Kiva.org social network proves micro loans can have major impact

Jessica Jackley had a simple idea to help her friends in East Africa get ahead — lend them $25.

It may not seem like much to you, but in the developing world where money and resources are scarce, it can mean the difference between poverty and the road to success.

A talented seamstress might need a small loan to buy a sewing machine, or a farmer might just need some seeds to plant.

Dubbed microfinance, the idea of many people making small loans to those in the developing world was a powrful one to Jackley. She seized on it and launched Kiva.org, the world’s first peer-to-peer online microfinance Web site.

Designed to connect willing lenders with aspiring entrepreneurs, the stories of each loan are told through member profiles filled with photos, video, and text. It’s a social network designed to do social good.

In 2005 Kiva, a non-profit company, was rocketed to popularity by the blogosphere and went on to be featured on a slew of top media – including Oprah. Today, it is lending in 150 countries and still growing.

ITBusiness.ca had a chance to sit down with Jessica Jackley at the Mesh Conference in Toronto.

When Kiva.org first launched, you received a lot of unexpected media attention after the blogosphere was buzzing about the site. You said you hadn’t even read a blog before the moment Kiva was highlighted by one. How does that experience compare with your Web marketing strategy now?

A lot of the media [coverage] that happened very early on took us by surprise … and we tried to react to take advantage of that.

The blogosphere was very interesting because it created all of this buzz very early on. Really, it was just a side project with a few businesses on a Web site that had already been funded. But in November of 2005, our first month really, something like 300 blogs wrote about Kiva [including] two of the three biggest blogs in the world. So one day, instead of just our friends and family going to the site, we had a million people read about it. It was wild.

First, we didn’t even know where it was coming from. Today, it’s much, much different. We have a PR team and we have a strategy around this. Even now, our main focus for marketing is building a great product and building the tools to allow lenders to spread the word themselves. That’s the best kind of way, I think, to spread the word about something like this. People trust that, and they trust personal recommendations.

We all know this now, but it’s what we’ve been doing from the beginning. When other press or media wants to do a story on it, awesome, hopefully that could supplement and validate the experiences people are having, and even bring a new language to it. But mostly we just focus on building a great product and let that speak for itself.

Kiva.org was overwhelemed by its own popularity on a couple of occassions. Oprah mentioned it and your Web servers buckled on the same day due to the traffic. Is too much media attention sometimes a bad thing?

Sometimes we have been overwhelmed by user demand, that’s true. Our site is shutdown, we can’t keep up with lender demand – it’s kind of an interesting problem to have as a non-profit. It’s definitely not a traditional problem. The only time I think that’s had a negative influence on Kiva is when we’ve said “Oh no, we should try to change more quickly, we should try to grow … so that we can keep up with the demand.”

We know very well now that’s not okay to do and that’s not a good option. I think we performed very responsibly at those times when there was pressure to grow lightening fast. We still did a good job at stepping back and saying “You know, it feels sad to think of a lost opportunity of all the Oprah viewers coming to the site and we just don’t have the servers to keep up with that.” But you also recover and give people other ways to get involved. You throw up the splash page and give them some other options, and hopefully you can re-engage that community in the future.

Community engagement is so important to the success of your Web site. Why do you make it such a focus?

Kiva’s mission is to connect people through lending to alleviate poverty. That’s how we started, that’s why we started — to share stories about our friends in East Africa with friends and family living in the U.S. That’s really central to what we’re about.

The more we can connect lenders to entrepreneurs, and we can connect lenders to lenders now, and even though many of the entrepreneurs are without electricity, if we can connect entrepreneurs to one another, and just more deeply connect everybody in that community I think that will really catalyze the exchange of even more information and funding.

It’s about what all sides need to have a meaningful experience through Kiva.

Do you find that people react the way you expect them too, after plunging into the site?

I really hope that lenders feel a part of this. Not just “Oh, I did an interesting thing.” But there’s no one else besides them and the other people that are listed on that entrepreneur’s profile page. They are the real person lending to another real, specific person.

They’re doing it, nobody else is doing it for them. So hopefully they feel engaged, they feel directly connected, they feel the truth of the situation, that is they are a part of this movement and they’re making it happen. It wouldn’t exist without them.

You’ve espoused the idea of “radical transparency” in the past. The idea is that you share everything with your community — good or bad. I wonder what sort of challenges that has posed, and what sort of rewards?

We focus on individuals, and people aren’t perfect so things happen. We don’t want to attempt to present some perfect, polished story of here is this project and how it’s going. It is people every day involved and engaged in making all of this happen. If something does go wrong — like we have an entrepreneur who defaults, or a microfinance institution that [does the same], and this is a very rare occurrence, but we have had a handful of incidents — we tell the lender community about that.

We say “oops, we did the due diligence, but still, this happened, we’re so sorry.” Then we tell them you don’t get your money back, or we’re taking legal action, or whatever it is we try to be honest with that and not hide it.

We say this happened, it’s hard work, and if you consider lending again then thanks for hanging in there with us. Same with when we run out of loans sometimes on the site. Sometimes our partners can’t keep up with lender demand – which is a great problem to have – but we’ll just be honest about it. What’s interesting is we’ll get people thanking us and saying “Thanks for telling me what’s going on, thanks for including me in this.”

People really feel part of it and legitimate stakeholders when you allow them to co-create it and allow them to influence it and tell them what’s going on. It’s more of a direct connection and for better or for worse.

Your funding isn’t put into some pool and risk isn’t mitigated with a lot of other people’s money. It’s a direct thing where this is a real person and they may hit some barriers along the way – again, 98 per cent repayment rate, so usually everything is fine – but when they do hit those little speed bumps, we’ll tell you about it and you can have that choice as to what you want to do about it. You can be angry, you can be thankful to know the real story, you can lend again or you don’t have to.

What does the future hold for Kiva? I hear you are expanding to include lend-seekers outside of the developing world.

Next year Kiva will launch operations also in the U.S. in terms of entrepreneurs on the site. You’ll see the goat herder in Uganda, the subsistence farmer in Cambodia, and also maybe someone in New York City that lost their job. You’ll see people from all over, not just developing world countries. That’s going to be a healthy thing for the world. It’s not a static positioning where I am always somebody that is wealthy and you are always someone that is poor.

Those buckets are bad for the world and as much as we can blur those distinctions and see that everyday someone has something they need in their life, and everyday someone has something they can offer. Let’s allow Kiva to be a place where people can empower each other. Maybe the person you helped last year now has the power to help someone else this year, even in your own country. That is a good thing for the world.

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