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Dear William,
This issue of Lift-Off is focused on micro-finance
and the lessons it has for entrepreneurs everywhere.
Also read about 5 wAys to make a successful startup
and see how Sam Calagione brewed a successful business.
I would much appreciate your reactions to the issues
raised. Best
wishes from Will.
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Headless Bankers: Starfish or Spiders?
The Unstoppable Power of Leaderless Organizations
Banks without bosses: Grameen
Bank and the Jamii
are
examples of two organizations that leverage starfish
principles.
Starfish, because if you cut off some part of the
body, the creature does not die.
Spider Organizations, on the other hand, may survive
if they lose one
leg, but minus two they can't function and without a
head they die (Starfish are headless). The new
book, The
Starfish and the Spider by Ori Brafman & Rod A.
Beckstone
charts Starfish Organizations as different as Jamii
Bora and Alcoholics Anonymous, which has no hierarchy of
leaders and no formal control structure. The authors
also show how the
Internet has become a breeding ground for Starfish
Organizations such as Open Source
Software
and Wikipedia.
In Kenya, Jamii Bora ('Good Family' in Kiswahili)
has devolved
responsibility to savings/lending groups who make
the loans and is unusual in that its staff is
composed almost exclusively of previous borrowers
with a firm understanding of clients' needs. There's
no 'passing up the line' for sign-off on loans. The
process of 'headless banking' stretches out into the
community. For example, at Mathare United Football
Club, all players are also members of the Jamii Bora
Trust, where they invest monthly savings and improve
their capacity to borrow funds for setting up small
businesses to help themselves and their families
escape poverty and secure a better future.
Products without owners: The basic idea
behind open source is very simple: When programmers
can read, redistribute, and modify the source code
for a piece of software, the software evolves.
People improve it, people adapt it, people fix bugs.
And this can happen at a speed that, if one is used
to the slow pace of conventional software
development, seems astonishing.
As an example, the Open Source Firefox
browser has
increased its
market
share from 8.5% to 12.5% in the last year -
at the expense of Internet Explorer. Since its
creation in 2001, Wikipedia has
rapidly grown into
the largest reference website on the Internet. The
content of Wikipedia is free, and is written
collaboratively by people from all around the world.
The Starfish Startup or Starfish Spirit: In
industrialized countries, we are used to Spider
Organizations. We pay enormous attention to CEOs and
power structures. The Starfish lesson, emphasized in
the book, is that while decentralized organizations
appear to be messy and chaotic, they are rapidly
becoming one of the most powerful forces the world
has seen. Of course, entrepreneurs are not going to
rush headlong to create Starfish Startups, but it's
vital to appreciate the importance of the underlying
collaborative community of business. Perhaps the
Starfish Spirit should be what inspires our
intention to grow and survive.
Click here to order the book.
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Millions for Beggars: Macro-funding through micro-finance
Enabling the poor to prosper through entrepreneurship
The world micro-finance movement is producing
macro-funding for the people at the bottom of the
pyramid: the world's poorest 4 billion people—80% of
the world's population who live on less than $2 a
day. The World Bank estimates that over 7,000
Micro-Finance Institutions (MFIs) have invested more
than $2.5 billion and are growing exponentially.
One example is Kenya's Jamii Bora Trust, an MFI that
began in 1999 when several former beggars and slum
dwellers asked Ingrid Munro—then head of the African
Housing Fund—to help them improve their lives. She
agreed, and since then a once-small savings
matching program has grown into a nationwide MFI
with truly ambitious growth and impact goals,
offering not only loans but also extremely low-cost
healthcare insurance, alcoholism rehabilitation, and
even housing mortgages for former slum dwellers.
With nearly $5 million of outstanding loans, the
Trust has upwards of 150,000 borrowers and a target
of half a million; there are low default rates, the
Trust is profitable and maximum first loans are only
$105
Jamii Bora and other micro-financiers - such as the
2006 winner of the Nobel Peace Prize (with its
founder Mohammad Yunnus) Grameen Bank of Bangladesh
- develop self-respect and entrepreneurial development
among people who have plenty of ingenuity but have
previously lacked access to loan finance, the first
financial step
on the ladder to self-sufficiency.
This development is not only sustainable in the
developing world, but also is instructive for many
of us in the developed world. Micro-finance loan
default rates are
negligible because borrowers offer honor, not goods, as
security. They have no collateral and
thus the confidence of the lender is measured in
personal terms, not assets that can be repossessed.
The loan amounts are small and yet the lenders have
built the processing means to handle them, often
working through community groups as intermediaries,
rather than expensive branch networks.
Learn more about Sustainable Startup
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Before Launching Your Startup: 5 wAys to be more successful
by William Keyser, Managing Director of WorkSavvy
Summary: You want to launch your business
right away. Your brain is bursting to get going. You
have
no choice. That's the way it is. But if you squeeze
your priorities and fit in one other process before
lift-off, your
chances of success will be greatly enhanced. Take a
deep breath and reflect on these five "A" words
about your way of being in business—now and later.
Avowing: Openly define your larger purpose to
yourself and others. Consciously know and share your
beliefs and values. Prepare yourself and others
involved in the startup on the way that these
beliefs and values will impact on the business and
the way it will be conducted. The benefits include
enhancing your good feelings about what you are
doing, creating a clearer business ethos and
identity to drive your business forward and make it
stand out and avoiding practices that could lead to
trouble with colleagues, customers and others
involved in the business.
Attending: Observe and notice what's going on
around you and be awake to what's at stake. Attend
to the issues of importance. These may concern your
family or your business milieu or the wider world.
Be sure to investigate all the resources available
to you and behavior - both yours and other
people's.
Trust your intuition and those 'little voices', but
be sure to make sense of the data you need to inform
and drive the business as it changes. "I haven't got
time for that, I'm way too busy to think about that
now." You
hear that pretty often, don't you? You may even say
it yourself. If you hear those words, hesitate a
moment, in case the intervention might be important.
Allowing: Stay present. It's easy to say and
difficult to do, especially for an entrepreneur. The
mind is full of things past and future, ringing
bells and pressing for attention. If you keep those
chattering monkeys at bay, you'll find answers to
problems coming from amazing quarters—often from
places you'd least expect. When facing problems, if
you listen quietly and remain open to potentiality,
especially in tricky, vexing or querulous
situations, solutions may appear as if from nowhere.
Be sure to cultivate the art of possibility.
Acting: Yes, yes, entrepreneurs know all
about action. They make things happen. But often the
best business school thinking on decision making
calls for careful analysis, data collection and
logical problem-solving. Of course, this is wise,
and yet you need to have trust that you can do it
now—with conviction. The business person with flair
is able to follow the flow, expeditiously. If you
delay and decide only when you have what you think
are all the facts, you may find out that what you
assumed was hard data was only opinion dressed up as
information.
Affirming: Have the courage to be honest with
yourself and others. Have the confidence to assert
your convictions positively. Be prepared to stand
for the beliefs and values that you declared before
you started the startup. This may mean admitting
that a business action was wrong. It may have been
made with the best of intention, but accepting the
error and moving on should reinforce the core of
what your business is about. How many times have you
had an encounter with a company representative that
would just not admit a mistake and continued to
defend his position with, "it's company policy not
to..."?
These five "A" words should give you great impetus
and also save you a lot of pain as your business
lifts off and sustains your original dream.
Ask Will to Amplify
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Brewing up a Business
Adventures in Entreprepeurship
Sam Calagione is the founder of Maryland's Dogfish
Head Brewery and his book, Brewing
up a Business, is the honest story of the
firm's first ten years. He tells of the ups and
downs, and though he is not slow at coming forward
about his prowess, he is disarmingly honest also
about his shortcomings.
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