I posted this in the .org forums, as a response to a new member, and it helped crystallized my thinking, so I thought I'd put it here too:
I think you found Prosper at the right time. The issues that
made things so difficult for earlier lenders (mostly, a lack of
information) are being addressed. New lenders have a better chance of
doing well on Prosper than those who started two years ago. Plus, you
get to start with a clean slate; Prosper has learned from previous
missteps in customer service and dealing with lenders, and will (we
hope) be more careful in its treatment of the newer generation of
For myself, I still think Prosper is a platform that is more useful to borrowers than to lenders, and I still worry that Prosper will go out of business without warning, but I have more confidence in it now than I did a year ago, and I can certainly understand the enthusiasm of those who have just recently discovered it. I wish the newbies much success in their Prosper adventures.
Back in the original Prosper forums, now archived at Prosperreport.com (thanks again 112233!), I started a thread called "Caladia's Picks," http://www.prosperreport.com/prosper/forums/archive/threads/1/6/9/16962.0.HTM about loans I would bid on if I had the $$$.
Ironically, when I actually was bidding, I bid with my heart and not my head, and it turns out my heart is a big softy, and frankly not too bright.
When making recommendations for others, though, I used my head, which, amazingly enough, seems relatively free of the brain damage that one might expect if one knew the abuse it had been subjected to over the years. [insert ninja smiley here!]
In the "Caladia's Picks" thread, I recommended 5 loans (actually 6, but one was canceled). Listing IDs: 83865, 82739, 107873 (Was 83220), 83314, 86519.
They're all a year old now, so I thought I'd revisit them and see how they're doing.
All current. Average rate 17%.
I am very impressed with myself. Now, I know, there will be those who say, "You know what would be more impressive? If you had found more than 5 loans. If more than a year had passed. If, perhaps, you had actually bid on those loans."
To those people I say "Shut. Up." :]
If you've never participated in an online forum, or if your
forum-related experience was limited to casual visits, it might be hard
for you to understand how some of us could have gotten so involved in
the Prosper forums. The excitement of being part of a new,
revolutionary way of doing business, the sense of connecting with other
people of all different personalities and backgrounds who nonetheless
still had some things in common, the freedom to talk about money, which
is normally a rather taboo subject, the intelligence and engaging
personalities of the forum participants, the drama that sometimes
occurred... these factors and others combined to create an environment
that, for many of us, was genuinely addictive.
It may help to think of it as similar to a "Real-Life"
I used to work at an apartment complex that was
marketed towards retired people. Most of the residents were over 70
years old, and many of them did not drive (this was in Texas, in an
area where there was no public transportation). As a result, the
complex's Community Clubhouse was the social hub for just about
everybody. The residents had potluck suppers there, holiday
celebrations, long-running bridge, domino and pool tournaments. They
kept photo albums and scrapbooks stored there. It was the place to go
to hang out with friends. The managers sometimes hung out there too.
Every now & then, the residents would kvetch about things: "Hey, you know, when we moved in here, they promised us a van twice a week to go grocery shopping." "You know, that's right! They should honor that
promise." And they'd talk to management about it, and sure enough,
management would set up the twice-a-week van service. The clubhouse
helped the residents bond as a community, and helped provide
communication between the community and the management.
Now, imagine that one day, out of the clear blue sky, the management padlocked the clubhouse door. When residents called to find out what
had happened, management said, "Oh yeah, we closed the Clubhouse. But
don't worry, you can use the toolshed if you want a place to
socialize. We put an old couch in there. Anytime you want to get in,
just come by the office and ask for a key. The key will be available
twice a day. We'll be monitoring the toolshed, and if anybody says
anything bad about the apartment complex or its management, they won't
be allowed in anymore. ...oh, your scrapbooks, photo albums, &
other memorabilia? We tossed all that stuff in the dumpster last
That's basically what the Prosper personnel did when, without notice, they "poofed" their original forums, with all the camaraderie, information and rich, complex interaction they contained, and replaced those forums with a poor imitation of the real thing, where each post must be approved by a moderator before it appears, and posts are only reviewed twice a day. (Seriously! Have you ever heard of such a thing?)
The Prosper community values the friendships and connections we
made in the original forums. We value the information and camaraderie that characterized them. It should be no surprise that we found another forum to hang out in, and that, sadly, the tone of the conversation has now changed to be more negative than it was before.
The Prosper personnel never did really understand how the community valued the forums, and they made a very bad mistake in closing and deleting the forums with no warning. They then compounded the mistake by attempting to quash all references to the alternate (.Org) forums.
Just at the moment when they should have been working to maintain a cordial relationship with the community, they alienated their stakeholders to such a degree that they made enemies of a number of intelligent, resourceful people. As others have already mentioned, the Prosper.com experience already has "case study" written all over it.
Hey, I finally figured out how to see and publish comments. %-) There are now comments published on some of the previous posts.
So last week my guy & I went to San Francisco, and while we were there we went by the Prosper office. Everybody was very busy, but I did get to meet Shira, Andrew and Rob, which I enjoyed. It's always nice to put faces with names.
Yesterday was my Prosper anniversary. I joined Prosper on May 31,
2006 and put up my first loan listing on June 1.
It took me another week or so to find the forums.
My Prosper position is unusual in that I'm both a borrower and a lender,
and my impressions of the site in the year I've been here are pretty
well summed up in this post in the Prosper forums:
My lending portfolio's performance is dismal.
Lendingstats has me at a negative estimated ROI; by my own calculations, I'll make about 8 bucks on my
$505 investment. I've learned a lot, from my own lending experiments
and from reading the forums. After a while, I felt like it would make
more sense to pay off my own loan than to keep lending, so I stopped
lending actual money. I felt like I finally had the hang of it,
though, so I kept a hand in by picking loans that I would bid
on if I had the money. See the "Caladia's Picks" thread in the Prosper forums:
I also kept my hand in by advising my Sweetie,
whose Prosper screenname is Dianthus. His Lendingstats profile:
I handpicked a few loans for him and set up his Standing Order. If you
look at his profile, you'll notice that he put $4000 on my loan at
8.4%. If he had divvied that up among the other loans instead, his ROI
would be over 20%. The loans I picked in the "Caladia's Picks" thread
are all current after 3 months, with an average rate of 17%. I'm a little annoyed at myself for having learned the early,
expensive lessons using real money, and then applying that knowledge
and making profitable picks with virtual money.
Dang-- real losses, imaginary profits. -sigh- At least Dianthus benefitted!
So now I keep looking at my portfolio, and wanting to start bidding again,
just to salvage my pride. But, while my confidence in my ability to
pick good loans has improved, my confidence in Prosper itself has
decreased. They're burning through
their venture capital, and they don't seem to have found a way to
successfully market the site to good borrowers. The ability to attract
good borrowers is especially important when you consider the problems with collections.
These are my biggest worries. I have threads about them in the Prosper
http://forums.prosper.com/index.php?showtopic=25735 (The Prosper Product)and http://forums.prosper.com/index.php?showtopic=25736 (Of Carrots and Sticks)
I just don't know if there's really much demand for the Prosper
Product, and the Prosper Product, unlike other types of loans, carries
with it almost no built-in motivation for repayment. If these two
issues prove to be insurmountable obstacles to Prosper's success, and
the company goes out of business, I think we'll all be kissing our
lending portfolios goodbye. They say they have a plan, but they said
they had a plan for debt sales too, and that turned out to be mostly
So here I am, one year in. Started out
asking for a loan to buy a new fence, learned about both borrowing and
lending so I know about both sides of the fence, and wondering about
the future of Prosper; still on the fence.
I'm not on the fence about Prosper itself though-- I still think it's a great concept that has engendered a unique and vibrant community. Thanks, everybody, for making the past year such an enjoyable one.