parents to this blog, so I'll have to cut it off there. Basically, I went on to describe the tough situation I was in -- having a job and needing to sign up partners. How do you conduct a partnership program with a full-time job? By the end of the email, I asked them for a small donation to help me get started.

My parents were kind enough to respond to this late night email and send a donation. This helped me quit my job and hire Chelsa to work part time vetting and signing up partners. By February, we had 6 partners, and now have a steady stream of businesses listed and funded on our site. We have started almost 200 businesses as of today.

One thing that strikes me about the email was how I was clearly surprised by minimal success we were having at the time. I guess it helps to remember some context. At the time, no one thought that the Kiva p2p approach would be scaleable and could grow at an acceptable rate. To date, many experts in the industry hold this view. Institutional funders -- both donors and investors -- wouldn't touch this idea.

Thus, I found myself in a dilemma -- one familiar to many entrepreneurs. In order to progress, I *had* to raise some money. However, I was in no situation to raise formal capital. Instutional capital wants to see a lot more traction before funding a risky idea like this. Thus, I was forced to seek out what are sometimes called "angels" or "first loss" donor/investors.

Being a non-profit, I believe, helped Kiva get from point 0 to point 1. As a non-profit, it is possible to attract people who are willing to donate small amounts of money at an early stage to be a part of something that has the potential to do a lot of social good. It isn't clear, by any stretch, that there are huge profits to be made in this business. Angel investors and VC's often desire a potential for exponential growth and 100x return on investment. I couldn't justify making claims for these kind of returns. I could make claims, however, that Kiva would become a financially healthy/ self-sustaining entity in 3 years.

Thus, I sought out a first round of angel funders, my parents being the first. These angels are people willing to take a risk to be a part of something innovative, or simply to help a friend. We are soon getting to a point where we will be able to approach institutions with a proven concept and longer track record. To get to that point, it is critical that Kiva continues to execute its business every day, and show continued progress. This is what the next round of donors/investors will want to see -- continued progress.

Let me know if things ever get stale.

Do As You Go (1)

2006-03-13T23:53:00.000-08:00

I wrote earlier in this blog that it took Jess and I a year to start Kiva after we had the original idea. I also wrote that some of my biggest mistakes with Kiva have been when I chose an overly conservative route. It is pretty clear now, if you are following us much, that we have changed attitudes. I am no longer the overly conservative leader that I was a year ago. In many ways I am trying to make up for lost time.

At about the time I started this blog, a major change occurred under my skin. The catalyst for this change was, more than anything else, the emails I began to receive from around the world. While it was clear Kiva was becoming popular among users, I had been plagued by the criticism for over a year that "Kiva wasn't scaleable." Initially, I didn't believe this. I had a gut instinct that it is not quite so hard to scale as people think. However, a year of talking to lawyers and practicioners wore me down. I came back from East Africa with a huge heart for this. A year later, I could barely connect with the fire that I had felt.

In late October 2005, this changed in one weekend. Jess was out of town at a retreat. I went sailing under the Golden Gate with my great friend Tim , and came home to a clear night in the woods where I live outside of Palo Alto. Checking my email before bed, I was receiving messages from all over from people asking for loans. Not only were individuals writing me, but legitimate lending institutions were writing in as well. I got messages from Bulgaria, Senegal, Kenya, Rwanda, Nicaragua, Gaza and more. These were from people that led lending operations and were excited about the possibility of listing businesses on our site. This, more than anything else, was my personal tipping point.

I had the sense that I had gotten into something pretty serious. Not only did I have lenders now , but I could clearly see there was a pipeline of interested and legitimate lending institutions that served the poor. Sure, this initial rush of emails was relatively small, but it was a valid sample set for things to come.

I went walking and, for the first time, I had a real strong sense of what was beginning to unfold. Kiva would become a database of thousands micro-businesses from many impoverished regions. The loan was a powerful tool to connect people over great distances for sustained periods of time. Reputation systems and extreme transparancy would allow for this to happen on a large scale.

I went home and emailed my parents....

Kiva 2.0

2006-03-06T19:17:00.000-08:00

I feel like it's 2005 all over. This time last year, I was spending all my free time in cafes in the mission, making the first version of our site. My day was basically this: Wake up at 8, drive an hour to TiVo, work until 6, get home at 7, hang out with Jessica all night, and start coding at 12. I would stay up until 3, get a burrito in the mission, then sleep until 8. I did this for several months and the excitement over bringing Kiva to life gave me energy reserves I didn't expect.

This month, I get the pleasure of spending almost all 24 hours on Kiva. I am sleeping about 4 hours per night and have plateaued nicely around this number. Once again, Kiva has brought me a surprising energy and I feel renewed each day. When you are doing something you love, it is suprising how much you can get done.

We are making, what we are calling, Kiva 2.0. I am blessed this time to have expert help with the software: Carl and Jeremy. We talked Carl into staying stateside until late march, and Jeremy has moved out here from Connecticut to work with Kiva. While Carl will soon be out having his big adventure , Jeremy has come to SF to help us turn it up.

I find that the best software comes from a small team of incredibly dedicated people working in concentrated bursts. The tight collaboration and intellectual closeness of such situations brings innovation. No longer am I alone, chasing a burrito at 3 AM.

Kiva 2.0 will further flesh out the ideas that inspired 1.0. Now that we have some volume on the site, there are so many cool things you can do. The main idea is to create a more open platform where our partners can post businesses directly to the site and be tracked via a reputation system. The Ebay analogy gets thrown around a lot -- and is often abused. Still, I do find it tempting to refer to our partners as "auctioneers" and the businesses as "auctions". Prosper.com has taken this to the extreme. Kiva will pursue the metaphor with some subtlety. In a more charitable space, it is important to maintain a design sensibility around the motivations of our users. Thus, look for Kiva to tread carefully around the Ebay metaphor.

When will it come out? If all goes right: 6 weeks. However, all never goes right in software development. You just need to develop a process where you can deal with bumps in the road. So far, with the help of Jeremy and Carl, it is going a heck of a lot better than a year ago.

Moses Update

2006-03-01T10:15:00.000-08:00

A lot of people have been asking me how Moses is doing after the disturbing post a week ago. I asked him to tell it in his own words.

Hello Matt,
This is some few hints of the recent presidential election in Uganda.
President Yower Museveni was declared the winner with 59.96% and the runner up from the FDC party got 39 percent.
Generally right now the FDC party is going to court for they complaint of mass rigging and intimidation of their voters.
Number of FDC voters were put in jail before the election and some were killed by gunmen who are believed to be the supporters of President Yower Museven.
Before thinking of taking the court action, the FDC big shots wanted the re counting of the ballot pappers but the Goverment has refused to allow the re count to be done.
Two days before the election day, soldiers were deployed all over Uganda even deep in the villages to frustrate the campaigns of the opposition.
Generally, the opposition parties feel that the election wasen't free and fair.
The elected president will be sworn in as the new elected president of the Republic Of Uganda in May 2006.
This will all happen if the court does not nulify the election results.
For me as a person, Im very safe and I have not been affected in any way both during the time of campaign and even after the election.
I have received the most recent report that all our beneficiaries of Kiva were not affected in any way. Im rejoicing together with my family.
Im now working very hard for Kiva because we want to catch up with the time that was wasted during the fear of the campaign violence.
I want to thank all of you who prayed for us and all the people of Uganda.
Matt, this is the brief content that I can give you concerning our presidential election.
Every blessings,
Moses.

Prisma and Kiva

2006-02-27T16:01:00.000-08:00

Kiva is scaling fast, finally. In the last 4 days, we have raised over $17K in loan capital to be sent to our partners. This has been mostly through our partnership with Prisma Microfinance which operates in Honduras and Nicaragua.

Prisma has been an amazing operation to work with. I met with Dr. Kendall Mau about a month ago at Stanford to talk about a potential partnership. Kendall is known as a world-wide microfinance expert who is a specialist in helping struggling organizations become financially sound. He has one of the toughest travel schedules of anyone I have ever met and is in demand all over the world for his consulting. He is also on the board of Prisma.

Kendall and I had a relaxed conversation to explore the possibility of Kiva working with Prisma. I wasn't sure how open they would be to working with Kiva. In conversations with MFIs (microfinance institutions), Kiva has mixed results. Some are very excited about the idea of posting their businesses to the site, and some are more cautious. I think the main concern is whether an MFI can easily post content to a website on a regular basis. Some are set up to do this easily, some find it unwieldy.

I left the conversation happy that I had met a great man connected to a great organization who could potentially help Kiva a lot. Little did I know how much they could help.

A month later, Prisma completed the application process and has already posted over 30 businesses with great content. David Satterthwaite, the President of Prisma has gone out of his way to make a Kiva-Prisma partnership work for both of us, and ultimately for the working poor in Honduras and Nicaragua. Kiva lenders are already making a huge impact through Prisma.

Thanks to everyone involved. This was one of the most exciting weekends of my life. Kiva can scale.

New Businesses Today

2006-02-23T05:01:00.000-08:00

I'm going to try to use this blog to make a Kiva announcement today. A bunch of new businesses are posted here:

http://kiva.org/businesses.php

Much thanks to our partners Prisma and Shurush for these.

This time I'm making no bets as to how long it takes for them to be funded. I lost big last time.

Uganda Turmoil

2006-02-20T22:58:00.000-08:00

Two weeks ago I got this message from Moses:

Hello Matt,
This is to inform you that our work is not going to be possible for very long time because of luck of electric power.
The Goverment has announced that due to the low water level in the lake, the power generation has gone very low. For this reason power will be switched off at 6am to 7pm every day.
This has now made all offices to buy their own generators.
For Kiva office, we are in dilema.
Moses.

For this, we were able to raise money so that the Kiva Uganda office could have power. I hadn't heard back in a while. Today I received this:

Hi Matt,
This is to inform you that we have not bought the generator yet because of the total confusion here in Uganda due to the forth coming presidential elections.
There is rampant killings during the campaigns and threteaning violence.
This has caused almost all the business communities to run across to Kenya to wait for us to go through the elections.
Most of all the shops are closed and the prices of commodities have been hiked very much.
We are voting on Thursday this week. We hope to buy the generator after the elections.
Thanks,
Moses.

Certainly, it is difficult to do business in Uganda right now.

NPR

2006-02-16T11:55:00.000-08:00

So we were on NPR yesterday. I was driving around Alviso, CA eating a McDonald's Chicken Sandwich when it came on. What a nice surprise!

http://www.theworld.org/wma.php?id=02156

http://www.theworld.org/latesteditions/02/20060215.shtml

Sleeping In

2006-02-10T17:14:00.000-08:00

There's a lot going on with Kiva beneath the surface. A lot of energy that is bound to bubble forth. The website is a place where the mounting pressure is occasionally released in short breaths.

A few months ago I was going through this turbulent, life changing time. I was quitting my job and basing my future on an idea which really hadn't proved to be scaleable. P2P lending was working with a small village in Uganda. But was this a serious idea, or more of a project?

Coincidentally, at this time, I struck up an old friendship with my high school friend Chelsa Bocci. Chelsa had recently returned to the Bay Area from a trip around the world. With her sister Shaina, they started in China, made it through tsunami-era Thailand and ended in South Africa where they worked at an orphanage for many months. Around this time, Chelsa started helping Kiva in a big way.

Yesterday, I went to sleep at 5 AM. Me and Jeremy stayed up long past the coyotes in my neighborhood began a morning howl. We were sending live the many businesses posted by our partners. That's plural. Kiva now has 5 partners -- thanks mostly to Chelsa. Three months of her work are beginning to bear visible results. We got stories in from Bulgaria, Gaza, Honduras and Senegal. We spent the greater part of the night marveling at these stories which featured everything from a Bulgarian Chokeberry farm to solar-cooked seafood in Senegal. We wondered how they would be received and at what rate. Jeremy said 24 hours and I had my money on 2 weeks. He bet me a dollar.

The morning coyotes died down and I joined Jessica in bed as the sun was pouring through our venetians. I awoke 1 pm as the dust was settling on a morning of unparalleled activity on Kiva.org. As I slept, Kiva lenders funded all 11 new businesses and have sent over $8,000 to the developing world. We had no more businesses to offer and I had to rewrite the depressing message on the site saying "We apologize for the temporary problem and hope you stay interested in Kiva". Of all problems to have, this is one of the best.

Why does everything happen this way with Kiva? Just at the time of greatest need, someone or something comes to help us in the most incredible way. The concept behind it is so very powerful and is much larger than the individual people contributing to Kiva. It has a strong wind and we are just trying to put forth a sail to capture some amount of this force. I hope that other organizations are able to capture some of this and harness it for doing lots of good.

Jeremy, I owe you a dollar.

Zopa and the Rise of P2P Lending

2006-02-06T15:26:00.000-08:00

Zopa.com is coming soon to the US, and Prosper.com is here (as of today). These are the first ever (for profit) person-to-person lending services to set foot in our country and I predict they will have drastic effects on how individuals access capital. These are services that allow one person to lend to another person using the internet as a matchmaking service. They are able to do it because they do not structure themselves as banking or brokerage operations. Rather than borrowing at one rate and lending at another, they simply facilitate a transaction between two parties. They make money by charging a small transaction fee for the service.

Last week, we had one of our biggest Kiva meetings ever. Chelsa and I got to meet Richard Duvall, the CEO of Zopa at the Top of The Mark in SF. I had some nervousness about being a CEO across from a CEO who has been called, by Bill Gates "one of the most dynamic people I have met”. However, the nervousness was quickly dissolved when we talked. Richard is an incredibly unassuming and casual person who has had an enormous impact in a short time. We talked about the future launch of Zopa in the USA, the regulatory challenges that organizations like ours face, and how we could possibly work together in the future.

One idea that I left with is that Kiva is part of a larger space of P2P lending organizations. It is important to know how we fit into the space and how we can benefit from other companies who are making the space larger. Kiva itself, we agree, can contribute a lot by showing how P2P lending can have an impact on people who are at the very bottom of the global economy. This can bring a lot of publicity and legitimacy to the space that can benefit everyone involved. I choose to view it as a pie that can grow larger for everyone, rather than a fixed set of capital that we must all fight over.

Another idea I left with is that P2P lending, although at its infancy, is developing standardized legal and business strategies. Companies like Zopa, Prosper, Kiva and others have been on separate journeys for the past two years. In many ways, we all thought of a similar idea around the same time in different parts of the world. We all took different strategies to bring it to reality and we all faced a huge legal fence pretty early on in our efforts. Zopa climbed the fence first by choosing to portray themselves as a mere transaction agent. The lenders on the site are the legal lenders of record, and the borrowers on the site are the legal borrowers of record. Kiva circumvented the fence by offering 0% interest. Offering 0% allowed us to avoid SEC regulation which would be prohibitive to a charitable endeavor like ours. In the future, we will most likely follow the Zopa lead by legally structuring our transactions in a similar way -- and thus being able to offer interest. It remains to be seen, however, how much Kiva users desire to make a profit off a charitable loan.

The first year after we started Kiva, we never used the phrase "p2p". We would always say something to the effect of "just like loaning to your friend or family member." We were looking for a way to do a very simple thing -- lending -- on a larger scale. We went through a year of people telling us "you just can't do that" , but just started anyway. Then, we heard of Zopa, who was doing it in a big way having solved all of the difficult issues we had faced. Meeting Richard face to face was comforting. Here is someone who has been through something similar and has come out on the winning side. He is not only meeting with us, he is offering to help us in some very tangible ways.

If only we had met him in 2004, Kiva would be so much farther along. Thanks Richard.

Old Concept Paper

2006-01-30T14:51:00.000-08:00

I haven't written to this blog in quite a while. The reason is that I am going through a lot of stuff that probably is best left off the blog. Thus, I am going to go back in time and post a concept paper I sent around in March 2004 which turned into Kiva. I sent this out to anyone that would read it and got mixed responses.

A lot has changed since the time I wrote this paper. In general, the biggest difference is that Kiva is now starting to rely on a network of existing partners in the field to do work there, instead of hiring our own staff in the field. Another big difference is that we are implementing a "rating" system whereby these partner's reputations are tracked on our site. The last difference is that we decided to frame the experience as "lending" rather than "investing". In reality, Kiva doesn't offer equity investments, it offers loan opportunities. This is a fine, but important, line.

Sorry for my lack of activity. I will probably not be able to blog about the daily activities of Kiva for a while.

Thanks,

Matt

-------------------------

Business/NGO Idea
Matthew Flannery
March 7, 2004

Introduction
-------
The following is an idea for an international
organization/company which seeks to connect
small US investors with small scale business
proposals in third world rural areas.

This organization is very similar to the Village
Enterprise Fund (www.villageEF.org) with a few
key differences. 1) It seeks to use technology
(internet) as a way to connect investors directly
with businesses and 2) It offers the possibility
that investors receive a return on their
investment.

Summary
-------
The average first-world citizen has the financial
leverage to start a real business in the third
world. The problem is connecting average first-
world investors with third-world entrepreneurs.
I propose an organization/company which serves to
connect these two worlds in an innovative way.

Website
-------
The website contains a browsable gallery where
potential investors can find a number of business
proposals. Along with pictures, these business
proposals come in a standardized format and
only those matching a certain standard of
quality get listed on the site. Each posted
business plan is evaluated by the staff
in terms of its likelihood for success and the
integrity of its claims.

Each business plan specifies the amount of
investment needed to get running. It's possible
that the investment could actually be given
out in rounds. In this scenario, the business
would have to fulfill certain requirements in
order to qualify for each sequential round of
funding.

Staff
-------
This idea is not like many internet business
ideas which claim to "run themself". This is
a rather labor intensive business that would need
significant staff.

In particular, the staff of this organization
would need to include the following.

--IT experts.
--Software/Web developers
--Accountants/Auditors
--Field agents who visit and record
data in rural areas
--Marketing staff

Integrity and Transparency
-------
The organization places a high value on integrity
and transparency. As globalization spreads,
third world countries can often get left behind
because their business world lacks integrity
and transparency. This organization seeks to
make these areas more valid candidates for
investment by bringing first world transparency
and integrity to the third-world.

Specifically, this means the following. 1) the
business proposals are as detailed and legitimate
as one can possibly guarantee. 2) All investments
go to purchase exactly what is listed and nothing
more. 3) Businesses are encouraged to achieve
or lose out on receiving future investments. We
are all about getting a return on investment.
Those businesses which are able to make consistent
returns will receive the most favorable treatment
by the organization and investors looking to compare
them.

Technology
-------
A large portion of the third world is just
recently coming into the mass deployment of
technology which makes this idea worth
discussion. The most notable of such
technology is the wireless internet which
is now becoming accessible from practically
anywhere.

The staff of the organization would be equipped
with a small number of wireless devices which
make the following possible from a rural location.
1) Taking a picture 2) Writing text into a word
processor and 3) Transmitting files wirelessly
over the internet.

Purpose
-------
The purpose of the organization is to help people
living in rural third-world conditions escape the
cycle of poverty. It has been demonstrated by VEF
that a good way to do that is to aid in the creation
of businesses. The idea behind this organization
is that, if ROI is proposed, people will be more
attracted to the idea of putting money into these
regions. Also, the benefit of cutting edge
technology is that it connects people more closely
than ever previously possible. You can imagine
a sense of "instant gratification" when placing
an investment in a small business overseas and
seeing in a matter of hours the impact your
investment is having on the recipient.

Outsourced

2006-01-15T22:21:00.000-08:00

Tororo, Uganda is not a common choice for American companies looking to offshore engineering resources. These days, most major Silicon Valley software operations are looking to India, Taiwan, the Ukraine and Russia for the hottest engineers looking to work at a fraction of the Northern California salary. When I was at TiVo, we had a team of Ukrainian engineers who quickly proved to me that outsourcing was inevitable. Don't kid yourself, the days of the American software engineer are numbered. Not all of us will be outsourced, but most will....eventually.

Next month, Kiva will become the first American company ever to set up a software operation in Uganda. The way this all happened is a long story that centers around my friend Carl. In my last days at TiVo, I was trying to keep my head above water, working on a hugely important project while dealing with the growing enthusiasm around Kiva. Every night I was staying up until 2 or 3 AM, coding the Kiva web app and talking to Africans on the phone. I would show up at TiVo to the biggest engineering challenge of my life. This was my big shot to rise to the occasion and I was showing up to work in a haze. I was living a double life and something had to give. I was totally spent.

Throughout this whole time, Carl, an engineer, was in the next cube over -- producing volumes and basically carrying the projects I was working on. He would also listen to me vent about how I was trying to build up new functionality in the Kiva website, and would often offer advice on how to fix problems I was working on. His enthusiasm for Kiva was growing, but so was our work at TiVo. We had deadlines every few weeks, and some major company deals depended on them. I would often show up in his cube, needing direction on getting the code to build. One of these times I showed up to him browsing craigslist for new apartments.

"You know, you can get a ranch in Uganda for like 5,000 bucks". I said.

"OK. I'll take it." Carl replied, totally straight-faced.

I laughed, patted him on the back, and looked back to his computer screen to see what he which apartments he was actually considering in the Bay Area. But Carl wasn't browsing the craigslist apartments. He just repeated himself. I looked back to him, and raised an eyebrow.

"You serious? You want to move to Uganda? Work for Kiva?" I asked.

"Well," he continued, "yes."

"Carl, don't tell me this if you're not serious." I threatened.

"I think I'm serious." He ended.

He WAS serious. So serious that he leaves in a few weeks. Life in Uganda awaits. Dial up modems, outhouses, servants, land, lush fields and forests and urgent unavoidable poverty will become part of daily life. There will be a certain freedom in straying from the cubes of the Bay Area. In its place, new constraints will certainly settle in.

When he shows up, Carl will become an area attraction. In many ways he will be seen as both a show-piece and an authority figure. The thing is, I don't think that Carl wants to be either of these. American visitors in Africa are often treated with deference, incredible hospitality and curiosity. This is quite different from the quiet, efficient life of a Silicon Valley engineer. Carl will have to learn to deal with the new found attention while still maintaining a sense of personal space. All the while, he will be producing acres of solid code. Hopefully he can find a few young students to make the Kiva engineering office permanent.

Tune into this story, it should be fascinating : www.carlsbigadventure.com .

Crazy Week

2006-01-09T22:45:00.000-08:00

Last week seemed to be a turning (tipping?) point for Kiva. Suddenly, the mainstream press decided it was time to start talking about us. This led to lots of schedule changes and pulling off the road at odd times to have impromptu cell phone conversations. I am not sure where all of those conversations will lead us.

It was nice because Jessica was still on break from business school, so we got to experience this together. There was a mention in the WSJ, which was a big moment for us that will open a lot of doors. Also, we had a fun interview with the BBC radio, which we did through KQED here in San Francisco. We experienced what many before us have experienced -- talking to a disembodied, far away voice through large head phones. The host of the show was incredibly gracious and helped us create a lively conversation. Jessica and I avoided cutting each other off, which is always a possibility when we talk about Kiva in the same room.

A year ago we had a section in our business plan about Marketing. It was conspicuously small, as we had no real marketing plan. We meekly wrote that we would "rely on the press and word of mouth." At the time, this seemed kind of like a longshot. I wasn't too proud of this section, but it seemed like the only way to go, and it did make sense given the people whose attention we hoped to gain. Certainly we weren't going to hire an expensive marketing team or pay a ton for advertising.

Now, looking back, what happened was faster and different than anyone's expectation. Kiva has spread almost entirely through people's personal recommendations online. Users aren't being influenced by the press as much as the press is being influenced by users. We have grown with each Kiva user’s personal sphere of influence, one by one. At the beginning, the only spheres were my own and Jessica's, which amounted to about 200 people. It took a long time to move out of this sphere, but when we did, it happened fast.

What I have learned: Trusted recommendations have a much more drastic effect than any newspaper, google adword, or billboard you can try to buy your way into.

I want to end this entry with a heartfelt thank you to Krista Van Lewen, a friend and PR expert. Krista believed so much in Kiva from the first day we started talking about this in September, and has applied her expertise tirelessly with us. It has paid off more than we could have imagined, and we are eternally grateful. Thanks.

The Coming Herd

2005-12-30T10:05:00.000-08:00

A long time ago, I read Thomas Friedman's "Lexus and the Olive Tree".

He describes the Electronic Herd as millions of people "sitting behind computer screens all over the globe, moving their money around with the click of a mouse." He talks about how the herd can literally transform economies overnight -- from distant computer screens in cubicles and basements around the globe.

Next week, it is likely that Kiva will be featured in both the Wall Street Journal and on a segment on BBC radio. Listen, Kiva cannot scale fast enough to handle the oncoming herd. We WILL scale to meet the demand, but not at the pace that modern technology has demanded.

So I will sit behind this screen and face the herd. Wish me luck.

Kwanzaa, PA

2005-12-26T19:59:00.001-08:00

I've been out in Pittsburgh, Pennsylvania now for almost a week. I find myself spending every other Christmas and every other Thanksgiving in Pittsburgh since I got married. One of the best things I get to do when I come out is to visit Sandra (Mom) Jackley's first grade classroom.

This year I was here for the last school day of the year so we got to have an assembly. We all sat down and obediently sang to the tune of the music teacher's animated powerpoint presentation. It's amazing how well elementary kids can sit up straight on hard gym floors for long periods of time. I remember doing that. It's also amazing how well they all sing together. I detected no inhibition and no attitude from the near 200 suburban Pittsburgh 1-3 graders on the floor.

We sang a few secular Christmas carols, then a Hanukah song and then....a Kwanzaa song. I had never sung a Kwanzaa song, but these kids had. In fact, they all seemed very well acquainted with Kwanzaa. Segueing from Christmas to Hanukah to Kwanzaa was effortless in that gym of 200 (mostly Caucasian) kids.

As a suburban 1-3 grader of the 1980's, Kwanzaa songs never reached my elementary school. In fact, Kwanzaa never hit any of my schools up until college at Stanford in the late nineties. I have reached this point in my life knowing little about Kwanzaa. Lately, in an effort to relate better to Africans, I’ve tried to learn more about anything African that I find.

I showed my ignorance on a phone call two nights ago with Moses who lives in Uganda. I thought maybe that Kwanzaa was widely celebrated in Africa. Apparently, as I have learned, this is not really the case. Kwanzaa is mostly celebrated by African Americans and other Africans who do not live in Africa. We were in the middle of talking about Christmas and how his family celebrates it. He was telling me that his family goes out to an adjacent rural village and has a feast with many relatives all together.

Then I asked him, "And do you celebrate Kwanzaa?"

"Kwanza?", he replied.

"Yes, Kwanzaa, the holiday?" I said.

"Yes, Matt. Kwanza is, you know, the first time. When you celebrate a kwanza, you are celebrating the first of something."

It became very clear after talking more that Moses' Kwanza was very different than the Kwanzaa I was talking about. He was talking about the Swahili word “Kwanza” which means “First”.

Then I told Moses, as I was reading about Kwanzaa on the internet. "In America, Kwanzaa is a holiday celebrated by African Americans to celebrate African Unity and cooperation. It is also to remember the oppression suffered by millions of Africans over many centuries."

"Ok, Matt, this is a very good holiday then. Let us celebrate Kwanzaa this year then together." He responded.

I instantly agreed and I am, as we speak, celebrating a modified Kwanzaa. Let me tell you though, that it is difficult to properly celebrate Kwanzaa unless you know where to look. This website has good instructions on how to prepare for Kwanzaa. If you start late, as I did, it is not easy. I am not trying to do everything perfect. In fact, I am just trying to do the candle ceremony. Even this, I have found out, is not easy to prepare.

The site says that the Kwanzaa candle ceremony calls for "seven candles, one black, three red, and three green". The problem here is the black candle. Ever try to find a black candle in the suburbs? Name a chain store and I bet they don't have a black candle. I even tried Michaels and JoAnn Fabrics. Each store had TONS of candles -- none of them black. The closest they had was the dark blue “Moonlight Musk”.

The staff at Michael's showed me how I could make my own black candle by buying a brick of wax, a mold, a wick and some dye. I decided just to cover one of my other candles with black clay they sold me. The absence of black candles in any major store makes me wonder though: How do most people celebrate Kwanzaa in this country? Do people have to just go to Afro-centric stores? Do the chain stores in other (more diverse) neighborhoods carry different colors of candles? Do people, like me, make their own black candles? Do they order online?

Whatever holiday you are celebrating, have a good one.

Africa Late Night (2)

2005-12-21T20:15:00.000-08:00

I burned through about 10 of these cards in the month before I went to Africa. When I got back, I stumbled onto something more affordable: UnionTelecard.com . UnionTelecard.com effectively ended my hobby of card collecting. With its simple web-based shopping cart and rock bottom prices, it just didn't make sense to go looking for zebra cards -- no matter how pretty they were. UnionTelecard.com changed the way I communicated with Africa.

When I returned from the trip I had a new hobby -- I spent every night writing PHP code in my bedroom. I was trying to create a little website that would enable me and my friends to lend to some of the business people Jessica and I got to visit in both Kenya and Tanzania. We had visited a random subset of the businesses started by VEF and it seemed like *every* one of them was an incredible success. I sat in these interviews, often in mud huts. Jess had several metrics she used to judge a business' success. Did the business still exist? Did the entrepreneur keep a savings account? Did the entrepreneur take sugar with her tea? I couldn't seem to find a catch. Helping people start businesses was just working.

So I got home and talked about the idea with David. David was quite a hacker himself. Each night David would stay up late helping me make a PHP/MySQL system like we use on Kiva.org. It's not rocket science, but it was my first web app. I had been programming for TV up until that point in my life. I made the app pretty fast, but it would be a year before we actually used it. It seemed like there were so many hoops to jump through to do something that was so simple at first. I just wanted to loan to some of the people we had met and document it online.

The biggest worry? Legal concerns. When Jessica came back we started setting up meetings with lawyers. This was a smart thing to do, but man was it deflating! Here are some examples of what we heard "You can't just let people loan on the internet!" and "Why don't you just go talk to the Google guys and get money from them?" and "Why don't you go work for someone like the Red Cross?" and the more usual "This just sounds really complicated."

If I had to do it all over again, I would have just started. This blog is definitely not about advice, but here is some anyway. If you have an idea you are passionate about, just try to start now. You will learn so much more from trial and error than by getting permission from everyone you know. Try and readjust. If you are doing something truly new, you will never be able to figure it all out before you start. I've learned more in the last three months than I had in a year and a half before that time.

Africa Late Night (1)

2005-12-15T14:44:00.000-08:00

Jess and I got married in August 2003. Before that, we took a 13 week pre-engagement class at our church. Yes, that's right. 13 weeks. This wasn't even for marriage, this was just for engagement. Did we learn much? Yes. Did we follow all of the instructions? No.

One of the things they make you do is talk about things. The obvious things, the big things like kids, money, family, and well, you know. We scored pretty well on our "tests" -- pretty well.

There were, however, a few concerns. We had this workbook. It was pastel green and pink and had pictures of happy couples on the front and childish cartoons throughout. I think it had a chapter named "Life Goals". Hitting this chapter about midway through the course was like hitting a fence. We had to answer all of these questions and write the answers in the workbook. This week, we had the question: "What are your Career Goals?

Matt 's Answer: I want to live in the Bay Area and work for high tech startups.
Jessica's Answer: I want to go to Africa and do micro-finance.

Ouch. That seems like a pretty big disconnect. You can imagine the concerned look of our classmates after our presentation. Hadn't you guys worked this out yet? Despite this eyesore, we passed the class and had a great engagement.

Fast-forward to Feb 2004 -- 6 months after the wedding.

I am living in Noe Valley. My flat-mate is this cool guy David who I met on craigslist. He smokes in the backyard each night and we talk about Burning Man. I'm subletting our guestroom to him for three months. Where is Jess? In Africa doing microfinance. Where am I? In the Bay Area working for a high-tech startup. D'Oh!

Another thing that pastel book tells you is to "Spend as much time together as you can during the first year of marriage." On this point, we weren't doing the best job at the moment. Certainly, Jessica's 3 month trip to East Africa wasn't the kind of thing suggested by the book. I was going to join her for about a month -- the middle month. So I had these one-month bookends to hang out in San Francisco and talk about neon-light installation art with David. It was like nothing had changed.

What did I do? I walked around a lot. I thought about Jessica, I missed her. I found myself trolling liquor stores in the Mission. It's not what you think. I was looking for PHONE CARDS. I became a phone card expert. These are the cards they sell behind the counter next to the bad magazines. You can find them in the Mission because that is where the immigrants are.

Each phone card is different. Some have connections fees, some have disconnection fees. Some charge by the minute, some charge by the 5 minute chunk. They all try to rip you off in some way and offer rates which turn out to be HALF of the real cost. Some work especially well for Africa, but most don't. You have to read the fine print. One thing they all have in common -- cool pictures. The Africa one's are especially cool. They got zebra cards, rhino cards and pretty much any big game animal card you can think of. I collected them like baseball cards.

And then, after I picked up the best card, I would call Jessica on the walk home through the Mission. This was a great feeling. Like a prize for finding the best card at the best liquor store, I got to talk to Jessica for a sizeable amount of time. As I walked down Valencia Street, I would hear sounds of sirens (in my neighborhood) juxtaposed with the sounds of roosters (in her neighborhood). I wonder what was louder -- nighttime in the Mission or morning in rural Kenya? Both can be loud.

New Developments

2005-12-13T08:43:00.000-08:00

1) New Businesses/New Regions

Village Enterprise Fund has posted new businesses in Dodoma, Tanzania and Kakamega, Kenya. They went up last Thursday night late. I intended to send out a general announcement to the new Kiva users, but stopped myself after seeing they we mostly all funded in less than a day. I guess I will save that announcement. Rowland Amulyoto is overseeing the VEF loan operation in Kenya and Richard Mazengo is doing so in Tanzania. Rowland is the former marketing manager for Kenya Breweries and Richard is an esteemed Pastor in Dodoma.

2) WSJ Interview

I had my biggest interview to date, the Wall Street Journal. Maybe I will see myself drawn in pencil?. Nope, I don't think so. They said I was one of 13 people interviewed for this article and have a good chance of not getting in it at all. Oh well, I'm not sure what Kiva would be able to do if we got in the WSJ soon anyway.

3) Kiva Gift Cards

Why wasn't I blogging last week? I was making the gift card feature. More complicated than I first thought...

4) Beta Round of Loans is Over

Jessica and I first started Kiva with seven businesses in Tororo. Yesterday, they all paid off their loans. I want to congratulate : Justine Onyango, Geoffrey Obanja Jasu, Apollo Olweny , Eunice Oyuk, Christine Awora , Elizabeth Omalla and Rose Athieno . It will be interesting to see what the Kiva beta round lenders decide to do with the repaid money.

Blackout

2005-12-01T08:45:00.000-08:00

There has been a power outage in Uganda which has delayed a Kiva announcement for a few days. Right now, they could really use this.

Bleeding Heart

2005-11-30T16:56:00.000-08:00

For two years I took the TiVo shuttle from the Caltrain on my long trek from Noe Valley to beautiful Alviso, California. As of recently, those days are behind me.

I developed a lively relationship with the TiVo shuttle driver, Marty. He listens to a lot of talk radio and would punctuate a point with an upward pointed index finger and a call to "read between the lines Matthew!". He's older than me and speaks with authority. We fought a lot -- and the drubbing noise of Rush Limbaugh, Michael Savage and Bill O'Reilly provided the perfect soundtrack. I'm sure the other shuttle riders loved hearing this chorus.

One term I heard a lot, from both Marty and the radio hosts, was "bleeding heart liberal". From many folks, I've learned that this is something you definitely don't want to be. If you are, you should downplay it -- especially in the micro-finance world. You need to be doing this for better reasons than a simple bleeding heart. People with good intentions have made so many mistakes. The landscape is littered with projects that sprung from bleeding hearts. It is with fear, then, that I wonder if I might possibly be one.

I'm a novice -- on so many levels. I was in Africa for three weeks. I am not an expert in Micro-finance. I don't have an MBA and I glaze over once talk turns to currency risk and waterfall debt. I am not competing with you if you are playing the game of who knows more about this industry. You win. If you took the time to find this blog, you probably know more.

So here I find myself dedicating my career to this concept. It has all been a blur since that time. So right now I find myself trying to put together the pieces. What just happened? Am I doing this for the wrong (stupid liberal) reasons? I think there is a section on our website about how we started. Maybe I will check that out...

Upon reflection, I think it has a lot to do with connecting people and crossing a boundary. It was thrilling for me to connect to small business people in Africa and realize that their stories were very similar to people I know. It was also shocking to hear success story after success story -- I wasn't necessarily prepared for that. Lastly, it was fascinating to see that the marketplace there is much like here, but a lot less efficient and lacking infrastructure. It was the similarities that got me interested.

Then I guess there are the huge disparities which made the similarities all the more striking. One day in Tanzania, Jessica and I were driving past a hillside filled with maybe 100 workers squatting on the rough terrain. When we got out of the car we realized they were all crushing rocks with hand tools to make gravel. Wow. All day every day, just crushing rocks by hand. I have never shaken a more callused hand in my life. Can you imagine what would happen if someone pulled up to that hill with a rock crushing machine? How much does such a machine cost? Certainly less than a few months of the combined labor of 100 workers.

I don't know where my efforts will lead me. I hear from naysayers most every day. I've heard dissenting voices frequently for 2 years. I hear your arguments and I understand them. I hear how you would do it differently and sometimes it makes great sense. Also, I see how there are a handful of related startups coming out in 2006 and I wish them all good luck. May we all succeed.

Finally, I admit it. This is a decision I made mostly with my (bleeding?) heart.

Word from Tanzania

2005-11-26T17:43:00.000-08:00

I've been having occasional sporadic communication with Christina Riechers, a Stanford grad who now is working for Village Enterprise Fund (VEF). Village Enterprise Fund is Kiva's first partner -- an organization on the ground working with us to conduct loans in Africa. I can pretty much say I am in awe of the work Christina is doing. After graduating from Stanford, Christina decided she wanted to spend a year in Tanzania evaluating the effectiveness of VEF's work there. Not your average path to say the least.

What has she been up to? Christina has been tracking down many of the businesses funded by VEF in Tanzania and conducting detailed interviews. This is similar to the work Jessica did two years ago. VEF has been around for 15 years and has started over 9,000 businesses (primarily through grants), so to effectively evaluate these businesses, she must track down a random subset. Many times this means venturing out to very remote areas and looking for people who have no permanent address. Having just a name, you can imagine this takes a lot of asking around.

In October, Jessica and I heard this from Christina through an email forwarded by Brian Lehnen:

"...although Tz (Tanzania) data will still be flowing in for a bit, here's a piece of excellent—amazing, really—news: of the 71 businesses we've interviewed thus far, NONE have failed. Some have changed businesses when they saw their first or second wasn't profitable,but all are continuing in some manner!!!"

I think the reaction of everyone within VEF was that it is amazing to get a quantitative, independent proof of something we have already seen: small business formation truly works in East Africa.

Today I got another message from Christina:

"I just wanted to send you a quick note to let you know that we've just finished up 3 wonderful days of VFC training here in Dodoma with all of the East African VFCs! This morning Pastor Onyango made a presentation to them about Kiva, and encouraged them to start looking amongst their businesses to find ones that perhaps would be ready to take out a Kiva loan. They were excited about Kiva, and are looking forward to finding out more as it's structure unfolds and playing a role in Kiva's entrance in East Africa! I must go at the moment, but wanted to let you know that all is well and your army of supporters has just multiplied over here!"

To clarify, a VFC is a "volunteer field coordinator" for VEF. VEF is able to make an incredible impact in communities through the work of hundreds of VFCs. When I first went to Africa it struck me as interesting, that, in such poor areas, volunteerism is so strong. However, what I learned was that, especially in rural impoverished areas, community involvement is very strong. Volunteerism is a natural extension of that. As Kiva begins to work with VEF in countries outside of Uganda, it will continue to benefit from the enormous network of volunteers that VEF has created over a 15 year period.

Thanks Christina.

A Humble Victim of Bloggers

2005-11-20T23:33:00.000-08:00

I used to think blogging was a tool best used in the Doogie Howser way. For those unfamiliar with Doogie, he was a child genius/doctor in the early nineties who had his own show. He was quite a reflective boy and ended every episode with a touching text comment on his computer.

For Doogie, blogging was a nice thing to do after being betrayed by his girlfriend Wanda -- or when he had a hard day and had to drill a hole in his friend's head at a ski trip. Doogie would sort through his problems and post his insights onto the blue screen. He didn't have a nice text editor (or even Windows), but he didn't need it. The kid was a BOY GENIUS.

Unlike Doogie, for a long time I ignored the art and science of blogging. I was either too proud or scared to try it, and admit I was a little skeptical - even jealous? - of those who had mastered it. This all changed in late October 2005.

As some have heard, last month I was hit over the head with that blunt object called the blogosphere. For a few days I walked around in a daze, needing someone like Doogie to relieve the mounting pressure in my cranium. I had to quit my job it got so bad. Now you will find me at a cafe drinking Coronas or coffee, depending what time of day. I might be there ALL day.

Let me say thank you to all the writers who have so thoroughly discussed Kiva. Your thoughts have been inspiring and your imaginations have wandered places we did not anticipate. We have learned a lot from you and reading your blogs has been important to us -- both here and in Africa. I now see blogging for what it is -- a powerful weapon that can wield enormous change. Sometimes getting hit over the head can be a good thing.

Lastly, I maintained a partial list of the blogs and am listing them below. These are the ones I found in an hour search, although there are probably twice as many out there.

www.worldchanging.com
psdblog.worldbank.org/psdblog/
www.nextbillion.net
www.xigi.net
boingboing.net
www.dailyKos.com
www.eurotrib.com
www.solutionsmag.net
sauntering.blogspot.com
sethgodin.typepad.com
www.larw.com
extempore.livejournal.com/friends
www.brianbaute.com
bohellz.blogspot.com
www.marginalrevolution.com
fjarlq.livejournal.com/friends
antoniofumero.blogspot.com
www.peacockcapital.com/blog
www.jonessoda.com/main.html
www.godspeedcomputing.com
www.entrepreneur.com/blog/0,6834,,00.html
www.mfisn.com
www.poil.ca
catless.ncl.ac.uk/bifurcated/rivets/
weblog.sinteur.com
www.bubblegeneration.com
www.greensboro101.com/localblogs.php
www.myleftwing.com/showDiary.do
catless.ncl.ac.uk/bifurcated/rivets
www.hotsaucelive.com
blog.thylmann.net/2005/10/kiva_the_africa.html
businessworks.ideologicllc.com/
dignifieddevil.blogspot.com/
www.treehugger.com/files
www.businessbricks.co.uk/
eventsmedia.blogspot.com/
www.tobiasbuckell.com/
blahsploitation.blogspot.com/
awilum.com/?p=37
www.licquia.org/
www.brainfuel.tv/
www.canopyblog.com/
audiovisualvision.blogspot.com/
grahamglass.blogs.com/
dignifieddevil.wordpress.com/
pandemicsoul.com/blog/?p=63
mbwana.blogspot.com
leftinthewest.com
spaces.msn.com/members/myelectricmayhem/
mathewgross.com/community
sonipitts.blogdrive.com/
www.personal-loan-blog.com
deed.squarespace.com/the-digest/
www.kn.com.au/networks/
www.blog.thesietch.org
theescape.typepad.com/escapees/
whywy.blogspot.com
posteverything.blogspot.com
makingmoneyontheinternet.creditcardmoney.net/
spaces.msn.com/members/MoooonRiver/
www.boosman.com/blog/
ming.tv/
bizzbangbuzz.blogspot.com
shetterly.blogspot.com
community.cerado.com
www.business-opportunities.biz
www.licquia.org
www.corprew.org
enrevanche.blogspot.com
yourleaders.org
nostarwhere.blogspot.com
www.livejournal.com/users/sophy/
againstthegrain.blogs.com/ttsu/
firepoll.typepad.com/fireblog/
wetware.blogspot.com
bambitroll.blogspot.com
nomadlife.org
www.bertramonline.com/
andthennothing.net/
www.newswire.poormojo.org/
weblog.randomchaos.com/
spaces.msn.com/members/checkraise/
www.worldtrans.org/
businessknowledgesource.com/businessnews/
brokekid.net
www.juicydlinks.com
livinginmonrovia.blogspot.com
culturalcanaries.blogspot.com
ayanaf.blogspot.com
www.yeaton.net/
www.ruk.ca
oraibi.blogspot.com
www.livejournal.com/community/__whatnow__
wandering-woman.blogspot.co
www.jacobgrier.com/blog
temp.starklawlibrary.org/blog/
walkereconomics.blogspot.com
blockzone.blogspot.com
www.spirithouse.com.au/spiritblog
plasticsnow.blogspot.com
theobvious.typepad.com/blog/
www.moleskinerie.com/
www.livejournal.com/users/foobarintel/
www.canopyblog.com/projectcanopy/
loan-mortgage-blog.info
www.nerdshit.com/wordpress
therealslingsandarrows.blogspot.com
www.livejournal.com/users/sari_sweets19/
mortgagediscover.com/moneyloans
relaxedfocus.blogspot.com
kmblogs.com/public/blog/85436
homeschoolresource.blogspot.com
www.personal-loan-blog.com
www.livejournal.com/users/aimeegee/
pandemicsoul.com/blog
www.livejournal.com/users/noumignon/
www.kenyanpundit.com
www.socio-kybernetics.net/saurierduval/
blogboing.com/index.php
smlpr.blogspot.com
mathewgross.com/community
monassar.blogspot.com
colinstalkback.blogspot.com
snarkmarket.com/blog/
www.livejournal.com/users/zoarre/
leads-blog.com/genealogy-leads
www.thelodown.org
www.pamrentz.com/index.html
rakingleaves.blogspot.com
beyondbricks.ecademy.com/module.php?mod=blog
ecademy.com/module.php?mod=blog
1ntr0sp3ct.blogspot.com
saelaenc.blogsome.com
www.kn.com.au/networks/
www.livejournal.com/users/jeerudoesntknow/
complicationsensue.blogspot.com
theescape.typepad.com/escapees/
www.livejournal.com/users/kimbellina/
plusnine.twoday.net/
phlipsrants.blogspot.com
orangefinance.blogspot.com
blogs.salon.com
www.cmdr-fire.co.uk/blog
complicationsensue.blogspot.com
phlipsrants.blogspot.com
houshuang.org/blog
spaces.msn.com/members/myelectricmayhem/
audiovisualvision.blogspot.com

Moses Quit (continued...)

2005-11-15T11:12:00.000-08:00

"And Matt, one day you may want to leave YOUR responsibilities to work on Kiva full-time," said Moses on this very same phone call.

Now this caused me to panic. Never had I been called out like this to make a sacrifice of such magnitude. I can't quit. Not now!

It happened. Last week I resigned from my day job at TiVo to take Kiva to the next level. The closest thing I have ever felt to this (although different in many ways) was the feeling I got when Jessica and I decided to get married -- stepping into a void of committment and surrender.

The same pattern emerged in both decisions -- I was struck with a deep sense of rightness about a version of the future but couldn't step up to the committment at first. Then, later, in a moment of weakness I admitted to myself what I had gotten into and jumped.

I know that getting married to Jessica was the best decision I have ever made.

Notes from the UN

2005-11-07T22:45:00.000-08:00

I spent today at the UN in NYC, at the "Year of Micro-Credit" Forum. Quite an experience for a chap like me. Here are some highlights:

Paul Wolfowitz: Finance is a private sector activity. Micro-Finance, as part of this, should be primarily a task of the private sector.

Simon Willis of Cisco: Virtual Collateral is an important idea in Micro-Finance (not the name of the next Hollywood sci-fi thriller). It is the idea that by simply tracking loan recipients, you are creating a situation where they have something to lose -- their reputation. Maintaining a record of identity is now within our grasp. He also adds that "Money transfer is just another form of information transfer."

There are thousands of MFIs (Micro-Finance Institutions) out there. Only a small handful have a credit history that qualifies them for true investment capital. The rest demand subsidies from aid organizations. This raises the question, how do we address the needs of Micro-Credit organsizations who have no credit?

The 100 million offered by the Omidyar family for Micro-Finance is 40% more capital than has ever been raised for Micro-Finance investment in all of history. This is causing major waves and more investment capital is sure to follow. Where can all of it be placed?

There are several thousands of MFIs in the world. Only 20 are to the level that they can raise their own money from the capital markets. There are only 100 that are considered "well-run".

Rory Stear of the Freeplay group: Only 20% of inhabited Africa has electricity. The average annual income in Rwanda is $203. Radios are key for communication in Rwanda. To power a radio for 5 hours a day in Rwanda costs $24 per year. The cheapest radio costs $12 to purchase. His company makes radios which can run for much cheaper using human (windup) power.

Princess Maxima of the Netherlands is real and not a fictional character. I saw her with my own eyes.

On the average, an MFI needs to dedicate 22% to administrative costs. Vikram Akula has lowered the overhead of his bank, SKS of india, to 6% through the extensive use of MIS systems in cooperation with Visa.

Raghuram Rajan of the IMF proposes a day when we remove the word "micro" from Micro-Finance. We should look at Finance as a spectrum of services that extend to the poor and rid ourselves of the chasm between Micro-Finance and Finance. Let's not kill the plight of the poor with kindness.

Dress code is not optional at the UN if you want to fit in. I should take this to heart.

Asli Demirgug-Kunt of the World Bank remarked that in Uganda, you must earn 20x the country's average GDP per capita to open a bank account. Banks in Africa are some of the most conservative. Banks in India take on much more risk when dealing with the poor. Why is this?

Richard Weingarten, Executive Secretary of the UNDP, remarked that Africa has seen reverses in major indicators during the last decade. For instance, life expectancy has decreased to 46 years old from 50 years old in the 1990s. He adds that Sub-Saharan Africa is now the primary focus of the UNDP.

Mantra of the day: Micro-Finance must be a profitable business if it is going to survive. There is a new crop of investors out there who want to invest in this industry but are demanding increased accountability. Although this is the overriding theme for the Forum, I ran into several detractors who worry about the pitfalls of emphasizing profit to the extent which it is currently being emphasized.

Kiva is MicroMedia

2005-11-04T00:44:00.000-08:00

Here's one of the main reasons I started Kiva: I love the stories and I desire the information. In the past 5 years or so, my mind has developed a real thirst for regularly updating content. I find it in the news, blogs, email and bank statements -- and now Kiva.

I was reading a recent blog entry about Kiva and the author said there was something addictive about it. In a way this was affirming: 1) it indicates that other people are experiencing Kiva in a similar way and 2) it shows that, at least for some, info about a poor entrepreneur's daily activity is considered "content".

Pro bono ==> Pro slowmo

2005-11-01T08:44:00.000-08:00

Okay, pro bono does not necessarily equal pro slowmo, but it can definitely lead to it.

If you are relying on someone to do work for you pro bono, you might find yourself working with someone who is a pro, but who operates (for you) in slow mo. Any offer help you is pretty much only as good as the size of the will of that person to help you. Gauging that is almost impossible at first.

The worst part is, once you enter into a pro bono agreement with someone, you have no control over the schedule. If you try calling your volunteer and getting upset, you will probably stop yourself before you start. It feels pretty ridiculous to pressure someone who is helping in their spare time and out of the goodness of their heart.

When you are starting an organization that wants to do good work, you will talk to hundreds of people who want to help. They DO want to help. But what good is having a hundred bite size, often incomplete chunks of help? This might cost you more than just paying ONE person to do a great job.

Introduction

2005-10-28T01:19:00.000-07:00

You are finding me at an interesting time.

We just launched Kiva. Kiva is a startup focused on connecting lenders with micro-businesses online. We provide the world's first and only online micro-lending opportunity and just opened to the public 3 weeks ago. We have now started over 30 businesses in Uganda and are scaling at a rapid pace. This is too much to summarize in a blog entry, so to find out more, go here. A HUGE blog, Daily Kos, covered us today. Thank you Daily Kos. In a couple of hours, your members funded every business we currently have. It was an incredible day.

Kiva is all about connecting people. Let me now introduce you to the people who are responsible for Kiva.

Jessica, my wife, and I came up with Kiva together. Kiva is a manifestation of what can happen when two people love eachother, spend every moment together, and allow imaginations to go places together that would have never been explored alone. For this reason, among others, it has been an amazing experience.

Moses Onyango is a man I met in a Nairobi hotel 1.5 years ago, and serves as a representative for Village Enterprise Fund (VEF) in Uganda. Moses has enabled us to work successfully with our first partner, VEF. He has been simply brilliant in finding successful businesses around Tororo and Soroti Uganda. He talks about goat herding and fish mongering the way a VC talks about semi-conductors and solar power.

Brian Lehnen is the head of VEF in the US, and has opened every door for us to run a successful online micro-lending operation. I first ran the idea past Brian in March 2004. "Nothing you just said sounds impossible" he said (this was the most positive thing I had heard yet). Brian has gone out to lunch with us on a regular basis for 2 years and is the reason we went to East Africa in the first place. VEF has started over 9,000 businesses in East Africa. I have a lot to learn from this man.

This blog will most likely be a mixture of my thoughts of what is happening now mixed in with stories from the past. It will chronicle what happens as Kiva goes from a beta-round startup with an important idea to a more significant endeavor with wider reach.

Thanks for reading.

Matt

Moses Quit

2005-10-25T22:31:00.000-07:00

I was on the phone with Moses the other night. We had a lot to talk about because that morning he had sent me an email saying he had quit his job. The note was ambiguous. I got him on the line:

"Yes, Matt. I have met with the elders of the church and I told them I have resigned as Pastor. Now I feel much better. My duties with the church were like a weight dragging me down. I can now fully dedicate what is in my heart to Kiva."

This was a moment where, in the past, I might have panicked in light of this huge sacrifice. Instead I just listened for more.

"I am off to Tanzania."

This project has definitely taken on a life of its own.