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A Chip on My Shoulder
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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...
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...
