Martin Luther King, Jr. described what it takes to live your passions when he said, “Faith is taking the first step even when you don’t see the whole staircase.” Matt Flannery and his wife, Jessica, put that statement fully to the test. Beginning with seven loans in 2005 for a total $3,500, Matt Flannery and his wife have created a website that has drawn international attention, called www.Kiva.org.


Kiva has facilitated microfinance loans totaling over $25 million in just the last two years. These are mircofinance loans that were provided by over 250,000 people. In the June issue appeared an interview with Professor Muhammad Yunus who first came up with the concepts and tested the principles of providing small loans to indigent people, people who were just getting by, in Bangladesh.


Matt’s fiancé(now wife) was inspired by a 2004 speech by Professor Yunus in Northern California, and she saw the possibility of being able to create a website that would allow anyone anywhere to provide such loans to burgeoning entrepreneurs in third-world and developing countries. Today, Kiva has allowed people everywhere, all over the world, to put into practice the principles that Muhammad Yunus pioneered. As a result of that, it has created tremendous attention.


Matt himself has been featured on “Oprah.” www.Kiva.org has been featured in The Wall Street Journal, on “Fox News,” in The Boston Globe, in Fortune magazine, in USA Today, and many, many others. Even former President Bill Clinton, in his book Giving, gave www.Kiva.org as an example of what is possible.


CHRIS ATTWOOD: Tonight we are extremely honored, privileged and excited to be able to talk with you, Matt, to hear your story and, in turn, hopefully, to inspire many people to take advantage of the services that www.Kiva.org provides. Thanks so much for being with us.


MATT FLANNERY: Thank you so much for having me. It’s really an honor to be on your show, and I really appreciate it. Thanks a lot.


CHRIS ATTWOOD: Matt, I know that Kiva was inspired by Professor Yunus, as mentioned. Would you tell us the story of how you and Jessica began this whole thing, and how you’ve begun to put it into practice?


MATT FLANNERY: Definitely. It’s a long story, and it’s been about four years since the story really began. Just before we got married-Jessica and I were engaged-we were living right off campus at Stanford University. She actually had a job there. I had just gotten my first job out of college as a computer programmer at TiVo making set-top box computer software. She said one night, “Why don’t you come along for this talk I’m going to at Stanford?


“A Bangladeshi economist is speaking.” I didn’t know anything about that kind of work at all, but I went with her on Wednesday night to hang out with my fiancé. We saw Dr. Yunus speak to about 35 people in a classroom in this small room at Stanford. He sat there and told his story about pioneering the microfinance movement. That was really something I hadn’t heard about. I don’t think I’d heard the word ‘microfinance’ before that moment. It really changed our lives.


CHRIS ATTWOOD: The things that can show up when you spend a Wednesday night with your fiancé!


MATT FLANNERY: Yes, hopefully you marry someone who’s interesting and she expands your horizon. She’s expanded my horizon.


CHRIS ATTWOOD: What was it that attracted you to this? Was it Jessica who was first attracted to this whole idea, really going more deeply into it? How did it evolve?


MATT FLANNERY: It was definitely Jessica. I went just to follow her. I loved the stories. I loved what Dr. Yunus was saying. For me, it wasn’t a moment that necessarily caused me to quit my job right away. It would take several other moments for me to do that; but she sort of declared right then that she wanted to dedicate her life to serving the poor.


She wanted to dedicate her life to serving the poor through business and microfinance, through the techniques and through part of the movement that Dr. Yunus first set in motion. That caused a little bit of a problem because she wanted to move to Africa and do it there. We were getting married.


CHRIS ATTWOOD: Was that a test for your upcoming marriage?


MATT FLANNERY: Yes, it was being tested right away. I was planning on moving not so far away; I was planning on moving to San Francisco with her, so we had to figure that out. A San Francisco/Kampala, Uganda commute; how that was going to work?


CHRIS ATTWOOD: Jessica actually went to Africa, isn’t that the case?


MATT FLANNERY: That’s true. Right after we got married, she took a job at an NGO that worked in Africa, surprisingly, and she was going to start six months later. She was just going to go for a trial period as sort of a consultant, so I went with her. Together, we found a way to blend our interests, which turned out to take shape in our company, Kiva.


CHRIS ATTWOOD: Fabulous. Now I get that it was Jessica’s passion. We focus in these interviews a lot on passion: how you discover your passions and how people have realized those passions to create great, wonderful things, which you and Jessica both have. It’s clear that Jessica had a passion for helping the poor and serving those who were needing that assistance very desperately, but it didn’t sound like that was your passion. Somehow I know that Jessica was certainly one of your passions; but was there an aspect of this that challenged that technical mind of yours, as well?


MATT FLANNERY: Yes. What started as her passion became my passion, as well; it was a shared passion. For me, I think what really struck me in my time there with her was the richness of the stories and how much I could connect to them. We were interviewing small business entrepreneurs, much like the ones whom Dr. Yunus helps, but in a different part of the world.


These were people who were starting a seamstress business, a small retail store, or a bicycle repair shop. We were interviewing these people, and I was just amazed at how much I had in common with them. As a wannabe entrepreneur myself, I had a passion for starting businesses, and I was trying to start several businesses at the time back home. I had a lot in common with these people, and I felt like they were kindred spirits, but they were halfway across the world,


Unlike in San Francisco, where you’re trying to raise $5 million, there all they needed was $100 or $500. That became really very attractive and unavoidable, the idea of, “Wow! I can invest in these businesses and make a huge impact.”


CHRIS ATTWOOD: From what I read, no one at the time thought it was possible for individual lenders to do this. That’s what Kiva does; it allows me as an individual to go online and to make a loan through an entrepreneur or a group of entrepreneurs in a developing country, right?


MATT FLANNERY: Yes.


CHRIS ATTWOOD: No one at the time thought that it was actually possible to do that. How were you two able to pull it off?


MATT FLANNERY: There were so many barriers. I think one reason we were able to pull it off is because we just started. If we went the route of talking to experts, which we did, we would run into so much pushback, so much negativity. You ask the question, “From a rural place in Uganda, how are you going to get digital photos onto the Internet at any scalable level? How are you going to get lots of stories from people from Cambodia or Nicaragua?” These are pretty depressed places that really need economic help, but places where the Internet, blogging, and digital photography are not necessarily a daily practice.


People said the idea wasn’t scalable. They said, “There’s no way you’re going to do that. Okay, you can do it for seven people in one town because you’re there, but there’s no way you’re going to do that on any meaningful level.” That was a really big setback. We took a long time to start because of that worry.


CHRIS ATTWOOD: How did you overcome that?


MATT FLANNERY: We came back from Africa. We decided we’d work on this idea on the side as sort of a hobby. We spent a lot of time writing a business plan, and we spent a lot of time talking to experts. We did that for about a year, and we didn’t get that far because we heard such much negativity. In the meantime, our lives were back to normal. We had our old jobs back; I was working at TiVo.


About a year later, instead of writing a business plan, instead of talking to a lot of people, we just decided to try it. At night, we actually just built a website. We talked to our friends, the friends we’d made in Uganda, and told them to start posting pictures to the website. We just wanted to see what would happen.


CHRIS ATTWOOD: You brought up the issue; you must have found some way of getting Internet connections to the people who were overseas, yes? Did they have some access in some way? That’s one thing that fascinates me. As you said, these countries, many of them are developing countries. They don’t have ready access to the Internet. What did you have to do?


Did you have to create relationships with Internet providers there? How did you actually create the connections so that you could communicate over the Internet with people or organizations in those countries?


MATT FLANNERY: What we saw was that we were on the right side of a trend. Although the Internet might not be everywhere at this moment, it’s certainly spreading very fast. It’s the same with wireless technologies, cellular technology. We saw that trend and we thought it was only getting better, only furthering our cause over time. We did see that most African villages are somewhere close to a small town, and when I say ‘small town’, I mean really small.


In those small towns in East Africa where we were, there was almost always one place where you could use the Internet, one place. If you could just go to that one place and write something, you’ve got something really exciting.


CHRIS ATTWOOD: Fascinating. One of the things that you two noticed, and that I’ve read about in reading through your work, is that you found that the stories had a powerful impact on people. You’ve integrated the stories behind these loans into the Kiva site. Would you talk a little bit about how you came to that realization, and how you’ve implemented it in the way that Kiva facilitates loans?


MATT FLANNERY: I was very much into blogging. I was very much into tracking content on the Internet over time; I thought it was really important. I say ‘I’, but it’s really ‘we’. Jessica and I thought it was really important to teach people that these stories are real. They’re really going on right now. It’s not simply marketing; it’s not propaganda. You can actually hear about the progress of a small businessperson half the world away over time as it’s going on.


People are really paying back their loans, and they’re really leaving poverty because of this opportunity. We believe fundamentally that if you could make that real and convince people that it was true in the same way we were convinced it was true, they couldn’t avoid helping.


CHRIS ATTWOOD: That’s been your experience?


MATT FLANNERY: That has been my experience consistently. People are inherently generous and inherently want to make a huge impact, but so many times we’ve just become jaded because we feel disempowered. We feel like we can’t make a difference. We feel like our money is just going to be taken away in some gigantic hole and never make it to who we’re trying to help.


If you can convince people, not through an annual report, not through a commercial, but through an actual person, a connection with an actual person in real time, you can really unlock a lot of generosity that already exists.


CHRIS ATTWOOD: I think it’s one of the most powerful things I’ve seen you do at Kiva. I, as a potential lender, can go in and see the individuals, make choices about who I want to lend to, and follow their stories. In a moment, I want you to describe the step-by-step process that a Kiva user would go through to do a microloan. Before we do that, would you just talk a little bit about the difference between what Kiva does and what Grameen bank does?


Professor Yunus, in our interview last time, described Grameen Bank, which he created just for the purpose of creating microfinance loans. I understand one difference, of course, is the key of individual lenders supporting individual small groups of entrepreneurs, but is there a difference in philosophy or structure about the way in which loans are made, or did you follow the Grameen Bank model pretty closely?


MATT FLANNERY: They are really two different types of organizations, so it’s not a direct comparison. Grameen Bank is an MFI, the world’s most famous MFI; MFI stands for microfinance institution. That’s an actual institution that lends to the poor or low-income people for the purpose of alleviating poverty for a social purpose. Kiva is a nonprofit based in San Francisco that runs a website.


What we do is this. Our website serves as a marketplace that MFIs use to raise money for their borrowers. We don’t actually work with Grameen Bank, but we work with 100 organizations like that in other places all over the world. We work with an MFI like Grameen Bank in Mozambique. This MFI uses our website to raise money for the low-income people they serve in Mozambique.


CHRIS ATTWOOD: I know that before creating a relationship with an MFI, you go through a process of due diligence. Would you describe both why you do that and what the process is that you go through? I assume that part of that due diligence process is just to assure the funds that are provided actually go to the entrepreneurs they’re intended for, and that things of that sort. Would you describe that a little bit?


MATT FLANNERY: Yes, that is exactly right. The purpose of our due diligence process is to make sure that the $25 you spend on our site actually gets to the person you’re trying to get it to. That’s a pretty difficult thing to pull off when you’re working in 40 countries and you’re a three-year-old organization. We’ve learned a lot over time about how to make that relationship better, to insure your money is getting there.


What we do, first of all, is we do a lot of reference work. We work with MFIs that have a reputation, are trying to defend their reputation internationally, and care about their reputation for that. If they steal the money, that will be known by the Internet public at large. We work with MFIs with audited financials with a track record of serving the poor. We audit the partners, as well.


We actually send auditors, like Ernst & Young, to visit the partners who we work with to actually randomly sample the borrowers on our site. We’ve been doing that for about a year, sending teams of these auditors to randomly sample. One other great thing we’ve done is we’ve worked with Kiva Fellows, and we’ve sent about 100 of these volunteers all over the world to volunteer, like the Peace Corps, at an MFI that we work with, like one in Mozambique.


What they’ll do is stay there for three months, help them use our website, and visit almost all the businesses on the site, as well. They’ll act like journalists and write these journals, these updates-blog entries, if you will-that our lenders receive. They’ll report back; it’s what you see on our site if you go to a section called Journals. If you go there, you’ll see thousands of stories, thousands of updates about the progress. Those are written by people who actually visited those people.


CHRIS ATTWOOD: That’s fabulous. You actually have representatives from Kiva, volunteers, who go to an area, gather the stories, and also see how the money is being used that Kiva lenders are making available.


MATT FLANNERY: Exactly. It’s really important; at first, we weren’t a big enough organization to do that, but we’ve come a long way.


CHRIS ATTWOOD: Definitely. Would you go ahead and describe for our listeners the step-by-step process that someone goes through to make a microloan, and what’s involved with that?


MATT FLANNERY: Certainly. Hopefully, our website is easy to use so most people can figure it out. What you do is you go to www.Kiva.org. You can see an entrepreneur on the homepage, and it says how much money this entrepreneur needs, where he/she is, what he/she plans to do with the money, and how much time it’ll take to pay it back. Say you choose to loan to an Azerbaijani man selling fruits and vegetables, like there is right on our website.


You can actually lend him $25 or more, depending on how much you feel moved to lend. You just put it in your basket, you pay by PayPal, and you get paid back over the course of about 12 months. You actually get your money back.


CHRIS ATTWOOD: What percentage of your loans actually get repaid?


MATT FLANNERY: At this point, we’ve had a 99% repayment rate. We’re very young. It could go down; it will probably go down and up, and down and up over time, but at this very young point in time, we have a 99% repayment rate.


CHRIS ATTWOOD: That’s so fabulous. That’s unheard of in the banking industry, in the traditional banking industry. No bank I know of has a 99% repayment rate.


MATT FLANNERY: I’m sure. As Dr. Yunus describes, low-income people are very, very good at that. MFIs do a very good job, in general, in screening, in training, in assisting, and in visiting quite frequently the borrowers on the site to help them pay back. It’s really a mutual agreement between lender and borrower. What you see is that the MFIs, like Grameen Bank, are very integrated in the community.


They visit the women who they serve quite often. They use a community structure to help bring up the repayment rate. Oftentimes, you lend to people in groups of women, who all vouch for each other, and they help each other pay back if one of them falls into trouble or gets sick.


CHRIS ATTWOOD: When I make a loan, do I get any updates or reports on what’s happening with whoever it is I made the loan to?


MATT FLANNERY: Often, you do. Sometimes you do; sometimes you don’t. It depends on where you lent to and what MFI you work with, whether it has the capacity to write about it. Some of them are quite overworked right now and don’t have the time to go online and blog, but we’re certainly trying to get that up so that you’ll hear back from the loan officer a report about how the borrower is doing.


The borrower himself usually doesn’t use the Internet. That’s because poor people worldwide in developing countries are generally not Internet users yet. We hope that will change.


CHRIS ATTWOOD: If I’ve gone and made a loan, when my loan gets paid back, then what?


MATT FLANNERY: If your loan gets paid back, you’ll get the money back in your Kiva account, so it will be like credit on your Kiva account. You can either withdraw the money and get it to your bank account, or you can re-loan it. We hope you re-lend it to someone else so you share the wealth. Or, you can donate it, yes.


CHRIS ATTWOOD: Fascinating. In essence, if someone had $50 or $100 they wanted to put it in, and they thought, “I could do without this for a year, two or three,” they could actually help support entrepreneurs in developing countries with a high likelihood that there will be no out-of-pocket cost to them whatsoever at the end of a period. As you said, alternatively, one could keep on lending or one could donate it to Kiva.


It seems to me pretty amazing that someone who really would like to make a difference but maybe isn’t, for whatever reason, inspired to make a donation per se, could still do something very significant and still have the use of the money in the long term, after perhaps helping an entrepreneur really get up and running. Am I understanding correctly?


MATT FLANNERY: You are understanding it. We’re trying to both encourage and educate people to get them to lend more. We’re trying to spread the word about lending as a way to help other people, social lending. Most low-income people around the world actually work, and they’re not necessarily in need of charity. In fact, charity might not be the best way to help most people around the world. Most people are actually hardworking, and they’re looking to grow a business.


What they need more than just a grant is a loan, because loans signal to that person, “I’m treating you as a business partner. I’m treating you in a dignified way as an equal.” They’re someone I believe in rather than someone who deserves my pity, or they’re so helpless that they need me to save them. Trying to spread that message around the world has been a real challenge, but really exciting.


CHRIS ATTWOOD: It is exciting. It represents a whole different way of viewing the poor. Instead of saying, “These poor people; we need to do something for them. We somehow need to take care of them,” it’s saying, “Let’s partner with those who are in need, and help them help themselves.” It creates more of a peer relationship rather than a paternalistic sort of relationship, which seems to me to be very healthy.


MATT FLANNERY: That is one of our biggest challenges, just spreading that message, what you just said.


CHRIS ATTWOOD: Matt, one of the things that’s allowed Kiva to be so successful is that you gained attention to it very quickly. For many of our listeners, every one of them has their own passions, their own dreams, and yet one of the biggest challenges that they have frequently is how to get others to support you, or how you get others to buy into your dream, so that you can expand and be able to realize that.


I think it would be very interesting if you’d just share with us how you’ve been able to get so much media attention and so much support from corporate sponsors to be able, in just three years, to go from seven loans at $3,500 to something well over 250,000 loans and over $25 million. That’s huge. Would you just talk to us a little bit about that? Tell us the story about how that support came and what you think the elements were that made it possible.


MATT FLANNERY: Sure. It happened on so many different levels, but I think the common thread through the whole thing is that we didn’t feel like we were necessarily making it happen. My wife and I didn’t necessarily feel like we were making it happen. What we felt like is we were opening up this idea to the community at large, letting a lot of people take it on as something that they cared about in their own way, and taking it on as something of their own.


CHRIS ATTWOOD: Can you give us some examples? How did you go about doing that? I think this is the sort of thing that stumps many of our listeners, so it would be interesting for you to share that.


MATT FLANNERY: In the most obvious way, it’s just that we have a website that lets you as a person choose what you want to do. It lets you make your own decision, have your own portfolio of loans, and get involved for at a very low price point. We’re trying to empower you to be your own philanthropist and make your own choices. That’s at one level.


At another level, we’re here in Silicon Valley; we’re connected to several companies, and we approached it always as, “Let’s do this together. You can have a huge impact. Here’s everything we’re doing, and we have no secrets to tell. We’re a nonprofit; we’re not making money off this. This is a public thing. It is for public good. It is something that the municipalities should get involved in, not Kiva versus Grameen versus some other organization.


“Everyone can share it.” Just being very open and holding things loosely proves to really work for us to help us start, to help us get going. We had people quitting their jobs at PayPal, we had Google helping us out, we had Yahoo! helping us out, and we had foundations helping us out. We had people volunteering in their spare time, lawyers and entire law firms getting behind it.


It’s because we were very generous with the idea. I don’t want to flatter myself, but I think as an entrepreneur sometimes you waver when doing something that’s your baby and holding onto it tightly, protecting it. Sometimes it feels really good to let go and let other people hold onto it and take it. Some of the best times have been when I let go.


CHRIS ATTWOOD: That’s a great lesson in and of itself. It also occurs to me listening that you had a very powerful story, a story that inspired and excited people. It inspired them even to the point of quitting their jobs or really giving them the possibility of fulfilling something that was deeply meaningful to them. Something occurs to me; we’ve done many, many of these interviews with people in all different arenas and all different fields, and this seems to be a common theme.


The success that each person has when they follow their passions and live their dreams really comes about when crafting a powerful and inspiring story that others are able to really tap into. I know that early in 2005, wasn’t it the case that an article or a blog entry in Daily Kos had a major impact on Kiva. Would you talk about that a little bit?


MATT FLANNERY: That’s part of the story. We were going along with our daily lives. We had this website up. There were seven people on the site. It was happening in Uganda. We were really proud of it, but it wasn’t really serious. One morning, we woke up and the website was inundated. We crashed for a while. I got 1,000 emails in my inbox and found out that this community called Daily Kos had all of a sudden stumbled upon the website all together and really connected with it.


They were writing about it. If I printed out the amount of writing and comments about Kiva on that day, it would have run up to the ceiling of my house; it was just a massive list. That was really eye-opening. I thought, “Wow! A lot of people can identify with this idea.” It’s not just our little project with husband and wife, Jessica and Matt, sitting here. It’s actually something all of these people on the Internet are writing about.


It’s like they all showed up at your house one morning and looked in the window! It was overwhelming. Very soon, I think the next day at work, I quit my job because it was just too much to handle, balancing all those things.


CHRIS ATTWOOD: For you and for everyone we ever talk to, in following their passions there always seem to be some bumps along the way. What were some of the biggest challenges that Kiva has faced as it’s grown, and how did you address this? How were you able to overcome them all?


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