How entrepreneurs can do a lot with a little

In her new book, Clay Water Brick: Finding Inspiration from Entrepreneurs Who Do the Most with the Least, Jessica Jackley, cofounder of the micro-lending site Kiva, shares the stories of resourceful entrepreneurs she has met and explains why you can start a new enterprise with far fewer resources than you think.

Jackley recently visited campus as a guest lecturer in the Authors@Wharton series. While she was on campus, Wharton management professor Adam M. Grant interviewed Jackley about the entrepreneurs she has met, why she started Kiva and where microfinance is headed.

An edited transcript follows.

Adam Grant: Jessica, tell us why you wrote this book.

Jessica Jackley: I wrote the book to share with people my own entrepreneurial journey, and more importantly, to share with them the incredible insight and wisdom that I encountered in unexpected entrepreneurs along the way.

For most of my formal business education, I got pointed in the direction of a lot of usual suspect examples — [the] who’s who in business, especially in Silicon Valley, the who’s who in the start-up world, which ends up feeling sometimes like a very narrow place of a certain kind of tech start-up led by a certain kind of person.

When I got to get out into the world and travel and work a lot with entrepreneurs — [often] in developing countries and communities that were socioeconomically disadvantaged — I would meet these incredible people doing really important work despite the fact that they had very little education or very few resources [and] often no connections to anybody in a powerful position. They lacked or had lost a lot, but they were incredibly wise, incredibly clear thinkers, intelligent people doing incredible things. I find their stories the most motivating and empowering and inspiring of any other entrepreneurial stories that I’ve encountered.

Grant: What did you learn from them? If you think of some of the entrepreneurs who affected you most, what were some of the takeaways?

Jackley: The title — Clay Water Brick — is inspired from the story of a brick maker named Patrick who I met in Uganda who started to change everything for himself when one day he decided to make life better and to try to build something. He had virtually nothing. So, he literally — not figuratively — dug into the ground beneath his bare feet and started to shape bricks out of the clay and mixed water with it to make it the right consistency.

After a few years, he built a brick business where he had several employees and was thriving, certainly relative to where he’d been before. That’s just one little glimpse of one story. The main lesson that he can teach all of us is that you really don’t need to wait to get started. You don’t need to wait until you have all your resources nicely lined up. Just start with whatever you have in front of you, even if it’s messy or scrappy or it’s rough around the edges — quite literally. Just start and you can build something pretty amazing.

Grant: You also did that yourself. So, tell us a little bit about how you started Kiva.

Jackley: Ten years ago I was in East Africa meeting people like the Patricks of the world, and I realized a few things. One, I realized that they indeed were incredible entrepreneurs. That was huge for me because for most of my life the narrative about poverty that I had heard did not allow for that to be a reality. I heard from well-intentioned nonprofit organizations that wanted me to participate in their work as a donor, that the poor were not entrepreneurial necessarily. They were people who had stories mostly of sadness and suffering and desperation, and they needed me to participate as a donor. The organization would take care of the rest.

I didn’t hear the stories of strength and empowerment and people lifting themselves up by their bootstraps if they only had access to a little bit of a resource that I had had access to my whole life — a small bit of capital, a small loan. That, for me, changed the story. I thought those stories were really worth sharing….

Two, for most of my life I’ve been kind of a Luddite. I studied philosophy and poetry as an undergrad. There were computer science courses. I did not take them. There were business courses. I didn’t take them — until later [when I] went back and got my MBA.

But [before my MBA] I saw the potential of technology in these very far-off places — in the middle of a village with no electricity source, in Uganda or Tanzania or Kenya where I was working at the time ten years ago. I saw how I could hand my cell phone to the goat herder who I was meeting and have that person talk to my mom and dad back home. I could leave my camera and get pictures from what was going on in that village where nothing else really had reached. It was very easy to connect them with just little bits that even I had.

Seeing that there was a new story to be told, seeing that that new story allowed for a different response, not just for anybody who heard the story to participate as a donor to a big nonprofit that would end up touching that person, but also somebody could respond directly, perhaps with a loan directly, which was needed, not just the donations. And then seeing that technology could really connect everyone led to the idea for Kiva.

I laugh when I read case studies that have been written about Kiva because … it’s often said in a very sophisticated, kind of intimidating way. I hear it and I think, wow, did that really happen? Oh, this is me, this is my story. They will say something like, “Thus was born the idea for the world’s first peer-to-peer micro-lending marketplace.” It was all these big words. Sometimes it’s even written about as an early crowdfunding thing. I didn’t use the word crowdfunding until [much later].

Kiva was born out of a very simple desire and a very simple set of ideas to connect people that I knew back in the United States with these new friends that I was meeting, these incredible entrepreneurs who had a different story to tell. The way to connect them was through a loan. So, that’s what we tried to do.

Grant: There are many people who have been inspired by the fact that this wasn’t just charity. You’re actually able to get a loan. The repayment rate is staggering. Could you tell us a little bit about how that works?

Jackley: I have one micro-credit, micro-finance joke, and here it comes. Get ready. Credit is due — ha, ha — not necessarily to Kiva for the super-higher payment rates, which are at least 98.5 %, often 99% on average at any given moment, but because throughout micro-finance, there’s a lot of work being done to help people succeed, especially with the mission-driven organizations that are out there. There are big banks that now offer micro-loans. Then there are nonprofits, grassroots organizations that offer loans. Sometimes they offer it to different groups. But even when they’re offering to the same [ones], you see a lot of organizations work really hard to make sure those people succeed and to make sure payment rates get up there, whether that means extending a loan, making sure that there’s group support, that sort of thing. Often loans are given in groups….

It has been really amazing to watch. It’s been one of the greatest experiences of my life to watch the world respond and say, yes, we value these entrepreneurs, too. We want to lend for free — at zero percent interest, for no financial gain. We want to lend to somebody so that they can try to reach their potential. It has been awesome…. Kiva’s about to cross $700 million in loans in these little $25 bets from people from all around the world.

Grant: Wow. Of course, you can’t help but wonder about impact. I know you’re aware there’s some evidence that’s come out recently suggesting that maybe micro-savings programs could be more effective than micro-lending programs. How do you react to that? What do you make of that?

Jackley: As [American author] Nicholas Kristof … has talked about, there’s no silver bullet. I would never claim to say that micro-credit, micro-lending is a silver bullet. He’s talked before about — in this and other contexts — a “buckshot approach,” an analogy I love. Micro-savings are often a part of micro-lending programs. Micro-finance is the largest heading we could talk about…. Micro-credit is one such product under that heading, one such service. Micro-insurance is one. Micro-savings is another. Often these things work best together.

I believe in the power of teaching people to think entrepreneurially, or better yet, just giving them opportunities to figure out how to activate that part of themselves. It doesn’t always have to be taught per se. I think you just give people opportunities to exercise what they already have inside of them. I value watching people go through the process of receiving a micro-loan regardless of the outcome of the viability of the business.

Now, of course, I very much prefer when those businesses thrive and go on to provide more of a sustainable livelihood for folks. But I’ve seen cases in which somebody receives a loan, [and there’s] an anomaly, like, there’s a disaster they needed some of the money for instead of repaying their loan fully. Or the business survived for a while but then it shifted. Whatever happens, if it’s not a business success at the end of the journey, I’ve never once met somebody who has not grown or changed in a positive way because of the entire experience of going through receiving that loan, being trusted with that resource and given an opportunity, given a chance to thrive and build something meaningful in their lives.

That’s a little bit of how I look at it. But I’m fascinated and very pro the idea of micro-savings programs. Maybe that will be the next thing that really takes over the space and is prioritized above micro-loans and other things. That would be interesting to see.

Grant: Jessica, what do you think are the biggest misconceptions that entrepreneurs carry around?

Jackley: Regardless of where they are, where we are in the world, entrepreneurs tend to get stuck more than they need to because they think that they need something to move forward. They can get there any way — over, around, through. They can figure out a way. Entrepreneurs are great at doing that in general, but I often see people stop at particular points where they don’t necessarily have the things they think they need.

For example, there’s a woman who thought that she needed to raise $90,000 for her small business. It was a whale watching tour business. It turns out that she put that out there into the world, to say this is what I need to get. I need this funding, so I can go purchase a new boat and all these things. Her friends didn’t have all the money to support her financially, but they knew she needed this boat. They were on the lookout for this. It turns out they found it at a tenth of the cost, incredibly discounted.

She ended up getting there in a different way than she thought that she would. But she definitely thought the path was raise the money, then find the thing itself, not go directly to the thing itself. Just a small example.

Grant: We don’t always need to be funded before we can get started as entrepreneurs?

Jackley: Absolutely not. It’s helpful, and for some, it’s absolutely the very first thing that is necessary. But it’s not always the case. That’s the fun of entrepreneurship, right?

Republished  with permission from Knowledge@Wharton, the online research and business analysis journal of the Wharton School of the University of Pennsylvania.”

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Author: Jessica Jackley is co-founder of the micro-lending site Kiva. 

Image: A woman walks on the esplanade of La Defense, in the financial and business district in La Defense, west of Paris, April 10, 2014. REUTERS/Gonzalo Fuentes