Nathan: Hey guys, welcome to another episode of the Foundr podcast. Nathan Chan here, CEO and publisher of Foundr Magazine, and also the host of the Foundr podcast. If you are new to joining us, we interview some of the greatest entrepreneurs and founders around the world, and really try and unpack and learn from their experiences, from building extremely massive businesses, they’re either number one or two in their industry, they’re proven entrepreneurs, they’ve done some crazy stuff, amazing founders. And today’s guest, her name’s Jessica Jackley and, wow, she’s done some incredible stuff.

Before I jump into talking about Jessica and what she’s done and what you can expect in this episode, I just wanted to say this will be the last official podcast episode for the year. It will be 2017, the last week, this goes live next week. We’re not producing any content. And, I’m actually feeling pretty tired right now, it’s 1:00 a.m., just grinding it out, just making sure I finish everything for the year up nice and, just, organized, and really starting to prep for 2018. We’re doing a big off-site Foundr retreat, second week of January, it’s gonna be awesome. We’re gonna align the team, and we’re gonna set some seriously big goals. We’ve got a lot planned for next year which I’m really pumped about.

And I think, you know, if there’s one thing I could share with you guys is, I’m so big on focus now. We did a lot this year at Foundr, too much, in fact. I just wanna focus, I really, really wanna just focus on producing, just, world-class magazines, world-class content, and world-class educational courses, so that’s what we’re going to focus on next year. I wanna do a SaaS product, probably 2019. I wanna do another Kickstarter, probably 2019. And, we might do a little bit of stuff on YouTube, but that’s about it. So, that’s about what I’m thinking about and, yeah, I need to get some sleep.

So, what is happening in this episode? Well, Jessica is the founder of a company called Kiva, and this is an amazing social enterprise. If you guys are not familiar with it, I’m a massive fan, they do micro-financing loans. And, pretty much, how it works is you can, you know…it connects people in developing countries to be able to get access to capital, and you can sponsor…you know, not necessarily sponsor a person but you can give them access to that capital, and they can do all sorts of things like start little businesses. So, it’s just an absolutely incredible initiative. They’ve done over $1 billion in micro-finance loans, so incredible achievement. She’s a very, very smart founder, you can learn a ton.

And, this is what we get asked a lot, you know, “How do you start a social enterprise? How do you start a movement like this? How do you keep going when, you know, you’re not really making any money,” and this is the interesting part, right? With these social enterprises, you can actually make them for-profit. So, we talk about all those kinds of things and, you know, everything that Jessica’s learned all along the way.

So, that’s it for me, guys. I hope you have a fantastic year. I look forward to making 2018 the best year yet, and I hope that is the same for you. I wish you nothing but success. Hope you have a great Christmas, New Years’, and holidays, and take a bit of a break and just relax and recharge for a big year next year. But, that’s it for me, hope you enjoy this episode. And, if you are enjoying these episodes and this podcast, please do take the time to leave us a review. It helps us more than you can imagine.

All right, guys, now let’s jump in the show.

So, the first question that I ask everyone that comes on is, how did you get your job?

Jessica: So, one of the great things about entrepreneurship is there’s nobody to ask. I mean, it’s for better and for worse. Nobody gives you permission, right, to go start trying out your ideas in the world, or doing a little experiment that you wanna do to see if stuff sticks, and see if stuff works. So, I got my job just by starting to do it. And, in all seriousness, any other actual formal kind of contract or agreement that I have around employment, like being a venture partner with a fund, or even teaching, I teach at USC, anything that’s a “real job”, I’ve been approached to have, and I haven’t…I don’t remember the last thing I’ve applied for. I may not, in my adult life, have really applied for anything. So, for whatever that’s worth, I think, when you want to work and live entrepreneurially, you learn very quickly to stop asking for permission, because there’s…you know, there’s no meta permission giver out there, nobody out there dubbing people official entrepreneurs. You just start doing stuff.

Nathan: So, how did you start doing stuff? Like, was Kiva your first venture, or have you done other things, or…?

Jessica: It was.

Nathan: Yes?

Jessica: Yeah. So, I…Well, okay. Way back, way, way back, I graduated college in 2000. I studied philosophy and poetry and, like, the opposite of this. I’d never taken any kind of business or entrepreneurship course. I had no interest, because I honestly thought business was bad. I thought business was about being greedy and taking and, you know, piling up wealth for oneself, and I wanted to be a giver, I wanted to help equalize things in the world, and…So, I thought business was the opposite, right, the bad guys, the takers. I wanted to be on the good guys’ side.

So, graduating with my Liberal Arts degrees, I kind of didn’t know what to do with myself. I only knew I wanted to go try to work for a non-profit. That was hard to do, because non-profits don’t have the capacity, usually, to recruit at job fairs and stuff on campus. So, without a job upon graduation, I moved to California, kind of on a whim. I was in love with a boy who lived out this way, and I ended up just staying and begging my way into a temp job at first. And that temp job led me…as an administrative assistant at the Stanford Graduate School of Business. But specifically, within the business school, in the Center for Social Innovation, this research center there that is really this kind of magical place where everyday people are thinking about solving, you know, social problems with business skills and entrepreneurial thinking, I happened to land in the right place. So anyway, I was there for three years, like, doing admin work, planning events, etc. And, one night, one of the lectures that I crashed was a guy, Dr. Yunus, Dr. Muhammad Yunus, talking about micro-finance, and I thought, “I wanna do that.”

And so, the fast forward, you know, kind of version of this story is, I basically quit my job a few weeks later and begged my way into an internship in East Africa, in Kenya, Uganda, and Tanzania, doing a survey for this non-profit. And this survey was around, sort of, impact on standard of living and, basically, how their products and services…their main offering was $100 grant at the time. I was tasked with finding out how much that had impacted people’s lives. Now, to be clear, it wasn’t even a micro-loan, it was a grant, but it was good enough for me, a non-business major. I thought, “It’s close enough.” And so, I went there and I trounced around East Africa for three months, and it was there that the idea for Kiva sort of began to emerge.

And the idea was super simple and straightforward, it was not as many books and, I don’t know, business school case studies and things like that we’ll write about it, it was not. Thus was born the idea for the world’s first peer-to-peer micro-lending marketplace. I mean, it was, “Hey, what if we lend money to our new friends in Uganda? Wouldn’t that be fun?” And then, “What if they pay us back,” and, “What if we, you know, spam our friends and family to collect the money little bits at a time?” I wasn’t even…We weren’t even using the language of crowd-funding, it was just that.

So, I’ll stop there. That was the idea for Kiva, as I tell it, was sort of originated and got going.

Nathan: Yeah, wow, and that was 2005, right?

Jessica: Yeah, we did our first pilot round of loans spring through fall of 2005. Yeah, that’s right.

Nathan: Got you. So, fast forward to now, 12 years later. Like, did you ever think it would turn out to what it is now?

Jessica: You know, I don’t know. It’s funny, I am a good visionary on some things but not on others, and I just didn’t…I think I’ve…I never saw where it would be today early, early on, but as it started to grow and change, I think I started to glimpse what it could be. So, you know, in our wildest dreams, in the very beginning, I was excited to see it spread to, you know, a dozen different countries, then maybe two dozen, and…I don’t know, it’s just so funny. I get it, I’m much less naive now, which isn’t saying a ton. I was super naive then, and probably still am about a number of things today. But, I think it was a strength, because I didn’t…I wasn’t…I didn’t care, I wasn’t obsessed with this idea that something’s only worth doing if it could grow and scale and be a billion-dollar company. I didn’t care. I wanted to have a different kind of relationship and connection with the people that I was meeting in East Africa.

So, that was the goal, to try this kind of experiment out. What would it be like to lend $25 and have them repay? Like, wouldn’t that be fun? And so, I was not obsessed with the idea of scalability and growth at the beginning. I was really deep in that specific little pilot, that specific experiment, and I think that that’s a good thing. I feel sad sometimes when I see people, whether students or post-grads or people decades after that, who are paralyzed by this idea that they have to know how the story will end, or they have to know exactly how to grow this thing to have so many zeros at the end, or to reach millions or billions of people You don’t always know that stuff starting out, and a lot of people won’t start if they don’t know, that they think that it’s not worth it, not good enough, just to experiment.

Nathan: Yeah, that’s a really interesting question, because I think it is, like, so common that, as founders, you have to have this visionary idea. But, you know, for you, 12 years later, what parts did come true and what parts didn’t come true? That’s what I’m really curious about, 12 years on.

Jessica: Sure. Well, I’m really happy and I’m heartened to see the purity of the idea still, I think, alive and well. Like, you know, there’s so many add-ons, so many other manifestations of this thing. Of course, there were conversations at the beginning and, I think, probably…You know, I haven’t been full-time in the office for years at this point, so I don’t know what’s talked about there today, but I…You know, for a while, in the early days, of course we talked about adding on interest to the loans, and having meaning because, of course, borrowers pay with interest and…it’s all on the website, easy to discover, but if you need me to walk through I’m happy to do that. Basically, though, the idea of providing interest back to lenders, you know, that was an idea since the beginning, but we didn’t do that, we wanted to keep it pure and simple. You lend $25, you get $25 back, and I’m glad to see that that’s remained.

I’m glad to see, I think, really, the spirit and the heart of this kind of partner-to-partner, respectful connection, that alone can create. I’m glad to see that. I do believe that’s still the case, in how I didn’t want it to lapse into the same old tricks…and I don’t mean “tricks” in such a negative way, let me rephrase…the same tactics that a lot of traditional NGOs and non-profits, somewhere along the way, decided was the best way to get business done, you know, that cycle of making a would-be donor feel guilty and shameful, and making them feel bad enough to whip out their wallet and give so they feel better about themselves. It was kind of a messed up set of incentives, emotional and otherwise. And so, I’m glad to see that, I think, Kiva’s remained pretty pure, and hasn’t compromised on its core values. I mean, it’s not perfect, but it’s done a pretty darn good job and I’m glad to see that.

Nathan: And what about the scale? Like, can you tell us around, like, the impact, like how far you’ve taken it right now? Like, how many micro-loans have been…?

Jessica: Yeah. I mean, I’ll tell you this. The website updates daily, so you should go there and look. But, you know, the quick and easy is it’s over $1 billion in loans.

Nathan: Yeah, wow. And did you imagine that it would be that size?

Jessica: I mean, I started to a few years in but, at the beginning, it just…that’s just not…Honestly, if I had stopped and forced myself to, maybe, but it wasn’t how I was thinking at the beginning I was thinking, “How can we do this one particular idea, and do it in an excellent way and in an authentic way?” And then, it blew up, it’s been scaled. So, no, I was not thinking, and I certainly…I wanna make this really clear. I think I have, but just in case. I was not driven by that, that was not the goal, like, “Let’s get big fast.” It was, “Let’s do this right. Let’s do this carefully. Let’s do it with an adherence to and a prioritization of the values that matter to us.”

Nathan: So, you started Kiva. How did you build early-stage momentum, because micro-lending wasn’t a thing back then.

Jessica: Well, so, micro-lending’s been around for a few decades. What no one has been doing was putting it, the experience, online, and certainly not for the retail donor/investor/lender. None of it, none of it was easy to do online in any form. So, yeah, we did that.

But, you know, we…I think it’s a talk by Bill Gross, who actually runs Idealab out here in L.A., where…I’m, like, a few blocks away from it right now as I’m driving to get my kids from school. But basically, he has this wonderful TED talk, and talks about the biggest thing, the biggest determining factor in the success of a venture is timing. Right? And so, I think we had great timing. We didn’t know it at the time, but we did. So, being able to launch during what happened to become the year of micro-credit for the UN, and it happened to be the year that Dr. Muhammad Yunus, you know, three years after I heard him talk, won the Nobel Prize for his work pioneering modern micro-finance. And, it happened to be the case that it was just out there a lot, people started to understand it. And, I think, technology, and people’s acceptance and familiarity with and comfort with utilizing technology to even do something as simple as make payments online. Like, I think everything was just at the right moment in time. People were comfortable and kind of got it.

So, we certainly had to explain what micro-finance was, but we got lucky because, for example, after Yunus won the Nobel Peace Prize, there would be these articles. Like, one of them was in “The Wall Street Journal”, and it was right after he had won. You know, “Dr. Yunus wins the Nobel Prize,” blah blah blah blah, “You too could be a micro-financier. Go to kiva.org.” Like, we rode that wave. So, I think in the very early days, we were lucky to get momentum from just the buzz that existed in general. And also, we really did get lucky with the right kind of media coverage and the right kind of ambassadors.

In the first month, after we officially launched, October to November of ’05, we had 300 blogs write about…300-some, I mean, maybe more…write about Kiva, including 2 of the 3 largest in the world at the time. And so, suddenly, you know, it wasn’t just my mom and dad and our friends and family coming to the website, it was an onslaught. And we’d post…We’d put a loan, a need, up, and it would be gone in minutes. Like, there was so much traffic, we could hardly keep up. So, we got lucky with that, because it’s one thing to get traditional media, that’s great, but to get buzz in the blogosphere at that early stage was kind of a big deal.

Nathan: So, you got that early stage momentum, but what’s kept it…? Like, besides having an incredible product and concept and, really, just a great offer, like, it’s just such a no-brainer, what else kept it going to this day?

Jessica: Let’s see. I mean, I would say we had a lot of amazing and dedicated people who believed in it, and we gave so much ownership to people early on. That’s one of the great things about being a start-up non-profit with very little cash, you know. The thing you can do is say, “Help, we need everyone, all hands on deck,” and you actually give people real responsibility, it’s not just lip service. So, when people have real ownership over something that they believe in, and they feel important and significant…I mean, I think that’s what most people want in their work, right, to feel like they’re doing something that really matters.

So, we had people, a handful of people, about a half dozen in the beginning, no one really getting paid but just going like gangbusters. So, not only for our full-time staff but even for volunteers and for others, it was easy for people to feel ownership over it. They got to make their specific, unique loan portfolio. They got to share it and, you know, spread the word among their friends. Even with our volunteering opportunities, there were these…there are today, we created the ability for people to do, sort of, micro-work, I guess. Like, you could log on for an hour or two a week and translate a business posting from French into English. And, like, nobody triple-checked you, like, that was…And then it went live on the site, so it was scrappy and fast-moving, and we…Like, there are just so many ways to put your fingerprints on it, and to feel truly, genuinely like you’re making this thing go.

Nathan: And do you think that’s key in the early days? You can’t…You have to be able to let go, right, as a founder?

Jessica: You know, I never…I try not to say, “You have to do this, you have to do this.” I feel like one of the worst things you can do as a start-up founder is go look at someone else’s rules for success. That doesn’t work. I mean, it’s…Unless you wanna look at a bunch of them and then choose a few of your own, and then hopefully write your own rules as you go, you gotta be really…you have to listen to your own reflections and insights, and observe firsthand for yourself what’s going on around you. So, yes and no. I mean, I think it was helpful to us, and I’m sure there are a million other ways to look at it. But, for us, for our story, that was crucial.

Nathan: Yeah, I like that. So, talk to me about ProFounder. How did the idea come about, why did you decide to start it, and what happened?

Jessica: Yeah. So, ProFounder…After I left Kiva a few years in, I went on about a 10-11 month, basically, kind of, around the world tour, I think it was 12 or 13 countries, writing case studies for Stanford. And I came back, and it was my last day in the office. I had turned in all my case studies, it was a great, sort of, project to do in between ventures. And I started up this conversation with my old classmate Dana, and basically we started to wonder to ourselves, “Gosh, why is it so hard to invest in start-ups and small businesses, and in our classmates’ start-ups? Why is it always the credited investors, whatever the heck they are, who have to put in a minimum of $25,000? Like, that’s crazy,” at least for us, right? So, we said, “Why is it hard to do that, and why can’t you invest in the coffee shop down the street?” We knew nothing about that particular…the web of laws dictating why it was and, in fact, still is relatively so hard to do that.

So, long story short, we started to dig in, learn, and we answered the question with, basically, the creation of ProFounder, which allowed entrepreneurs in sort of a DIY fashion to raise actual investment capital, like, from their friends and family and communities. Now, technically, these were through private rounds of fund raising, you know, private versus public, and they…What we did was designed for…I’m doing air quotes here, you can’t see, but…”the lowest common denominator”, which is unaccredited investors, which is about 90-plus-percent of the population in the U.S. So, we designed for everyone else, not just the same wealthy individuals who the laws, at the time and even still, make it easier for them to play. Like, of course they get to, you know, throw their money around, and get to bet on start-ups and small businesses that they believe in, because the laws have, somewhere along the way, decided…or, the lawmakers, somewhere along the way, decided that if you have money then you must be smarter, I mean, if I may be so bold.

So, you know, for the protection of people with less money, the laws had been much more prohibitive. And there’s all this weird historical stuff, like, around protecting widows and orphans, but we’re talking laws from the ’20s and ’30s and ’40s. So, we basically stepped back and said, “Okay, the world’s changing quickly.” Even if you wanna do a private round of fundraising from “friends and family”, which is a legal term, believe it or not, we thought there was a better way to do it. Do it online, do it a la kind of a Kickstarter way. So, that’s what we had built.

What we learned, to summarize quickly, is that, yes, it’s possible. It was possible at the time to kind of Frankenstein together this set of legal exemptions and laws that would allow you to raise a private round of funding from friends and family. But, at the time, crowdfunding was still not legal, and it still wasn’t that easy or inexpensive of a process, and people still didn’t feel sure of it, and still wanted to use lawyers. And so, even though we had helped a number of different companies, and helped them raise hundreds of thousands of dollars, and our products was working, we saw the crowdfunding exemption within the Jobs Act, Title IV specifically, start to come along. And it was just a twinkle in the eyes of lawmakers at the time, so we dove in, encouraged that, and even tried to, like…

Well, Dana, my co-founder, flew to Washington more than once and lobbied Congress, and we actually got to help draft the language in that law because we figured that was the best way to promote what we really wanted to have happen in the world, which was to allow anybody to contribute to those businesses and actually have an equity stake, or any kind of securities-based stake, whether it’s revenue share equity or whatever. And then, we pushed for that, and what that meant was, after the last, not to get too complicated. And we went, we got to be in the Rose Garden, it was so fun. We saw the law, you know, the bill finance law. But, after that point, we realized that either we needed to just wait it out and wait for that law, for the FCC, to create rules around that law, to make it real, or we had to build something that was gonna be a total gamble on how the new law was interpreted, again, to make rules, specific rules around it.

At the time…this is, again, a very quick version of things. But, at the time, there were also two other factors that came into play. So, not only was it going to be a gamble either way but…you know, and we had money on the table, and I could have taken it, we both could have taken it, but I didn’t really want to because, one, we were getting a lot of flack from the California Department of Corporations. Nothing specific, nothing actually, literally threatening to us, but they were starting to ask a lot of questions, and we knew that we weren’t just going to be able to act first and apologize later. They were asking so many questions that we thought it would be hard to be nimble. The other part of it was, I was eight and a half months pregnant with twins, and I thought, you know, is this the right time to pivot and to kind of start over for me, personally? And I could have, like, that’s the thing. I feel like I had everything out there to do it, but I feel really good about that decision.

And I’ll just, if it’s okay time-wise, I’ll keep going for, like, 30 more seconds. I wrote a chapter in my book about this. But, I didn’t know how to think about the story, my story, as a founder of ProFounder and, sort of, the decisions that I had made around the…I didn’t know what to do with that for a few years after. I got approached, even, by somebody at one point, and they said, “Hey, we’re having this conference where we talk about failures, and we think you should come and talk about ProFounder,” and I’m like, “Well, gosh, thanks, but I am happy to admit, I have lots of other failures I can talk about but I don’t think ProFounder is a failure.” I feel really good and clear and strong about choosing to not raise a Series A, and winding down the company and giving the assets to our investors. Like, I feel good about that. And it took me a few years to figure out why exactly…or how exactly to talk about it in a way that I hope is more comprehensible.

But basically, I was doing this exec ed class at Harvard Kennedy School, and we did a case study on one of the more famous…I’m forgetting the year, but…Everest treks, right, and basically the story of this expedition, a bunch of people heading up to the top of the mountain. They spent years, you know, training and looking forward to this, and all this money to get there, and they were just about, you know, a few hours from the summit and a storm starts to roll in. And, more or less, half the group says, “Screw it, we’re gonna get to the top,” and they go and they summit, and it’s great and they’re up there, and then the other half just goes back down the mountain. Well, of course, the half that goes back down the mountain lives to tell, and the guys that summited, everyone died on the way down, and I really felt like…and I’m so sorry I’m saying it in such a quick summary, kind of flippant way, and I don’t mean to.

Basically, I remember reading that case study and it hit me so hard. I thought, oh my gosh, I…we…you know, the goal wasn’t the summit. I feel like, in a lot of…not necessarily Silicon Valley culture, though it’s certainly prevalent there. But, just, in a lot of entrepreneurial cultures, certainly start-up culture where people aspire to get venture funding and do all those things that I rattled off earlier, right, like start billion-dollar companies, and there’s all these random, arbitrary goals, I feel like the goal is to keep going at all costs, and just never stop, right, get the money when you can and keep pivoting and iterating, and never die. And I really felt like, given the climate legally, given my own knowledge at that point of what was working and what wasn’t with our business, and what was happening in the crowdfunding world, I really felt like there were some storms coming. We probably could have survived them for a while, but there would have been a breaking point, and I feel like we turned back at a safe moment in time. And, we didn’t take money that maybe we would have been irresponsible to take, because it was such an unsure climate for years to come.

So, I feel really good about the decision. I feel like I didn’t summit Everest, but I lived to tell. You know?

Nathan: That’s a great story. Well, look, I’m super mindful of your time, and I just wanna say thank you so much for taking the time to speak with me. Just, five seconds, where’s the best place people can find out more about your work?

Jessica: Oh, sure. If you…Well, on my website, I try to keep things relevant there, it’s just jessicajackley.com, and follow me on Twitter. And I will be shouting from the rooftop when I have new things to launch, which I should in the coming year, so…

Nathan: Awesome. Well, look, thank you so much for your time, Jessica.

Jessica: Yeah. Hey, and…Oh, it’s a pleasure, and thank you for being mindful of it. I really appreciate it.