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[traveler505]

Trav, et al,

I was always under the impression that going state by state was a first-mover/quicker-to-market strategy.  Not only that, but partnering with some other entity would doubtless require some sort of revenue sharing or other compensation to the partnering entity.  Nothing nefarious about that that I can see - especially as borrowers are free to accept, or not, the rates that the marketplace (prosper lenders) ultimately decide to offer them.

-t

I don't believe I was suggesting anything nefarious; if I were, my post would have had a MNH tag.  I was looking for a rational explanation for what appears on the surface to be a very bad business decision.  By partnering with a bank or credit union, Prosper could probably have increased the number of funded loans (and thus its revenue) by 50%.  Yes, there would be an offsetting expense from compensation to the partner, but do you really think it would have outweighed the benefits? 

As for the first-mover advantage, in the time that Prosper has been in operation, two competitors have now succeeded in offering nationwide service, while Prosper is still stuck in state-by-state mode.  It doesn't appear to me that LendingClub's time-to-market was that much longer than Prosper's, so if Prosper thought that there was a time-to-market advantage in using state licensing, it was wrong.  And if Prosper viewed state-by-state licensing as a temporary fix, it has been very slow -- much slower than LendingClub -- in taking that next step.

IMO, the first-mover advantage/quicker-to-market theory just doesn't fit the facts, now that LendingClub in particular has shown just how quickly it could establish a national presence.  That's why I'm looking for alternative explanations for why Prosper can't or won't do what LendingClub has already succeeded in doing.