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/

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.

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!

_______

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.

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.

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.

'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.

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...

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.

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:

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 ...

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.

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?

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.

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 .

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