Paul Buchheit - Latest Comments

Re: Paul Buchheit: Help me distribute $100,000 to new entrepreneurs in Africa

Julia Kurnia — Mon, 03 Mar 2014 16:00:20 -0000

According to our attorney (the Morriston & Foerster securities regulation specialist who was responsible for brokering Prosper's legalization deal with the SEC), even in the unlikely event that our model were construed to be illegal, we would not be prevented from returning funds to lenders.

That said, there is no doubt that Zidisha is on untested territory. There are many risks other than regulatory issues. Lenders could lose their funds if civil conflict breaks out in Kenya, if the currency is devaluated in Indonesia, if overall default rates rise above their historical levels, and many other scenarios. This kind of lending model hasn't been around for long enough for its risk to be predictable.

This is why we recommend lending through Zidisha be treated as philanthropy only. You should not lend more than you would normally allocate to charitable donations.

Re: Paul Buchheit: Help me distribute $100,000 to new entrepreneurs in Africa

Fact check — Mon, 03 Mar 2014 15:45:17 -0000

What happens when the SEC catches wind of what you're doing? Will Zidisha lenders be notified that their money is locked up for good?

Re: Paul Buchheit: Help me distribute $100,000 to new entrepreneurs in Africa

menriquez — Mon, 03 Mar 2014 15:26:03 -0000

"but I have nothing but praise for people willing to take the risk"

amen.

Re: Paul Buchheit: Help me distribute $100,000 to new entrepreneurs in Africa

undecillion — Mon, 03 Mar 2014 15:23:59 -0000

There is big a difference between (a) enforcing one's vision ala Millennium Villages Project on africans by organizing their village life and (b) micro-financing activities conjured up by africans themselves at reasonable interest rate. Also the fact that one approach didn't work or failed miserably doesn't mean that people should stop trying to solve the problem with a new approach if they care enough abut the issue. Whatever you think about nobel peace prizes, one of the really deserved awards in recent times went to the microfinancing pioneer Mohammed Yunus based on results on the ground. There is potentially more risk in trying to repeat previous success stories in africa due to political instability poor infrastructure and what not, but I have nothing but praise for people willing to take the risk.

Re: Paul Buchheit: Help me distribute $100,000 to new entrepreneurs in Africa

peacefool — Mon, 03 Mar 2014 15:07:56 -0000

Money lending != handouts,
dude.

[Responsibility to pay back] vs [free beer].

Re: Paul Buchheit: Help me distribute $100,000 to new entrepreneurs in Africa

Julia Kurnia — Mon, 03 Mar 2014 15:07:55 -0000

Zidisha is legal whether or not lenders request to withdraw their funds. Funds withdrawals are not considered to be returns on financial investments or securities, but rather cash gifts given freely.

Re: Paul Buchheit: Help me distribute $100,000 to new entrepreneurs in Africa

Factcheck — Mon, 03 Mar 2014 14:54:12 -0000

So, Zidisha is only legal if users don't try to withdraw their funds?

Re: Paul Buchheit: Help me distribute $100,000 to new entrepreneurs in Africa

Julia Kurnia — Mon, 03 Mar 2014 14:52:09 -0000

Yes, those two statements side by side do sound inconsistent. I'll try to clarify.

Legally, we may not offer a guarantee that lenders can withdraw their funds, because this is considered to be selling securities under US law. As a nonprofit, we are not licensed to sell securities. Our terms of use therefore state that Zidisha is under no obligation to honor lenders' requests to withdraw their repaid funds.
In practice however, we have honored every withdrawal request submitted by every lender since our founding four years ago.

Borrowers certainly are obligated to repay loans as long as they are capable of doing so. They sign a repayment contract similar to those used by local lenders, and there are considerable consequences for willful default, such as pursuit of mediation by local community leaders.

Re: Paul Buchheit: Help me distribute $100,000 to new entrepreneurs in Africa

Misunderstanding — Mon, 03 Mar 2014 14:40:39 -0000

So to summarize, you are not participating in a "handout program" and providing false hope, yet there is no guarantee that anyone can or will ever see a return on their investment?

Forgive me for being so blunt, but I do not see how the two statements can coexist? Is it due to the fact that those being lent the money do not realize that they aren't obligated to repay the loan?

Perhaps I'm missing something?

Re: Paul Buchheit: Help me distribute $100,000 to new entrepreneurs in Africa

menriquez — Mon, 03 Mar 2014 14:36:54 -0000

Julia,

it's so hard to me to discuss these issues and not come-off as a uncaring prick/tool...so keep in mind that i am aware of this and, in fact, not totally unsympathetic to this opinion :)

i can tell your heart is absolutely in the right place, but believe it or not, so is mine.

Nina Munk's book on this very issue is, roughly of course, 32 million times better at explaining how, in Africa, the best of intentions and plans can often lead to more harm then good. i just hate seeing good money thrown in after bad...a trait learned from playing way too much no-limit poker i'd guess :))

fyi, i was led to this page thru Hacker News and, since I recently heard Ms. Munk's rather amazing experience on my favorite podcast, Econtalk, just by happenstance, I decided to throw in my unsolicited and, im sure, rather uninformed opinion on this effort.

i truly...TRULY...wish you and your organization nothing but the best of luck with your well-meaning plans, but i will also plead that your try to learn from the mistakes and advice of the many, many others who have previosuly tred down the path you now find yourself on,

regards,
mark enriquez

Re: Paul Buchheit: Help me distribute $100,000 to new entrepreneurs in Africa

Julia Kurnia — Mon, 03 Mar 2014 14:25:10 -0000

Thanks for bringing up Kiva Zip. Many people have asked how we are different, and I recently posted this comparison to help address that question: http://www.huffingtonpost.c...

Zidisha does not offer securities. Unlike Prosper (and Kiva) we do not provide any guarantee that lender funds may be withdrawn from the platform. This does not preclude our honoring lender withdrawal requests in practice, but does mean that they are not defined as securities under US law.

Re: Paul Buchheit: Help me distribute $100,000 to new entrepreneurs in Africa

Fact Check — Mon, 03 Mar 2014 14:14:54 -0000

Paul,

A few facts you and your readers should become aware of re: Kiva vs. Zidisha as there are key omission which Zidisha doesn't like to bring up publicly:

1) Kiva launched KivaZip.org a few years ago which allow you to lend money at 0% directly to Kenyan and U.S. entrepreneurs. It's already raised more money than Zidisha and is growing fast, taking advantage of Kiva's scale and 8 years of operating experience supporting 1 million entrepreneurs in 75 countries.

Main thing to point out is that Kiva itself is not static, and in fact is tracking well on the high interest rate problems you outlined for long term impact at scale.

2) Zidisha is operating illegally. Why does KivaZip let you lend at 0% vs. making a return? Because letting people earn a rate of return is illegal per the Securities and Exchange Commission. Sites that ignored this like Profounder (link below) and Prosper (link below) have been shut down once they get on the radar of the SEC.

Zidisha is operating illegally, and it is only a matter of time before they are asked to cease and desist. Or they could significantly change their user experience to the point where other models that have struggled (see MicroPlace.com, which recently was shut down by its owner eBay for lack of traction).

At that point, will your actual money be withdraw-able from Zidisha?

Profounder case study: http://techcrunch.com/2012/...

Prosper case study: http://techcrunch.com/2008/...

If anything needs more time, resources, energy and disruption, its finding solutions to problems the affect the poorest 4 billion on the planet. Awesome to see YC and its community getting involved. Just wanted to be sure that everyone got a view of the fuller fact set between KivaZip and Zidisha, since Zidisha has been keen to position itself against Kiva.

Re: Paul Buchheit: Help me distribute $100,000 to new entrepreneurs in Africa

Angelface — Mon, 03 Mar 2014 14:13:29 -0000

This is a great and noble work, Paul. :)

Re: Paul Buchheit: Help me distribute $100,000 to new entrepreneurs in Africa

Julia Kurnia — Mon, 03 Mar 2014 13:37:44 -0000

I do not believe the comparison to the Millennium Villages Project is apt. Zidisha is not a grant or handout program - in fact, the negative effects of such handout programs is why we prefer lending over gifts.

Regarding the point about doing more harm than good, I'd suggest reading through some of the comments recently posted by borrowers in the activity feed in our website. Here is one such comment from James Wainaina, a smallholder farmer in Kenya who has taken and repaid several Zidisha loans:

"It is amazing how ones life can change so dramatically... Prior to Zidisha era, my life was just dragging on, each day preceded by nothingness. Just waiting for the day to drag on to the next one. Currently, my family and I are more anticipatory of the next day. We are purposeful; our life is full of purpose. We now have things to do each and every day. Work dignifies a person. When I buy a cow, milk the cow, dig a well or see people working on my farm, I feel dignified and worthwhile."

Best,

Julia Kurnia (Zidisha founder)

Re: Paul Buchheit: Help me distribute $100,000 to new entrepreneurs in Africa

menriquez — Mon, 03 Mar 2014 13:19:06 -0000

been brushing up on your "Jeff Sacks"-ian marketing, have you?

your using the false premise that just giving money to Africans, with no real way of tracking mid and long-term benefits and goal achievement, is beneficial and worthy of being used as a marketing gimmick to promote your website?

you really should brush up on you overall understanding of giving aid to Africans and the analysis of the Millennium Villages Project and how often false hope is actually worse then the status quo...i've included a few basic link to at least clue those interested in the deeper issues.

It's been shown over and over that just dumping dollars to Africans often causes much more pain and suffering in the long run then it fixes in the very very short.

cites...

http://www.nytimes.com/2013...

http://online.wsj.com/news/...

and last but not least...

http://www.povertycure.org/...

i tried to give cites from all sides of the political spectrum, least you think im some sort of partisan hack...

Re: Paul Buchheit: Help me distribute $100,000 to new entrepreneurs in Africa

SteveMorin — Mon, 03 Mar 2014 13:05:12 -0000

Paul awesome idea!

Re: Paul Buchheit: Help me distribute $100,000 to new entrepreneurs in Africa

DHS — Mon, 03 Mar 2014 12:40:14 -0000

Awesome marketing idea, Paul! I love that you're donating repayments to Zidisha too!

Re: The quest for freedom and safety: Why I donated $100,000 to YesOn19

465696335 — Sun, 26 Jan 2014 07:36:24 -0000

http://disqus.com/

Re: The Gift

billy — Tue, 14 Jan 2014 03:15:33 -0000

Indeed God is our giver and we owe him a lot. Thanks for sharing. tfi the family international

Re: Collaborative Charity

billy — Tue, 14 Jan 2014 03:13:58 -0000

Very well said. its your option and I respect that. Thanks for sharing this/ . click here the family international

Re: The Gift

TooLate — Sun, 12 Jan 2014 18:07:27 -0000

I'm very sorry to dig it all up, you may not even read this but I must write that.. There was never mentioned anything about virgins in any religion. Although, there is a lie telling that it's in Quran/Hadith. Do not believe in what bigots say, always try to explore things by oneself.

Re: The Gift

Aaron — Fri, 10 Jan 2014 02:04:50 -0000

Hi, Nice post thanks for sharing. Would you please consider an
intro to my website on your next post. Please email me back. Thanks!

Aaron Grey
aarongrey112 at gmail.com

Re: Collaborative Charity

maxi — Fri, 20 Dec 2013 00:22:06 -0000

holaq sy argentino y quiero que me alludes a cumplir mi sueño de alludar alos demas creando un refujio para niños que lo nesesiten

Re: Amazingly bad APIs

fb — Wed, 11 Dec 2013 17:06:43 -0000

Could not agree more. Endless, needless abstractions on top of miles-high scaffolding makes some Java APIs as pleasant to use as pulling teeth. If I had to be fair I would say this disease isn't exclusive to Java, but unfortunately Java is where I see this abuse happen the most.

Re: Collaborative Charity

fancysimple — Thu, 05 Dec 2013 04:46:42 -0000

Good to hear it and Congratulation for earning that kind of amount.

tfi the family international are proud of you.

God Bless!