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So Marty Monaco got a room at General Assembly for my mock pitch to Brad Hargreaves yesterday. 11:30-12:30 Room 1. I sent a text to Rachel. "Top Guy, running late, 15 minutes."

I had five slides prepared on Google Docs. My machine does not have Microsoft Office, never has had one. The five slides were barebones. White background, ugly black letters.

"You did not talk about the market at all!" Marty later said. How could I have forgotten to mention the market!

So I Had A Shake Shack Burger

The Most Popular Dish In New York: Shake Shack Burger, Madison Square Park

The Stink From India

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New York Times: November 2010: India Microcredit Faces Collapse From Defaults: India’s rapidly growing private microcredit industry faces imminent collapse as almost all borrowers in one of India’s largest states have stopped repaying their loans, egged on by politicians who accuse the industry of earning outsize profits on the backs of the poor. ........ Indian banks, which put up about 80 percent of the money that the companies lent to poor consumers, are increasingly worried that after surviving the global financial crisis mostly unscathed, they could now face serious losses. Indian banks have about $4 billion tied up in the industry ........ for-profit “social enterprises” that seek to make money while filling a social need ...... microfinance in pursuit of profits has led some microcredit companies around the world to extend loans to poor villagers at exorbitant interest rates and without enough regard for their ability to repay ...... microfinance could become India’s version of the United States’ subprime mortgage debacle, in which the seemingly noble idea of extending home ownership to low-income households threatened to collapse the global banking system because of a reckless, grow-at-any-cost strategy. ...... legislators in the state of Andhra Pradesh last month passed a stringent new law restricting how the companies can lend and collect money. ..... local leaders urged people to renege on their loans, and repayments on nearly $2 billion in loans in the state have virtually ceased. Lenders say that less than 10 percent of borrowers have made payments in the past couple of weeks. ..... the industry faces collapse in a state where more than a third of its borrowers live. Lenders are also having trouble making new loans in other states, because banks have slowed lending to them as fears about defaults have grown. ..... “They aren’t looking at sustainability or ensuring the money is going to income-generating activities. They are just making money.” ...... the industry had become no better than the widely despised village loan sharks it was intended to replace. ...... SKS and its shareholders raised more than $350 million on the stock market in August. Its revenue and profits have grown around 100 percent annually in recent years. This year, Vikram Akula, chairman of SKS Microfinance, privately sold shares worth about $13 million. ...... a few rogue operators may have given improper loans, but that the industry was too important to fail. “Microfinance has made a tremendous contribution to inclusive growth,” he said. Destroying microfinance, he said, would result in “nothing less than financial apartheid.” ...... Indian microfinance companies have some of the world’s lowest interest rates for small loans. Mr. Akula said that his company had reduced its interest rate by six percentage points, to 24 percent, in the past several years as volume had brought down expenses. ..... many lenders grew too fast and lent too aggressively. Investments by private equity firms and the prospect of a stock market listing drove firms to increase lending as fast as they could ..... the number of borrowers who are struggling to pay off their debts is much smaller than officials have asserted. He estimates that 20 percent have borrowed more than they can afford and that just 1 percent are in serious trouble ...... microfinance firms had lost sight of the fact that the poor needed more than loans to be successful entrepreneurs. They need business and financial advice as well ..... the industry was now planning to create a fund to help restructure the loans of the 20 percent of borrowers in Andhra Pradesh who were struggling. ..... The television, the mobile phone and the two buffaloes she bought with one loan were sold long ago.

Home ownership by the poor is not what caused the global financial meltdown. It was bad behavior on the part of bankers. This crisis in India can also be attributed to bad behavior on the part of bankers. But this crisis is overblown. Before I ever came to America I thought New York City was all about crimes and crimes alone.

Yunus On Loan Sharks

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Muhammad Yunus: The New York Times: Sacrificing Microcredit for Megaprofits: one of my goals was to eliminate the presence of loan sharks who grow rich by preying on the poor. In 1983, I founded Grameen Bank to provide small loans that people, especially poor women, could use to bring themselves out of poverty. At that time, I never imagined that one day microcredit would give rise to its own breed of loan sharks...... India’s crisis points to a clear need to get microcredit back on track. ..... Troubles with microcredit began around 2005, when many lenders started looking for ways to make a profit on the loans by shifting from their status as nonprofit organizations to commercial enterprises. In 2007, Compartamos, a Mexican bank, became Latin America’s first microcredit bank to go public. And this past August, SKS Microfinance, the largest bank of its kind in India, raised $358 million in an initial public offering. ...... Commercialization has been a terrible wrong turn for microfinance, and it indicates a worrying “mission drift” in the motivation of those lending to the poor. Poverty should be eradicated, not seen as a money-making opportunity. ..... these commercial organizations raise larger sums in volatile international financial markets, and then transmit financial risks to the poor. ..... commercial microcredit institutions are subject to demands for ever-increasing profits, which can only come in the form of higher interest rates charged to the poor, defeating the very purpose of the loans. ...... Grameen Bank .... has 2,500 branches in Bangladesh. It lends out more than $100 million a month, from loans of less than $10 for beggars in our “Struggling Members” program, to micro-enterprise loans of about $1,000. Most branches are financially self-reliant, dependent only on deposits from ordinary Bangladeshis. When borrowers join the bank, they open a savings account. All borrowers have savings accounts at the bank, many with balances larger than their loans. And every year, the bank’s profits are returned to the borrowers — 97 percent of them poor women — in the form of dividends. ..... we charge 20 percent to the borrowers. .... every country where microloans are made needs a microcredit regulatory authority

I share Yunus' aversion to "loan sharks." I grew up in the Third World. I know what loan sharks are. I saw too many of them in action while growing up. It is not a pretty sight.

Microfinance

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