Kiva Case Study

Topics: Nobel Prize, Norwegian Nobel Committee, Nobel Peace Prize Pages: 17 (5435 words) Published: May 19, 2015
U.C.!Berkeley!–!Haas!School!of!Business,!Independent!Study! !
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Kiva!Case!Study!
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Sarah!Anderson!
Joel!Ramirez!
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December!6,!2007
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Introduction!
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It!was!a!beautiful!morning!in!November!2007!when!Jessica!and!Matt!Flannery,!the! founders!of!Kiva.org,!walked!into!their!San!Francisco!office!to!greet!the!rest!their!ever" growing!team.!!Kiva.org!(Kiva),!the!world’s!first!person"to"person!micro"lending!website! had!seen!incredible!growth!over!the!past!year.!!Media!exposure!such!as!an!appearance! on!the!Oprah!Winfrey!Show!and!a!mention!in!Bill!Clinton’s!book,!Giving,!resulted!in!an! enormous!number!of!lenders!coming!to!the!Kiva!website!in!hopes!of!lending!money!to! entrepreneurs!in!the!developing!world.!!!

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In!2005,!Kiva!introduced!microfinance!to!the!internet,!and!since!then,!has!created!a! global!community!of!people!connected!through!lending.!!By!partnering!with! microfinance!institutions!in!over!30!countries,!Kiva!has!given!small!businesses!in! developing!countries!the!opportunity!to!grow!and!thrive.!!The!company’s!microfinance! partners!post!profiles!of!loan!applicants!on!the!website,!where!anyone!with!a!credit! card!and!an!internet!connection!in!United!States,!Canada,!Europe!and!beyond,!can! provide!small!loans!to!the!businesses!of!their!choice!(See!Exhibit!1!for!a!sample!profile).! !

As!of!that!November!morning,!Kiva!lenders!have!funded!over!$14.5!million!to!over! 22,000!entrepreneurs!through!65!microfinance!partners!in!37!countries.!!The!team!was! meeting!to!discuss!the!upcoming!board!meeting!and!the!strategy!for!Kiva!in!the!coming! year.!!Though!the!meeting!was!filled!with!satisfaction!and!pride!in!what!the!team!had! accomplished!since!their!inception,!major!decision!needed!to!be!made!and!debates! ensued.!!While!their!growth!was!astonishing!and!exciting,!it!was!also!difficult!to!manage.!! Furthermore,!loans!on!Kiva!were!still!not!interest"bearing.!!Matt!had!always!dreamed!of! having!the!Kiva!model!be!a!marketplace!offering!–!one!where!lenders!would!receive! interest!on!their!loans.!!To!get!Kiva!off!the!ground,!they!had!decided!on!no"interest! bearing!loans!for!lenders,!because!legally,!providing!interest!was!too!complicated.!! However,!!things!had!gone!well!with!the!0%!interest!product,!and!now!there!was! dissention!in!the!ranks!about!whether!or!not!to!pursue!offering!interest!in!the!future.!! Jessica,!Matt’s!wife!and!co"founder,!thought!sticking!with!0%!return!to!lenders!was! important!to!their!strategy!and!brand.!!As!Jessica!and!Matt!discussed!the!issue!with! their!group,!they!grappled!with!a!number!of!questions.!!Were!interest"bearing!loans!the! best!route!to!take?!!And!if!so,!was!now!the!best!time!to!do!it?! !

Kiva!History!
In!late!2003,!Jessica!Flannery!was!working!at!Stanford!University!as!a!staff!member!in! the!Public!Management!Program.!!A!passionate!extrovert!with!a!great!interest!in!social! entrepreneurship,!Jessica!gained!access!to!a!wide!array!of!ideas!and!contacts!in!the! social!entrepreneurship!arena!through!her!work!at!Stanford.!!Her!fiancé,!Matt,!was!a! Tivo!programmer!with!aspirations!of!being!a!Silicon!Valley!entrepreneur.!One!night!in! 2

the!fall!of!2003,!she!and!Matt!went!to!hear!Mohammed!Yunus,!the!Bangladeshi!banker! and!economist,!speak!of!his!accomplishments!to!the!microfinance!world.!!In!2006,! Muhammad!Yunus,!along!with!the!Grameen!Bank,!was!awarded!the!2006!Nobel!Peace! Prize!for!their!joint!efforts!to!create!economic!and!social!development.!!The!prize! announcement!stated:!

Muhammad!Yunus!has!shown!himself!to!be!a!leader!who!has!managed!to! translate!visions!into!practical!action!for!the!benefit!of!millions!of!people,!not! only!in!Bangladesh,!but!also!in!many!other!countries.!Loans!to!poor!people! without!any!financial!security!had!appeared!to!be!an!impossible!idea.!From! modest!beginnings!three!decades!ago,!Yunus!has,!first!and!foremost!through!...
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