I’m writing from JFK airport. It’s 70 degrees in NYC now and I am still chained to a laptop. Working for Kiva can sometime be a very isolating experience. There is this huge desire to connect with the borrowers/lenders/friends who come to our site. However, in the end, I am simply staring at a titanium and plastic object most hours of most days.

A few months into launching Kiva Beta, we were working with only 1 partner in one area of Uganda — Tororo. Jessica and I realized, after a year of research, that it would be hard to get traction working with established microfinance institutions. We had this business plan that painted a grand vision of a great future. It talked about how Kiva would drive low cost debt capital to microfinance institutions (MFIs) world-wide, who were very undercapitalized. One thing we realized early was that there was a lot of investment capital being thrown at a very small number of MFIs. Something like 5% of MFIs were taking in about 100% of all investments in microfinance. Thus, a large part of our mission would be to attract the softer, p2p debt to smaller, developing institutions. These are the orgs that can not attract true commercial debt capital. So our plan was to find these orgs and to have them list their businesses on our site.

However, as two people in an apartment, doing this in our spare time, it wasn’t easy convincing even the smaller orgs to list their businesses on our site. Basically, we had no reputation and no money to offer them. We had only the plan that we would list their businesses and attract debt through "viral marketing." It was an uphill battle calling organizations from all over the world. Finally, we just decided to start by listing the businesses found by our friend in Africa — Moses. Moses, working with VEF, found 7 businesses and posted them to our site. They were funded fast and then we just waited around to see what would happen.

Lots of great stuff happened, some of it intentional, some of it unexpected. One "unintended consequence" was this "virtual bulletin board" effect of Kiva in Tororo. Tororo has at least one internet cafe, and its surprisingly accessible even to people of very modest means. At that time, Kiva had no office in Uganda. Moses would go to the internet cafe every day and work there, posting journals and businesses to Kiva.org. To him, it definitely became his office. Right from the beginning, a problem he began having was that the loan recipients would come to the cafe to watch him post repayment info and blogs about them. They would also look over his shoulder and keep track on the other businesses on the site. Kiva.org was showing publically something that is otherwise very private in Africa — personal financial info. Kiva.org was becoming a place where people could monitor the progress of other people in Tororo.

I think that, in general, the loan recipients felt immortalized and proud of being on the internet. It’s unclear to what extent they felt added pressure to pay back their loans. Who knows whether this is a positive or negative side effect of doing microfinance on the web. The most interesting possibility is that a system like Kiva actually contributes to the "reputational collateral" aspect of microfinance. In a world where you have no physical collateral, all you have to lose is your reputation. The internet increases the stakes because it can make your payback/default public for the world to see.

This is a rather cheesy graphic from a recent Kiva powerpoint presentation:

Last November, when Kiva hit the blogosphere, I read so many entries saying how Kiva was a "Web 2.0 App?". For me, my first reaction was bewilderment. What is a web 2.0 app anyway? Does that mean you have AJAX? Tagging? Social networking? In no way did we think about web 2.0 when designing the site. However, I read recently that a characteristic of web 2.0 is "creating network effects through an architecture of participation." Are we doing that? Who knows…who cares!