Matt Flannery - Entrepreneur,

Matt Flannery is a company that needs little introduction. A micro-financing operation based out of a humble San Francisco office, has grown in a single year from a four-person company with little investment a year ago, to a company with more money than it knows what to do with today. This is a problem, but for co-founder Matthew Flannery, this problem is at least on the better end of the spectrum.

After a premature midlife crisis at 22, Matt spent 4 years working in a job he did not enjoy, but learned from immensely. His entrepreneurial spirit brought him to Los Angeles, and what followed were a series of failed ideas, ranging from DVD vending machines, to a personal online clothing rental service.

Matt’s passion for KIVA comes out of his love for his wife, through her love for Africa. What started as a social entrepreneurship program in Uganda, has now become a service for developing nations all over the world. But even an idea as sound as the one behind KIVA is not invincible; at many points the company seemed on the brink of disaster. National exposure, however, from the New York Times and PBS, has catapulted KIVA to levels of what seems to be socially entrepreneurial stardom.

Visit today, and see how you can personally fund dreams across any divide.


I kind of did the same thing you are doing when I was your age.I did a bunch of informational interviews.I interviewed ‘Jack’ from ‘Jack in the Box.’I interviewed entrepreneur friends who started companies.I interviewed people who worked for design firms.Writers.I moved to LA for a while and tried to be a writer.I tried to start maybe ten companies.


Yeah.Matt’s sort of a hairbrain guy.It was like I had a midlife crisis at 22.

Zach:What kind of businesses did you try to start?

I tried to start so many.I have a list.

Zach:A lot of non profits like this though?

No.Just wacky ideas.I tried to start a DVD vending machine company.I tried to start an online clothing rental company.

Zach:Clothing rental company? Like for janitorial services or something?

No.Like luxury clothes.They’re stupid ideas.

Zach:That’s not that bad of an idea.If you need a suit and don’t want to buy one.But I guess you have to keep a large stock of clothes.

Yeah.I also tried to start a robot company where the robots were connected to the internet.They were always living in a new episode of a story.So you’d have many of them, and every day they would be different characters with a new episode to perform together.

Zach:How far did you get with that idea? Did you ever actually have robots?

I had prototypes.I had drawings.Brand name.Stories. Pitchdeck.Never actually had hardware.That’s sort of the breaking point.When you start using your hands to make something, it’s a pretty big step.So I didn’t get to that step.I failed.

I think a lot of those ideas sort of fizzled out.It’s not that they failed, but it’s like a couple months later I was wondering why I was doing it.

Zach: You lost your passion for, if you will.

You get some perspective on what you’re doing and you realize it’s kind of stupid. So you peter out.

Zach: They got the whole video vending machines now.In grocery stores and stuff.

Yeah. And that happened right as I was trying to do it.As I was trying to do it, then BOOM!I saw this company spring up in Los Gatos and that was a damper on that idea.

I actually had an investor for that idea. (Laughs)

That’s interesting that you were doing interviews like us and going out and picking people’s minds and trying to put that into personal benefit.Because that’s exactly what you did right?You interviewed people for a personal benefit, not with what we’re doing, putting it out there for others?

Yeah.I was really restless, so I was really unsatisfied with most things.When you’re really unsatisfied, every few weeks you try to do something new.It’s not like I was trying to do it all at once and resolving.It was trying something, and a few months later I was trying something with the same set of questions, with the same set of unsettled feelings.

Zach:But you had a job at this time?What kind of stuff did you do?

I was building software for TiVo.

Brett:How long did you work for them?

Four years.

Brett: So that was your first job out of Stanford?

Pretty much.I also got my master’s degree during that time.That was a little thing I did.A little passion at the moment I had.

Brett: I was reading in your bio that once you had this idea in Africa, you came back, and you spent a year researching it.You went around and interviewed people as well, like people in law.Did that feed from the interviews you did prior and seeing the benefit in that?

Sure.It was the same thing.It was a process I had done before which is you have an idea and you shop it around.You talk to anyone related to the idea and you try to get feedback.I spent a year doing that.

B: How many people did you talk with and how did it play into the development of everything?

We probably talked to fifty people.It created a refining fire for an idea.I think when you have an idea, it sounds really great.It’s like this pristine thing.You’re just so excited.And then you test against reality and things become more discouraging and down to earth.You realize all the complexities around it.

So that year was a tough year because most of the feedback we were hearing was negative.So we almost didn’t start.We wondered what we were doing.It just wasn’t practical.

B: So how did you overcome that and keep seeing it through?

The thing that set this idea apart from all those other wacky ideas was a few things.First, it was something we could do without much help.We could create a website.We could create loan opportunities in Uganda for very little money.It was something we could do, our wife and I.As opposed to the robot idea where I needed a hundred thousand dollars to start.

That was one facet of this idea that allowed it to keep going.Another thing was it was something a lot of people cared about.It was something that we cared about.

A lot of those other ideas for me were a little empty.It’s like you get over that initial excitement of trying to be an entrepreneur, which is alluring, but once you get over that, and you get to the actual content of what you’re doing, there wasn’t a lot of content there.

‘Do I really care about online clothing rental?’No. I just want to be on my own because I’m unsatisfied.

A lot of my ideas were negative reactions to my current state.They weren’t proactive moments towards something I loved.

This idea is different.The actual content of the idea I enjoy every day.I actually enjoy working in Africa.I enjoy all the people I was meeting.I enjoy the purpose and cared for it, in and of itself.The thing that kept us going was the actual work, we liked.Rather than the result.

Because if you’re just looking to be an entrepreneur and get rich, or looking to be a successful guy, that’s not very motivating every day.In the end, that’s a nice end point to be at.Sure, I’d like to sell a company and make a million.But, it’s hard to get there and if you don’t enjoy doing the shit work, you won’t get there.

Zach: You can’t maintain your momentum every day if you don’t like what you’re doing.

Yeah.This is just my personal thing.I don’t know if everyone’s like this, but that’s how I operate.You’re up against so much negative inertia when you’re trying to do something like an entrepreneurial idea.The inertia of not doing it is so great that in order to overcome that, you need to actually like everything.

I liked programming computers.I liked running the website.I liked designing the website.I liked to talking to my friends in Uganda.I liked working with my wife.I liked figuring out the legal complexities.In and of itself, it was worth it.

8:23 We definitely felt like doing this idea was worth it as a non successful idea.Even if it was mildly successful it was still worth it.Even if no one else knew about it, and it was just us, we would have done it.And that’s the difference.

B:That’s pretty interesting.It sounds like you never set out to make Kiva into what it is today.You just care about it, and you wanted to help some people in Uganda.And if it caught fire, then it caught fire.

Yeah.That’s the initiating difference.We didn’t have a financial incentive.So it took that allure away.We just did it for what it was.It was actually just for us, my family, and my friends.

B: So did you ever think it would be where it’s at today?

Maybe I had a pipe dream about that, but I didn’t spend much time worrying about that.I spent a lot of time doing what was next.

B:Exactly.As an aspiring entrepreneur myself, that’s the tough thing.You have a million ideas of what you want to do, and you think they’re all going to be successful until you start talking with people and getting that feedback.That’s appreciated.

Also, if it’s a good idea, by the nature of a good idea, you will get a lot of negative feedback because it’s a good idea.A good idea will receive more negative feedback than a lot of bad ideas.

B: Why’s that?

Because what will set it apart is that it will have a contrarian hypothesis.Really groundbreaking, good ideas have a contrarian nature.They contradict the common wisdom.They contradict common sense.A little bit, not completely, but there is an element of that.That’s why no one else is doing it.Because no one else thinks it’s feasible.

If it’s a really, really good idea, a lot of people won’t think it’s feasible.And that will make it a good idea.The fact that they think it’s not feasible.

But just because they think it’s unfeasible doesn’t make it a good idea.There’s this logical syllogism.If they think it’s a good idea, it does not implicate that it’s a good.If they think it’s a bad idea, it does not implicate it’s a good idea.But if a good idea does implicate that they think it’s a bad idea…I’m a philosophy master student from Stanford.So, I go off on logic sometimes.But all really good ideas will have a strong group of people who think it’s a bad idea.

Zach: And there’s also the fact that if it’s a real bad idea, people might just not spend the time to be critical of it.A good idea is always harder than you think it is, so when you start thinking about, they’ll be some criticism because you need it be constructive and get the juices flowing.But if it’s a bad idea, people are like, ‘Hey!I got an idea!’And others are like, ‘Yeah…that will work out for ya.’

People cared about it being a bad idea. There was some passion behind their criticism of it.It was sparking some sort of interest even if it was a bad idea.

B: I was reading on the site that you do loans because you love the stories that come out of it.I’m wondering what you’ve learned from all of these developing world entrepreneurs, and how that’s affected you as an entrepreneur today.

Primarily, the challenges they face are very similar to the challenges we face.That’s a real powerful idea.When I started realizing that on a day to day basis, that was really connective.The stories make sense to us.A story about a woman selling fish on the side of the street in Uganda, you can get into profit margins, inventory management, the same things that businesses here think about.

There’s a commonality that can unify people.Which is exciting.Because people can relate to business stories in any country.

B: That’s a hard comparison to make. The challenges that they face, are the challenges we face too.I think a lot of Americans don’t draw that comparison.What you’ve found that there is no difference.Everyone is worried about profit margins.

There’s differences in scale.You can add three zeros to the numbers a Ugandan entrepreneur is dealing with.The problems they face, just chop off some zeros. It’s the same mentality, same thinking, same skill set to be an entrepreneur.

B: How often do you go overseas to meet these people?

Maybe two or three times a year.Once this year and twice last year.

B: Primarily you spend most of your time overseeing Kiva from here? How many hours do you spend and why do you spend them?

My hours have gotten a lot better.My first year, this time last year, we had four employees that were unpaid.We had the same website, and we were four people trying to run it.We didn’t get much sleep.We pulled all nighters twice a week last year.It was a really challenging time.

Our main challenge was fighting the void of nothing.Fighting that we had no customers and very few users. That was our main challenge, was to get the word out.

This year we have a different situation.We have more users than we can necessarily, healthfully handle.Our main challenge is building infrastructure to handle all that traffic.

Why do I do it?Well, because I’m passionate about the cause.It unifies all of my interests.It’s exactly what I should be doing.I love that.

It’s also stressful.It’s fucking stressful.All my rhetoric, all my writing, everything I’ve said over the last year is on the line.Things could go wrong.A lot could go wrong.Personally, my ego and reputation are wrapped up into it.Probably more than it should be.

I’m definitely not getting paid a lot.That’s not why I’m doing it.I do it because I feel that we’ve walked this far and we’re on a tightrope.If we screw up now, that would suck.So I really need to create a safety net for everyone.

Zach:So you’re getting more users than you say you can handle?How do you handle that when you’re funneling money and giving this aid to people?How do you make sure that you get as much of it as you can?Is that what you’re facing right now?

We aren’t stretching our due diligence thin, and our risk management thin.We could probably get thousands of more stories and pictures on the site, but you have to dip into less and less reputable partners.And send more and more money to smaller NGO’s that probably shouldn’t be getting that much money.

I’ve experienced that firsthand.I’ve been to Africa and I saw the NGO that we sent $300,000.It wasn’t pretty.They can’t handle it.I don’t want that to happen again.

Zach:That’s a lot of money.

We’ve done $9 million a month, most of it in the last few months.In our world, that’s 3% of our portfolio.To them, that’s more money than they’ve ever seen in a generation.

Zach: When you read the stories and see that some people are starting their own businesses for as little as $500, and all of a sudden they’re getting $300,000?I mean, do they even have logical places to funnel all that money?

It’s not one person that’s getting all that money.The NGO can find people.People line up.But they account for it.They can’t manage it. They can’t get it back.They can’t do all the visitation and screening that they need to do.They can’t do it right.I’ve seen that.

Zach:Is that something you can control?

We can limit the amount of money sent to a NGO.That NGO should probably only have $10,000, not $300,000.They can probably handle that in a hands on way.But they don’t have the computer systems to manager $300,000 a month.They don’t have computers.They have paper and they’re writing it down.They’re not educated.

Brett: You mentioned earlier that you have more people than desks here now, and you’re looking to get out of this office and into something bigger, but I’m wondering how you attract so many talented, passionate people.Because I was reading some of their bios, and they’re amazing.They’re impressive and successful and driven.How do you attract those people to a non-profit?

One at a time.Everyone that works here has their own story as to how they entered and how they got to know us, or how we got to know them.A lot of them are old friends.And then you have a currency of doing something people care about.Which is really attractive.If you can combine that currency with actual currency, good salaries, it’s pretty easy to get great people.

We’re a financially sustainable organization.We’re cash flow positive.So we can pay competitive market wages to people.Those market wages combined with a cause that’s greater than ourselves that every one cares about creates an exciting workplace.

B: Is that the same line with your board of directors, and the companies that have jumped on board to help you guys?Is that ‘We’re doing good, alleviating poverty’ attitude it?

Yeah, I mean, who can argue with that?Alleviating poverty and microfinance.People don’t argue to that.Most people can get behind that.Right wing conservatives can get behind that.Religious rights can get behind that.The radical left can get behind that.And everyone in between.It’s something that everyone cares about.

B: Have you gone out and sought these sponsors or board of directors?Have they come to you?A little mix?

We have a board of directors and that has come primarily through a network of entrepreneurs and venture capitalists in Silicon Valley.Myself and my co-worker Primyal, he’s really experienced and well connected in Silicon Valley.Much more than me.

All these corporations, it comes with personal relationships.So with every corporate relation, it comes with someone we probably know there.A few of us are really well connected.Not me, but Primyal and my other co-worker Alana have spent time at eBay, PayPal, Google, these companies where they know the President of PayPal.Or the founders of Youtube.That’s one way we’ve been able to get more support.

B: So one of the things, personally, I’m struggling with is that I have this thing you can’t argue with and people have come to me with ‘Pursue the Passion,’ it’s something you can’t really argue.A lot of people come to me wanting to get involved and give back, and I’m struggling with the whole non-profit thing because to be honest, it’s not that attractive for an entrepreneur because you think about a non-profit and you think about a struggle and not making money.But is that even true, the whole non profit thing?

It’s not necessarily true, but it’s generally true.Most non profits depend on fundraising, grants, rich people, and they use up the money and they ask for the money again.That creates a really depraved mentality I think.It’s a scarcity mentality.You only have so much money, and you can only use it so much.