Collin Timms is founder and chairman of Guardian Bank, a co-operative bank established for the poor in Bangalore, India. He is also managing trustee of The Bridge Foundation, one of the largest microenterprise development organizations of India. It has promoted over 130,000 small businesses among rural women below the poverty line in Karnataka, Tamil Nadu, Andhra Pradesh, Kerala, and Orissa. Timms is also founder of GSK Enterprises, a venture-capital company developing socially responsible enterprises having a wide portfolio in health care, transportation, hospitality, and education.
Timms is involved with many other organizations including The Sierra Club of India (founder); Convergence Institute of Media Management & Information Technology Studies (COMMITS), a college offering postgraduate courses in media (founder and trustee); MICRON, India’s first credit bureau for microfinance (founder); Opportunity Microfinance India (OMI), supporting Opportunity International in microfinance (founder); and founder of Spot City Transit, a social enterprise for self employment using city taxis.
Timms and his wife, Dr. Olinda Timms, an anesthesiologist, live in Bangalore, India, with their son, Liam Timms, who is a student.
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I first met Collin Timms at a conference on Good Business in Rome in October 2006. When he told me his story, I was intrigued and asked him to write something about it for Ethix. Since then, we have corresponded, but he has been involved in too many things to write the story. In a recent correspondence, he asked me to interview him, so we connected through Skype on September 23, 2010.
Tell us about your personal story
I grew up in a working-class family. My father worked for a company, mostly blue-collar kind of work. There was always food on the table and education to be had, but very little else in terms of comforts or luxuries. There was a desire to overcome the infliction of poverty and acquire a better life.
Because of the focus on education and business, early in life I started my first business while still in school. I graduated as a civil engineer, but worked mostly in business. I realized my core talents were not in work as an engineer, but in finance, though I didn’t have formal training in that. Whatever kind of business, I found the financial issues were constant: balance sheet, cash flow, and all of the related issues.
How did you get started in using your resources to help others?
We started with a goal to get a decent meal, then we grew our goals. It came to a point in my life that I had accomplished more than I would have dreamed. Most people, when they get to that point, want to create even bigger goals. You know, you have your Mercedes, and now you want your Rolls Royce. You have a million rupees, now you want a billion, you have a billion and then you want a trillion. [Editor’s note: one million Indian Rupees=$22,000.] You keep on creating bigger and bigger goals.
It came to a point in my life that I had accomplished more than I would have dreamed. Most people want to create even bigger goals, but I wanted a different type of goal.
About 15 years ago, I decided I wanted to get off that track. I wanted new goals, but I wanted a different type of goal, and I wasn’t sure what that was. So I went through a phase of introspection lasting almost two years, trying to define this. Each of us has a different definition for happiness. I realized I got a tremendous amount of satisfaction out of conceptualizing something and making it work, and from being of help to others.
Getting Started in Financial Services
One day I was called in by a local parish priest who told me of someone who had trouble with his business, and he asked me to help him out. I didn’t know what to expect, but by talking to him I was able to help him rework his business concept and operations model, and really help him. I realized I achieved two things in this one act: I was able to plan something that worked and I was able to help somebody achieve something. I walked away from that experience feeling very good.
I started doing more and more of this, and essentially that is what I have been doing ever since. It appears like I am helping other people and creating socially responsible businesses, but the truth be known, I am just having a great time and feeling a deep satisfaction out of this.
I realized I got a tremendous amount of satisfaction out of conceptualizing something and making it work, and from being of help to somebody.
It started for me with a very unstructured way of helping people. Then I learned about the Bridge Foundation. I have been managing director of it for the past nine years, but when I first learned about it, the Bridge Foundation was a small, fledgling organization with a very interesting concept of an enterprise solution to poverty. It wanted to use business as a way to help people out of poverty.
This spoke very deeply to me and I decided this was an organization I had to get involved with. They invited me to join the board of advisors, where I got more involved. Later I was invited to join the board of trustees. As other trustees were getting older, they asked me to be the managing trustee. So that’s how I got involved in the Bridge Foundation, one of the oldest and largest microenterprise organizations in India.
Sometime along the course of that activity, I realized there were certain limitations in the financial services that could be offered to the poor, and these could be overcome by a bank. One major limitation is access to capital, which most microenterprise organizations struggle with — more so, 15 years ago. No one would give money to a microfinance organization. The bank was a natural answer to this, as it bank churns the financial resource within the community without having to reach outside it. The idea was suggested in one of our think-tank sessions, and I happened to have some good connections in the government at that time.
One of my passions is to develop the entrepreneurial resources of the community and that could be facilitated by a bank. I took the idea to the bishops in the community (India has a very small Christian community representing less than 2.6 percent of the population), and some of the bishops were skeptical as they didn’t know me. They thought I might gather some resources and then disappear. But I got tremendous help from the Catholic archbishop who was very enthusiastic. With that support we got started. I went from church to church talking about starting a bank, and step by step we got the resources. And that was the start of Guardian Bank.
When I was working with the Bridge Foundation and starting the bank I was still involved with my own business. I had some resources myself and so I got into some personal philanthropy as well. As you can see, I like to do about 10 things at once.
What is your preferred way to invest in a startup business?
One of the things I realized about starting a business is the key is not necessarily the capital or the idea, but the person behind it all. It is the person who pours his soul into the business to give it a life of its own. I call this person the champion. In the case of Guardian Bank, I was the champion. Every business has to have a champion.
I realized I can have a great idea, market survey, or a business plan, but without a champion the chances of success are greatly reduced. Rather than start a business and try to find a champion to run it, it is much easier to build a business around a champion, based on his ambitions, aspirations, and skill set. I tested the idea with a few businesses. I needed to find a few people with good moral character, the right work ethic, and the right skill set.
These champions may be good at what they do, but to run a successful business, particularly a small one, you need many other skills, and sometimes the champion lacks those skills. That’s where I found a role for me to play, enabling me to not just offer them capital, but also to add those financial and business skills that they may be lacking but that I developed over many years of practice.
It turned out to be a very viable position. I started to consciously develop the whole system, which I now have down pretty well in our venture company GSK Enterprises. It is always a challenge to find champions, and I am always looking around for people, no matter what line of expertise they have. I have found that I really enjoy the feeling that comes from making somebody else’s dreams come true, rather than just my own. To hear somebody talk about their dreams and plans, and then to lend them some money and expertise and see these dreams turn into reality is very rewarding. It also creates value for me, because I will end up owning a small share of a very profitable business. Last year I signed 15 balance sheets representing 15 different businesses, each one run by a very capable and skilled person. They represent very diverse areas: health management, legal services, commodity trading, stock broker, restaurant, social housing, banking, and taxis.
Rules of Engagement
I never own the majority stake in the business … to encourage the champion and to limit my instincts to try to control the business.This process works on a few rules that I developed myself. First, I never own the majority stake in the business. My stake is always less than 50 percent. I have found this to be a very important thing to encourage the champion and to limit my instincts to try to control the business. There are instances where I have put up 100 percent of the capital for the business for 25 percent of the ownership. I try to never let my stake go under 22–23 percent and never over 49 percent.
I also try to find champions who not only need the capital, but my business inputs as well. I am not just an angel investor or a venture capitalist, but also a long-term participant in the growth of the business. It has been a very successful strategy so far.
Women and Microenterprise
Many micro-enterprise projects lend primarily to women. Is that the case with yours?
Women are much better micro-entrepreneurs, and there are a number of reasons for this. The objective reason is that much of micro-enterprise is actually auxiliary income for families where the primary source of income is agriculture. The cause of poverty in India is very small land holdings with very little supportive infrastructure. For example, there is no irrigation, so you depend on the rainfall. You may have bad weather conditions, and your revenue stream goes up in smoke. You may have already borrowed up to your eyeballs to purchase the seed. You get pushed into poverty, and once you get into debt, in India the interest rates are so high that it becomes a generational thing. People never get out of such debt.
One way to get families out of poverty is to offer them an alternative source of income. We realized this supplementary income could best be managed by the women who were motivated to address family needs and were very good at multitasking. Women are very low on the status ladder, with low self esteem, and one of the big achievements of microenterprise is to enable women to become bread winners, asset creators. This has been the great achievement.The key is not necessarily the capital or the idea, but the person behind it all.
Then again, women are natural savers, natural nurturers, so all additional income that is earned is for the family or put back into the business. They have less of a tendency to spend money at the liquor store. Further, the whole microenterprise system is built around organizing these women into groups, trust banks, or self-help groups. This is done to distribute the delinquency risk. The responsibility for the repayment is then shared by the group.
We have found that if you put men in a group, it ends in a clash of egos. They don’t work well together and the group disintegrates quickly. But something magical happens when you put women in a group. Besides the gossip and complaining about mothers-in-laws they are able to support each other. The collective capacity of the group is many times the sum of its parts. All in all, we concluded it made good sense to focus the microenterprise resource on the women.
The Roles of Each Type of Financial Service
How do you see microenterprise lending, banking, and venture capital fitting together?
There are three types of financial activity that I am involved with. The microenterprise is done through the Bridge Foundation and operates at very low ticket sizes. We support a lot of people through the Guardian Bank, but it is in the form of loans.
The third is my personal investment with the partners to start up even larger enterprises. It is this last one that I take the equity position. At this level, the gender doesn’t matter to me at all. I have partners who are women and partners who are men; I am completely gender blind here. What matters is the commitment level, the skill level, but also the skill gap. Sometimes I find people who are pretty good at doing what I do and there is no value I can add to their business. I don’t invest there just with money if I can’t contribute, because it doesn’t make for a good long-term partnership.
Hopes for India
I have been looking at population trends and it appears India has and will continue to have many more young people than any other country in the world including China. What are your hopes for India longer term?
I am a diehard optimist! I am extremely optimistic about India. We have a very young population and a first-rate education system. The average Indian puts very strong emphasis on certain core things needed for any kind of economic growth: education and savings. We need to add a few more things to that. We are slowly getting around to better health care and hygiene, and improving the productivity and life expectancy of the population. But this is happening at a surprisingly fast pace.
We are also becoming more globally conscious. We need to develop products and services that are not just marketable in India, but also accepted around the world. This affects our quality standards and our thinking about process flows. Our software industry is a very good example of this.
We have a huge problem with poverty, a legacy of hundreds of years of self-imposed isolation and self-imposed class distinction. This has pushed millions and millions of people into abject poverty. The people have also been systematically exploited by various rulers who invaded and governed India over thousands of years.
There has been a huge disparity in the wealth distribution in this country. This is slowly changing by the creation of the Indian middle class. The key to any country that wants to become a part of the developed world is the growth of its middle class. Until 1992, the middle class was 9 percent of the population. Today we are close to 20 percent.
Once we get to 30 percent of the population paying taxes, we will be able to solve a lot of our problems.I feel in the next 20–25 years we can get to 50 percent middle class, which would constitute 600 million people contributing to the economy, paying taxes, etc. As of now, only 7 percent of the population pays taxes. Once we get to 30 percent of the population paying taxes, we will be able to solve a lot of our problems.
Along side of this is a lot of optimism and energy among the young people, a lot of positive attitude sometimes bordering on arrogance. There is a feeling that we can do it too and we can do it just as well as anybody else. I am extremely positive. I think the next 20 years belong to India.