BYU-ESR-2009
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Keynote presentation about Vittana at the BYU Economic Self-Reliance conference in November 2009.
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BYU-ESR-2009
- 1. Building a world where anyone can go to college Kushal Chakrabarti Co-Founder and CEO, Vittana kushalc@vittana.org
- 2. Our thesis: Education is income-generating. vittana
- 3. In fact, more income-generating than micro-entrepreneurship. vittana 30% 24% Percentage of Students 18% 12% 6% 0% 0% 50% 100% 150% 200% 250% 300% 350% 400% Increase in Wages After Graduation
- 4. What We Do
- 5. Meet Haward, 21-year-old Nicaraguan law student. vittana
- 6. Meet Haward, 21-year-old Nicaraguan law student. vittana
- 7. Catch-22: No student loans in developing countries. vittana “However, in order to get approved [for a college loan] I’d need a college diploma, a steady job and a house or land for collateral. What 18 year old kid do you know who has all three of those things?” — Daniel, Peru
- 8. We work with MFIs to develop new student loan programs. vittana
- 9. Expertise in building effective student loan programs. vittana
- 10. Expertise in building effective student loan programs. vittana What Works:
- 11. Expertise in building effective student loan programs. vittana What Works: • vocational school and “titles”
- 12. Expertise in building effective student loan programs. vittana What Works: • vocational school and “titles” • children of microfinance borrowers
- 13. Expertise in building effective student loan programs. vittana What Works: • vocational school and “titles” • children of microfinance borrowers • mom as a co-signer
- 14. Expertise in building effective student loan programs. vittana What Works: • vocational school and “titles” • children of microfinance borrowers • mom as a co-signer • high school graduates
- 15. Expertise in building effective student loan programs. vittana What Works: • vocational school and “titles” • children of microfinance borrowers • mom as a co-signer • high school graduates • emerging countries
- 16. Expertise in building effective student loan programs. vittana What Works: • vocational school and “titles” • children of microfinance borrowers • mom as a co-signer • high school graduates • emerging countries • interest-only grace period
- 17. Expertise in building effective student loan programs. vittana What Works: What Doesn’t: • vocational school and • group loan model “titles” • no long-term cohort for group model • Prisoner’s Dilemma: rational to • children of cheat microfinance borrowers • 100% grace period • mom as a co-signer • no credit bureaus, IRS • students need to build habit of • high school graduates consistent repayment • MFIs need chance to follow-up • emerging countries monthly • interest-only grace period
- 18. Just to make it a little more concrete. vittana Typical loan • 18-25 years old • 6-24 mos. to full repayment • $500-$1500 total amount • bank teller is #1 profession • Paraguay, Peru, Nicaragua, Mongolia
- 19. Usually takes 3-8 months to build one from scratch. vittana XacBank EDAPROSPO AFODENIC Fundacion Paraguaya Nov ‘08 Feb ‘09 May ‘09 Aug ‘09 Sep ‘09 Dec ‘09
- 20. Those students appear on http://vittana.org vittana
- 21. You can choose an individual student to make a loan to. vittana
- 22. Students graduate, get jobs and repay over 12-36 months. vittana
- 23. No funds of our own to lend — you make the loans to students. vittana
- 24. 7 months in: First students graduated, jobs, repaying. vittana
- 25. Remember Haward? vittana
- 26. Remember Haward? vittana
- 27. http://vittana.org. I’d like to ask you all to make a loan today. vittana
- 28. The Big Picture
- 29. 30 years in, microfinance borrowers are succeeding. vittana Accion International Annual Report 2008 Copyright 2008, Accion International
- 30. Have homes and food, their kids have been going to school... vittana
- 31. But now, 20 years in, those “kids” are graduating high school. vittana
- 32. They know education is the only way out. vittana 30% 24% Percentage of Students 18% 12% 6% 0% 0% 50% 100% 150% 200% 250% 300% 350% 400% Increase in Wages After Graduation
- 33. Want to become programmers, lawyers, accountants. vittana
- 34. But have no way of even getting the chance. vittana “However, in order to get approved [for a college loan] I’d need a college diploma, a steady job and a house or land for collateral. What 18 year old kid do you know who has all three of those things?” — Daniel, Peru
- 35. What’s the problem? Not MFIs. They want to start lending. vittana Why? For MFIs: • market: 10% (Peru) to 40% (India) of projected portfolio • social impact: proven increase in income (10-20% / year) • customer loyalty: 3- year loan term vs. <1-year term • competitive pressure: can’t fall behind other MFIs
- 36. Question: Education, important? vittana
- 37. Question: Education, important? vittana Who here thinks education is important?
- 38. Question: Education, important? vittana Who here thinks education is important? (show of hands)
- 39. Catch-22: No track record => no investment => no track record. vittana Track Record Knowledge Investment
- 40. 1 person can’t invest $50M, but 1M people can invest $50. vittana
- 42. Being a Social Entrepreneur
- 43. My car. vittana
- 44. Um, yeah. No back window. vittana
- 45. Haven’t had a back window in 154 days. vittana 154
- 46. Lesson #1: Be obsessed. vittana Be Obsessed
- 47. I was thinking about how to illustrate obsession... vittana
- 48. I was thinking about how to illustrate obsession... vittana Midnight 1am 2am 3am 4am 5am 6am 7am 8am 9am 10am 11am Noon 1pm 2pm 3pm 4pm 5pm 6pm 7pm 8pm 9pm 10pm 11pm
- 49. I was thinking about how to illustrate obsession... vittana Midnight 1am 2am 3am 4am 5am 6am 7am 8am 9am 10am 11am Noon 1pm 2pm 3pm 4pm 5pm 6pm 7pm 8pm 9pm 10pm 11pm
- 50. I was thinking about how to illustrate obsession... vittana Midnight 1am 2am 3am 4am 5am 6am 7am 8am 9am 10am 11am Noon 1pm 2pm 3pm 4pm 5pm 6pm 7pm 8pm 9pm 10pm 11pm
- 51. I was thinking about how to illustrate obsession... vittana Midnight 1am 2am 3am 4am 5am 6am 7am 8am 9am 10am 11am Noon 1pm 2pm 3pm 4pm 5pm 6pm 7pm 8pm 9pm 10pm 11pm
- 52. Lesson #2: Pull the plug. vittana Pull the Plug
- 53. Tangent: Seattle Tech Startups community, email list. vittana
- 54. With gems like... vittana — Jeff Lawson Founder and CEO, twilio
- 55. and... vittana
- 56. and... vittana
- 57. Back to the point: You need to be committed. vittana
- 58. Lesson #3: Ask for help. vittana Ask for Help
- 59. We’ve been blessed. But, you have to ask. vittana
- 60. Lesson #4: Talk to your customers. vittana Talk to Your Customers
- 61. At least 25 of your (real) customers. vittana “If you haven’t talked to 25 people in developing countries [about what you’re building], don’t even bother.” — Paul Polak, Founder of IDE, Entrepreneur of the Year
- 62. Lesson #5: Something will go (horribly, horribly) wrong. vittana Something Will Go (Horribly, Horribly) Wrong
- 63. I’m not kidding. vittana Copyright 2009, Randy Toy, racertoy.com
- 64. So, WHY?
- 65. So, WHY?
- 66. So, WHY?
Notes de l'éditeur
- This is our thesis. If you forget everything else, decide to take a nap, If you remember one thing from this talk, It is this. Do I have your attention? ;) Education is just as income-generating as micro-entrepreneurship. Going to college to become a programmer, Is just as income-generating as -- If not _more_ income-generating than -- Opening a fruit stand by the side of the road. In fact, It is more income-generating.
- This is the distribution of income increase in our initial students. A before and after education, in some sense. Look at the x-axis. This is our fundamental point &#x2014;- Really, our counterpoint to traditional microfinance &#x2014;- Not only is higher education income-generating, It is more income-generating than micro-entrepreneurship.
- I'd like you to meet one of our students. This is Haward. Before Vittana partnered with AFODENIC, Our microfinance partner in Nicaragua, Haward simply did not have any way of getting a student loan. MFIs just don't give loans to students.
- It's exactly like traditional microfinance thirty years ago. If you have the money, you can get the loan. If you don't have the money, you can't. This is a quote directly from a student One of our staff members interviewed from Peru A few weeks ago. I want you to ponder the irony of this for a moment.
- Vittana works with microfinance organizations around the world, To develop brand new student loans programs, Often for the first time ever in those countries.
- Though we're still a very young organization, We have a pretty good idea of what works and what doesn't. vocational school &#x2014;&#xA0;real, employable skills life + economic foundation incentive/enforcement to repay no long-term cohort leave village to go to school, leave school to get a job no way to enforce *poof*
- Though we're still a very young organization, We have a pretty good idea of what works and what doesn't. vocational school &#x2014;&#xA0;real, employable skills life + economic foundation incentive/enforcement to repay no long-term cohort leave village to go to school, leave school to get a job no way to enforce *poof*
- Though we're still a very young organization, We have a pretty good idea of what works and what doesn't. vocational school &#x2014;&#xA0;real, employable skills life + economic foundation incentive/enforcement to repay no long-term cohort leave village to go to school, leave school to get a job no way to enforce *poof*
- Though we're still a very young organization, We have a pretty good idea of what works and what doesn't. vocational school &#x2014;&#xA0;real, employable skills life + economic foundation incentive/enforcement to repay no long-term cohort leave village to go to school, leave school to get a job no way to enforce *poof*
- Though we're still a very young organization, We have a pretty good idea of what works and what doesn't. vocational school &#x2014;&#xA0;real, employable skills life + economic foundation incentive/enforcement to repay no long-term cohort leave village to go to school, leave school to get a job no way to enforce *poof*
- Though we're still a very young organization, We have a pretty good idea of what works and what doesn't. vocational school &#x2014;&#xA0;real, employable skills life + economic foundation incentive/enforcement to repay no long-term cohort leave village to go to school, leave school to get a job no way to enforce *poof*
- Though we're still a very young organization, We have a pretty good idea of what works and what doesn't. vocational school &#x2014;&#xA0;real, employable skills life + economic foundation incentive/enforcement to repay no long-term cohort leave village to go to school, leave school to get a job no way to enforce *poof*
- Though we're still a very young organization, We have a pretty good idea of what works and what doesn't. vocational school &#x2014;&#xA0;real, employable skills life + economic foundation incentive/enforcement to repay no long-term cohort leave village to go to school, leave school to get a job no way to enforce *poof*
- But, just to make it a little more concrete.
- We spend anywhere from two months to 8+ months to building these programs, And we're getting better at doing it every month. And when a program is up and running,
- Students from those programs then appear on our website.
- Where you choose a specific, individual student. Maybe because you were also a poor law student (like Haward), Or because you truly believe in the power of education (Mario is a teacher), Or you understand the struggles of a single mother in school (like Edelmira).
- Over 12 to 36 months, As they graduate, get degrees and get jobs, They repay. And as they repay, Vittana repays you. If you made a loan for $25, you get $25 back.
- We &#x2014;&#xA0;Vittana &#x2014;&#xA0;can build student loan programs around the world. But we have no capital of our own to lend or donate. And these students have no other source of financing Except through the loans that you make through Vittana.
- Seven months ago, we started out with our first student loan program in Paraguay, With the amazingly innovative Martin Burt and his Fundacion Paraguaya. And now, the first students from Paraguay are starting graduate And get jobs. And repay. And what has been truly humbling for me is that not only are these The first loans for Vittana, But they're also the first student loans _ever_ made in Paraguay.
- Let me bring you back to Haward. His loan just got filled a couple weeks ago on Vittana.
- I'd like to ask each and every one of you to do one thing when you go home today. Make a loan. I can build all the student micro-loan programs I want But unless people like you make loans, these students have no way of ever getting a loan. So, whether it's for $25 or $50 or $100, When you go home today, I'd like to ask you to Make a loan through Vittana.
- Let me jump up to the big picture. Let me tell you what we see. And why we are here.
- It's been about 20-30 years since microfinance was first invented. The original generation of borrowers have built businesses, Made homes and raised families,
- Been able to buy real food and get clean water, and Send their kids to school. And for the longest time, when people said education in development, This is what they meant &#x2014;&#xA0;primary school, basic literacy.
- But now, it's been about 20 years. Those kids are starting to grow up. They're finishing high school. Looking around for something to do. They don't want to buy a cow and sell milk. Or open a roadside fruit stand.
- They may not have ever seen this graph, But they know that education is the only way out.
- They want to become accountants, Or programmers, Or teachers. This is the next generation of microfinance &#x2014; The next generation of borrowers, quite literally.
- But they have no way of even getting the chance. But outside of the US and a handful of other countries, Student loans just aren't available. If you have the money, you go to school. If you don't, you don't. So, what&#x2019;s the problem?
- It&#x2019;s not the MFIs. Over and over again, we hear from MFIs that they know this is a really big deal, That this part of their 5-year plan To make this a little more concrete, In Latin America, the numbers we hear are that 10-20% Of the current borrower base wants a student loan every year In India, that number is 40%. They know that and I know that, And their any of 10 other reasons that they need to start offering student loans. Let me ask a question.
- Who here thinks education is important? (Can I get a show of hands?) How many of you are funders? Everyone else put your hands down. Would you invest $25 million dollars in a developing-world student loan program right now? Why not?
- Who here thinks education is important? (Can I get a show of hands?) How many of you are funders? Everyone else put your hands down. Would you invest $25 million dollars in a developing-world student loan program right now? Why not?
- Until there is a track record of tens of thousands of developing-world student loans, Attending school, getting jobs and repaying, No traditional investor can invest the $10 or $25 or $50 million needed. But, at the same time, until someone starts investing, Not one student will be able to take out a loan, Attend college, get a job or repay. And until someone starts investing and MFIs start lending, No one will understand what it takes to make this work.
- That's where Vittana comes in. There's something really special and really unique here. Where no one traditional investor can invest $50 million, Vittana can make it possible for a million different people to each lend $50. And we can jump-start the student loan programs. We can get the ball rolling. We can get the first MFIs to start lending. We can get the first students going to college. Graduating and getting jobs. And repaying. At the same time, we're working every day to understand &#x2014; To better understand what works and what doesn't. So that not only can we build better and more effective programs ourselves, But also when the day comes that the traditional investor says That, hey, so I've been hearing a lot about these student loans I want to invest $10M, Tell me more. We'll be able to say, yes, We know what it takes.
- This isn't about us. We don't want the $10M. This is about creating something that is so much bigger than us, Bigger than any one of us. Vittana is building a world where a student anywhere in the world Can get a student loan to attend college. It's very important, so I'll say it again. This isn't about us. The whole point of Vittana is we can go first Where no one else can or is able to move forward And get the ball rolling. And catalyze a market - A system - An entire new generation of microfinance that is so much bigger than us.
- I was asked to speak about what it's like to be a social entrepreneur. To be honest, I wasn&#x2019;t really quite sure about how to do that. It's like the difference between reading Saving Private Ryan vs. actually being in the trenches. But I'll do my best. So I thought I&#x2019;d just tell you a few stories, And tell you about a few lessons I&#x2019;ve learned. You&#x2019;re going to hear from the general &#x2014;&#xA0;Jim afterwards &#x2014;&#xA0;running the war, I&#x2019;m the captain in the trenches who hasn&#x2019;t slept enough, Hasn&#x2019;t showered in a week &#x2014;&#xA0;figuratively speaking, And is starting to think ramen and a fruit roll-up is a well-balanced diet.
- Why don't I start here? This is a picture of my car. It's nothing special, Just a plain ol' Pathfinder. Why am I showing you a picture of my car? Trust me, it&#x2019;s not something I&#x2019;m trying to show off. See anything unique?
- Yeah. It doesn&#x2019;t actually have a back window.
- 154. That is the number of days I haven&#x2019;t had that back window. My car was broken into back in June And, over the course of nearly six months I just haven&#x2019;t had time to get it taken care of. You want to know what it means to be a social entrepreneur? That&#x2019;s the best explanation I&#x2019;ve got.
- You&#x2019;ll hear people bat the word &#x201C;passion&#x201D; around. Passion is good. But it&#x2019;s a weasel word. Total cop-out. You need to be *OBSESSED.* If you talk to any startup CEO, any entrepreneur, any founder, The one thing they'll tell you is you need to be obsessed with your company. Not just "committed," not just full-time, _obsessed_. Because, I don&#x2019;t care what you&#x2019;ve done, This is harder than anything you&#x2019;ve ever done. And if you&#x2019;re not obsessed, if you&#x2019;re not on top of every tiny detail, You&#x2019;re not going to make it. Starting a company is like ramming your head through a brick wall. Repeatedly. By choice. After you haven&#x2019;t had a proper night&#x2019;s sleep in a month. At 4am when your website just exploded. When your friends have stopped calling you to go out Because they know you&#x2019;re just going to say no. If you&#x2019;re not obsessed, You&#x2019;re not going to make it. I was thinking to myself, Well, How do I show what it means to be obsessed? And then I realized, sadly, that 99% of my job is writing email. So I thought of this.
- This is a graph of email send activity over the course of the day. Averaged over a bunch of days. This one is a good friend at Microsoft, You can see... And then there&#x2019;s a manager from Very successful, she&#x2019;s done some amazing things up in Seattle. And then there&#x2019;s me. Yeah. See a difference? I&#x2019;m not special, I work hard, but not necessarily more than other good entrepreneurs, This is what it takes. You need to think about your company day and night, day and night.
- This is a graph of email send activity over the course of the day. Averaged over a bunch of days. This one is a good friend at Microsoft, You can see... And then there&#x2019;s a manager from Very successful, she&#x2019;s done some amazing things up in Seattle. And then there&#x2019;s me. Yeah. See a difference? I&#x2019;m not special, I work hard, but not necessarily more than other good entrepreneurs, This is what it takes. You need to think about your company day and night, day and night.
- This is a graph of email send activity over the course of the day. Averaged over a bunch of days. This one is a good friend at Microsoft, You can see... And then there&#x2019;s a manager from Very successful, she&#x2019;s done some amazing things up in Seattle. And then there&#x2019;s me. Yeah. See a difference? I&#x2019;m not special, I work hard, but not necessarily more than other good entrepreneurs, This is what it takes. You need to think about your company day and night, day and night.
- This is a graph of email send activity over the course of the day. Averaged over a bunch of days. This one is a good friend at Microsoft, You can see... And then there&#x2019;s a manager from Very successful, she&#x2019;s done some amazing things up in Seattle. And then there&#x2019;s me. Yeah. See a difference? I&#x2019;m not special, I work hard, but not necessarily more than other good entrepreneurs, This is what it takes. You need to think about your company day and night, day and night.
- Any entrepreneur worth their salt will tell you that you absolutely, positively Need to be committed to make this happen. You need to be full-time. And not even just full-time &#x2014;&#xA0;full-time plus. A lot of folks say they'll leave when it picks up, Or when they get funding, Or when they hit milestone X or Y or whatever. But here's the secret: Unless you pull the plug and go all out, None of that is going to happen. It just drives me up a wall. Quick tangent. Seattle has this small, tight-knit community of technology entrepreneurs. Called STS: Seattle Tech Startups. This community has an email list of entrepreneurs, funders, and few other folks talking. The wise, old entrepreneurs are always around. New ones or entrepreneurs-to-be come on every day And are known to ask the same questions over and over again. So, this one day, a guy called Jeff Lawson, who runs a startup called twilio, Wrote up a deck.
- It contains gems like
- and
- and
- (Believe it or not, this gets asked all the time By folks who want to network.)
- But, back to the original point, This goes doubly for social entrepreneurs. The problems you'll face are doubly hard. If you need to be full-time and/or committed as a normal entrepreneur, What on earth makes you think you can do it part-time as a social entrepreneur? Doesn't give your problem the respect it deserves.
- Entrepreneurs help other entrepreneurs. Everyone knows how truly hard it is, And people will go surprisingly, amazingly out of their way to help you if they can. 99.999% of people in the community will gladly take an hour or two out of their day To help you. We've been truly blessed to have the kinds of people helping us Who are helping us. But, they won't come if you don't ask.
- You have to ask. You have to ask. At this point, we get approached by a fair number of entrepreneurs on a regular basis, And, despite the mass of email I send you saw, these are some of the first emails I respond to. My team sometimes wonders why I don't just ignore them, And I think back to the days when I was just starting out, And it's not even a question.
- One practice I have at Vittana is to talk to at least one customer every day. Every Sunday, I randomly select five of our lenders, whether they've made a loan or not, And send them an email, Asking if I can borrow 20-30 minutes of their time, To ask them how we can do better. If we're living up to their hopes. It's not a sales call &#x2014;&#xA0;I don't ever ask them to make a loan, It's making sure we live up to our constituents. It's absolutely crucial to stay connected to your customers, As an entrepreneur in general, Because if you're not, you build what you think your customers want Not what they really need.
- But _especially_ as a social entrepreneur, Where we often don't have the same background, language or even country as some of our customers, Where we're so disconnected from what's happening on the ground in Paraguay, Or Peru or Mongolia or Rwanda or wherever. That we're _especially_ at risk of building something that we think "those people" need. And you see this story told over and over and over again in development. Paul takes an especially harsh tone but it's true. You need to talk to your customers.
- Something will go wrong. Horribly, horribly wrong. Completely not according to and catastrophically not according plan. Don&#x2019;t worry about it. It happens to everyone. And if you ask any entrepreneur for their war stories, They all have them. And if you buy them lunch (hint), They&#x2019;re usually more than willing to share. See point #3. This is where you need to be absolutely, positively, 150% committed. Because if you have that job at Microsoft, It&#x2019;s really, really (fatally) easy to say, oh would not have worked anyways. If you're not fatally scared to be completely embarrassed in front of your friends, That you'll be a seen as a total screw-up by your friends, It's really, really easy to give up. You can't. This is that brick wall that you need to blast through. And you'll need to blast through it again. And again.
- I couldn&#x2019;t find anything special to say here, So I thought this my be the one time I get to use FAIL blog in my presentations. So, I've painted a pretty gritty, dirty from-the-trenches picture so far. This is reality.
- So, why? Why do all this? Because the good days outnumber the bad days. And even one good day more than pays off for a hundred bad days. Especially as a social entrepreneur. The change that is possible out there, The change that we get to create, The time and hope around this right now, Is incredible. There hasn't ever been a time like this before. The confluence of technology, government, entrepreneurship, The fact that there's even an idea of "social entrepreneurship," Is truly incredible. There aren't enough of us. I love Seattle, I love the tech entrepreneur community, I love how much support they've given us, But then I look around and wonder where the social entrepreneurs are, I can count them all on one hand. For every 10 or every 100 for-profit entrepreneur, There is maybe 1 social entrepreneur. There aren't any fewer problems and they aren't any easier, It's just that there aren't enough of us.
- Because there's an incredible, unique opportunity in history right now. Because the world needs you and there aren't enough of us. Because you can do so much good. But, most importantly, because there's something inside of you telling you that you should. Let me finish up with a story. We spent a fair amount of time in Peru and Paraguay last year, Meeting students, MFIs, microfinance families when we were first starting out. There were lots of amazing people and even more amazing stories. But there were two that really stood out to me. Let me tell you about one of them. This guy, Eduardo, was assigned to be our guide from the MFI. About the same age as me. Wanted to go to law school. 3 years for law school, 5 years for undergrad. No student loans in Peru (back then). This guy's game plan was to work for a year, Go to school for a year Work for a year Go to school for a year Work for a year... For 16 years. And this was his game plan and he was sticking to it, He was 5 years in.
- People are amazing, Truly amazing to do what they need to do to accomplish their dreams. We might not be able to get to Eduardo, But think back to Haward. He's basically the same guy. We might not be able to get to Eduardo, But we can definitely do something for Haward. And, we have. It's really amazing what we can accomplish, Both as social entrepreneurs and as a community as a whole. I'd like to ask each of you to go home today, And make a loan. Whether it's for $25 or $50 or $100, A Vittana loan changes a student's life forever. It really makes a difference. Thank you.