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[cwsswc]

They were dead in the water for the first half of the year and they only managed to reduce year-to-year expenses by $100K?

I would assume the key word in the phrase is "net". In the AMJ quarter for 2009, Prosper actually lopped off more than $1.2 million in operating expenses vs. the same period year ago, most of it in "compensation and benefits" and "marketing and advertising". The unfortunate piece was that the reduction in operating expenses was accompanied by a substantial reduction to revenues, likely caused by the shutdown.

In any event, it's still a nasty and unsustainable cash burn, with no sign of really getting better soon.

I wonder when the VCs will stop throwing good money after bad.

[ira01]

In any event, it's still a nasty and unsustainable cash burn, with no sign of really getting better soon.

I wonder when the VCs will stop throwing good money after bad.

I guess we'll find out in the next few months.  If it was my money, I wouldn't put another penny in.  The anemic pace of new originations has to be very concerning.

[onthefence]

In any event, it's still a nasty and unsustainable cash burn, with no sign of really getting better soon.

I wonder when the VCs will stop throwing good money after bad.

I still think the idea is workable.  And Prosper could eventually generate enough loans to cover their expenses.  The only question is if the Venture Capitalists are going to give up providing them more money before Prosper reaches that state.

If I were a Venture Capitalist, what I would want to know is how Prosper intends to quadruple their loan generation from their peak and how long they expect it will take to reach that level of production before adding another cent.  That is a major concern right now.

Of course Prosper has already taken a significant reputation hit due to all of the defaults.  That has significantly reduced lender's appetite for loans.  Continuing their old practices of pumping through whatever they can just isn't going to fly anymore.

[God-Father]

And don't forget - they are missing a few states worth of lenders since the peak.

[Investar]

And don't forget - they are missing a few states worth of lenders since the peak.

They are missing lenders in 12 of the top 20 states (by population). Texas, Florida, Pennsylvania, Ohio, Michigan and North Carolina are missing among the top 10. They especially 'hurt' for Florida and Texas where a disproportionately large number of lenders were participating. Next 10, they are missing New Jersey, Arizona, Massachusetts, Indiana, Tennessee and Maryland. Top 20 states make up 47% of the US population.

[babelphish]

They're going bankrupt, it's just a matter of when.  Prosper fails for similar reasons that bundled mortgages fail:

1)  With so many interested parties, re-negotiating the loan is virtually impossible.  Even worse, the potential negotiator has already been paid.
2)  The underlying securities are toxic.
3)  There is less information than a traditional lender would have.
4)  Despite being billed as social, it's actually more impersonal.  If you default on BoA, that's a large company who's not going to give you unsecured credit again and has the resources to sue you.  If you default on Jane, Bob, and Joe for 50 bucks apiece, well they'll live and they can't do anything about it.  It's not like borrowers were crying because lenderdude9732 was defaulted on for 23 bucks.

The early adopters came, got burned, and left.  There's no more word of mouth, just the occasional newbie and a few hardcore idiot gamblers.  Heck, it was sorta gambling in the beginning because we only relatively recently got 3 years worth of data on some loans!  Before then any modeling and lending was based on pure speculation and wishful thinking.

[ira01]

If I were a Venture Capitalist, what I would want to know is how Prosper intends to quadruple their loan generation from their peak and how long they expect it will take to reach that level of production before adding another cent.  That is a major concern right now.

These are indeed the right questions.  Unfortunately for Prosper, I believe the answer is that it can't be done.  As I explained in some depth here and here, Prosper's monthly originations had pretty well flat-lined during the eight months prior to its shutdown, at around $7M a month.  If Prosper couldn't significantly increase its originations during all that time, before its loss of momentum from the extended SEC shit-down, before loan performance really went into the crapper as its loans aged and no new loans were originated to artificially decreased the default rate, before it lost more than half its pool of potential lenders due to state prohibitions, and before its SEC Registration statements and Prospectus made it clear just how crappy and precarious Prosper is, how in the world is Prosper going to do so now?  I think it would take a long time before Prosper even got back to the $7M a month mark -- forget the 400% increase in originations necessary for Prosper to just break even.  

[no-whammies]

They're going bankrupt, it's just a matter of when.  Prosper fails for similar reasons that bundled mortgages fail:

1)  With so many interested parties, re-negotiating the loan is virtually impossible.  Even worse, the potential negotiator has already been paid.

I agree with most of this, but there continues to be some benefit to the negotiating party in the form of lender service fees.  And are borrower fees assessed throughout also?  Anyway, would collecting on 90% of the loans improve their reputation as well revenue stream, if so, by how much?

[no-whammies]

As I explained in some depth here and here, Prosper's monthly originations had pretty well flat-lined during the eight months prior to its shutdown, at around $7M a month.  

Am I the only one receiving:
Fatal error: Call to a member function get_by_ID() on a non-object in /home/servers/prospers.org/blogs/plugins/_auth_smf.plugin.php on line 160

Ira, I can't check your blog entries.  Or anyone else's for that matter.

[ira01]

As I explained in some depth here and here, Prosper's monthly originations had pretty well flat-lined during the eight months prior to its shutdown, at around $7M a month.  

Am I the only one receiving:
Fatal error: Call to a member function get_by_ID() on a non-object in /home/servers/prospers.org/blogs/plugins/_auth_smf.plugin.php on line 160

Ira, I can't check your blog entries.  Or anyone else's for that matter.

Both links work for me.

[ira01]

Nominate for Lobby.

[Investar]

Nominate for Lobby.

Okay with me.

[TotoMMB]

Am I the only one receiving:
Fatal error: Call to a member function get_by_ID() on a non-object in /home/servers/prospers.org/blogs/plugins/_auth_smf.plugin.php on line 160

Ira, I can't check your blog entries.  Or anyone else's for that matter.

Both links work for me.

Whammies (and ira), I got the same error msg.

[zapp05]

Am I the only one receiving:
Fatal error: Call to a member function get_by_ID() on a non-object in /home/servers/prospers.org/blogs/plugins/_auth_smf.plugin.php on line 160

Ira, I can't check your blog entries.  Or anyone else's for that matter.

Both links work for me.

Whammies (and ira), I got the same error msg.

ditto.
i'm using Firefox 3.5.2
note: i can pull it up okay with IE 6

[ira01]

Am I the only one receiving:
Fatal error: Call to a member function get_by_ID() on a non-object in /home/servers/prospers.org/blogs/plugins/_auth_smf.plugin.php on line 160

Ira, I can't check your blog entries.  Or anyone else's for that matter.

Both links work for me.

Whammies (and ira), I got the same error msg.

ditto.
i'm using Firefox 3.5.2
note: i can pull it up okay with IE 6

That's odd -- Mtnchick reports the links working with FF 3.5.2.