Premal Shah

Transcription

>>Presenter: Hi everyone. Alright, what a crowd, this is awesome. Iím Winnie Lam and itís my pleasure to host our guest, Premal Shah who is the president of Kiva, to Google today. And Gary Briggs is from Google and heís gonna be hosting the fireside chat but I guess weíre kind of missing the fire. I mean, the fireís in them. [Laughter] >>Presenter: Anyway, let me tell you about Premal. So, Premal is the president of Kiva. He first dreamed of internet microfinance back in 2004 when he was working at PayPal. And so, at that time, he took a three month leave and developed the internet microfinance concept in India. Well, he came back, didnít go back to PayPal and he came back, quit his job at PayPal and launched Kiva thereafter. And today Kiva raises over a million dollars every single week to help the working poor in 60 countries, very impressive. For Premalís accomplishments as a social entrepreneur, he was named a young global leader by World Economic Forum and selected to Fortune Magazineís top 40 under 40 in 2009. Now let me tell you interesting things about Premal. [Laughter] >>Presenter: So, Premal has been known to do the worm dance in weddings. So, maybe, if weíre lucky we can, okay, during the Q and A one of you have gotta ask him to do a demo. Okay, I didnít tell you about this beforehand, sorry. [Laughter] >>Presenter: Anyway, so Gary is doing the chat with Premal today and most recently Gary is the, Googleís Vice President of Consumer Marketing. And one of Garyís roles prior to coming to Google was at PayPal where he headed up the global marketing team. And, in fact, it was in the hallways where Premal and Gary first talked about Kiva. So, without further ado, please help me give a really warm welcome to Premal Shah and Gary Briggs. [Applause] >>Gary Briggs: Hi everybody. Iíll just go through, what weíll do is Iíll ask Premal a series of questions over the next kind of 40 minutes or so and then weíll take questions at the end. So, hopefully weíll licit some discussion at the end. I also know Premal a little bit, as Winnie was saying, and heís a pretty humble guy so it was exactly the reaction I expected from you when she started talking about your background, youíre like looking down, right? [Laughter] >>Gary Briggs: Shucks! So, Winnie told a little bit about the story of how you got started but I do remember there was a lot of discussion about the beginnings of microfinance in the hallways and then you just, you just had this fire about getting started. So talk about the early bid of getting started. >>Premal Shah: Sure, sure. Well, thanks everyone for making the time in the middle of your day to come here. And, you know, one thing I wanted to talk about is something Iím sure everyone in the room and everyone who is kind of watching feels which is, at one point in your life you may have had an experience with poverty. And, for me, I was raised in a middle class family in Minnesota, in the suburbs of Minnesota. And when I was 5 years old my parents brought me back to India for the first time. And, you know, there is a, there is a memory, for me, that really affected me which was I was walking through a village, thereís this town Dabhoi which is in Gujarat, the state of Gujarat. And itís where my father was raised and it was rainy season and the streets were pretty muddy and we were in a market. And I was holding on to my momís hand and my mom gave me a one paise coin to hold onto and we were walking through and it was a little muddy and I dropped the one paise coin in the mud and my mom pulled me away saying, ìOh, itís dirty.î And within seconds, a woman who was older than my mom, in a ragged sari,uh, walked over, leaned over very slowly, picked up the coin from that mud and then pointed, you know, looked up at the sky and thanked God for finding this one paise coin. And, you know, as a 5 year old, youíve witnessed this experience of what is such little money for my mom and what answers the prayers for someone else. Itís this very confusing thing about the world today, the inequality, the indignity of poverty. And I know all of us have probably had an experience very personal with it. And for me, I think, from that time, kind of fast forward 15 years later I was in college and I wanted to do something in India, I didnít know what it was and I was an economics major at Stanford and I put together this slide and I just wanna show it to you guys cause I feel like a lot of us are in different places of our journey. One of the most common questions I get is, ìHow did you end up at Kiva?î and, so, I wanted to show this thing because this really, I think, shows the kind of up and down path. So, on a graph here, I charted my kind of level of aliveness over time starting at the age of 20 to basically today. So, it started with sophomore slump and I discovered microfinance in a class. And what I loved about microfinance was it was a business approach to poverty alleviation and Iím a huge believer in the markets. I just donít think the markets always work for the poor. So, when I heard about what Muhammad Yunus had done and this, kind of, incredible invention called microfinance, I tried to direct all my studies towards that. And I was lucky enough to get a research grant from the university to go and study at the Self Employed Womenís Association which is a large microfinance institution in Ahmedabad, India and its seven hundred thousand members and they do incredible work. And then, like a lot of people are graduating in '98, I became a management consultant in New York. >>Gary Briggs: I donít know anyone who would put management consultant at the top. >>Premal Shah: Yeah, yeah. [Laughter] >>Premal Shah: Exactly. It was completely >>Gary Briggs: I was, like, on the same chart at one point. >>Premal Shah: The only validating thing about being a management consultant is you can create killer charts like this, I feel like. [Laughter] >>Premal Shah: But, you know, I donít wanna bag on it too much but it wasnít for me. And luckily, and Iím sure a lot of you guys are here for the same reason, I was lucky enough to join a company that was doing incredible things with technology. So I was an early employee over at PayPal. And you know how fun it is to build things that millions and millions of people use and really value. And you guys feel this every day and itís the most incredible company out there here at Google. And, so, it was so fun and so enjoyable and I learned so much about the revolutionary power of technology, to connect people, to create opportunity. And we were acquired by eBay but at some point I experienced burn out and I really wanna put this out there cause I donít know where everyone is at with their journey but, certainly, I hit it. And for me it was that 3 month sabbatical that Winnie was talking about that absolutely changed my life when I went back to India. And thatís where I was testing the idea of, hey could you make a microloan to someone over the internet? And it was when I came back, thatís when I ran into you, Gary, in the hallway and we were trying to brainstorm names. Gary and I didnít actually work together in the same group but I knew he was like a consumer marketing genius and we had like a list of a hundred names that weíre trying to figure out what we should call this website that allows you to make microloans to each other. >>Gary Briggs: You were telling me one of the ones earlier when we were talking about one of the ones you didnít go with which I thought was pretty funny. >>Premal Shah: Yeah, the leading name that we had was grassroots capital dot org [Laughter] >>Premal Shah: And I loved it cause it describes what Kiva does. But then a friend of mine said, ìOh yea, grassroots capital? Yeah, legalize it.î [Laughter] >>Premal Shah: And so then I could never get that image of smoking grassroots capital out of my head. So it killed that name. [Laughter] >>Gary Briggs: You would have had the logo like that. >>Premal Shah: Yes. Exactly, exactly. [Laughter] >>Gary Briggs: So, on this chart which is quite good by the way [Laughter] >>Premal Shah: Thanks. >>Gary Briggs: Very well done. Yeah. Oh my God itís working, so the early days if you kind of go through it, itís not all up and to the right, I mean, people write about those stories, itís never up and to the right, right away but also when you started to see it was working, what started happening in the early, early days? >>Premal Shah: Yeah, so I remember I left PayPal and Matt Flannery, the co-founder of Kiva, left his job at TiVo, he was in computer programming and he jokes about heís pausing live TV and getting really good at that and he had an experience in Uganda that transformed his life. And, so, weíre, we both quit our jobs, weíre both volunteering trying to kind of nurture Kiva and I remember when he typed in Kiva into Google, the top result was a spa in Santa Cruz. Like, it was completely, we used Google Analytics really early on and maybe only a hundred people would be coming to the website, probably looking for the spa. Only 2 or 3 would actually make a loan on the website. So, it wasnít looking very good, in fact, I looked in the database early on to see if my parents had used the website. [Laughter] >>Premal Shah: And even they hadnít used it. They were so pissed that I left like a good career job at PayPal [Laughter] >>Premal Shah: for like a non-profit and they were pissed I wasnít a doctor, actually. >>Gary Briggs: Hopefully they hadnít told you that they had used it. [Laughter] >>Gary Briggs: And then you checked the data and they hadnít. >>Premal Shah: Yeah, exactly, exactly. So when you get something started itís really hard to get the traction. And the moment that kind of changed everything was about a year into our existence. We were volunteers for about 7 months and then we knew we had to start putting people on to healthcare and at least paying some kind of living wage. So about a year into our existence we had about a month left of kind of cash in the bank, it was about 5 people and, uh, and in October 2006 absolutely changed the course of Kiva which was, in that month, Muhammad Yunus won the Nobel Peace Prize for his pioneering work in microfinance, heís the founder of the Grameen Bank, they reach over 6 million families in Bangladesh with loans and savings and insurance and a variety of services. Just an incredible, heís a saint and heís walking on the planet today. And then two weeks later we were on PBS Frontline World which is this 15 minute documentary that they created about Kiva and it was on Halloween night, weíre sitting there, I remember weíre looking at Google Analytics, weíre gonna watch the traffic, you know, try to go up, and weíre sitting there in our Halloween costumes [Laughter] >>Premal Shah: And it hits on the East Coast and all the sudden the traffic goes down to 0 and what happens is our site crashed [Laughter] >>Premal Shah: Cause we were on this 22 dollar a month server plan, you know? [Laughter] >>Premal Shah: And it was so painful for the next 4 days our site couldnít get back up. But, of course, on the internet when your site crashes it actually builds the meme. >>Gary Briggs: Yeah. >>Premal Shah: So that, right there, more than anything and, in fact, one of our engineers, he basically put up a little PayPal button that said, ìYouíve melted our servers, help us buy new ones.î [Laughter] >>Gary Briggs: Wow. >>Premal Shah: Yeah, we raised 130,000 dollars from the internet community [Gasps] >>Premal Shah: And thatís what allowed us to get everyone on healthcare, actually do real due diligence on these organizations [Laughter] >>Premal Shah: around the planet and get off the 22 dollar a month server plan [Laughter] >>Premal Shah: So that was that moment in time that then, from that point, you know, um, things really started taking off >>Gary Briggs: Yeah >>Premal Shah: and people, the word started spreading. >>Gary Briggs: Yeah. I have to admit I was imaging you four days in your Halloween costume, running around trying to make the server work. [Laughter] >>Premal Shah: I was in a penguin costume and >>Gary Briggs: A penguin costume? Thatís pretty good. >>Premal Shah: And it was pretty ridiculous. [Laughter] >>Gary Briggs: So we should, I donít know how many, if everyone knows exactly how Kiva works and you mentioned about Grameen and a little bit of microfinance. How does it work, how do you even get started? >>Premal Shah: Sure, just by show of hands how many of you folks have made a loan on Kiva? Awesome! >>Gary Briggs: Wow. >>Premal Shah: How many of you actually have money sitting in your Kiva accounts that you have to respend or relend to someone? Okay, thereís about 25 million dollars sitting in peopleís Kiva accounts that could be in the hands of the working poor. So, just keep coming back and relending that money. And weíve just built an auto loan feature that allows you to automatically deploy it. But I wanna walk through the user experience of the website for those of you who havenít used it. So, essentially, you come to the website and you can go to our lend tab and, essentially, we feature some loans across the top, like, group loans, um, that typically go to poorer microfinance clients. Right now weíre featuring Arab youth loans, they tend to be slower to fund sometimes on our website. We find that women fund faster than men. Anyway, you can sift through, and, the site and, I donít know, letís pick TÈlÈ in Togo who wants a thousand dollars to purchase beverages. And, so basically what you can do is read a little bit about TÈlÈ. Sheís posted by a Kiva field partner, and this is what we do, Kiva is a non-profit organization based in San Francisco. We have about 90 staff members around the world and a big part of what we do is we go and find organizations like WAGES, here, and we basically look at their social performance, their work in the community and we give them some kind of public badging and then we assign them a risk rating. So 1 to 5 star risk rating, if youíre a 5 star organization you can raise over a million dollars from the internet community on the platform, if youíre one star we start you off at 25,000 dollars. So itís a way of basically allowing these organizations, weíre giving them visibility and voice to basically raise money so they can reach more entrepreneurs in their community. So theyíre the real heroes at Kiva. Theyíre the ones who are doing the hard work every single day on the ground in over 60 countries. So theyíve been on the Kiva platform for 50 months and theyíve posted up nearly four thousand entrepreneurs onto the website. Anyways, oh, and we use Google Maps right here and you can kind of see where people from around the world have lent to this borrower. So, anyways, the way it works is, itís pretty simple, you can lend 25 dollars or more and if you hit lend 25 one of the big questions that we often get is, ìHow does Kiva pay for the rent and for salaries?î About 60 percent of how we make our money is through tips. So, like, when you go to a restaurant you tip a waiter an extra 15 percent, we ask you to kind of throw in an extra 15 percent on top of your 25 dollar loan. And, on average, you know, we get about 7 percent, so about half the people stiff us. But, you know, itís those tips as well as kind of donations from foundations, corporations and individuals that allow us to kind of expand into some of the hardest to reach places on the planet. And then a cool thing about Kiva is that itís a loan not a donation. And usually every month, so the average loan term on Kiva is about 10 months and you get paid back in monthly installments. So, if you lend 25 dollars youíll get 2 dollars and 50 cents emailed back to you every month and that lands in your account as Kiva credit and then once you get 25 dollars back you can turn around and withdraw that money or you can relend it. Most people choose to relend their money to another entrepreneur. So thatís the basics of the Kiva user experience and then, you know, often times youíll get an update on how the entrepreneurís business is doing. And itís not always good news, sometimes businesses fail. But itís, what we wanna do is try to just make, give a window into the world and make it as accessible and easy as possible. People participate as a business partners not necessarily as a, you know, Iím your benefactor and youíre my beneficiary but really a partnership relationship. >>Gary Briggs: Talk a little bit about, Winnie had mentioned at the beginning throughput for the week but just give a sense of scale and how many folks are you reaching now? >>Premal Shah: Sure, so Kiva today has reached 800,000 small businesses, entrepreneurs, students in 62 countries, um, the total amount that has flowed through the website is about 320 million dollars in 25 dollar increments from about 800,000 people on the internet. So thereís incredible symmetry between the number of people who are lending on the website and the number of people who are borrowing. Thatís a really cool thing. 80 percent of the loans go to women >>Gary Briggs: Yeah. Thatís what you said before. Itís more women than men. >>Premal Shah: Yeah, itís more women than men and thereís a 98.9 repayment rate on the website. >>Gary Briggs: Wow, much better than mortgages in California. [Laughter] >>Premal Shah: Yeah, yeah itís, we did a graph between, I think, the S and P 500 over the last 5 years and kind of did a Kiva portfolio and the working poor are outperforming. >>Gary Briggs: Some other folks. >>Premal Shah: Some other classes, yeah. >>Gary Briggs: So you mentioned when you asked the group about how many folks had accounts with balances and that you had the auto donate feature, talk a little about some of the features, cause you and I were talking about this the other day that there are some new features you have on the site. >>Premal Shah: Yeah, so just to, just to show a few features on the website. One that Iím really excited about is the community tab, right, so this, what we realize is that people doing social good can be a social experiment or social experience. One of the things that we kind of built without really thinking too much about is the ability to create your own lending team, for example, the Atheists and the Christians are the top 2 lending teams at Kiva [Laughter] >>Premal Shah: And they compete with each other, itís incredible. The third team is the Milepoints team. These are people that wanna get credit card points [Laughter] >>Premal Shah: by lending on Kiva and getting the money back. And then thereís team Europe [Laughter] >>Premal Shah: And then the Friends Bob Harris, this guy, heís beating the Australians. [Laughter] >>Premal Shah: So itís really amazing. Thereís 22,000 teams, thereís over a thousand schools, 1,300 universities, thereís, I think, a Google team. Letís see. [Laughter] >>Premal Shah: Itís the moment of truth here. >>Gary Briggs: Apparently weíre not beating Bob Harris. >>Premal Shah: Yeah we only have 58 members of the Google team here. [Laughter] >>Premal Shah: But you guys are, yeah, I mean, itís 40,000 dollars lent. A lot of Googlers using the website arenít even aware of the Google team. >>Gary Briggs: Yeah. >>Premal Shah: Consider joining it cause itís a, kind of, track your progress together as a community. The other thing that Gary, you know, that you pointed out is the auto lending feature. Which is basically, I wonít demo it, but in your ìmy portfolioî page you can kind of set a few perimeters, women, women in Uganda, um, who are in agriculture and then anytime a woman from Uganda in agriculture comes on the website it will automatically deploy that money. >>Gary Briggs: Great. Any, any, um, you kind of think about some of the, well one of the things thatís amazing is the stories that come out from the users but thereís some incredible even somewhat bizarre in some cases, I guess. But interesting stories of folks and who youíre reaching. >>Premal Shah: Yeah, you know, thereís so many amazing stories throughout the year and, I mean, I just love reading through the site every day. And I think, when you make a loan to someone you get to participate in their journey as a business owner. And thereís so many creative ways that people create a living for themselves. So, one of the things Iím really excited about is kind of some of the new ways that our field partners are really trying to help the under-served. If this room right now were the country of Kenya, everyone from right here to here would be rural subsistence farmers. One of the challenges is reaching you with microfinance. Itís so far, I mean, if, just imagine the most rural place youíve been to. Itís very, very hard and costly to get to you. But then, you know, one of the organizations that I think is just amazing, weíre working with this organization called Juhudi Kilimo and, in fact, a Google employee helped develop a management information system for this organization, itís a really progressive org. But what they do is they provide a hybrid cow to farmers. And a hybrid cow, whatís a hybrid cow? Well, typically cows in that area deliver milk once a day; these cows deliver milk twice a day. And often times, itís called asset-based financing. So when you lend to a Juhudi Kilimo borrower on Kiva, instead of the borrower getting money theyíll get a cow and usually itís a two for one where the cow is pregnant. [Laughter] >>Premal Shah: So, itís amazing and youíre literally right there doubling the farmerís dairy income, right? And itís an incredible intervention and they offer an insurance service and, I mean, these are things that are happening all around the planet right now. I mean, another thing >>Gary Briggs: You can't go on next, how does that work with a hybrid cow? [Laughter] >>Premal Shah: More fuel efficient [Laughter] >>Premal Shah: So basically itís mixed with a European strain that is just a higher producing cow in terms of milk. >>Gary Briggs: Wow. >>Premal Shah: But since it also has, I guess, a local strain itís more, I guess >>Gary Briggs: Resilient. >>Premal Shah: Yeah, resilient. So thereís these interventions all around the planet that make so much sense. I mean, we see things with solar power cookers that can save you, the avoided cost from having to go and gather wood, to heat and light your home, >>Gary Briggs: The fumes >>Premal Shah: The fumes >>Gary Briggs: are terrible, yeah. >>Premal Shah: The fumes from kerosene kill more people every year in the developing world than malaria. >>Gary Briggs: Yeah. >>Premal Shah: Respiratory illnesses. And one in three people live in energy poverty are completely off the grid. So thereís real cost, you actually, itís a poverty penalty when youíre poor. You pay more for the basic services that the middle class and rich have access to. >>Gary Briggs: The time it takes to go get water or the time it takes to or the danger you run into trying to go get wood, it is pretty extraordinary. >>Premal Shah: Exactly. So if you can get patient capital to finance basically a technology like a solar power cooker or being able to create a main line to the direct water source, your avoided cost over time would be, youíd be able to make those monthly payments back. >>Gary Briggs: Yeah. >>Premal Shah: Itís, I think the clearest example here in the U.S. is if the government said any vehicle that has over 50 miles per gallon gets zero percent interest financing for 30 years, itís like mortgages are 30 years long, so your monthly payments are so low that itís a no brainer from your fuels cost savings to actually go and switch over. More American households would buy Priuses, etcetera. And so I think thatís the idea here. Beyond just starting small businesses thereís a lot of costs that people pay that if they could, in exchange for small monthly payments, a large lump sum they could buy technology that could change their life. >>Gary Briggs: Yeah, and get back to, yeah, thatís totally, and the time it benefits too. I mean, so we were talking a little about it at the beginning and the idea of up and to the right, you guys are still a small business, still out trying to do what you can. What are some of the challenges youíre currently facing in running the company? >>Premal Shah: Well, I think, um, the two biggest challenges, one is, you know, for anyone thatís read about microfinance in the last couple years, itís not perfect. Itís not a silver bullet. Thereís a lot of issues and itís a very young, itís a promising developing intervention but it has its limitations. And one of the things that affects me the most is, we were just talking about Kenya, if you live in a rural area the cost of getting you these loans especially if itís a hundred dollars, for this organization to be able to basically go out on its moped, you know, two hours into the village and make a hundred dollar loan disbursement and then every week come back in a group meeting and collect a little bit each time over the next 50 weeks, itís very costly if you look at the interest rates. And, so, one of the things, you know, I really struggle with is how do you continue to make the costs go down for the worldís working poor? Itís not risk based pricing because most of, we have 98 percent rate >>Gary Briggs: Higher repayment rates >>Premal Shah: Yeah we have great repayment rates. Itís, I think, itís, itís around how do we use technologies to make the credit appraisal as well as the disbursement and collection of cash, how do we address that? So thatís one big challenge. The second big challenge is, you know, while microfinance today has reached about a 150 million people, so itís pretty successful in a scale, thereís about 2.5 billion people who are left out of the system today. And if we go on the Kiva website, when I was showing that kind of lend tab, you see business that were expiring. These are people who in this hour need a few hundred bucks and theyíll go unfunded on the website. And thatís just a reflection of high impact but underfunded things that are happening all over the planet. This is just a window into that. And so what I wanna do, now Kiva in the beginning we kept running out of loans. Like every Christmas, youíd log into Kiva and weíd be out of loans on the website cause itís very challenging in low bandwidth environments to actually get these loans posted. Now we have too many loans. >>Gary Briggs: Yeah. >>Premal Shah: And not enough people coming. So if youíre ever thinking about trying Kiva, this is a big reason why Iím here at Google today, Iíve never done a talk in 6 years, I think nowís the time to really get out the word and really spread it. Then what we do is we send a signal to the NGOs all around the planet that, you know what, the internet community itís, thereís, itís a real source of patient capital. >>Gary Briggs: Yeah. >>Premal Shah: And, so, those are kind of the two big challenges right now. >>Gary Briggs: Just cause, we talk a little bit about this too, but digging into that, and you mentioned about 80 percent of the loans were to women, 20 percent were to men. Are there particular loan types that are more likely to close than others? Do you see patterns? >>Premal Shah: What we see if women fund two times faster than men on the website. The agriculture sector, if youíre, thatís the fastest to funds sector, transportation is the slowest. You know, we see, for example, surprisingly, for example, loans in Iraq were originally very popular and now weíve seen those expire more and more. I wonder if itís because itís out of our consciousness. So weíre starting to see these patterns and what we wanna do is just continue to layer on more and more pieces of information so people can make decisions not only with their heart but also with their head and then just get the word out. >>Gary Briggs: So you mentioned at the very beginning of things like Frontline, you canít have a Frontline documentary every day, but in terms of getting the word out, it is really hard. I mean are there certain tactics that youíve found that have been more helpful than others? Is it, you know, PR? Is it AdWords? Is it, you know, other people telling other people? What works best for you in terms of growing demand cause, as you mentioned, youíve got a good supply now? >>Premal Shah: Yeah, you know, one thing weíve done that was pretty interesting is Reid Hoffman, who is the founder of LinkedIn and heís made a lot of money recently and [Laughter] >>Premal Shah: And we both worked with him at PayPal and >>Gary Briggs: I see him on TV all the time now [Laughter] >>Gary Briggs: Heís got a book. >>Premal Shah: Yeah, heís on Bloomberg, heís got his own thing, yeah. Heís awesome. [Laughter] >>Premal Shah: He's awesome. So what heís done is heís like, ìLook, Iím not gonna go and lend 25 dollars to people.î He put out a million dollars to the internet community and we converted that into 40 thousand free 25 dollar trials. And then we put that out on twitter and said, ìUse Kiva for free.î And itís even on the header of our website right now. Usually every month, ten thousand people will try Kiva with their own money, well, in the month of March 40 thousand new people tried Kiva for free. And hereís the genius of this program, when someone tries that 25 dollar loan of Reidís money, theyíll lend it to somebody in Cambodia and as that woman in Cambodia repays her loan the money goes back to Reid. So Reidís real cost is the default rate on Kiva. So, although heís gen, you know, mobilized a million dollars and 40 thousand new people, his real cost will only be able 10 thousand or 11 thousand dollars. Already 12 percent have put in their own money and will probably recycle it over and over and over. So, those are some things, but I think itís just an all out effort at building awareness about any cause. What weíre trying to do is actually create a single brand and then behind whatís happening is thereís many NGOs and theyíre working in many different communities. And instead of having them spend money building their own brand, building their own technologies to fund-raise, letís make it as efficient as possible for them and create a simple consumer experience for people to connect with the work that theyíre doing around the planet. >>Gary Briggs: Well, you mentioned as you were telling stories about Kenya and M-Pesa is a mobile technology, thereís a lot of technologies that are now helping on distribution, can you talk a little bit about what youíre seeing, whether it be outbound or inbound? >>Premal Shah: Yeah, I think the coolest thing in terms of financial services for the poor; the big game changer is mobile finance. Iím sure many of you here have heard of M-Pesa. M-Pesa is a mobile payments technology in Kenya and what it allows you to do, Gary, if I, I can kind of send you money stored value to your phone, then you can go tell local gas station and send the gas station owner money and he will pull money out of his till, Kenyan shillings and give it to you. So everyone almost kind of turns into an ATM machine, if you will. >>Gary Briggs: Yeah. >>Premal Shah: And itís about 4 years old. 78 percent of the adult population in Kenya uses it, 25 percent of the GDP now flows through this M-Pesa mobile payment system. Itís incredibly promising, in fact, thereís this quote by William Gibson, he talks about the futureís here, itís just not evenly distributed yet. [Laughter] >>Premal Shah: And everyone talks about the Silicon Valley and whatís happening out here but I wonder why Kenya is so far ahead in terms of mobile payments. Itís incredible because what it does is people who live in rural areas, the cost of actually getting them a loan has completely collapsed. And weíre doing a pilot now with Kiva where instead of having a microfinance institution in the middle, weíre actually doing something where if youíve gotten a loan on Kiva before, or a church group can vouch for you, you can get listed up in Kenya. We have 80 borrowers in Kenya, itís a pilot called Kiva Zip. And then when you lend money to that person, within minutes the money goes to them at zero percent interest. And there incentive to repay is a future loan that will be cheap. Just like, this is why we pay back our credit cards, cause we donít wanna ruin our credit score so that we can actually get future access to opportunities. So, the M-Pesa system, you know, we think combined with crowd funding, can really collapse the cost. The cost, for example, accepting savings, savings is really expensive for banks to offer to the poor because you canít charge an interest rate, you actually have to pay out a little bit on the deposits, but now people are saving money on their cell phones. And thereís this great quote from this woman that I heard on Kiva in Kenya that said, ìMy husband may try to break into my phone but heíll never be able to get the money off my sim.î [Laughter] >>Premal Shah: So what it does in terms of womenís agency, people's agency >>Gary Briggs: Probably why men should get loans >>Premal Shah: Well, you know, itís a game changer. Itís allowing people to have the security, the privacy, the convenience of mobile finance. I think thatís something weíre really excited about. >>Gary Briggs: And the distribution, I mean, obviously the distribution power is extraordinary. I had a chance in Kenya, I was with the tribesmen, this was about 3 years back, and I was trying to take a photo of him and he had a robe and he kept covering, he had a Kipling case holder, I remember, and his cell phone. This was in the middle of nowhere and Iím trying to take a picture of him and heís trying to cover it up cause he didnít want any photo of him with a cell phone. But the distribution of these and ability to move money on them is could be very transformative for what you guys are trying to do. So we have a lot of, itís great we have a really great turn out but folks, in a couple more minutes weíll ask you guys for questions. But, what can Googlers do to help you guys? >>Premal Shah: Sure. Well, just your existence is awesome and I wanna honor that, honestly. [Laughter] >>Gary Briggs: I think we mostly agree with that. [Laughter] >>Premal Shah: No, I mean I say this from a place of, we were counting up, the other day, the number of services we use from Google and, you know, uh, you know, from Google Apps to using the maps on every single borrower page to, weíre really trying to drive more video on the website cause that seems to resonate with the internet community. So weíre working with Hunter Walk and his team at YouTube. To, I mean, itís just, itís ridiculous and you hear this, Iím sure, from all sorts of website owners but I just wanna thank you guys for, and you guys do it at a price and a quality that really enables NGOs around the planet to be more effective. So thatís really, I just wanna honor that. Couple things, you know, obviously thereís making a loan .You can get involved by volunteering at Kiva. We have a program called the Kiva Fellows Program where you can go, weíll train you in San Francisco in our office for a week, and then weíll ship you out to 1 of 60 countries where you can get an experience helping building that local field partner and their work with Kiva. Weíve had over 450 Kiva Fellows now, in the last few years, and a lot of Googlers have done it. I know you guys have peer bonuses and spot bonuses here and you give out cash, well, we have Kiva gift cards and itís kind of like cash because you can give someone 250 dollars, they will then just, the only condition is they have to lend it out to someone and then over the course of the year theyíll get paid back and withdraw that cash. So itís simple things like that, just weaving it into our day, that, and I think the person might appreciate it just as much as cash. Those are some of the ideas that we have and if people are interested in doing something like what Reid did, or just kind of doing a bulk loan on a platform so that the internet community, particularly I think classrooms around the world, if we can let them try it for free, I think thatís a really exciting thing. And I wanna make this as, itís just, we know when somethingís, itís the one penny problem, if you can make it free more people will use it and then over time people may put in their own money. So those are some ideas. >>Gary Briggs: Okay. Thatís a good idea with a spot bonus you get a Kiva >>Premal Shah: Kiva gift card. >>Gary Briggs: Kiva Care or something like that. >>Premal Shah: Yeah. >>Gary Briggs: Thatís a really great idea. So, if there are questions what weíll do is you can just stand up or raise your hand if you have a question and then hopefully if we can hear it weíll repeat it for folks on VC. Yes? [Skips question] >>Premal Shah: The profiles of the people that you see here, typically, what happens is the non-profit partner that we work with or the NGO, will predispurse the money cause we donít want these people to wait for a loan. And then they backfill the loan, so while theyíre fundraising, the average loan profile on Kiva gets funded in about 3 days. But if it goes to day 30 and itís not a hundred percent funded, it expires off our website. Now, when you make a loan to Luciana here in the Philippines, if she defaults, so if her business is not successful, then you and the 20 other people who have chipped in to fund her loan will lose your money. So your repayment is tied to her success. >>female #1: But in terms of, what happens if she got the money but it didnít get funded by Kiva? So whoís covering it? >>Premal Shah: Thatís where the local field partner eats the loss and thatís the risk. And then the more that happens, the less people in their community that they reach. And then you get your money back and hopefully youíll recycle it. >>female #1: But suppose, okay, what about the business, like I put in 25 dollars but she hasnít reached her 350 dollars and itís still counted towards what goes to her, I mean, does that go immediately >>Gary Briggs: I think the question is, is it up to date? >>female #1: Do you see what Iím saying? >>Premal Shah: Yeah. So what we do is we have an all or nothing model which is once it hits its fundraising target, then we wire on a monthly basis to our field partners and so if it doesnít hit that 300 dollar threshold then that, none of that money goes to that field partner. It actually goes back to the internet lender and it goes back to your Kiva account to put it somewhere else. >>Gary Brigg: Itís like a Groupon tip; the loan has to tip over >>female #1: If I put in 25 dollars and itíll sit there for 30 days and then Iíll get it back? >>Premal Shah: Thatís >>female #1: Does that make sense? >>Premal Shah: Exactly. And today that happens probably, itís the minority case but itís happening at an increasing rate. >>Gary Briggs: Just cause youíre getting more requests for loans. >>Premal Shah: Yeah. >>Gary Briggs: Okay, yes? [Skips question] >>Premal Shah: Itís important to keep in mind, one of the best books Iíve read on microfinance and financial services for the poor is called Portfolios of the Poor and the situation is much more complex than village money-lender bad, Kiva good. Itís actually, if youíre a poor household, chances are youíll have loans from multiple sources; friends and family, your neighbors, microfinance institution, some from a village money-lender and what we love to do at Kiva is make the internet community part of that mix. Cause we think the internet community will be more patient and do it at a lower cost than the village money-lender and even some other formal sector things. Um, so, my sense is that right now maybe some of our, some microfinance institutions or money-lenders would be upset about the internet community doing it but I donít know, I mean, you guys deal with this all the time, thereís existing ways of things and then technology can create a new way and it can create more value for people. And, you know, we try not to get too bogged down by that. >>Gary Briggs: Itís not like being in Brooklyn, they have to travel a long way to get to you so you feel personally connected. >>Premal Shah: Thatís right. >>Gary Briggs: Yes? [skips question] >>Premal Shah: I wanna show you guys something that I think is one of the coolest things. It just happened in the last few months. We launched the ability for you, whatís your name? >>male #1: Alex. >>Premal Shah: Alex, you can vouch for someone, weíre gonna roll this out, itís, right now itís a password protected limited pilot thing that weíre running, you can vouch for someone who you think is underserved, that is a small business, say maybe in the Tenderloin in San Francisco. Okay, and this person, they might not have a credit score that allows them to get a loan from a bank but if you know their character and are willing to vouch for them, for example, weíre working with Glide Memorial Church in San Francisco, if they know someone in their congregation that they really wanna back, they can vouch for them. So I wanna show you what weíre doing now within the US because people are more online, right? So, here is Victor. Victor runs Cafeto Coffee Shop in San Francisco California and this is his Kiva Zip experiment that weíre running. And he basically, you know, he got paid out via PayPal, his interest rate is zero percent and itís a 12 months repayment term. The people who vouched for him is the Mission Economic Development Agency in the Mission District in San Francisco. Victor graduated from one of their business training courses, wants to set up a coffee shop and the internet community basically has helped him raise his 5,000 dollars. And now heís running his coffee shop, he employs 5 people part time and heís paid back 43 percent of the loan. Now, hereís where it gets, I think, really amazing as people, as the under-served, as the working poor come more and more online, Victor vouched for his friend Ernesto. So, Ernesto is a taxi cab driver who wants to buy a taxi cab medallion in San Francisco. And you can see that now, Victor, has endorsed Ernesto. And Ernesto and Victor basically, hereís the, you know, hereís the experiment we, the hope is that Ernesto will really want to pay back because Victorís reputation is tied to his repayment. And this is a way that I think we can reach people at a call structure that, you know, itís like trust networks, essentially. So weíre really excited about this Kiva Zip experiment. I donít know if this is gonna work but this is, I think, we can test a lot of the edges of innovation here in the U.S. because people are more connected and itís easier to reach them and do these pilots and PayPal we can get money to them. And weíre also running this pilot in Kenya because of M-Pesa as well. >>Gary Briggs: Thereís a question just behind Alex. Sorry, yeah? [Skips question] >>Gary Briggs: So I think itís kind of an incubator question. Are you helping kind of incubator type activity, yeah? >>Premal Shah: You know thatís a really great idea. You can image that Victor and Ernesto, you know, as there are more and more of folks just here in the San Francisco Bay Area who are using Kiva to make their case to internet community to get loan funds, patient capital, that we could layer in other value-add services. So, for example, Google has a small business unit and maybe you guys have training and we could develop a module, itís like a, itís a Kiva, Google boot camp for entrepreneurs who want to now bring their business online. And these two businesses might not be online but Iím sure there are ones. Or, for example, we can use the reputation systems that you guys have developed. You know the community feedback score on small businesses? As a way to actually get, get, raise money on Kiva. So, thereís so many things that we could do, weíre really early in kind of thinking through how to layer it in. But I think thereís a lot of promise. >>Gary Briggs: Is there a question over here, I thought? Yep, go ahead. Thatís great. [Skips question] >>Premal Shah: So Iím familiar with Wokai, Iím good friends with Casey, there CEO and co-founder. And, you know, I think it speaks to the plight of, itís really hard, itís, itís, itís Kiva for China, thatís what Wokai is. And theyíve been at it for a few years and just in May theyíve had to close down and itís really hard to find funding and keep going. And unless you get that kind of flag wheel effect or that traction, itís really hard to make this model work. And, so, one of the things we wanna learn from Wokai is actually take a lot of the learningís in China and figure out how we can actually lever this platform, all of this goodwill, thatís been built to get into China more efficiently so that for every dollar spent running Kiva, we can have even more levered impact. And, so, this is the case for actually, non-profits actually coming together and consolidating more and sometimes failure can be good. Thereís that Darwinism cause that way we can kind of focus our resources and get the most impact. >>Gary Briggs: Yeah, thatís great. Was there a question in the front row? No, did you have a question? >>female #1: Oh, I had one other one >>Gary Briggs: You did? Okay, over by the wall. Yes, please. >>Premal Shah: So just to summarize your question, a few things, one is around interest rates, two is just around how this money is spent? Loan capital spent? Is it consumptive or is it for productive purposes? Those, uh, it was in that set >>female #1: [inaudible] >>Premal Shah: Sure. Hereís what, I mean, what you guys do at Google, you guys are gonna be a part of this overall solution where the worldís going. Which is as we get more insight into small businesses, so as you get cash register data, one of the loan types weíre doing now on Kiva is, for example, if we, if thereís, if this guy has, I guess, Google Wallet or a square device to accept the credit cards, that data could then basically show up to Kiva lenders, right? And what we could do is structure a loan so that a percentage of revenues actually up to a zero percent return, or maybe one day if the SEC allowed it you could even get for profit returns, who knows. But that kind of data insight could actually get us a better sense between people who invest and how that money, you know, how that money is used and, and the income generation. The truth though, is, for the working poor, these loans often times are subsistence loans and the more valuable thing about the loan is the ability to cope with a crisis whether itís a medical emergency, a funeral expense, kids going to school, yes itís consumptive but it comes into a mix in a household in a bulk sum in exchange for small affordable repayments over a longer period of time. One thing that we screen for at Kiva is over indebtedness. It happened here in the U.S. with the subprime meltdown which is, often times people, you know credit can be debt and it can really work against you if you donít know portion control or if itís not done in a fair, transparent way. And I think there are some cases, for example, in Southern India by some for-profit microfinance organizations, which Iím a huge fan of for profit, I want the poor to be able to take advantage of profitable services but sometimes that motive for growth, growth, growth comes at the expense of responsibility. And, so, we have to be very mindful about how to be responsible lenders and thereís things around price transparency, fair collection practices and I think the industry, especially in Southern India, thereís a pretty stark reminder of when microfinance can actually harm and not help. So we wanna screen out for the right organizations that have a much more balanced view on growth. Thatís our perspective at Kiva. >>Gary Briggs: So thereís probably time for two more questions so just go over to the wall. [Skips question] >>Premal Shah: Yeah, the question was about fraud. [Laughter] >>Premal Shah: And fraud absolutely happens, all the time. And one of the things that >>Gary Briggs: One of the things we used to say at PayPal is you know youíre successful when the fraudsters come after you. Itís the way [Laughter] >>Premal Shah: Thatís good stuff. >>Gary Briggs: Itís true. Itís the nature of money on the web, unfortunately. >>Premal Shah: Yeah, early on, too, when we didnít have very good due diligence practices we were defrauded all the time. [Laughter] >>Premal Shah: And now weíre still defrauded but less so as the percentage of the loan volume. In fact, I think the first 10 field partners we signed up, I think 8 of them weíve had to close down because of malfeasance or they, we just didnít know what we were doing. And, you know, I think the thing, we know fraud and corruption is a fact of life, this is the way this state of the world I, what we wanna do is just put a little sunlight on it. So by having internet platforms you can go through our field partner page and see the 30 partners that weíve had to close out of the 200 because of problems and you can read why. And hopefully a future donor or a future funder wonít come in, theyíll Google the partner name in Cambodia or in the U.S. or wherever and theyíll say, ìOh, looks like they had some problems on Kiva. What happened?î They can read about it and we even invite the organization to state their case and we just wanna put more sunlight on all of this and that way people donít throw good money after bad. >>Gary Briggs: People who defraud Kiva have a special place in the afterlife I would think. [Laughter] >>Premal Shah: You know, it teaches us and even with the Zip model, we found in intermediary theyíll still be, you know, Victor and Ernesto could collude, right? >>Gary Briggs: Yeah. >>Premal Shah: I mean we havenít seen that yet itís still a really small pilot so itís just human nature, thereís always some bad. The question is can we minimize the bad so we can allow all this good to flourish? >>Gary Briggs: I love the fact that you do keep it up there and you kind of shine a light on it thatís actually a great practice. Last question. [Skips question] >>Premal Shah: Well, Iím a big believer in doing the smallest possible thing in the present moment and try smallify things, I mean, if, think, what Kiva does so well is we all know the worldís problems and I think thereís compassion collapse. You start hearing these stats, one trillion this, one billion that and we just wanna make this human scale and make this something that people can do very quickly, very simply, with a low barrier to entry. And then I think itís just, how we move that practice, that mindfulness, into what weíre doing every day. And that, you know, I, hopefully that answers your question beyond kind of like making a loan is, you know, I donít know, take a breath. Be grateful for the place and time that we are in right here, I mean, what a joy to, especially to work for a company that, I mean, you know, I really believe in what you guys are doing and you guys spend a lot of time and resources on things that donít seem to have an immediate economic return for the company and I really, I think you guys walk your talk. So, oh, around do no evil and, I really believe that. I see that for the last 10 years or whatever. So, Iíd just savor the time that you have here. And then, you know, more than social entrepreneurs, people quit the company and go leave and start something, social intrepreneurs. The amount of change you can make with the resources here at Google, banding people together, I mean, we wanna create, for example, some kind of, I was talking to our lead engineer last night, I was like, ìWhat would be helpful for Google engineers to do?î and he was like, ìWell, we could use helpî if you guys had a sabbatical program here, weíre right here in San Francisco creating, itís called an open source playground because the list of ideas is so long but our ability to get them done is just, you know, itís very slow. And, so, if we could open up the ability for all developers to come in and develop things and through some kind of stage gate path put it up onto the website that would really unlock the potential of this. And this is only one of the websites, all these other systems, like the systems that are, our field partners use around the world, I mean, they all need a lot of engineering, love and attention , for example. So, get involved with local non-profits that do global things or things in your own neighborhood, too. >>Gary Briggs: Sounds like we need a hack-a-thon at Kiva. [Laughter] >>Premal Shah: Yeah, we should do a hack-a-thon, thatís for sure. >>Gary Briggs: Alright, I think weíre about out of time. Premal itís great, I mean, itís a great audience in terms of turn out and things like that. Youíve been incredible from the time I met you in the hallway. So keep going at it. Itís having a huge impact in the world, so thank you. >>Premal Shah: Cool, thanks. [Applause]