Long time partner, Kiva.org, recently granted us some insight into their operations. Our partnership began in 2006 and we are proud to have been part of the early stages from start up to enterprise. They have graduated onto maintaining their very own hosting environment. It’s a very big step forward for Kiva and we’re excited for their phenomenal success!
Since their Launch in 2005, Kiva has brought micro-lending to mainstream and remains an industry leader. Kiva’s mission is to connect people through lending for the sake of alleviating poverty. What’s that mean? They are the world’s first person-to-person micro-lending website, empowering individuals to lend to unique entrepreneurs around the globe. Kiva CTO, Sam Mankiewicz, gives us some insight into Kiva’s growth and their future plans.
When you first envisioned the potential of Kiva and micro-loans, what were your first steps in moving toward having an organization like Kiva?
In 2004, Matt Flannery and Jessica Jackley took a trip to East Africa, where they witnessed the power of micro-finance. They saw and heard how grants had been used to build small businesses, which could then support a family. They were inspired to find a way to facilitate loans to small business owners in the developing world and, as a result, the idea for Kiva was born. 2004 was spent making phone calls and holding meetings with micro-finance experts, lawyers, economists, and Internet experts.
In March 2005, through a local contact in Uganda, seven loans were posted on Kiva, totaling $3,500. They included a goat herder, fishmonger, a cattle farmer and a restaurateur. Six months later, every loan had been repaid.
Kiva Founders – Jessica Jackley and Matt Flannery
After the first hurdles were cleared, at what point did you see the scalable potential for the Kiva project?
In October 2005 Kiva announced the world’s first micro-lending website in a press release. From that, the Daily Kos discovered Kiva and broadcast the website to hundreds of thousands of its readers.
When Kiva reached the mainstream press, did the business structure scale well with the demand? I imagine there were some pretty deep growing pains; can you elaborate on these and how you overcame?
For the first set of loans Kiva facilitated, we worked with a pastor in Uganda who personally disbursed loans to local entrepreneurs. The villagers had no other sources of capital, and thus had to wait for money to come through Kiva to receive their full loan.
In the ensuing four years, Kiva has grown by several orders of magnitude. In order to accommodate the growth, we began to work in over 50 countries with finance institutions for the under-banked – or micro-finance institutions (MFIs). Those MFIs are able to disperse loans to entrepreneurs as they request them, and that money is backed by Kiva loans.
Inside the Kiva Offices – Photo Credit: Harry Kikstra
How did you plan on scaling your infrastructure? If I remember correctly, it wasn’t exactly painless. Any advice for those entrepreneurs on the cusp of growing to a larger scale?
The short answer is that in the beginning, we didn’t.
Kiva was fortunate to receive some broadcast media exposure early on, and it ended up taking our site down, for almost two whole days. That was when we switched to (mt), and started to look at the performance of our application pretty seriously. The following Fall, we got another shot with a national broadcast television opportunity – The Oprah Winfrey Show. The potential peak load from TV was just so much higher than our baseline usage that we still weren’t sure the site could hold up. So rather than try to ride it out, we decided to put up a static HTML page for ~20 min. after Kiva was mentioned on-air, and then restore the full site functionality after the wave had passed. It turned out to be a great decision; during the time the static page was visible, we collected much more in direct donations than we would have with the site fully saturated, and we still had record numbers of new users and loans made during the rest of the day.
The lesson there was not to let your engineering pride get in the way of making a smart trade-off.
I would assume Kiva would not be possible without the Internet, would you agree? If you agree, what platform will be the next expansion platform for Micro-financing and third world development? I’m going to guess mobile, you?
The Internet makes it possible for Kiva to facilitate loans quickly, efficiently, and on the large scale that we do. Without it, those things would not be possible.
We do think that mobile will play a big role in micro-finance as mobile payments become more sophisticated. We hope to someday facilitate loans directly from entrepreneur to lender via mobile payments, though that is still a distant vision.
Kiva Entrepreneurs from around the world.
Do you have a stand out success story from your investments at Kiva?
We’ve actually seen a number of people in developing nations lending to people here. We’re incredibly inspired by that, and think it shows that we really are connecting people around the world to help alleviate poverty.
Here’s an example: Gloria, a business owner in San Francisco, purchased Parkside Postal three years ago to provide a neighborhood mail and shipping center for the community. Despite strong sales in her first two years, she was still unable to qualify for a loan from a bank. More recently, the recession has been hard on Gloria’s business, and she was forced to draw down her savings to keep the business running.
What’s the next phase for you and Kiva?
Hitting the $100 million mark was a significant milestone for us, and one that made us look toward our next big achievement. We’ve set three strategic goals that we believe are both ambitious and achievable within the next 5-years:
1. Raise $1 billion in loans over the Internet
2. Reach two million entrepreneurs around the world
3. Realize our own self-sufficiency in the process