HyveUp – Chris Larsen – Prosper

Date : 2007/11/06 In - HyveUp - Tags : ,
prosper

Last week, I interviewed the head of Prosper.com. Prosper is a P2P money-sharing online platform. Lenders (or creditors) offer a given interest rate on the money they are willing to lend, and borrowers (or debtors) pick the lenders with the lowest interest rates.

The company is led by Chris Larsen, formerly founder and ceo of e-loan. What leads Chris to run Prosper is not the killing business model that lies beneath the P2P lend&borrow money system. Chris’ main motivation is to change the credit system as we know it today. Not only does he believe that it is feasible, he also thinks that by doing so, the entire American economy could experience a deep change.

How could a P2P lend and borrow social network be a major economical changing factor? Well, first consider the role of credits in the American culture: Credits are as vital as health or education. An individual has to go through a credits corporation for temporary extra cash, and pay high interest rates. Alternatives are close to non-existent. People’s lives are in the hands of financial corporations.

Chris Larsen believes that the Internet can destruct corporations’ monopolies. Prosper is an example of how it could happen. The lend&borrow network operates just like a social network: users can find a loan by themselves or be part of a group that is trusted and always on time for payment.

Prosper tutorial

This peer pressure system gives lenders more confidence when allowing a loan to an individual. Group members will act as ground-keepers to preserve the credibility and trustworthiness of the group. The system has been very carefully designed. The network counts almost 500,000 registered users, and $97,000,000 have been loaned so far.

Today is the rise of online social networks. The crowd emerges in an organized and interconnected fashion. First victims: the traditional media and their advertising partners. Mass communications messages do not have the right format to get through the social Web communications canals.

Micro-lending interest rates beat traditional institutions’ rates, and social networks technologies are mature: Could credits institutions be the next victims of the social Web?

One Response

  1. Hi Xavier,
    Zopa (http://www.zopa.com) has been doing that for a while in the UK. It is a tough model as the rates for lending ineluctably edges towards high street lending rates. Managing default is pretty tricky too. But this has a lot of applications on the areas of micro-credits. It will be interesting to see how it unfolds.

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