Entries from January 2007 ↓
January 30th, 2007 — Kiva from Matt Flannery @ Kiva Chronicles
A big theme of the journey through Kiva has centered around the decision of organizational type. Jess and I started out right away thinking it would be formed as a nonprofit. One of the first things she did was to look for an attorney to incorporate us as a 501c3. It took over a year from start to finish to get 501c3 status and it was a serious pain.
This summer was kind of rough in this regard. It was taking forever to hear back from the IRS. We sent a letter to them to expedite the process but didn’t hear back for months. Kiva was crawling along at $1-$2K in loans and 25 new users a day. We weren’t making traction very fast.
There are a lot of debates in social entrepreneurship around the topic of whether to become a 501c3 or become a for-profit. It’s my impression that prevailing winds within the field suggest the for-profit model whenever possible. "It’s hard to scale a non-profit" , I would hear a lot. Or, "you can access so much more capital" if you convert to a for-profit model.
That was just my experience with people in the social sector. However, It contrasts sharply with what I heard from the financiers of the tech world, Premal and I spent a fair amount of time in the offices of Sand Hill Road…especially last summer. In general, the VCs we talked to wanted to consider ideas that had a decent shot at a 10x return on their investment. When we ran models of trying to eke a 10x return out of Kiva’s model, it never felt quite right.
We also briefly looked for "patient capital" investors but turned up very little. There just not a lot of that patient capital out there knocking down doors. This new, but limited, class of investment is arguably harder to access than donations.
I’ve had the luxury of working closely with three experienced angel investors on the board. This fall I was at a breaking point. At our October board meeting, we were down to $15K in cash reserves with a monthly burn rate of about $15K. Fundraising was getting pretty urgent and wasn’t sure if we could hit payroll. I ran the for-profit idea past the investors . Unanimously, the board shot down the for-profit idea. One board member asked us to call him if we were about to hit zero so he could liquidate some of his assets.
Right after that, the Frontline PBS show happened. Combined with a new model around optional lender fees, we became cash-flow positive the next month. We now have much more predictable income and are financially stable. We never had to call for a liquidity event.
I’m not religiously tied to the nonprofit structure. It’s working for us now, and has several advantages. Prominent among these is user good will and branding. I consider Kiva to be a public property owned by it’s users. This feel would be harder, but not impossible, to pull off if we were a for-profit. There is a level of trust we gain as a nonprofit that would be harder to gain as a for-profit. Equally important are variable cost savings because of donated services. Right now, PayPal has donated free transaction processing to us, which means we aren’t charged the usual 3% off of every transaction. Our model would be much more difficult to pull off without PayPal’s partnership.
For anyone deciding between the two, my main thought is to be fiercely practical — not religious — about the org type you choose. These are tax-structures, not religions, you are choosing between. Each can be maximized in it’s own way if you just focus on getting work done.
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Continue reading → Tax Status Revisited
January 27th, 2007 — P2P Lending from Old Stump @ Money Walks
It has been a while since I’ve published this list. Well, here it is. I am involving myself in some extra-Prosper activities for the foreseeable future and I’ll have less time to track these and other interesting Prosper numbers for the next few months…
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Continue reading → 2007-01-27 Listings Pending Verification
January 26th, 2007 — P2P Lending from Ramon @ Ramon's Kiva Blog
I came across this lender (or here for another instance of the same lender) while browsing lending opportunities on Kiva. This must be the first sighting of a new trend: small, corporate entities in the “First World” helping small, corporate entities i…
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Continue reading → Corporate Kiva lenders?
January 22nd, 2007 — Kiva, latin america, loans, microfinancing from Ramon @ Ramon's Kiva Blog
Interestingly, my entrepreneurs in Ecuador appear to be paying back faster than the ones in Mexico. I guess to sample is too small to take any statistical conclusion…Change the world one loan at a time - visit Kiva.org to find out how.
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Continue reading → Repayment rates…
January 22nd, 2007 — Kiva, ecuador, loans, microfinancing from Ramon @ Ramon's Kiva Blog
As I wrote before, I’ve had quite a lot of troubles finding a new investment opportunity for the second half of January. The offer of Latin American businesses was quite low, often even zero. I even emailed Luis at Mifex to ask if there were new busine…
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Continue reading → Finally - invested again
January 19th, 2007 — P2P Lending from Old Stump @ Money Walks
I really think things have improved dramatically. Prosper was as good as their word and seem to have put in significant additional effort since early December. I’ve updated the spreadsheet as well for those interested in it.
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Continue reading → 2007-01-19 Listings Pending Verification
January 19th, 2007 — P2P Lending from Old Stump @ Money Walks
Once I told the Prosperites over at Prosper’s forums, they came up with a few interesting comments. Especially Nonattender. He pointed out that I charted winning bids as opposed to winning bids in funded loans. He was also curious as to what the chart …
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Continue reading → Revisited: More Bidding Patterns
January 18th, 2007 — P2P Lending from Old Stump @ Money Walks
This one is a biggie. I’ve been working on it before, especially around the 22nd of December, but I couldn’t get it in a nice format to display. Today I worked a bit more and now I’m ready to bring you … tadaaa….How each month’s lenders bid over t…
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Continue reading → More bidding patterns
January 18th, 2007 — P2P Lending from Old Stump @ Money Walks
I’m trying to include a new column for median days pending verification. To those who requested the information with most recent date at the top, I’ll look into it, but it is easier for me to add the data to the bottom of the spreadsheet than the top. …
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Continue reading → 2007-01-18 Listings Pending Verification
January 17th, 2007 — P2P Lending from Old Stump @ Money Walks
Life is interesting. You’ll notice on the right there is now a section on my blog named “Sites I Visit”. Those are some of the sites on the Internet that I find interesting and that relates to Prosper.com. It came about as a result of an email asking/o…
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Continue reading → 2007-01-17 Listings Pending Verification and Other Musings
January 17th, 2007 — Kiva, latin america, loans, microfinancing from Ramon @ Ramon's Kiva Blog
We passed the 15th of the month a few days ago, and I have been frantically looking for a good Latin American business to invest in to fulfill my promise of “a new business every paycheck”. I need to diversify a little, as the only opportunities that a…
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Continue reading → More on the same theme…
January 16th, 2007 — P2P Lending from Old Stump @ Money Walks
I just can’t get it right. Sometimes I say “pending review”, sometimes “pending verification”. Well, when you look in the database, its pending verification, but I think (too lazy to confirm) that on a listing it say “pending review”. Just today rename…
Continue reading → 2007-01-16 Listings Pending Verification
January 16th, 2007 — Kiva, Scale from Matt Flannery @ Kiva Chronicles
I’m having a slight identity crisis and it involves scarcity.
For the past two years I’ve operated in an environment where scarcity was the rule. We had a really small budget and stretched it so wide. We used open source methodologies, we had no IT person, no travel budget, no QA testing, no paid accountant, used furniture, little insurance, no computer budget, no server administrator, low budget hosting, a CEO who writes code, etc, etc. Most of all, we had no free time and all became workaholics. I’d venture to say I saw the sunrise 100 times last year.
Scarcity, while we might complain about it, can become a badge of honor as well. In the nonprofit world, I see that all the time. Nonprofits often compete in terms of their overhead ratios. Most every nonprofit out there advertises to it’s funders how it likes to keep overhead low so that the majority of funds it raises goes to constituents. Kiva is not all that different. Last year we raised $2M in loans through our website and spent about $200K on our own staff (aka overhead). Thus, we can advertise that our overhead was no more than 10% of the total funds sent to our consituents. That’s golden in the fundraising world.
This kind of competition, while it seems logical to the public, can also be destructive. For instance, is it a good thing that Kiva had no QA testing process last year? Sure, we spent less on dreadful *overhead*, but at what cost? A buggier website?
I’ve definitely thrived on the narrative that Kiva, despite a lack of resources, has overcome enormous challenges and made a positive impact on the lives of thousands. That’s a very motivating story. The question is, how will things change once we have more resources? Is there a way to maintain a similar motivation in an adequately- funded organization? Also, can we break the destructive scarcity mentality?
In the last post, I asked everyone how much loan volume they would predict for Kiva in 2007. THANK YOU for all of the comments. Since I spend all my time building an organization, I don’t have time to blog a ton right now or respond to all the comments. I read them all and they guide my thinking. I really appreciate the sense of community that is evolving on this blog.
Olana, Premal and I have put together a budget to present to the board. We set the big goal next year at $10M in loans, but have contingincies in place for smaller and larger amounts. This means our overhead budget will go to about $1M for the year. IMHO, this is enough to adequately staff and resource our org for a $10M year. We need to get approval from the board. Pending that, we will be hiring soon….
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Continue reading → Scarcity Mentality
January 15th, 2007 — P2P Lending from Old Stump @ Money Walks
I always espoused the thought that new lenders were lured into bidding on higher-risk loans because of the high interest rate. I also thought that lenders would learn and adjust their bidding patterns accordingly.But is that truly the case? Take a look…
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Continue reading → Do Lenders Learn From History?
January 15th, 2007 — P2P Lending from Old Stump @ Money Walks
January 13th, 2007 — P2P Lending from Old Stump @ Money Walks
There is much talk of the poor quality of listings on Prosper. Many lenders complain that they cannot find quality listings to bid on. Even more lenders are complaining about the higher-than-normal* default rates that they seem to experience.There are,…
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Continue reading → Blame the Lenders? Or the Borrowers?
January 13th, 2007 — P2P Lending from Old Stump @ Money Walks
I’m also considering adding Google AdSense ads to these pages. If you have an opinion one way or another, surf over here and let me know. Thanks.
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Continue reading → 2007-01-13 Listings Pending Review
January 12th, 2007 — P2P Lending from Old Stump @ Money Walks
January 12th, 2007 — P2P Lending from Old Stump @ Money Walks
Here is a list of listings cancelled within the last 30 days.
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Continue reading → Learn About Cancelled Listings
January 11th, 2007 — P2P Lending from Old Stump @ Money Walks
Yes, it must have been a busy day at Prosper’s office. Just look at how many listings they’ve been cancelling.Incidentally, I’ve had a fun day. Now that I’ve solved my data assimilation problem, I’ve had some fun playing with the data. This is what, my…
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Continue reading → A Busy Day at the Office
January 11th, 2007 — P2P Lending from Old Stump @ Money Walks
Thanks to Prosper John for getting the data download fixed. Here’s todays update on the Prosper position. Seems the Prosper Elves have been hard at work!
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Continue reading → 2007-01-11 Listings Pending Review
January 11th, 2007 — P2P Lending from Old Stump @ Money Walks
Just a few days ago I published a graph on how many bidders are actively bidding each month. Over on our new lenders-only forum, Prospers.org, Xelint-Enterprise asked if I could overlay that with the number of loans.Interesting idea, but Prosper only i…
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Continue reading → Prosper is Hard at Work
January 11th, 2007 — P2P Lending from Old Stump @ Money Walks
For the last two days the Prosper data download seems to not have any data in it fresher than January 9th. Hence I’m unable to update the statistics on listings pending verification. I hope that it is a Prosper operating glitch rather than a response t…
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Continue reading → No New Information
January 9th, 2007 — P2P Lending from Old Stump @ Money Walks
This time I decided to look at the number of active bidders on Prosper. I did this by counting the unique bidder identities that made one or more bids in any given month. Looks even more interesting in the form of a graphWe hade a very significant upti…
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Continue reading → Active bidders
January 9th, 2007 — P2P Lending from Old Stump @ Money Walks
I’m very pleased. No, not with Prosper, but with myself. I’ve finally managed to improve the process by which I create these stats and manipulate the Prosper data download to a few clicks. That should leave me with more time to actually play with the d…
Continue reading → 2007-01-09 Listings Pending Review
January 8th, 2007 — P2P Lending from Old Stump @ Money Walks
I’ve been otherwise occupied and apologize for the delay - here are the latest numbers. Things are looking increasingly worse for the number of loans in the pipeline.
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Continue reading → 2007-01-08 Listings Pending Review
January 5th, 2007 — P2P Lending from Old Stump @ Money Walks
There is a whole cottage-industry that sprang up around Prosper. First there are the statistics sites that present Prosper data in new and innovative ways, then there are additional forums where people can gather to chat about Prosper and lending and f…
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Continue reading → Things surrounding Prosper
January 5th, 2007 — P2P Lending from Old Stump @ Money Walks
And I don’t particularly like it.I was perusing my Prosper.com account earlier today and I noticed a discrepancy in the numbers - kinda glaring and easy to spot - see for yourself. (Go ahead, click on the omage for a larger image, I’ve figured out how …
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Continue reading → Something I just discovered today
January 3rd, 2007 — P2P Lending from Old Stump @ Money Walks
In one week I’ve had three of my sterling repayers starting the payoff process. Some of the older, hand-picked loans. It leaves me with a lot of uncertainty. I was hoping for those loans to balance out possible variations in loans picked with my SO. No…
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Continue reading → Crumbs!
January 2nd, 2007 — Kiva from Matt Flannery @ Kiva Chronicles
Our site has been branded around small loans, with a primarily African focus. We started in Uganda with $300 - $500 loans which seemed large at the time. In that part of the world, a $500 loan is a usually a second stage loan given to somebody that has already proven some ability to repay a micro-loan in the past. When the first round of Ugandan loans was posted up, we wondered how users would react.
If you look at our site at this very moment, for the most part, you will see a pretty different story. Most of the loans currently listed are $1000 and up….with a heavy focus on Eastern Europe. Why is this? You ask. It’s not because our partners in Africa, South America and elsewhere aren’t posting up smaller loans.
Instead, what is happening is that our partners in these parts of the world are posting quite a few smaller loans every day. It’s just that these loans are the first to be funded and moved to the "raised" section of the site. Thus, what you see on the site usually are the loans that take the longest to be funded.
This points to an interesting phenomenon: users prefer small loans. Also, users seem to prefer African loans above all. Thus, when a partner posts up a an African, female, agricultural entrepreneur, this entrepreneur gets funded sometimes in minutes. On the contrary, an Eastern European retail store or taxi driver will sometimes take weeks to be funded. Every loan is getting funded, just a drastically different rates.
Another, more important phenomenon, has happened to us: a pretty drastic surge in business. I wrote that, while in Toronto, I watched our user base and our loan volume double. We crossed the $1 million mark in November. The trend has only accelerated: we crossed $2 million last week. We have amazing lenders. This has caused growing pains for those of us writing software, for our partners posting loan opportunities, and for the rest of our staff which has been tirelessly working to sign up more partners and conduct due diligence. It’s a cliche around here: these are all good problems to have.
Check out this chart of our traffic and loan volume. If you have a sec, let me know what you think. How much of this growth is seasonal? If you were me, how much loan volume would you predict for ‘07?
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Continue reading → Seasonal?
