I just attended the second annual users conference for Prosper.com in San Francisco, CA (www.prosper.com). They call it Prosper Days. The organization has certainly matured in only 2 years. Instead of just having a complaint session, the participants this year came to meet other lenders and borrowers, learn of the latest technological advances, give they comments on great and not-so-great activities, and constructively discuss areas for improvement. I came away very satisfied with the whole experience and thank all the Prosper.com employees for putting on a great conference.
What were some of the most valuable things I picked up from the conference?
- Prosper has really beefed up its collection's department. A detailed explanation of what Prosper is doing to go after delinquent accounts and its approach with defaults was given. I've been in the business for over 20 years and have never seen such a high level of delinquency control. I feel fully at ease that Prosper.com is doing the best job possible.
- Many of the participants threw around the term ROI as if it were the end-all of all investment decisions. It occurred to me that no one really knew what they were talking about when referring to ROI. It was confirmed during one of the sessions that there must be hundreds of different ways to calculate ROI. One person's ROI criteria may not match another person's ROI. I thought myself rather odd in that ROI had no real meaning to me. Yes I understand the concept, but I really don't use it. Since I approach my investment in Prosper.com as just one of 3 microfinance banks that I operate, I use the more banking criteria of Return-on-Assets (ROA). At any rate, I came to realize that I didn't need to feel inferior for not understanding nor applying the ROI concept to my Prosper investment.
- The last great thing I learned was how to grant loans to borrowers in the High Risk Category. Prosper classifies its potential borrowers into 6 main categories - AA, A, B, C, D, and E. However, there is a 7th category of the truly needy. I somehow did not include this category in my overall investment strategy. Time for me to update my lending criteria to expand my personal commitment to do more social good.