What Happened

It's been about ten days since released the community and liquidity features.  I'd say it worked out slightly better than I expected.  Here's roughly what happened. 

On Thursday the 29th we started the process of making liquid all of the payments that had been returned to Kiva, but which had not been returned to our users.  We ran a script which 'settled' all of these 'unsettled but received' funds into our users accounts.  The script walked through every unsettled payment and settled it, a process which took several hours.  While this was being initiated we took the site down.  After the payments were settled, we began the process of emailing each user who received Kiva Credit and let them know the good news. 

At the same time, we released the Lending Teams feature.  So, as users were coming back to use their new Kiva Credit they also learned about the new ways they can connect on the site by joining a team. 

We had a lot of activity, in the first 10 days since the event, our users have lent about $2.5M on the site.  Before that, we had been lending about $3M every month, so this is a significant jump.  However, instead of new funds being injected into the system, this surge of lending is compromised mostly of dollars that are already in the system.  Instead of sitting in our account, they been liquidated...headed next into the hands of entrepreneurs on the site with the help of our Field Partner MFIs. 

As far as Lending Teams go, that generated a lot of activity as well.  Right now, we have over 700 teams in the last 10 days.  Just by glancing at the community page, it seems like a few thousand users joined teams since the 29th.  The Teams feature is allowing for higher engagement among existing users and certainly making the site more interesting and increasing page views.  It's unclear, however, the extent to which the community will generate a significant number of new users or whether it will just strengthen an existing community. 

The increased liquidity will certainly create more movement of funds and more frequent calls to action for existing users.  However, it does remain to be seen whether the liquidity will do anything to expand our user base. 

It's interesting to think about how the liquidity will affect the actual amount of money that resides in the Kiva User Funds account.  As you may recall, Kiva houses all of the funds that are owed to our users in an account separate from the operational funds account.  Money comes in through PayPal, and we send it out monthly to our partners.  At the same time, money comes from our partners once a month in the form of repayments.  For nearly wire outgoing to the field, there is an equal and opposite wire incoming from the field.  Often, two transactions to/from the same place net out to zero.  Thus, my postulation here is that the net balance in the User Funds account won't significantly change.  Thus, the interest (float) income Kiva accrues won't change either.  This is different than what most would expect.  Whatever the impact on our float, the decision is worth it, IMHO.  Increased activity is inherently good, no matter if it takes a short term bite out of revenue to Kiva.

Our site has been selling out constantly since August 30th.  We've had briefs periods of plenty, and many more of scarcity.  We're not doing anything to control supply and demand this time.  We slowly sign up partners being careful not to rush the process.  My guess is that the rest of the year is going to look this way, teetering right on the edge the whole time.  In a way, that's how I like it.