Saturday, March 15, 2008

I did it

This morning I cleaned up my bookmarks file. In the process I deleted my bookmarks to prospers.org.

Will I manage not to type the address in the address bar of my browser? I don't know. We'll have to see how long it lasts. I think the first 12 hours will be the worst, then I should be able to start recovering my life. Do all the things I've not been doing.

Realistically, I've been done with Prosper.com since the incident when they redacted my and other users' posts in their new forums without showing that the posts have been edited. So we'd type in a link to prospers.org, and prosper moderators would change it to link to prosper.com. That's just dishonest. It was the end for me. I stopped my standing orders and I've been on a constant withdrawal regimen since then.

There's many of us over at prospers.org in that same boat. In my February 2008 review of lender sentiment, over 50% of the respondents indicated that they are only withdrawing funds from prosper.com. That leaves us with few real Prosper-related issues.

Traveler505's MNH (My New Hobby) reports are a beacon of light. Fred93's late loan statistics are interesting - they show that there is a distinct possibility that Prosper has started to turn around the horrible loan default rates that plagued Prosper during the first two years of its existence.

What does that leave us with? Squabbles and "popcorn" threads. The most amusing thing to do on prospers.org these days is to fight. Look at that horrible creditboards thread. That's what the membership put their energy into. Puzzles, games, trivia. The most buzzing part of the prospers.org boards is the Off-Topic area.

Then we have a fundamental "free-speech" problem. I'm all for free speech and allowing criticism. But I don't believe that we have to say this in the most derogatory way we can. Some members relish saying things harshly and cruelly. It's offensive and it drives away some of our members that are offended by that form of behavior.

Prospers.org is unique in my experience in that it does not regulate the interaction between it's members. Anything goes. And I'm not sure that is the right thing. There are many staunch supporters of that, and I realize well the difficulties in setting and maintaining standards, but does that mean that we don't have to have standards?

Whenever I observe the behavior over at prospers.org, two books comes to mind. William Golding's Lord of the Flies and a book from my school days - N.P van Wyk Louw's Raka (book not available in translation). It is hard to put into words exactly what I feel - I does seem as if we gravitate towards the lowest common denominator if we have no regulation.

There is no point in fighting for higher standards if what the population want are bread and circuses. I have to be realistic. The dream, the community, that was Prosper is no more and will never be. Many have realized it and moved on. It is time for me to do the same.

Prosper may yet succeed, but it has learned the early lesson: The dream of an Internet-based P2P lending site cannot be a "community." Too many people are too desperate and will say or do anything to obtain some money. Their ability and willingness to repay are frequently much lower than their stated intentions. Lenders are too gullible and greedy. We believe sob stories and lend money to those with a sad story to tell. We lend when the rates are unrealistically high.

What should Prosper do? Borrowers often misrepresent facts in listing descriptions. Other times listing descriptions cause soft-hearted lenders to bid on totally unrealistic loans. At the same time, the ideal of Prosper was to humanize lending and lend when and where banks couldn't and wouldn't. Will Prosper learn the lesson that banks and financial institutions have learned that the numbers portray the most realistic assessment of the viability of a loan? That will leave many would-be, deserving borrowers out in the cold. Fact of the matter is that there has not been enough successful lending on Prosper to make any other case.

The future of Prosper is where Zopa and LendingClub already are. Lower rates to lenders, at best a few points above CD rates. Numbers-based lending, shaving a few points off the rate spread between borrowers and lenders, but not dramatically different from what banks and financial institutions are offering. Chris Larsen should know this. After all, eLoan didn't make mortgages substantially cheaper to the borrowing public.

So, look for Prosper to adapt two things or wither on the vine. Firstly, they have to get a sensible process for borrower verification. They cannot continue with a haphazard, cumbersome process that is much harder and complicated than brick-and-mortar institutions use. Good customers will not put up with that. In my opinion, a borrower that puts up with some of the hoops Prosper makes them jump through is scarily desperate for money.

Secondly, Prosper has to improve it's anti-fraud and collections activity. It's not too late to aggressively pursue legal action against those that has already defrauded Prosper and its lenders. Creating a reputation of being tough on fraud is something Prosper desperately needs. This requires more than the pathetic example of fraud prosecution Prosper announced at Prosper Days 2008.

Collections on the other hand, is probably a lost cause. Many, many of the existing loans were made to borrowers that simply will never be able to repay those loans. Far better, in my opinion, is that Prosper puts more effort into making sure that future loans go to more capable borrowers. Not to say that there shouldn't be stronger collections activity, but you pick more strawberries in a garden than in the desert, if you get my drift.

So, arrivederci, Prosper and prospers.org. Wish me the strength to continue in my journey.

13 comments:

Tom said...

What are you going to do with all the new free time?

LC said...

Sorry to see you go for good, HO. You've been an extremely valuable member to the community.

I see brighter days for Prosper, but that's just my opinion.

I wish you would reconsider. You'll be bored to tears without us.

But if this is it, I wish you the best in all of your adventures...

Anonymous said...

Good grief, Lord of the Flies? Come on now, there's also plenty of nice friendly people there who want to keep in touch with each other and don't need a rant tarring them with a single paintbrush. And don't you think you owed something to the people who stuck up for you for so long by at least discussing this with the community you are hatcheting?

I am grateful for your work, Hollow Oak, and grateful for all our discussions. I think you are a fine, upstanding individual.

I'm just a little disappointed in the way you've chosen to express this. And the harm it does to those of us in the community who aren't playing Lord of the Flies.

Please visit sometimes.

Tokyo Joe

Anonymous said...

@TJ: +1

Hope you reconsider, HO.

Anonymous said...

I knew you wouldn't respect me in the morning.

Call me?

DebInVenice said...

Beware the Ides of March.

HollowOak, it seems you've hit the wall over many of the same issues that caused me to step away from Prospers.org for nearly 3 months starting last December. I agree with much of what you have written.

Taking that long break was good for my mental health. Maybe in a few months you'll join the "land of the lurkers" like me. ;) Whatever you choose, I wish you and your family the best.

Anonymous said...

I know you've been thinking about this for awhile, from reading your other posts.

In leaving, you'll be missed. If you decide to come back, you'll be welcomed. Your posts are interesting and insightful. Maybe you could take time off to write a book. Please no "Lord of the Flies". There is that element here, but many are good at the core and have found a way to make community.

ferrix said...

You will be missed.

But that's not to say you should come back,, you should do whatever is best for *you*.

Thank you, my friend, for all you have done for us.

Torrey said...

As the "petulant child" who adores seeing "Mr. Tree", I will miss your wisdom and posts. But I fully agree with your reasons. I have stepped away as well, though I was not entrenched as much as you have been. I learned a lot from you. I extend my appreciation and gratitude for the positive impact you've left with me.

If you change your mind, I am sure you will be welcomed with open arms. You may even find some tree huggers. :)

Torrey

Anonymous said...

Boo hooo

Islandmele said...

This is certainly one of my bigger disappointments. But I want you to know that I have always held you in high esteem for your insightful contributions. You will be missed Mr. Tree and I do hope that Prosper can win you back in the future.

All the best to you!

112233 said...

I enjoyed your contributions. Stop in once in awhile when you aren't doing something more important like looking for crappy restaurants with your family (and those moments are more important). Good luck with everything.

tash said...

I'll miss your Ent-like wisdom (though you did move a bit faster).