Prosper.Com - One man’s misery is another’s gain
Every now and then a startup comes along that really crawls under your skin. Yes, this would be a different blog if I started every post with that opener.
Of course you’ve heard of Prosper.com. They’ve closed multiple rounds of funding and have transacted about $92mln in loans on their website. If you visit the site, you’ll see listings like the one from Ms. Anniversary Gift, she’s looking for a $11400 loan @ 13.55%. Or, Ms. Helping-Me-Be-Less-Stressed, she’s looking for $20,000 @ 23.79%. How are you going to be less stressed with a loan @ 23.79%? Or Mr. Reinvesting-In-Prosper, he’s my favorite. He’s looking for $22,650 @ 22.25% only to reinvest it back into Prosper.com at a higher rate as a lender.
I can’t believe that we’re calling Prosper.com a hot startup. Oh cool, they just added social networking features to their site. I can actually add the suckers that I’m charging 25% interest to on my “Friends” list. C’mon, REALLY! I’ve seen coverage for this site on every major technology site (including my favorites). And not one of them has questioned their model. Not one. Investors are validating it by throwing money at them, blog/news sites are covering them as a hot startup.
Apart from the complete erosion of our moral compass, there is a greater issue that needs to be addressed here. Actually, my mistake, I take that back. The biggest issue is the erosion of our compass.
With that point settled, I’m just wondering what happens when we have a channel that allows us to lend money to people with a not-so-good credit score. What’s the word I’m looking for? Desperate? No, no, Subprime. That’s it. What could possibly go wrong with Subprime lending?
Prosper.com…$92mln. C’mon, you’re just getting started. That’s not even a major dent yet. Transact away. The more loans you give out, the better.
When you do go belly up (and you will), my “favorite” sites will be the first to cover your demise.
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