Finance: Prosper experiences diseconomy of scale
Sam Rose blogs about Prosper's lender rebellion.
In a cogent analysis of what's going wrong, what's overlooked is that there seemed to have been a change in the business model from the founders' Yunus-like "invest in your community" philosophy -- where the lenders DID know the borrowers (loan your child's school teacher enough money to move into the district) -- to an inappropriate scale-up that compromised a sound business model designed to contain these risks.
I suggest visiting the blog not only to read the post but because at the bottom there are links to other conversations online about these topics.
"invest in your community" Boy, where have those days gone??
Posted by: Hamed Elbarki | April 23, 2008 at 04:29 PM