Get past the PowerPoint stage quickly.
I think the thing is, if you think you’ve got a good idea and you think it ought to exist, I wouldn’t spend too much time asking for permission. I would spend a lot of time trying to build it out, get past the PowerPoint and mock up stage and really try to get it on the web and see what kind of serendipity hits you.
If it’s not working, then you’ll learn and you’ll figure out the biggest constraint to it not working and you’ll run like hell against that next constraint. And keep your iteration cycles really short. Too often we spend so much time going through projections and business plans when we’re starting companies, when all that really matters is traction.
That’s something that Kiva did pretty well. Which is: get the idea out on the web, see who finds it, keep iterating. As we hit constraints, we iterate against the constraints. And here we are 3.5 years later with a site that’s raising a million a week.
That’s the big thing. Quit asking for permission and start building it and get it live.
Kiva launched before every detail was figured out
The site basically had 7 businesses that we had our friend in Uganda, a pastor named Moses, find for us. And the money people lent those businesses on our web site went to my business partner’s personal bank account. Then we wired it out to Moses in Uganda and he handed out the loans to 7 entrepreneurs. One was a fish monger. Another was a fruit seller.
I think it wasn’t all throught through how we were going to get the money back and how the billing and payment systems worked. But the simple concept was something that we just wanted to prove out. When I came to Kiva, we didn’t have a PowerPoint presentation or things like that. But we had a Web site.
When you launch, be aggressive
When we started, our belief was even if we were doing something inadvertently illegal, we should be really aggressive. Because we’re just trying to help people. And I think regulators are human, and people understand.
I think we were probably a little more aggressive–and thank god we were. If we tried to get our heads around all the rules, I think it would have totally killed a lot of the innovation. There’s a great quote by Peter Thiel, the founder of PayPal, he said, “If you’ve never missed a flight, you spent too much time in the airport.”
Kiva, like a lot of companies, does the analysis of probability of detection multiplied by probability of enforcement multiplied by penalty size. I think that’s the right attitude when you’re trying to start something that is hopefully going to change the world. Because it’s impossible to figure out all the rules and apply them all.
The infrastructure comes later
As Kiva grows, there’s more to protect. Just like when PayPal grew there was more to protect and things slowed down. I think it’s starting to look like a more well-managed, better governed company. We do have a general council here going around and making sure we are in compliance with the long list of regulatory bodies that govern what we’re trying to do.
We’re trying to close the gap, and I think we’re pretty mcuh there. But in the beginning, your biggest risk is no one knowing you and no one using your site. And keeping that as your #1 constraint–that no one gives a damn about what you’re doing–if you focus on that, instead of “oh a regulator might shut us down,” I think that’s the right way to go.
Even if you run into major problems, you can solve them
Prosper.com, they’re right now being shut down the by the Securities and Exchange Commission. And they are a for profit, person-to-person lending site started right here in San Francisco. And they did some regulatory work when they started–apparently not enough. And they ended up raising over $180 million. They have 180,000 users. They were first to market with domestic, person-to-person lending. They really established a brand–and then got shut down with a cease and desist order from the SEC.
So now when you go to the site, you can’t make a loan. They’re waiting for a government official to approve an application. Meanwhile, their users I believe are engaged in a class action lawsuit, so it’s getting a little dangerous for them. But my gut on this one is that five years from now, ten years from now, by Prosper being so aggressive and getting out way out in front and being a first mover, that they will be the market leader when it comes to domestic person-to-person lending because they got upfront and they’ll figure out this regulatory issue. Because fundamentally what they’re doing is good.
Don’t fear the regulators. Fear not getting traction.
[Thank you Sloane Berrent for caring enough about Kiva & Mixergy to make this program happen. The focus on “just launching” was inspired by this Mixergy interview with Guy Kawasaki. And thank you Jay Tillery for matching my Kiva gift!]
