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[ira01]

My guess is that someone at Lending Club had a quiet word with Prosper and informed them of some mistakes in their rationale - hence the post has been pulled. Just a guess....

I suspect that Prosper's blog post got pulled because they put up a screenshot of Lending Club's website without approval from Lending Club.

That would be fair use, IMHO, since Prosper's screen shot is for the purpose of comparison and discussion.  I think an error in Prosper's methodology is more likely.

[312lender]

Charts aren't copyrightable either.

[Staneslav]

a

[SLN]

The blog post I mentioned before is now live on Prosper's blog. I had an email exchange with someone at Prosper today and apparently a bug in Wordpress allowed it to slip out prematurely to RSS readers before it was live. So, here it is now for the whole world to see.
http://blog.prosper.com/2011/03/04/like-all-investments-returns-from-p2p-lending-are-a-function-of-risk/

[kenL]

I wonder if Prosper got the memo to not use "Loans that do not meet the current credit policy" when doing their analysis of LC's loan performance? 

[Faithful_Steward1]

Anyway, long story short, you are much more likely to make money today than several years ago on Prosper. To the point where I still think Reflective Rupee might break 10% RoI. Prosper can fairly came that the average RoI is increasing.

Nice try. Arguing +-5% when all remaining principal is lost when Prosper BK's?

[DCS]

Given the unique nature of peer-to-peer lending and its imperfect correlation with industry-wide measures, we suspect [LC's use of industry-wide TransUnion data] is one of the primary reasons that their loss expectations have not been very accurate to date.

A lesson Prosper learned that first year of its own operation, when they used industry-wide Experian default numbers and suggested lenders should simply add the rate they hoped to earn on their money to determine an appropriate bid rate for a listing.



Personally I think Prosper absolutely should advertise on their blog about this.  If an advantage they currently have over their competitor is more accurate bidding guidance based on their own database of loans, why not advertise it?  This will probably lead to LC improving their own default estimates.

[ira01]

Given the unique nature of peer-to-peer lending and its imperfect correlation with industry-wide measures, we suspect [LC's use of industry-wide TransUnion data] is one of the primary reasons that their loss expectations have not been very accurate to date.

A lesson Prosper learned that first year of its own operation, when they used industry-wide Experian default numbers and suggested lenders should simply add the rate they hoped to earn on their money to determine an appropriate bid rate for a listing.

Prosper was doing that far longer than the "first year of its own operation."  I didn't join Prosper until March 2007 (well over a year after Prosper's inception), and it was still touting the Experian default numbers (and its bogus formula "bid rate = expected default rate + desired return") long after I joined Prosper. 

[DCS]

I trust your memory better than mine.  First two years then.

[kenL]

Personally I think Prosper absolutely should advertise on their blog about this.  If an advantage they currently have over their competitor is more accurate bidding guidance based on their own database of loans, why not advertise it?  This will probably lead to LC improving their own default estimates.

I agree, Prosper's new system is accurately gauging defaults and they are setting interest rates accordingly. They are doing a great job with that and they should try as hard as they can to get that word out.  The problem is that few believe them (and with just cause). So to give some extra credibility to their estimates of their own performance they are telling the world that they are doing better than the other guy. I don't like that way of promoting oneself and I'm sure the other guy doesn't like it either (it would be a lot nicer if they could work together), but it is the easiest way to give credibility to their numbers and that credibility hump for Prosper is a huge one to get over.

I trust your memory better than mine.  First two years then.

Yeah, Ira's memory is a wonder of the modern world. I also trust it better than my own.

[SLN]

I don't like that way of promoting oneself and I'm sure the other guy doesn't like it either (it would be a lot nicer if they could work together)

I agree with Ken here. I think the industry is too small and fledgling still to start having a war with each other. I would prefer it if Prosper spent their time and energy figuring out how to grow the industry rather than trying to take business off Lending Club. I understand the temptation - their returns have been excellent the last year and a half - and according to Lendstats far better than Lending Club. But a shouting match between the two companies will do little to expand the popularity of p2p lending. And come on, at less than 0.01% of the consumer credit market surely it is better to grow the whole pie rather than take a little bit of the 0.01% away from the other guy.

[Urbi_et_Orbi]

Those two companies hardly deserve to the bundled together in the same category.

Let's hope Prosper's attempts at industry collusion died with Zopa USA.

[Staneslav]

a

[kenL]

Let's hope Prosper's attempts at industry collusion died with Zopa USA.

Good point, working together would probably eventually lead to collusion. I guess it is good if the 2 companies are at least a little at odds with one another.

What I definitely would prefer, as SLN suggested, is that Prosper concentrate more on increasing the total market and less on trying to take market share from LC.