Venture Philanthropy Conference (9/30/2004)

Rather than just give a chronological account, I've tried to group things by issue, recording points that happened at any time during the day. All in all, a successful first instance of the conference. It brought together a lot of people who were enthusiastic about the topic and nearly everyone gave it a "would attend again" rating in an informal poll. The Alumni Center was a very nice venue for the conference--I was surprised how much it felt like its own world--separate from the rest of campus.

Venture Philanthropy, Stats and definitions

Venture Philanthropy (VP) is the practice of making grants to non-profit organizations in the style of a venture capitalist: with high engagement, clear objectives, measureable progress, often targeting organizational growth (via capacity building). Funding for general operating purposes (rather than only specific projects) shows trust in the investee.

There are about 42 organizations in the US that fit the definition, controlling about $400M of capital, making $50M/year in grants (only about .2% of all foundation grants).

Advice for relationships between donor organization and investee

• Expectations should be very clear, ideally a "contract" in writing (Melinda Tuan, REDF)
  
• Money isn't enough, need to imbue culture as well, but can't go faster than the organization is ready to absorb (Gordon Cook, Common Good Ventures)
  
• Help with business plan development, but don't assume that all ventures need to scale; forcing it can destroy a good thing (Lee David, NESsT) [Note: This was contradicted by Vanessa Kirsch, who felt that VP was by definition about scale.]
  
• VP is accountable for the success of the investee, sometimes requiring heroic efforts during crises of leadership at the organization (Kim Smith and Vanessa Kirsch)
  
• Seek anonymous feedback from investees (Kim Smith, New Schools)
  
• Consider putting an investee or two on your board (David Saltzman, Robin Hood)
  
• Probably shouldn't take a board seat; better to get an independent to add more perspective (and fundraising capability) to the board (David Saltzman)
  
• Program directors need to have both domain knowledge and organizational knowledge; though some non-profits felt that they would always have more domain knowledge than the program director.
  
• Needs to be due diligence and good fit in both directions
  
• Needs to be long term (3+ years); and clear about what happens after that. A sudden drop in funding is deadly to these organizations.
  
• What do you do when an investee fails to meet a goal? Depends. What was the cause? Broad Foundation answer: decrease funding, but increase amount of time spent with investee by a factor of 4.
  
• People won't change until they realize they're on a "burning platform" (ie, an offshore oil rig on fire, and need to jump to save themselves). In planning for change, figure out where the burning platform is, and where the resistance is. (Carol Welsh Gray, Joint Venture Silicon Valley)
  

Trends in Venture Philanthropy

• Looking to public sources of money to supplement/replace individual donors and other foundations (Carol Thompson Cole, Venture Philanthropy Partners)
  
• Collaborative funding (Vanessa Kirsch, New Profit)
  
• Individual donors are less convinced about the merit of all of the measurements, and are willing to rely on foundations to "handle" that (Peter Hero, Community Fund of Silicon Valley)
  
• VP is emerging as there are substantial changes in source of money (both industry and people), in tax law, in demographics of donors, in ....
  
• Funds can act as a facilitator, bringing together multiple organizations (both investees and funders), act as the convener of funders in a problem space and geography
  
  

Opportunities/Challenges for Venture Philanthropy

• Finding scaleable organizations (need to work with them at an earlier stage) (Nancy Roob, Edna McConnell Clark Foundation)
  
• Ongoing need to tap capital and talent pools (Carol Thompson Cole)
  
• Philanthropic Capital Markets: This was a topic that came up a couple times, generally in the sense that there needed to be an "IPO" opportunity where investing foundations could "achieve an exit" and hand the organization over to the "public market". There was no delusion that these would be break-even organizations, but rather the foundation had proven that it was a viable, valuable idea, and the foundation needed to move on. One attendee said "access to a capital market" was really a code word for "We need more money."
  
• Accounting change: Currently grants to build capacity show up in organizations as revenue, even though it's really more about increasing the capital of the organization. (Rob Waldron, Jumpstart) [I don't really understand the implications here, can anyone help?]
  
• The hidden secret is that VP is hard work. Will the trend-followers still be interested when they discover that?
  
• VP can grow by acting as a leader within the philanthropy space.
  
• VP needs the infrastructure to enable aggregation of donors, so that it can be not just the gifts by the few, but by the many
  
• Boards need to play a more active, more PROactive role: not just financial oversight, but financial inquiry; not just strategic planning but strategic thinking.
  
• It's venture philanthropy, but how many
  risks are really being taken? In the end, looking back from a hundred years from now, the question will not be about efficiency or effectiveness, but whether we are attacking the major issues of the day.
  
• We need to create a sense of urgency, and use whatever means are provided. Fear and defensiveness are the governing responses to change and insecurity. When (not if) the next terrorist attack comes, what is teh opportunity to bring people together? (Kate Fulton)
  
  

Problems with Venture Philanthropy

It was a goal of the conference to be truly self-evaluative, not just self-congratulatory. I thought that they did a good job of this. Some of the specific points that came up were:

• Tendency to move too quickly, assume experience in traditional ventures will apply in the VP world as well
  
• On a related point, some VP in the early days were viewed as arrogant
  
• Focusing too much on metrics can blind philanthropy to the full mission, and sometimes results in short-sighted decisions like reducing costs when the resources are necessary to program success (Peter Hero)
  
• VP can't get too involved, lest the investee organization lose the confidence/will to act on its own.
  
• Focus on outcomes can generate a lot of additional work for investee. Investors should request only reports they really use; and should collaborate on common formats with co-investors where possible. They should be sensitive to making large bureaucratic demands, especially in cases where they're providing only a small percentage of the budget. (Rob Waldron cited example of spending 7-8 days with one funder that provided less than 3% of his budget.)
  
• VP's are sometimes intermediaries representing funds that the investees have direct access to as well, sometimes confusing the picture.
  
• Demands can be too great, especially with respect to capitalization of organization.
  

Wisdom from Rob Waldron

Rob was a former CEO recruited to run Jumpstart. He talked a bit about the difficulty of the transition from a company were everyone did what he said to working in a non-profit. He also had a few pointers I found interesting. He said "It's better to be a great recruiter and average manager than an average recruiter and great manager."

There are 3 ways to increase money available to good programs:

1. Grow the pie: Increasing donations from 2% to 3% of income in the US would be a 50% increase in available funds.
   
2. Steal share: Many ineffective non-profits should "go out of business" freeing up funds and talents to support other non profits.
   
3. Reduce costs: Mergers would enable about a 20% cost reduction in overhead expenses, enabling more dollars to go to program efforts.
   

Patience!

A closing note (that came up a couple of other times) was that VP is still a very young field, evolving very quickly. There has been a lot of success among the challenges, and as things get bigger and better understood, some of these growing pains should pass, and VP's impact be magnified. In the meantime, plan for some quick (smaller) wins to tide you over. And remember that you need to publicize those successes!

RDVF alumni (Thomas George and Tom Munnecke) 9/29/2004

Thomas George, RDVF '03, stopped by the office after Dr. Shariq's seminar. A mutual friend, Kate, had introduced Thomas to me via e-mail after they met at a conference a month ago. So we knew there was a common interest. Thomas is working in Kenya on a project to improve the effectiveness of the marketplace for rural producers. He listened to my pitch on microcredit, and agreed that it was important, but only one aspect of a complex problem that enabled his interest group to participate on equal footing in the market. In addition, they also need: education, information (about market prices), and laws that offer protection. His current project is attempting to develop all of these in concert.

He wondered whether I should not stop with just the IT infrastructure for the bank, but rather create a full bank myself. Right now that seems very intimidating, but being able to have full control over the design and not need to worry about legacy data does have a certain appeal....

Tom Munnecke, also RDVF '03, hosted a meeting of people interested in the Omidyar Network. Although I was not able to attend the talk, he stuck around afterwards, and we went to dinner with one other attendee, Nini. Our dinner conversation wandered over a range of topics:

• IT Platform for MFI: Is it reasonable to assume that MFI's have a PC? Nini's assumption was that even the larger MFI's (10,000 borrowers) were distributed among village branches (perhaps 20) with 500 borrowers each. I think that the branches are "virtual": really just a loan officer that visits weekly, and he or she carries data/money back to the central office for subsequent data input. But it will be interesting to check my assumptions in a couple of real world institutions.
  
• Uplift scholars: Tom had started a site called the Uplift Academy. It was dedicated to the notion that any one person can make a difference. He ran into tech trouble about the same time that Omidyar.net was starting up with the same vision. So he joined the Omidyar effort. But he thought that it would be interesting to start a program called "Uplift Scholars", essentially a fellowship of people around the world dedicated to making things better. He compared it to Ashoka Fellows, but on a much broader scale (hundreds of thousands of people) but not as much financial support (probably none at all).
  
• Omidyar.net: A related function of the network is to surface worthy projects. People can attach "magnets" to ideas that they think are good. People essentially use their reputations to recommend articles to the readership at large. If people disagree with the editorial choice, they give negative feedback, reducing the influence of the recommender. This notion of selection can be applied to development projects deserving of funding as well.
  
• Feedback and network effects: Tom commented that his high reputation score would be hard to achieve if he were joining the network today. There's something of a "rich get richer" effect in the reputation process (since he is highly rated, more of his comments get read and rated). He also noted that the reputation algorithm has been intentionally obscured so that (supposedly) only Pierre Omidyar knows how it works so people can't game the system.
  
• Medical profession, hospice care: Tom reflected on some of the perverse incentives of the current US health industry. They have little financial interest in seeing people stay healthy: they're paid when people have doctor visits, hospital stays, and require medication. Even errors that cause complications are (assuming not severe enough for malpractice/negligence law suits) beneficial to the bottom line. Tom's background included some large, long-term projects implementing medical information systems. Hospitals are also incented to perform procedures which lengthen the span of life, even if the result is a lower quality life.
  
• Improv: In one of his posts, Tom mentioned that he was interested in how improv ties in to notions of collaboration and uplift. I'm also a big improv fan (and sometime performer) so we chatted a bit about some of the concepts of "Yes, and" and the like. He felt that a facilitator who laid out some of the improv guidelines had done a good job, but not gone far enough to get the full value out of it.
  

RDVP Seminar: Syed Shariq (9/29/2004)

Syed Shariq, co-director of the Kozmetsky Global Collaboratory, spoke with us about the research going on at the collaboratory and the "Real-Time Venture Design Lab (ReVeL)". Their goal is to make social ventures more sustainable, and they do that by helping the founding entrepreneurs create and refine their narratives. They find that the narrative is the way to convey the vision, values, and culture to others beyond the founding team, so that the organization can survive the loss of any person. An alignment of the organization's narrative and goals with the founders' personal narratives leads to a resonance that magnifies the power of the message.

The ReVeL methodology (based on success at JPL design sessions) is to have all the key players co-present for 3-hour sessions, with all of their models also available for visual display, where they hammer through the major issues to reach convergence after 5 or 6 of these sessions. The ReVeL sessions address:

1. Founder
   
2. Team
   
3. Constellation (market, funders, etc)
   

The experts in each session include a narratologist, and a navigator/facilitator. By matching the entrepreneur's narrative to the patterns and archetypes demonstrated in folk tales, the experts help in constructing a better way to "tell the tale", and potentially can bring visualizations to the narrative as well.

We talked a bit about the tie to brands--the ability to recognize the character and integrity of the company; and whether it can be built solely with money (e.g. Coca-cola, dot-coms) vs. those that are consistent with the founders' narrative and vision (e.g., HP, Disney (in the pre-Eisner era)).

We also covered the difference between a social movement and an organization, mentioning groups such as Beyond War, Swahdyay, Mondrian, and Body Shop. Doug McAdam of Stanford was cited as an expert on social movements.

Urban Studies 122 (Philanthropy) 9/28/2004

Laura Arillaga, founder of the Silicon Valley Social Venture Fund, is also a lecturer at Stanford on the subject of Philanthropy. Her courses (in both the Public Policy department and the GSB) are among the first that take an academic view of the topic, and she's developed many of the course materials/case studies herself.

She led the class on a discussion of the differences of Charity vs. Philanthropy:

Charity	Philanthropy
short term	longer term
Address Symptoms	Address Causes
Ad hoc/reactive	Strategic

And the role that philantrhopy can/needs to play in society:

1. Meeting solcial sector needs
   
2. Taking risks, investing in innovative models
   
3. Increasting civic engagement
   
4. Being a connector / facilitator among actors
   
5. Further itself
   
6. Sponsor research
   
7. Increase public awareness and interest
   
8. Influence public policy
   
9. Strengthen specific social institutions
   

She gave some stats on the scope of donations (about 5% of GDP, split equally between volunteer labor and financial contributions; with most of the finanical giving coming from individuals (74.5%) or bequests (9%)). Annual giving averaged about 1.8% of income, at the high end of the recent range from 1.5% (1995) to 1.9% (1970). She pointed out two famous foundations (Howard Hughes Medical and Annenberg) that had rather checkered roots.

We talked about some of the motivating factors for people to give:

1. Create a legacy / have a lasting impact
   
2. Community improvement
   
3. Increase justice
   
4. Improved social standing
   
5. Religion
   
6. Personal experience
   
7. Tax benefit
   
8. Altruism
   
9. Honoring an individual
   
10. Political reasons
    
11. Emotional
    
12. Prevention oriented
    

She posed the question of how we would handle a hypothetical $1B windfall to be used for philanthropic purposes, then suggested that as we think about the question (over the course of the term) we use the model:

1. Values
   
2. Mission
   
3. Passion/Interest
   
4. Gift (e.g, time or money)
   
5. Amount
   
6. Vehicle
   
7. Grantee
   
8. Contract with Grantee
   
9. Evaluation Plan
   

RDVP class 9/27/2004

The two readings to prep for the class were one by Paul Theroux, describing an observer's view of the life in Africa and the folly of reformers who had come to "fix" it. The second reading, by Hernando de Soto, was a more technical one, describing the costs of bureaucratic red tape (in terms of process steps required and years or decades to do things like obtain title to land). A second chapter from de Soto's book focused on the benefits the West has gotten from its system of ownership/title which allows physical assets like homes serve a dual purpose as collateral in the financial space. He argues that trillions of dollars are locked up in "dead capital" in the land and buildings around the world that cannot be accessed because the system is not in place--too many competing claims prevent anyone from having a clear title.

Stuart gave a quick bio similar to what we fellows had done:

• a passion for building things
  
• a career trajectory from journalism through startups to social ventures and managing the Reuters program (with a stint managing research as well)
  
• an interest in cycling (including a trip on Hawaii)
  

Then he started us off on the question of whether entrpreneurship is the right starting point for international development, given the deep structural issues. There followed a discussion of the merits of working within the system vs. outside of it; along with other forces that can act as change agents (funders like the World Bank or media). We reflected further on the pace of change and the tipping point, and presence of a charismatic "voice" that can lead the change (or act as a visible symbol of society's changing perceptions). Carlos posited that people that want to change the structure are re-distributors of wealth, but entrepreneurs are creators of wealth.

This led Greg to reason that the marketplace is the way to assign value, and there's no reason that social ventures/goods shouldn't be subject to the same scrutiny. Margarita agreed that one-sided charity (givers who get nothing in return) create a bad power dynamic (leading to ineffective deployment of resources). Stuart chimed in that this was the point of the reading: To succeed you must understand the needs: not just the needs of the people, but the structural issues. Our projects don't start from a clean slate; even our own subjective point of view influence what we think is good. Margarita and Greg echoed the desire to ensure that philanthropy was a two-way street, with the "customers" needing to have "skin in the game" (e.g., pay something, or volunteer time) so that we, the program directors, can ensure that they VALUE what we are trying to do.

We talked further about the benefits of building on top of a system or structure (can leverage others' work, esp. in tech) but also the challenges of being seen as attacking the status quo (e.g., "mechanizing" banks in India).

There was further discussion about whether we are (or should be) encouraging everyone to be an entrepreneur, where the risks of failure could be harsh. Sure, the market is harsh, but is there any viable alternative? We should be creating things that allow more people to succeed as entrepreneurs, according to Greg, like a franchise model, for example. Carlos argued that people are already plenty entrepreneurial, but that hasn't enabled them to lead a comfortable life--it's the urban equivalent of subsistence farming. Margarita described the role of government of providing the risk capital for public projects--putting in the first, riskiest money, but allowing the private sector to get the lion's share of the gains if it works out.

Stuart as the realist, pointed out that for all of our projects there will be someone who doesn't want us to succeed.

In that context, we talked a bit about established players that had something to lose, including bureaucrats that supplement their incomes with bribes. Jack mentioned that Kenya had successfully implmented an anti-corruption program; Mans talked about a reality TV show that taped the catching of corrupt officials; and Margarita said that part of the e-government initiative from the World Bank is to drive out corruption.

All in all, an interesting discussion, based more on the fellows' experiences rather than the details of the reading. A good mix of advice, speculation, interesting citations, recounting of personal experiences and synthesis. I look forward to future discussions.

End of Orientation grab-bag

This single posting captures several different short topics which didn't merit entire entries of their own:

1. Reception with past fellows (Wednesday evening)
   
2. Intro to ESW conference
   
3. Intro to LinkedIn
   
4. Intro to Social eChallenge (part 2)
   
5. Office Conversations (Helen and Jose)
   
6. Dinner Reception at Stu Gannes' house
   
7. Poster Construction
   

1. Reception with past fellows (Wednesday evening)

We had another nice reception. What made this one different was that alums of the program were invited, too. A handful made it, and I enjoyed meeting and speaking with Ken Novak, Ed Yoon, Melanie Edwards and Segeni Ng'ethe. It's encouraging to see that the past fellows have gone on to do interesting things.

2. Intro to ESW conference

Ashwin is a PhD student in Civil Engineering, and a student member of the Engineers for a Sustainable World group. He talked a bit about the upcoming Solutions for a Shrinking Planet conference at Stanford, as well as courses, seminars, and mailing lists. (It does seem that there's a rather poorly integrated patchwork of these at Stanford under different departments, leadership, etc.) The RDVP fellows will have the opportunity to present posters at the conference.

3. Intro to LinkedIn

Patrick Ewers, Director of Groups for LinkedIn, gave us an overview of this business networking service. Nearly all of us were already familiar, with a couple of us being fairly heavy users. Patrick introduced "groups" which were new to me (labels that you could self-identify with, then your network search shares anyone that also self-identified with that label, even if they are more than 4 degrees away).

The most helpful part of the discussion was advice from Margarita regarding profile construction: Get over your aversion to self-promotion. People will be more likely to find and respond to a well-crafted, interesting profile.

4. Intro to Social eChallenge (part 2)

Tracy Ho gave a slightly more formal presentation about the BASES Social eChallenge than Brij's earlier presentation. Talked a bit more about the in-kind prizes (legal service from Cooley Godward and Wilson Sonsini) and the judging philosophy that judges made decisions based on ability to meet stated project goals (so a project with a narrower scope wasn't inherently at a disadvantage against a bigger project.)

5. Office Conversations (Helen and Jose)

Friday afternoon offered a bit of a breather, with no scheduled activities. It turned out to be a good time to relax in the lobby downstairs (where brownies and cookies had mysteriously materialized) and talk more with colleagues.

Helen expressed an interest in seeing if we could work more closely together to see whether expanding access to microcredit might be one aspect of her goal of increasing the opportunities of small and medium entreprise owners in China. She was also interested in the BitPass system, a payment scheme with low overhead to get started as a merchant.

Jose and I talked about the "plan behind the plan" for Volunteer Bank. While he is excited about the idea of Volunteer Bank, feels that it will have a beneficial impact, and is interested in the technical aspects of making it happen, he is less captivated by the day-to-day operations. He would rather, he said, be working on the next idea or ideas, pipelining them for others to carry out. His real passion, then, was to create a Social Venture Incubator, rather than a single social venture. We talked a bit about the incubator model including the more successful instantiations of it in the dot-com world, places like Reactivity and Idealab. We also talked about how either Volunteer Bank or the incubator could be the focus for his project (with a related concern about the aptness for entries into the eChallenge), or the most demanding dual combination: focus on the incubator, but use Volunteer Bank as a full-length example of a project being incubated.

6. Dinner at Stu Gannes' house

Stuart graciously opened his lovely Palo Alto home for a catered Chinese food dinner with the fellows and their families. A couple other "friends of the program" attended, and it was a great opportunity for relaxed conversations (not counting the boundless enthusiasm of the 3 approx. 4 year-olds).

7. Poster Construction

In preparation for the ESW conference, we spent some time on Thursday afternoon starting to make a poster (30" by 40" board with eye-catching, informative material to use as a visual aid while talking with conference attendees about the project). By the end of the afternoon, I'd roughed out most of the content (repurposed PowerPoint slides from my initial presentation and tweaked them a bit). But having done a poster before (in my AI conference days...) I knew that the layout and paste up work takes longer than generating the content. So I came back on Sunday, and plowed through (modulo a nice break for dinner with Renee). Total time investment: 8-9 hours. I'm pleased with the result, and will post a photo soon.

Dan Gillmor: Intro to Silicon Valley

Dan Gillmor writes a column and blog for the San Jose Mercury News. He's also the author of the recent We the Media. RDVP invited him to give a perspective of Silicon Valley, ostensibly to those fellows coming from outside of it. In reality, he gave the requisite history quickly, and launched us into a free-ranging discussion of interesting topics, some of which I've excerpted here. The one thing that struck me most is that in contrast to my mental stereotype of a hardened, sarcastic journalist, Dan really seemed to care deeply about the community (broadly defined), and be personally affronted by violations of trust in it.

He argued that Silicon Valley is the expression of Moore's Law; and as everyday devices grew more powerful, had embedded memory, and became networked, they can revolutionize the way we think about them. His 5 factors leading to the creation of Silicon Valley were:

1. Pool of human capital
   
2. Culture of entreprenuerialism, risk taking (and the freedom of not penalizing all failure); also a flexibility and willingness to adapt business plans
   
3. Money (esp. proximity to Venture Capital)
   
4. Great research university: Stanford, with its fluid connections to business Berkeley, USF, and Santa Clara
   
5. Weather
   

Dan placed the start of the internet bubble at the Netscape IPO. And while he did place some blame on the greed of public investors, a quiet anger came through when he described the role of VC's, investment bankers, and brokers whom he accused of benefiting while they transferred their historical risk into the unsuspecting (or at least uninformed) public.

Asked about most exciting new markets and opportunities, he cited wireless, especially unlicensed portions of the spectrum, and web services.

On Microsoft: It remains to be seen whether the "enormous cost that the world is paying for the Microsoft monopoly will be balanced by the philanthropy [of the Gates Foundation]." It would be great if 200 years from now, the only thing Bill Gates was remembered for was his philanthropic work.

On Social Entrepreneurism: "Profit maximization is difficult to reconcile with projects for the greatest impact for people who need it most." But it is good to "bring rigorous skills to non-profits which have been a mess."

On housing prices in the Silicon Valley: Dan has said for more than a year now that there are bubble conditions in the housing market. There is no rational explanation for the rise in prices.

On Corporate Governance: The amoral nature of corporations, combined with the fiduciary responsibility of the board to maximize profits for shareholders is exacting an unknown long-term cost.

On the Future of Journalism: Every revenue stream for traditional media companies is under attack. It's unclear that they'll be able to survive. And while some news outlets (e.g., Local TV news) could go under with no major ill effects, the loss of real investigative reporting would be serious. Perhaps it will move to the non-profit sector, or the individual armed with blog and video camera. The explosion of independents would place a huge burden of quality assessment on the already over-burdened consumer of media. Google is a first cut at a "reputation" service that judges quality based on the PageRank (roughly, the number of incoming links). Objective reporting is unique to the late 20th century America; prior to that media companies did have a position, which they advocated in their publications. Functioning, quality media are a pre-requisite to a free society. Capitalism also requires honest information.

On the economy: This generation may face a lower income than the previous. Will cheaper goods and a spirit of volunteerism enable us to maintain an equivalent standard of living with fewer dollars?

BASES Social eChallenge - Brij Kothari

Brij Kothari was a 2003-2004 RDVP Fellow, and a winner of last year's BASES Social E-Challenge. He spoke a bit about his project interactive books presented online with the text presented Karaoke style as the words were read aloud. The stories are translated into many languages (text and speech) while the expensive parts of the production (original story and graphic work) are shared across all languages. Delivery can either be done via download, DVD's, or television. The project is ongoing, with seed funding from the Social eChallenge prize money, some support from HP, as well as self-funding from the team. They aim to produced 20 books in five or six languages before seeking a distributor.

Brij also talked about the mechanics of the eChallenge itself, the benefits of the structured deadlines, the injection of enthusiasm from student team members, and the prestige of being associated with a successful project. Although the details were a bit hazy, it sounded like there were 3 rounds:

1. 40 teams submitted an executive summary
   
2. 16 teams submitted a full business plan and made an 8 minute investor pitch
   
3. 6 teams were singled out as finalists, with a second round of judging a month later
   
4. 3 winners were identified, given networking opportunities with VC's and legal professionals
   

The judging criteria that Brij mentioned were:

1. Social return on investment (primary)
   
2. Financial return on investment (secondary)
   
3. Team balance
   

Fellow Presentations: Day 4 (Moulaye Ely Diarra)

Moulaye Ely Diarra is focused on improving the efficiency of the agricultural marketplace in Mali. During a period of a socialist government (1960 - 1980), all commodities were sold to the government at fixed prices. The government would re-distribute them according to the relative needs of the regions in Mali.

Although now in a market economy, the producers (farmers, mostly) are still at a disadvantage, because they lack information. The 67 different market places in the country typically meet on a weekly basis, but there is little aggregated information about the price or demand for quantities.

Moulaye works for the Mali government in a Market Information Systems group, and they have been gathering statistics about price, quantity, stock, completed transactions and market altering conditions since 1989. The data are collected locally, then transmitted as binary files over HF to the central headquarters, where SPSS is used for data cleaning, and reports are run. Unfortunately, it is hard to distribute the information to the producers that could most benefit from it. Few people have cell phones ($200 cost vs. $1/day income) and previous attempts to broadcast via TV failed (contracts with negotiated prices were not respected).

One goal of the project is to create a more distributed system of data publishing and retrieval. Could HTTP run over HF, allowing the serving of dynamic HTML pages of market prices and (appropriately authenticated) submission of new data? Giving this level of information to the public-at-large would reduce the inequity that places the producers at a disadvantage.

A larger goal would be to create a virtual market place, where producers and traders could reach an agreement on the quantity and price of the goods to be delivered, removing the necessity and expense of bringing goods (e.g., a half-ton of wheat or six goats) to the marketplace only to discover that those commodities are not in demand this week.

One of the other fellows mentioned e-chaupal as an electronic market in India, where market prices are set by ITC, a major corporation.

Fellow Presentations: Day 4 (Renee Chin)

Renee Chin has a background that combines ethnography and community development. With diverse research interests and experience in technology, health, learning, and organizational behavior, she's uniquely qualified to handle the challenges of working with both the medical community and the patient community to determine how telemedicine (and other medical technologies) will mesh with current conditions, and how it needs to adapt to fit local needs.

Renee will be working with Jack Higgins on fielding a telemedicine system in India and creating the "localization toolkit and process" (to borrow a term from international software development) to allow the successful deployment of the telemedicine technology in other developing communities throughout the world.


Her listing of some of the different aspects of a "health ecology" give a sense for how many different touchpoints there are:

1. Hospitals, Clinics, Health Care Providers
   
2. Religion
   
3. Nutrition
   
4. Health habits and practices
   
5. Techonology
   
6. Social networks
   

Renee also outlined the methods and requirements of a successful implementation:

1. Include community memebers in the planning and goal setting
   
2. Understand the organizational and work practices
   
3. Focus on the clinician
   
4. Provide hands-on training
   

She'll be conducting interviews using the "Rapid Assessment Process (RAP)" protocol of interviews, observations, and participation during December 2004 in Kuppam, India. The ultimate product of her work will be (in addition to a successful deployment in India) a field guide for customizing telemedicine, including topics such as:

• Uncovering the local health ecology
  
• Appropriate research methods
  
• Physician Recruitment
  
• Program Development
  
• Limitations
  

Fellow Presentations: Day 4 (Jack Higgins)

Jack Higgins is a pioneer in telemedicine, founding Video Housecall in 1994. He challenged the traditional notion that telemedicine was a tool for doctors to consult among themselves. Rather than relying on expensive, fixed setups that require long lead times to secure time slots and expensive per-hour operating costs, Jack looked at a way to put the technology within the reach of more people. By creating a simple, PC-based solution with a digital camera and communicating over the internet, he found that patients can communicate directly with their doctors with costs at a level easily within reach of the average school and many patients' home computing environment.

The school is an interesting application area: as school budgets have come under pressure and demand for nurses has exceeded the supply, the "school nurse" that I knew growing up is a thing of the past. Now, a single nurse might serve 7 schools, with just a health aide on site at the others. Jack started a program where schools would have access to doctors via telemedicine, allowing a response that's faster than an ambulance in many cases. For his innovative work, he was featured on a segment of national TV news.

A further experiment has proved out the capability of handling the diverse range of conditions and complaints that a clinic faces. A remote California town has a clinic that is closed on Mondays. The nearest hospital is a 4-hour roundtrip drive away, over treacherous mountain roads. Jack set up a system whereby he could remotely view and interact (telemedicine provides 2-way communication with both audio and video) with patients who would otherwise need to go to the hospital. His findings were that 70-80% of the cases could be treated remotely, saving considerable time and expense.

With two successful projects under his belt, he continued to pursue his goal of providing telemedicine in the developing world. A current project, Promotora Telemedicine project, tests the cross-cultural aspects of telemedicine. Targeting Hispanics with diabetes (some 25% of those over age 45), the pilot project took 20 cases and treated them in a combination of free, local clinics (without access to specialists) and remote consultations with specialists. Of the 18 who stayed in the study geography (San Jose to San Francisco, CA), 17 cases were in control, allowing the patients to resume work and normal activities.

After successfully proving the efficacy in these local trials, Jack is ready to tackle the international angle. Through a fortuitous connection with HP, he's able to piggy-back on the eInclusion effort. Mobile clinic vans with both the necessary technology and medical supplies were already planned for deployment in India as part of HP's program. Jack and Renee Chin will provide the medical expertise and localization/acculturation (the "software" to run on HP's provided "hardware", if you will) to make the project work. The medical expertise will initially be doctors volunteering from their homes or offices (most likely from America and Europe). Subsequent target geographies (based partially on interest from funders) are South Africa and Vietnam.

Fellow Presentation: Day 4 (Durga Pandey)

Durga Pandey has refocused his project on communicating the value of education to families in India. Starting from the premise that education is the key to all development projects, Durga asked himself why the projects to improve primary education in India haven't been more effective. He concluded that the efforts are being undercut: by the teachers (some of whom show up at the school only on payday); by the government (which doesn't always recognize the way that programs must be tailored to accommodate differences in the states); but, most of all, by the parents. Millions of parents are illiterate (44.2% of adult population) and so they don't appreciate the importance of sending their own child to school. Instead, they see immediate costs:

1. Loss of the child's wages (many start working as young as age 3)
   
2. Cost of school books and uniforms (students may be send home if not in uniform)
   
3. Cultural risk of educating girls who might try to escape their traditional roles
   

And there are not visible benefits that offset these costs.

As a result, there is no pressure from the parents to attend school, nor are there alternative learning opportunities in the home.

Since Durga has started down this track only recently, the project plan stage was more of an open discussion: people suggested that perhaps the value of education could be communicated by tying it to one of the two things that people really care about: Bollywood movies and cricket.

Durga did note that the picture is not entirely bleak: literacy rates over the decade from 1991 to 2001 improved from 52% to 65%, the largest increase of any decade in the 20th century.

[Apology to Durga: This summary is somewhat less thorough than others. As the designated photographer for the session, I found that my notes suffered...]

Social Entrepreneurship at Stanford

Melanie Edwards was part of the inaugural class of Reuters Digital Vision Fellows, and has maintained an active role on campus as the director of Social Entrepreneurship. She outlined a number of related programs, projects, and courses:

Public Policy 190

A lecture series bringing key people from social for-profits, not-for-profits and NGO's, this class attracts 80-90 students, a mix of MBA's, engineering grad students, and undergrads. RDVP Fellows have the opportunity to give a 1-minute blurb at the first course offering on September 28th.

Public Policy 193 Social Entrepreneurship Collaboratory

A course offering where teams of undergraduates research and carry out projects on problems that interest them, receiving course credit for their work. RDVP Fellows may serve as mentors to the teams. Approximately 200 students participate, and the course has been growing at 40% per year.

FUSION (Future Social Innovators Network)

A group of approximately 350 like-minded students who host a conference and run a mailing list for social entrepreneurship issues.

BASES Social eChallenge

A counterpart to the BASES eChallenge business plan competition, the Social eChallenge proceeds along the same schedule with the same structure and judging, but is a separate pool of competition with its own prizes. Only those plans with a significant social component (either for-profit or non-profit) may compete.

Advanced Social Entrepreneurship Collaboratory

Bringing marketing and fundraising experts to class, this series is for students who are making significant commitments to projects on campus. May be open to RDVP fellows.

Philanthropy Class

Laura Arillaga's class, autumn quarter, is open to RDVP fellows. (Note: I've been attending this one, see subsequent blog entries). It deals mostly with the grant writing and evaluating process, especially in the context of venture philanthropy. She brings in many guest speakers, especially heads of major foundations, and has been responsible for the production of the discussion cases.

Global Philanthropy Forum

Has had 3 conferences at Stanford, with another scheduled in early March 2005.

GSB Social Venture Club

A student-run group at the Stanford Graduate School of Business.

World Affairs Council: Microfinance for profit

Greg, Helen, Sunita, Margarita and I made the trip up to San Francisco to see a panel organized by the World Affairs Council. The panelists were:

• (Moderator) Bruce Wydick, Professor of Economics (and Dept. Chair) at USF
  
• Kate Cochran, VP of Resource Development at Unitus
  
• Didier Thys, Executive Director of the Microfinance Information Exchange
  

Didier Thys led off with a quick comparison of for-profit (FP) and not-for-profit (NFP) microfinance institutions (MFI's). He said that on average FP MFI's have $46M in assets compared to just $13M for NFP's. For-profits are better positioned to use leverage and debt/equity to raise funds, compared to NFP's that rely more on grants. On the flip side, NFP's reach an average of 60,000 people, while for profits reach only 44,000. With loan sizes more than triple the NFPs, it seems clear that FP's reach the vulnerable non-poor, while NFP's are drawing more borrowers from the ranks of the extremely poor.

Kate Cochran gave a quick history of Unitus' founding in 1999 by 5 businessmen with a common interest in poverty eradication. Chairman Mike Murray was at Apple for the birth of the Mac, and was an early Microsoft exec as well. Unitus focuses on high potential MFI's, noting that something like the 80-20 rule applies, perhaps even more extreme, since just 2% of the MFI's reach nearly 70% of the borrowers, while 2/3 of the MFI's have fewer than 2,500 borrowers.

Kate and Didier agreed on most of the issues throughout the night, with Didier offering more quantitative justifications, and Kate representing the investor point of view. They agreed that microfinance is a way to help people and maintain their dignity. It's not a charitable transaction, but a way for people to increase their choice set. MFI's can be a good sustainable business.

Asked about trends in MFI's, the speakers identified:

• Diversification of types of loans and services
  
• More customer-centered innovation (like insurance products)
  
• More access to capital market funding
  
• More commercial funding
  
• Move to individual loans rather than group loans (enabled by IT and credit scoring applications)
  

FP MFI's were not the silver bullet: subsidies will always be needed, especially in areas of low population density. It takes, Kate said, 10,000 borrowers to be at a scale to reach break-even.

Bruce noted that in a competitive market, there was a tendency for MFI's to move "upmarket", focusing on larger, more profitable loans, leaving the poorest people unserved. This had been observed in Guatemala.

A further potentially problematic trend fostered by the movement toward FP MFI's is that grant equity was being targeted more for consultants and studies rather than startup loan capital. Didier pointed out that subsidized MFI's need to use their subsidy well (ie, serve the poorest) rather than competing (with an unfair subsidy) against other FP MFI's serving the upper echelon of the poor.

Kate said that she thought India represented the largest opportunity for microfinance. Unitus just made its 4th investment, supporting an MFI in Bangalore. Market research indicated that there was an available market of 5M people, currently served by 2 MFI's with 10,000 borrowers each.
Didier echoed this comment, claiming that poverty was split roughly into thirds, with one third in India, one-third in China, and one-third elsewhere in the world. He pointed out that Microfinance was heating up in "large economies" like Brazil, Mexico, India, and Nigeria.

Kate listed the steps of the typical Unitus relationship:

1. Initial grant to build infrastructure
   
2. Additional debt funding (from either a loan guarantee or direct loan)
   
3. Help to transfer them to a FP status (hard to do!)
   
4. Make an equity investment (looking for a 10X increase in number of borrowers over a 5-7 year time frame)
   

They don't yet have a model for an exit strategy, but that's not stopping them from raising a debt fund currently, or planning to raise an equity fund in 2005.

Didier, when asked about what fraction of existing MFI's were self-sustaining, referred to statistics from a sample of 124 that have provided MIX with more detailed information. Of those 124, 64 are sustainable (just over 50%) and of the sustainable ones 18 (about 28%) are FP and 45 (about 72%) are NFP's.

Kate said that the biggest constraints to MFI growth were capital and capacity (which included a technical/IT component as well as just the "permission" to think big). For example, SKS, a Unitus investment in India was serving 5,000 borrowers 2 years ago. Since Unitus' investment, they have now reached more than 55,000. Scaling an organization at that rate causes challenges at the personnel/policies/systems level, too.

Both speakers thought that scale would be a pressing issue in the future, with mergers and acquisitions resulting. Also, increased involvement from large commercial banks liek Deutsche Bank and Citibank.

Microfinance has really not taken off in the US, though some community development funds and credit unions are starting to take an interest.

While the financial metrics are well understood, the social aspect of the double bottom line is still being defined. Didier mentioned a 6-degree measure that included:

1. Financial Self-Sufficiency
   
2. Breadth of Outreach (how many borrowers are there?)
   
3. Depth of Outreach (how poor are borrowers?)
   
4. Scope (how many services are offered?)
   
5. Cost of Outreach (How well is the operation performing?)
   
6. Worth of Outreach (How is it valued by customers?)
   

Ironically, it is the investment funds which are pushing the search for the social bottom line.

Securitization of microfinance loans is starting to happen, with Grameen, ICICI Bank, and JP Morgan pioneering the way.

The Consultative Group to Assist the Poor are spending time lobbying to make legal/market conditions more favorable to microfinance. Didier claimed that some MFI's in Mali were shuttering operations because interest rate caps made them economically infeasible.

Kate said that Unitus had surveyed 140 MFI's in 12 months, evaluating them on criteria such as the market opportunity and country's macro economic conditions, the management team and its appetite for growth, the potential for profitability, and the average size of borrowers' first loans (a proxy for whether the poorest are being reached.)

In order to attract and retain private investors, MFI's need to build a track record, showing the possibility of achieving scale and profitability, and provide an exit strategy. Didier felt that potentially $2 TRILLION of US investment money was influenced by social considerations and could potentially be mobilized for the right terms.

Mohammed Yunus, founder of the Grameen Bank and the field of Microfinance, will be receiving an award at the World Affairs Council meeting on November 27th.

Fellow Presentations: Day 3 (Margarita Quihuis)

Margarita Quihuis described 5 themes that have captured her interest and have each found a way into her proposal:

1. Access to capital (especially for the entrepreneur, and not just the microentrepreneur)
   
2. Why the poor pay more for goods and services (see, for example, pages 5 and 6 of C.K. Prahalad's "Serving the Poor Profitably")
   
3. The undocumented community
   
4. Diaspora as an economic force and agents for change in their home countries by spreading knowledge
   
5. Silicon valley and venture capital at an inflection point, needing to serve world markets (not just enterprise software)
   

Margarita identified the market of remittances (money sent by expatriots to family in their home countries) as a capital flow that is currently inefficient (a recent report suggested that the poor pay $3-4 Billion/year in excess fees on remittances).
Her proposal, called INDIGO, is to use a portion of this capital to create a private microequity fund.

The benefits of such a program are that it:

1. Offers capital in a structure that encourages growth, since that benefits the investors, rather than merely repaying principal and interest as in a loan
   
2. Offers a path into the formal financial markets for groups that have historically had a hard time breaking in
   
3. Provides a valuable service at a better rate than the community can currently charge
   
4. Can be run as a service provided by the community for the community (with associated advantages in cultural marketing and brand development)
   

Margarita has done some research on her target market, finding that

• Annual remittances to Mexico are $16B, the second largest source of funds (after oil) for the Mexican economy
  
• The average user of a remittance service
  
  
  
  • Does not have a bank account (56%)
    
  • Earns less than $30,000 (65%)
    
  • Sends, an average, a total of $3,000 in 7 transactions
    
  
  

Margarita has started to evangelize the program, already receiving interest from some local foundations and credit unions. Indeed, the fellows joined in a lively discussion, with Carlos saying that bank fees for cashing a foreign check were so high in the Dominican Republic that it was cheaper to buy a plane ticket and fly to Miami to cash a check than use a bank in the Dominican Republic. The discussion evolved into a more theoretical discussion of the nature of money and some of the innovation in stored value cards and the separation of payment from recipient/beneficiary. Margarita mentioned the Cemex program that allows people worldwide to order cement for delivery to Mexico. Mans pointed out that InterFlora has served as an international exchange among florists for many years.

Fellow Presentation: Day 3 (Helen Wang)

Helen Wang is focusing on boosting small and medium sized enterprises (SME's) in China. On a recent trip there, she'd proposed assisting with improving connectivity, but the response was that government plans for handling that are proceeding, and another project in that area would be more de-focusing than helpful. Rather, the expertise that Helen could bring was that of the Silicon Valley entrepreneur:

• Accounting
  
• Marketing
  
• Product development process
  
• Customer Service / User-centered design
  
• Ways to enter global market
  

The SME's occupy a disadvantaged niche in the Chinese economy: most large firms are joint ventures or government sponsored. Most SME's have grown up from family businesses, with the common disadvantages: little access to capital, challenges in succession planning, and often limited expertise in marketing, IT, and innovation. Without government support, these SME's (like NGO's) often starve for the access to markets that they need.

Helen has lined up two strong champions:

1. at Peking University, a Director of the Center for SME promotion
   
2. an executive at the National Institute of Technology Incubators for SME
   

The key pieces that they are looking for are:

1. Access to financial resources (up to about $20,000)
   
2. Management skill
   
3. Technology
   

Helen has created a provisional architecture for bringing interactive multimedia courses to local training centers and remote SME's, with a training center based at Peking University. She is seeking sponsorship from the Chinese government, Foundations, Technology Companies, and VC's (the latter two benefit by obtaining an entree into the desireable Chinese market.)

Fellow Presentations: Day 3 (Mans Olof-Ors)

Mans Olof-Ors gave his project presentation about the Fair Trade Marketplace. Unfortunately, I wasn't able to hear it, but I'm trying to get a summary.

Lunch with Kate Cochran, Unitus

Kate Cochran is the VP of Resource Development for Unitus, an NGO focused on achieving scale in microfinance by accelerating those MFI's that have the markets and potential to grow by a factor of at least 10 (from serving tens of thousands to serving hundreds of thousands). She was in the Bay Area for a panel presentation at the World Affairs Council, and offered to meet with me and Margarita Quihuis to talk about our Reuters projects and how Unitus might help us and possibilities for working together.

Unitus is a relatively recent NGO, started in 1999 by a professor and a group of 5 business people with an interest in poverty eradication. Their method is to find successful MFI's that have lots of potential. They consider market opportunity and competition (a recent study for Bangalore estimated 500,000 potential borrowers currently served by 2 MFI's with a total of 20,000 accounts). They look at the the management team, what they have achieved and what they might achieve. And they look at the infrastructure (especially IT systems) that the MFI has in place.

Once Unitus finds a worthy MFI, they typically make an investment of $2 - 4M, partially a grant for capacity building, and partially as an equity investment. Unitus becomes a partial owner of the MFI, and takes a seat on the board. They collaborate on a plan to grow the organization to meet the needs of the borrowers.
One key step along the way is to help the MFI change their status from a non-profit to a for-profit, showing that, run properly, a MFI can be a sustainable, profitable venture.

We asked Kate about the biggest challenges facing the growth of these MFI's. Among her responses:

• Financial Engineering: She felt that there were huge opportunities to connect capital with borrowers if we could just come up with the right structure. Unitus is starting a think tank (aka "Bankers without Borders") to address this sort of innovation. Mike Murray, chairman of the Unitus board (and formerly a key person on the first Mac team and early exec at Microsoft), is spearheading the effort. Kate offered to introduce us to Mike.
  
  
• Credit Reporting: How do you assess the credit risk of individual borrowers or the overall risk of a portfolio of loans when your clients don't have a previous banking relationship?
  
  
• IT Systems: Unitus made an investment in SKS India partially on the basis of its strong IT systems. Kate thought that the systems that they're using should be broadly applicable, but re-use is currently being held up as intellectual property issues are worked out between SKS and Grameen Foundation USA Technical Center. Kate offered to introduce us to technical contacts at SKS and Grameen Foundation USA.
  

The conversation continued for a full hour, covering a range of topics from the role of diaspora and expats living in the US (whose dollars and votes can greatly influence the political process in their home countries) to the use of governmental postal services (like India Post) for the "last mile" delivery of services to the raising of equity funds for MFI investing and the opportunity to show the feasibility of having a private-only equity fund.
Kate was exceptionally helpful, and offered to stay in touch as we further refine our project plans, including potentially meeting up on her next planned trip to California (Oct 21?).

CSLI and Media X (Keith Devlin)

Keith Devlin is the Executive Director of CSLI, the Center for the Study of Language and Information, which hosts the Reuters Digital Vision Program. In addition to his role at CSLI and Media X (where he's also the Executive Director), Keith is NPR's Math Guy.

Keith walked us through the charter of CSLI, its formation in 1983 as a joint venture between Stanford, SRI, and Xerox PARC (funded mostly by a $23M grant from RAND's System Development Foundation). As info tech expanded beyond text and language, the study of user experience elements encompassed a broader research agenda. CSLI continued to be the containing umbrella, until 2001, when Media X was formed, and CSLI returned to its original core focus.

Media X sounds like an innovative academic structure: really just a network of faculty and departments; a budget line item without permanent faculty or building. This flexibility enables Media X to respond quickly to requests from its member companies (and industrial liaison is largely its raison d' etre). Major partners (like IBM, Nokia, Cisco, etc) pay $300K/yr with a minimum 3 year commit to help set the research directions for Media X. Minor members (SAP, Microsoft Research, Mattel, GlaxoSmithKline, Steelcase, Fisher Price, Philips, etc) pay $50K/year and have access to all of the research generated. Since Stanford retains the rights to the research, companies are not subject to the overhead (62%) typically tacked on by the university to contract amounts. Media X is focused on next generation technology for:

• Commerce
  
• Learning
  
• Entertainment
  

The projects tend to be quick turn-around, focusing on ideas that are 6 to 12 months away from commercialization.

Fellow Presentations: Day 2 (Carlos Miranda Levy)

Carlos Miranda Levy has been a major force in the creation of content for the Latin America web. He's created country-specific portals, as well as sites devoted to virtual communities, virtual libraries, etc. He focuses on quality of content rather than striving to update it continuously, using a publishing metaphor more akin to a book than a newspaper. The result is highly rated pages, even though they may go more than a month between updates. Carlos is part of a two-person team that maintains about 20 such sites among his other activities.

His RDVP focus is a rural mountain village in the Domincan Republic called El Limon. Formerly a forgotten "remote" (only about 5 miles from another town, but still far away...) village, El Limon was thrust into the spotlight when John Katz came from Cornell to create a mini-electric grid, using hydro electric power from the irrigation canals. The generator produces about 10 Kilowatts, enough to meet modest power requirements for 20-40 families, and to run a telecenter with 5 or 6 computers and wireless internet connectivity.

Carlos' focus is to provide opportunities for the young people of the community so that they feel they have options and can still experience personal development without flocking to the city. He works to make sure that there is not undue external influence in trying to "steer" the community, but rather that the community is free to choose its own course of development from among the wider range of options provided. By giving people more options and opportunities, you empower them to be responsible for their own future and that of their community.

Carlos also mentioned some tools that he uses that he thought might be of use to the other fellows, including:

• Drupal, a hierarchical content management system that allows cross connects in the hierarchy
  
• Moodle, an eLearning system that handles course management, quizzes, assignments, chats, etc
  

Fellow Presentations: Day 2 (Steve Ketchpel)

Your humble blogger, Steve Ketchpel gave the next talk. My slides are available, but you're probably more interested in the summary. I started off with a case study of a successful microcredit borrower, and continued with some additional stats to back up the success of microcredit from both a borrower's and lender's point of view. Given the benefits, there seems no reason not to aim to reach ten times as many people, so I turned to some of the approaches that might be used to scale microfinance, including organizational growth (e.g., Unitus), software development (e.g., moap project), and debt securitization to bring more capital to MFI's to make additional loans (e.g., page 14 of The Milken Institute's Project Isabela (requires registration)). The recurring theme was that "Yes, microcredit works. And it needs to reach 10 times as many people."

Fellow Presentations: Day 2 (Jose Arocha)

Jose Arocha started off with a bit of personal history, as most of the fellows have. I generally haven't included that in the write-up, because I'm not sure that they want their private info included in a public blog. Part of Jose's family's political involvement was so interesting that I'm going to make an exception: while Venezuela was still early in its democratic stage (about 40 years ago), Jose's grandfather was the governor of one of the states, for the prevailing political party (the social-democrats, I think). At the same time, Jose's uncle was the leader of the socialist revolution party! Must have made for some interesting dinner table discussions...

Jose also gave an interesting background of Venezuela, describing it as "a poor country with a very rich oil company called the government." Apparently, the country has been in nearly continuous crisis for the last 20 years, as the middle class has shrunk from 60% to a mere 18%. People are starting to recognize that they can't wait for the government to solve all the social problems, and are looking for ways to self-organize. Some marches have attracted more than a million people.

With this background, Jose's Volunteer Bank is an immediate, practical way of matching volunteers (and their skills) with social needs. The Volunteer Bank will be a web-based application, but the technology portion is not the real focus: creating an overall exchange system is. Volunteers may earn points ("V-miles") for donating their time and talents. These V-miles may be redeemed for products and services from sponsoring companies, who receive recognition for their socially responsible stance. Most donations would be in-kind (movie tickets and the like), but some companies may choose to make a "matching grant" of dollars for V-miles donated back on behalf of certain organizations.

Jose has done more prep and project planning than most of us, lining up other organizations to help with the project:

• Apal@ncar: A Venezuela development gateway of 7,000 social organizations
  
• FIPAN: A collection of 75 NGO's focused on assisting children and families
  
• Redbinaria: A web development company in Venezuela
  

He's even got a detailed Microsoft Project plan with a target launch date of 30 March 2005. Ambitious, but with the traction that he's got, a great goal to shoot for.

Fellow Presentations: Day 1 (Yann Kwok)

Yann Kwok is looking at the problem of ensuring that patients take their prescribed medications at the appropriate times. He is continuing a project started by Steve Willhelm last year. Yann gave some stats about the costs imposed by non-compliance:

• 125,000 fatalities/year in the U.S.
  
• 10-25% of hospital admissions are a result of non-compliance
  

The project reached proof of concept stage, where Dr. David Green of Cape Town, South Africa, tested an SMS-based messaging system with his tuberculois patients. The 18-month long trial has been a success, with two remaining issues:

1. Cell phone theft
   
2. Not having medications with you when the reminder arrives
   

In order to combat both of these problems, an SMS-enabled pillbox has been constructed. One hundred prototype units (at a cost of $120 each) are expected to be built this month, and will be provided to patients under a "subscription pricing" model.

Yann was also looking at alternative program funders, wondering whether insurance companies or pharmaceutical companies might be willing to buy units given to patients, or if there was enough pricing power in the developed world that profit could be used to underwrite costs in the developing world.

Fellow Presentations: Day 1 (Dipak Basu)

Dipak Basu is a Cisco employee and the founder of NetHope, an organization that helps non-profits benefit from the network. His project is to create a communication and information network for the Sunderbans, a delta region in India home to Royal Bengal Tigers and the largest Mangrove forest (and also King Cobras and hurricanes, though the tourist agency is less upfront about them....)

The Sahara India Pariwar has proposed an eco-tourism project that would result in the eviction of 5.4M people and be of questionable ecological merit. (See, for example, a dissenting opinion from the Environmental Investigation Agency.) This is but one of the challenges that the poeple of the Sunderbans face. Dipak also cited economic challenges such as transportation, education, health care, employment and exploitation; as well as ecological problems like high seas death, loss of land, and forced migration.

Dipak has sketched out a network that will provide connectivity for this population, enabling them to transmit, collect and store information about weather (including cyclone warnings), emergency preparedness/response, medical emergencies, commodity prices, health care and human rights infomration. The basic structure follows the hierarchy of political divisions of villages and blocs, and the overall cost of the basic components was just $28,000. Of course, the supporting costs run much higher, and Dipak is looking for sources of capital and operating funds to make the project work.

He has had initial meetings already, and has assembled key people in the teams that will work on the project, including represetnatives from Ashoka, Cisco, and NetHope. He recognizes remaining challenges in getting the local government support, having the needed electrical power, and being able to license the wireless frequencies needed for the project.

Fellow Presentations: Day 1 (Greg Wolff)

Less than 1 week into the program, each of us needs to get up in front of the group and present our project plans. Fortunately, the fellows are passionate about their projects, and have interesting backgrounds, so even four hour-long presentations back-to-back can hold our interest.

Greg Wolff led us off. Greg works for Ricoh Innovatiosn, and has gotten a head start on his involvment with the Reuters program. He'd supervised a four students (2 each from Stanford and Berkeley) who had done research over the summer on the issues around obtaining social services, starting with interviews of some current clients.
Based on these 18 interviews, they created a personal journey model (basically a transition state diagram, for us geeks) that shows a bad decision (often substance abuse, crime) leading to a downward spiral, until eventually hitting rock bottom. At some point, there was an epiphany, (often due to prompting from a child or loved one) that led to a desire to change (aka "learning ready moment"). From there, improvement is possible, but the temptations are still present and often lead back to the "bad decision" state. By omitting all of the first hand stories, I'm really not doing justice to the research, but that was the core of their findings.

With this background knowledge in mind, they re-envisioned the way social services could be provided. One model was the "talent agency" approach. The main mindset shift here is to view the clients as assets rather than costs. The power of this approach is that clients can help each other rather than all being "acted upon" by the agency. There were a number of sensible recommendations that went along with this, such as having a single point of contact (your "agent") and providing a complete solution (access to all needed services in one place).

Two of the students had worked on a prototype system to support some of the interactions of such an agency using a "business card" metaphor. In addition to having contact info and references "built-in", the card recorded in a tangible, visible way, the contributions you had made to the community in the form of sharing skills, mentoring, volunteering, etc.

A final interesting point that hit home for me was the notion of college as a transition stage of "reduced consequences". Most middle-class youth have the luxury of this stage where they have more freedom (practically as much as being on their own) but guaranteed security of a dorm room and dining hall to meet basic needs. Even poor choices that result in encounters with campus police are far less likely to have permanent consequences than equivalent off-campus behavior.

---

At this point, Greg started to talk more about what he planned to do next, rather than what had already been accomplished. He and I had already had a few emails and discussions, so I had a great appreciation for the challenge of presenting the framework that he's tackling. He argues that the software development process (and more generally all digital intellectual property) is a "sick ecology" like a dying coral reef that doesn't have the incentives, actors, and processes in place to yield reliable, useful products and content that society needs; nor does it adequately reward those that make contributions in this "alternative" realm.

Greg's presentation was as much advice to the fellows (as we are building digital IP and systems in this ecology) as it was his own plan of what to do. He encourgaged us to

• Choose pilot sites that are representative of the larger market, but easy to work with by virtue of proximity, attitude, and available resources
  
• Turn observations into specific, testable hypotheses
  
• Measure project results
  

He further talked about the different stages of concept demonstration, pilot, and scale-up, pointing out that each has challenges in appropriately defining the technology, business model, and use cases. As technologists, we often focus on the "easy" part, ignoring the other critical parts that will enable customers to buy and use our ideas, or even WANT to.

Greg continued with a couple of case studies of small businesses (in the construction and pharma research areas) that are suffering from the mismatch of the needs of the business (simple, cheap, easily integrated) with the goals of the vendors ("feature rich", high price tag, proprietary, annuity revenue stream). Most small businesses don't want to be (or employ) IT experts, but given the state of the industry, they have to.

IDEO: Day 2 (Brainstorming and Rapid Prototyping)

After our user studies yesterday, we summarized our findings of major findings and presented them to the other groups. The resulting list of 11 design aspects helped to inform the other work that we did throughout the day.

A quick presentation introduced the key IDEO brainstorming guidelines:

1. Defer Judgment
   
2. Encourage Wild Ideas
   
3. Build on the Ideas of Others
   
4. Stay Focused on Topic
   
5. One Conversation at a Time
   
6. Be Visual
   
7. Go for Quantity
   

With that, we were off. Our group (an amalgamation of people who had participated in each of the 3 user studies) came up with more than 50 ideas in about 45 minutes, and I think each of the other groups generated even more.

After lunch, we moved from brainstorm mode into prototyping, where the watch words are "Rapid", "Rough", "Relevant" and "Repeat". The idea, of course, being to get user feedback as quickly as possible on key design considerations, prove the feasibility of proposed designs and try out different "high risk" alternatives to test different points in the search space and narrow in on the most promising ones. IDEO is well stocked to support that, so they had all sorts of materials and tools to build prototypes quickly.

Our design focus furthered the medicine prescription compliance problem that we'd been working with so far. Our subject was a 42-year old rheumatoid arthritic woman, with interests in her kids and exercise. The design goals were:

1. Maintain a connection with the doctor
   
2. Keep a regimen
   
3. Be portable
   
4. Respect privacy
   

Our group produced a prototype of a pillbox integrated with a water bottle carrier. It wrapped around a drinking water bottle as an insulating sleeve, but had a timer / alarm device (with voice recorder so the trigger could be the patient's daughter plaintively asking Mommy whether she had taken her pill). Higher tech options involved a "silent" mode where the alarm triggered a flashing light that illuminated the water; a "smart dosage" mode where the appropriate medications dropped into a chamber; and a "compliance monitoring" mode where the door used to get the meds out triggered a time stamp, recorded by the device and uploaded (via either bluetooth or a code displayed on the device's LCD that could be submitted via web form at a later date). This compliance record was sent to the patient's doctor and HMO, where she receives a discount off her premium if she maintains full compliance.

It was fun to see what other ideas had emerged as well:

• Internet-enabled picture frame that had reminders at apporpriate times
  
• A stylish brooch that acted as a pillbox
  
• A bracelet equipped with alarm
  
• A medicine "advent calendar"
  
• A pez dispenser with your doctor's head
  

All in all, a fun, instructive couple of days that were good for getting us to work together as a group, think creatively, and impart some useful tools and processes.

IDEO: Day 1

IDEO, the award winning product design firm in Palo Alto, runs "IDEO U.", a program designed to propagate its culture of innovation and user centered design. The Digital Vision Fellows are participating in a two-day workshop.

This morning we started out right away with a hands-on exercise in teams of 2 or 3. Using only 6 feet of masking tape and ~60 pieces of uncooked spaghetti, create a free-standing tower as tall as possible in 15 minutes. We created a tetrahedral base supporting a "strut" of two parallel lines of pasta cross-braced (rather poorly, I must admit) with more pasta. The 3 foot strut sagged so that it was only 25 inches off the table top, and exhausting our supply of both time and tape, we finished near the bottom of the pack, winning the "chef's hat" award for being the first team to move out of the planning phase to try construction. I understand that's behavior they're trying to encourage, but given the outcome, I'm not sure that it was the right thing in this case. The group that got the highest
(Jack Higgins and Durga Pandey) reached 45 inches.

We talked about the challenge of complying with a prescription (our pre-workshop homework had been to take a "medicine" of M&M's morning and evening for 4 days).
After a discussion of IDEO methodology and human factors consideration more specifically (including levels of physical, cognitive, social, aesthetic and emotional), we did another fun exercise that was trying to infer as much as we could about a person based upon about 40 pictures they took documenting a "day in the life". It was interesting to see how much you could determine about their family, friends, eating habits, socio-economic status, hobbies and interests just based on the photos.

Then on to lunch and a quick tour of the IDEO campus, including the very cool "technology box" and "materials wall", both of which provided samples that could inspire brainstorming.

In the afternoon, we did a user study related to "monitoring" (following up on the notion of medical prescription compliance). Our group went to a nursery school and the director gave us a tour talking about some of the schedule, regulatory, learning philosophy, security, and instructional issues associated with caring for children from 104 families.

We returned to IDEO to compare notes with the group and characterize the results, abstracting the general themes that were relevant to medical prescription compliance. Tomorrow we'll do some brainstorming and rapid-prototyping.

DVF Conversations: Microfinance (with Moulaye and Helen)

This morning I had one of the first "office chats" with my colleagues of the kind that I expect will help shape the project and give me greater insight into the challenges of operating in a foreign country and culture.

Helen Wang talked about the challenges of microcredit in China. She said that working through NGO's tends to hamper efforts, because the government controls development efforts. Therefore, attempting to work outside of the government is ineffective, and NGO's do not get the access and authority they need to be successful.

She also said that in many cases the small amounts loaned in the typical microcredit program are not enough for the types of projects that would enable growing a small business. The need for capital is more in the range of 40,000 - 100,000 Yuan ($5,000 - 12,500) whereas most microcredit programs start below $500 and top out at $3,000 or so. She said that entrepreneurs can turn to friends and family to borrow the small amounts and that at the high end of the range, banks will make business loans, but there is a middle ground where options are few.

Moulaye Ely Diarra said that Mali did have an effective microcredit program, started by a woman from Mali and her American husband. The MFI employed about 200 people and most of the businesses were started by women who sold (or re-sold) vegetables and fish, buying from fisherman or farmers and re-selling in the village.

Speaking with Conviction: Melinda Henning

Melinda Henning is a communication consultant. She came and gave a half-day workshop for our group on Speaking with Conviction.

Since most of my previous speaking experience is with "academic" settings (especially conferences) the "advocacy" style of speaking is new and challenging to me. Rather than trying to plow through as much as you can in an assigned time slot and using Powerpoint to project details, in advocacy settings, it's much more about forming a connection with the members of the audience, conveying a simple message, and having a desired outcome.

Her preparation process is comprised of 7 steps:

1. Audience
2. Message
3. Action
4. Points
5. Proof
6. Packaging
7. Props

In addition, she gave helpful guidelines on stance (feet shoulder width apart, hands at sides), movement (if you move, move at least 3 steps, and do so in conjunction with the points that you're making), eye contact (with each audience member, maintaining gaze for the full thought/sentence, moving amongst people, but not in order) and gestures (big, with upper arm away from the body, reinforcing your points, and one hand at a time).

We each worked on a 2 minute speech which we gave a few times to either one other person or a small group. It was tough to keep all of the different things in mind, but it did seem that any one that was a current focus did get better. Now if I can just fit them all together....

Welcome!

This blog is intended to capture the development of my Digital Vision Fellowship project.
The Reuters Digital Vision Fellowship is a program funded by the Reuters Foundation and hosted at Stanford University. It brings together about a dozen mid-career technology professionals to learn about issues in the developing world and create technology-based solutions.

My project will be in the area of Microfinance, in particular Microcredit. Microcredit is the practice of loaning small amounts (possibly as little as $50) to people who would otherwise not have access to capital. Typically, these are women in the developing world with no collateral available.

I believe that technology can help to support Microfinance, and will focus on a couple of different general approaches.

1. Using technology to improve the efficiency of operations for a microfinance institution.


• Front office: Helping loan officers interact with borrowers


• Back office: Helping the banks track the loans and reconcile the books
  
2. Characterizing the loan portfolio in such a way that microcredit loans can be bundled and re-sold into larger credit markets, thereby making more money available for loans.

I'm still in the very early stages of research for this project, and am trying to get in touch with current microcredit practicioners to make sure that these hypotheses are correct. Please let me know if you or someone you know could help me with this critical stage of my research.