United Prosperity and Rails to Help Billions of Small Entrepreneurs

by on October 23, 2008

Bhalchander Vishwanath

Bhalchander Vishwanath is the Founder and CEO of United Prosperity. He grew up in Pune, India and lives in the SF-Bay Area. He did his Bachelors degree from IIT Bombay and after working for two years with Tata Motors did his MBA from IIM Bangalore. He subsequently worked with Wipro, Microsoft, MphasiS and most recently Infosys and led several multi-year projects in financial services and insurance. Early in his career he also managed to do a little bit of marketing and sales. In September 2007, he quit his job with Infosys to set up United Prosperity and since then he has been enjoying his stint at entrepreneurship and of course building their application using Ruby on Rails.

Satish Talim of RubyLearning talked to Bhalchander Vishwanath of United Prosperity.

Satish Talim>> Could you tell us something about United Prosperity?

Bhalchander>> Sure.

There are billions of small entrepreneurs all over the world who need a small loan to start or grow their businesses. However banks will not lend to them without collateral. Most of these small entrepreneurs are poor and have no collateral, thus they are denied access to capital which is so crucial to improving their lives.

Microfinance institutions (MFIs) lend to poor entrepreneurs without demanding collateral, but they too face similar challenges. Banks will often not lend to emerging MFIs without collateral or a guarantee. Nobel laureate Prof. Mohammad Yunus wrote in his recent book on Social Business and the Future of Capitalism, that the biggest challenge we face in expanding microcredit is not execution capacity, but lack of guarantees to help microfinance institutions through their initial startup years.

Similarly there are several technology innovations in renewable energy for example available for the poor, but they cannot buy those products because Banks will not lend without collateral or a guarantee and the poor do not have collateral or money for guarantee.

With United Prosperity anyone with a PayPal account or a credit card can come to our website www.unitedprosperity.org and guarantee small amounts on behalf of small entrepreneurs. Based on the guarantee given by the general public or social guarantors as we call them, the bank lends to the small entrepreneurs and they can improve their lives.

A very interesting facet of our model is the effective utilization of capital as it really stretches the social guarantor’s dollar. The guarantee social guarantor is not a donation. Once the loan to the entrepreneur is paid back, the social guarantors can take their money back or support other entrepreneurs. The biggest strength of the guarantee model is that the guarantee is only for a part of the loan amount, so $1 in guarantee can facilitate $2 to $5 in loan to the entrepreneur.

Our Beta site is already launched and we are finalizing our partnerships with Banks, microfinance institutions and technology innovators. Once the partnerships are finalized, social guarantors will soon be able to guarantee loans to small entrepreneurs and make a difference to their lives, while maximizing the impact they make for every dollar in guarantee.

Satish Talim>> Bhalchander, why did you choose Ruby on Rails (RoR) for your product?

Bhalchander>> The system required for implementing our model is quite complex although it may seem pretty simple for a casual observer. The version 1.0 which is really a no-frills version has close to 65 tables, 50 transactional screens, 4 file uploads, a couple of batch processes and PayPal and Google Photo/Maps integration. We wanted to build the system with a very small team quickly and development speed was a very important criterion for choosing the platform. We evaluated Java, .Net, Python, PHP, Erlang and Ruby on Rails. Ruby on Rails seemed to be the strongest on this criterion. The application is largely about database updates where Rails is very elegant and Rails is also very well suited for Agile methodology which we wanted to use. Cognizant is supporting us by doing Pro Bono development of the system, also has a great team and some of their developers had worked on ROR earlier. All these factors made us chose Ruby on Rails.

Satish Talim>> Were there any surprises in working with RoR?

Bhalchander>> It was a great surprise that the learning curve for a developer to get acquainted with RoR is very short. It would hardly need 2 -3 weeks of training to get well versed in RoR, leaving apart the language specific learning. RoR framework lays down a good platform for database driven applications, as it provides with application layout and we just have to embed the business logic. Data defining and Data manipulating was very easy with the help of Models and Migrations. There are quite a lot of community plug-in/libraries available which can give an additional advantage even for newbies. Surprisingly, Google Picasa API was not available in Ruby but was available in Java, .Net, PHP and Python. We had to develop the code for integration.

Satish Talim>> You made a trip to India last year to look for offshore RoR development partners. What was your impression about the RoR scene in India?

Bhalchander>> Yes. I had visited India in November 2007. My first impression was that Ruby was becoming popular in the startup community. There were several startups who had gained a good degree of expertise in ROR. One difference I did not notice as compared to the startups in the SF- Bay area was that fewer startups in India were using Agile development methodologies which is almost the norm in the SF-Bay area.

I also learned that some of the larger software services had also done several projects on ROR with their enterprise clients. Overall I think a lot more people are using ROR than what it appears on the surface.

I was also highly impressed by your efforts at spearheading the inclusion of Ruby in the curriculum of Pune University1 and such engagement with Academia is great for the emerging startup culture in India.

Satish Talim>> What advice would you give startups about platform choices?

Bhalchander>> This is an extremely important decision and not an easy one. Paul Graham of Y Combinator in his famous article “The 18 Mistakes That Kill Startups” identifies ‘Choosing the wrong platform‘ as one of them, and I completely agree with him.

Taking time to select the platform, evaluating various choices and taking inputs from the developer community I think is very important. It took us almost five months to finalize the platform and settle on Rails. At the outset we decided that we will have an open mind in choosing the platform. We identified which parameters were important for us like developer productivity, scalability, ease of maintenance etc. and assessed each of the platforms against these parameter. We also evaluated each platform on non-technical criteria like availability of developers, ability to retain experienced developers who have worked on the platform, licensing costs etc. I also spoke to several startup CEOs and experts on their opinions on the platform from various perspectives. And you may remember, I spoke to you as well and sought your advice. Finally Chiradeep Vittal, our CTO gave the official blessing and we settled on Rails. And we have been very pleased with the choice. We think Rails is a great platform for database intensive applications which need to be built quickly.

Satish Talim>> Getting back to United Prosperity, what are your future plans?

Bhalchander>> We have three goals – expand partnerships, build a community of social guarantors and develop software to enable the first two goals.

On the partnerships, we are currently working with HDFC Bank in India and an MFI called Ajiwika in Jharkhand, India to get first the partnership finalized. Once that is done, we plan to add more MFIs, technology innovators and banks as partners. Once we have piloted our model in India, we plan to make our guarantees available in other countries as well.

We would like to build a community of social guarantors who support the entrepreneurs. We plan to reach out to them, largely through social media – social networking sites, social bookmarking, SEO, blogs and so on.

The need for guarantees is huge but to be relevant we have to keep our guarantees very affordable and keep our organization cost structure very low. To do that we plan to make extensive use of technology in automating key aspects of our operations and adopting an ‘open source’ software development model, where software developers can get involved in our mission of combating global poverty by volunteering their time and expertise to build the United Prosperity platform. We already have a backlog of features to be added, and we will be delighted to hear from interested developers.

Thank you Bhalchander. In case you have any queries, questions on this article, kindly post your questions here and Bhalchander would be glad to answer.

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  1. Ruby is now part of the computer science curriculum at the University and starts this coming January 2009.
Posted by Satish Talim

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{ 6 comments… read them below or add one }

Bhalchander Vishwanath October 23, 2008 at 2:13 am

Hi Satish,
Thank you very much for having me. I would like to add one more point – given the huge demand for capital from billions of small entrepreneurs, long term scalability of the platform was also an important criterion in the selection of the platform. When we made the platform choice, we saw several Web 2.0 companies choosing Rails and most of them were pretty confident of scaling Rails and that gave us a lot of confidence in going with ROR.
Cheers,
Bhalchander

Reply

Vasudev Ram October 23, 2008 at 6:33 am

Interesting interview.

>The biggest strength of the guarantee model is that the guarantee is only for a part of the loan amount, so $1 in guarantee can facilitate $2 to $5 in loan to the entrepreneur.

How does this work? who supplies the rest of the loan amount?

- Vasudev

Reply

Bhalchander Vishwanath October 23, 2008 at 6:52 am

Hi Vasudev,
The loan to the MFI is made by the bank. Most banks are happy to lend to the MFI with a partial guarantee and therefore the guarantee is typically for only a part of the loan amount. There are other benefits of the guarantee model as well. You could check http://www.wiseclerk.com/group-news/countries/us-unitedprosperityorg-guarantee-a-microloan-to-small-entrepreneur-in-india/ where I have listed out other advantages and also how the guarantee ratio is determined.
- Bhalchander

Reply

Vasudev Ram October 23, 2008 at 7:38 am

Thanks, Bhalchander. I get it now. Will check out the link.

- Vasudev

Reply

Marcos Ricardo October 23, 2008 at 6:54 pm

Hi,

First of all that is a great initiative, congratulations Bhalchander.

I would like to know the impact of the current international financial crisis on this project, and if it is specific to India or if it will be available all over the World.

Thanks.

Reply

Bhalchander Vishwanath October 23, 2008 at 10:20 pm

Hi Marcos,
Thank you. We are not yet operational so we do not know the impact of the current financial crisis. But from what I have read, there is considerable interest in social investing amongst the general public. So in the short run, we may have ups and downs but in the long run, I think there is considerable potential. Check slide 2 of this presentation, the latent potential for social investing in the US is estimated at $22B :http://www.slideshare.net/dmc500hats/svmn-meeting-ebay-microplace-karl-willey

We want to make this model available all over the world and we have designed the technical infrastructure to support that ( i.e. controller layout, data model etc.). However getting the concept across to partners and getting contracts finalized takes considerable time and effort. Hence we want to first pilot it and have an operational model in place, before we take it all over the world.

Cheers,
Bhalchander

Reply

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