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28 Comments
- rynoon, on 10/12/2007, -0/+11Does this article really require three separate parts or does posting each part periodically and getting it dugg to the front page add significantly to your ad revenue?
- danboarder, on 10/12/2007, -1/+6@russ960 - wrong. Capital is what allows business owners to grow their business. Many people do not have sufficient collateral to access the capital they need to build a small business.
Social lending, microfinance, microcredit, peer-lending, and other financial services have helped over 100 million people lift themselves out of poverty. See www.MicroCreditSummit.org for stats.
Also see www.kiva.org -- recently featured on Frontline (PBS).
Dr. Yunus of Bangladesh was a winner of the Nobel peace prize this year for doing exactly this - helping people gain access to capital and build their own small businesses. See http://nobelprize.org/nobel_prizes/peace/laureates/2006/ - palmer, on 10/12/2007, -1/+5Way to condone the use of the nonsense "Web 2.0".
Bravo, geniuses. - hotdigg, on 10/12/2007, -1/+5Some of you people should take the time to visit zopa and prosper to see how they really work. They screen the borrowers and examine their creditworthiness prior to being accepted. If a borrower defaults, they are reported to credit bureaus. Most of the borrowers are not desperate, they are responsible people who want a better rate. They get better rates because banks are eliminated as a "middleman". Obviously, the websites Zopa and Prosper take a cut off of each loan but much less so than a typical financial institution makes on you.
- geekee, on 10/12/2007, -0/+3The blog is stupid. The amazing thing about this lending scheme is you can be your own bank, taking the same lending risks they do and reaping the same rewards. It's not charity, it's business.
- SecondGuesser, on 10/12/2007, -2/+3@Russ960
With all due respect, Russ, your opinion is overly biased and rather simple-minded.
First of all, there are many people who want to determine their own way to make a difference in the world, so visiting a church and asking to meet the hungry may not be an endeavor that calls them to action. That is their right.
Secondly, if everyone with funds to give did as you say, we may very well feed all the hungry mothers, but we've now taken away charitable resources from those that don't happen to be hungry mothers who have notified a church.
Debt instruments are financial tools that come with financial responsiblity. In a free society, each and every individual should be able to exercise his or her right to use those tools or to forego them. Some individuals will see that they can leverage responsible uses of debt into a better financial position for themselves or their families. Irresponsible users, conversely, will find that they have made their situation worse.
I can tell that you've never tried to build an irrigation system to enable agriculture in an African village or tried to fund the an American medical education for a gifted student from the Asian subcontinent. If you had, you may realize that these beneficiaries would be PLEASED to repay in the future for the funds to be able to accomplish something today. Business models like Prosper and Zopa do just that.
Having worked in this industry, I've looked at both Prosper.com and Zopa.com extensively, and I can report that the interest rates charged on those loans appear fair and competitive for each credit class. (Such is not the case with predatory lending such as payday outlets, as you rightly complain.) Your argument is even more moot by the barrier to entry; how many "weak and desperate" have access to the internet to apply for a loan? It's not like putting a payday lender outlet on the corner in the ghetto.
Those of us who operate in the realm of practicality (and not pipe dreams) know that charity alone will not solve social problems. There's simply not enough of it to go around. Therefore, creative business models and marketplaces can be created to align the incentives of those with resources (money) and those without them to realize greater good.
In addition, the traditional "charity" of which you are fond is perhaps the most wasteful model of social change in the history. Many charitable organizations spend a full 70% of donations simply SOLICITING MORE DONATIONS. Awfully wasteful, if you ask me. By streamlining charitable resources, it turns out that competitive or profit-driven models such as Propser or Zopa are actually delivering a greater net benefit to those that need it the most.
By the way, my business partner and I are working on a related project and are looking for gifted developers to help us. Our business model promises to revolutionize the way charitable resources are located and deployed, leveraging principles of free market economics. If you have time and skills to donate to the cause, let's figure out a way to get in touch. Both my business partner and I are giving our time pro-bono to this effort right now, although we are putting together a business plan and seeking funding. We have competed and placed well in many B-school business plan competitions and have already an impressive advisory board that includes respected national figures. - raindogmx, on 10/12/2007, -1/+2So what?
- psylence, on 10/12/2007, -4/+5Direct links: http://www.zopa.com http://www.prosper.com screw the lame blogspam.
- dancpsu, on 10/12/2007, -1/+2How can "social lending" take off when in the end you're giving something to some stranger on the net?
- panique, on 10/12/2007, -1/+2So, does that mean that "Web 2.0 phenomenon" == "opportunity to defraud people out of millions"?
- appetite, on 10/12/2007, -1/+2It's mutually beneficial and thus a vast step up from the status quo. You no longer need a million dollars to make 8% interest. You no longer need to have your wages garnished or fall prey to some sketchy debt collection agency if you shoveled yourself into massive debts with high monthly minimums, interest rates, and late fee penalties.
Not everyone can justify just giving their savings away to other people. But temporarily loaning people money at 8% interest rates can save the debtors a ton of money in the long run.
This service is taking money from banks, not regular people. - rynoon, on 10/12/2007, -0/+1Response: Part 1
So, I think that...
Microsoft Zune: Join The Social!
Looking for a loan? Look no further than Money Mart.
Walmart: For all of your Holiday needs.
McDonalds. I'm lovin' it
Read part 2 of my response tomorrow. - SecondGuesser, on 10/12/2007, -0/+1Russ, I didn't say that you were wrong or naive. I merely said that your opinion is biased. If a profit-driven model creates positive social change, why is that a bad thing? I heard in your statement that profit-driven models take advantage of the less fortunate. I know from experience that this is not the case, and my project aims to prove me right.
You make the point that lending someone money when they are drowning in debt is a bad thing. Is it really? What if the new loan is at a lower rate or over a longer term? Then the debtor actually benefits. Why would you wish to prevent such a thing? - itanshi, on 10/12/2007, -0/+1it was a big deal in the past web 1.0 era. you might remember it. 'give me a dollar' and people did
no reasons given - raindogmx, on 10/12/2007, -0/+1Awww man...
But seriously, what's wrong with this guy writing an interesting article and trying to profit the best way he can? It isn't anything like spam.
I'm waiting for the next chapter of your response :) - willcode4beer, on 10/12/2007, -0/+1SecondGuesser, if you put up a way to be contacted, I would be interested in the project you are working on.
You can post a msg on my blog if you like: willcode4beer.blogspot.com - goettel, on 10/12/2007, -0/+1"Web 2.0" is an attempt by those who missed out on the birth and infancy of the internet to lay claim to what they didn't grasp the first time round. It's a fluke, and using it marks you as a non-geek at best, and total arshat at worst.
- miaow, on 10/12/2007, -1/+1forgetting the 'interpersonal' side, that i would rather not know of when lending :
the big advantage from borrowing from a site like zopa is that you can pay the loan off quicker if you can, and you pay less interest than expected. this doesnt happen with loans from banks etc. but you need to take the original rate into consideration. a few months ago it was cheaper to borrow elsewhere (except if you pay off very early).
from a lenders point of view, i don't see much of a point financially, except if you lend to riskier borrowers. with zopa i know the money is spread out to avoid risk, and the default % is expected to be very low. even if you do that, you still need to keep pumping the same money in to get the yearly rate you expected. - ADVIZR, on 10/12/2007, -2/+2This isn't blog spam in any way. The dugg story is for part 3 of the article series on social lending. It would be blog spam if the poster had instead created a blog post for the sole purpose of redirecting/showcasing the article.
It's a little annoying when people think that actual articles and good posts in blogs are "spam." Also, Digg doesn't allow multiple links in a submission. Believe it or not, some people actually want to read informative articles that talk about sites and topics in depth, in a larger context than specific sites. - ChrisF79, on 10/12/2007, -4/+4The first two parts were awesome so excellent follow up! Part 4! Encore, Encore!
- slither83, on 10/12/2007, -0/+0Anyone knows of a site like this for Canadians? Dosen't have to be based in Canada, as long as they accept Canadian Lenders/Borrowers.
- russ960, on 10/12/2007, -1/+1@hotdigg - On your remark I did go and look at prosper and it seems most of the people listed on the home page are asking for money to pay off other loans. It seems all they are doing is trying to find a way to keep the money moving around to fool themselves about their debt. If your paying off a loan or credit card with another loan your still in debt you have done nothing but move it around and maybe lower the interest. Wouldn't it be better to simply pay it off. Most people that consolidate credit cards don't stop spending on those cards. It's loan CONsolidation.
- bremmi, on 10/12/2007, -2/+2Zopa and Prosper rock. This article does not. Sorry - the last two were much better. No digg.
- souljah4jc916, on 10/12/2007, -0/+0Keeping emotion out of it sounds like the way to go, even if this is the new "cool and trendy" thing to do online. Yet, this is an investment with risk associated to any lender you may lend your money to. Of course there will only be "sob" stories and can provoke much emotion, but you've still got to ask yourself that one fundamental question, is the juice worth the squeeze?
- russ960, on 10/12/2007, -2/+1First off my response is directed to the article posted. In this article the author seems to think it is charity to give someone a loan. I am certainly familiar with micro loans for businesses and that is much different than what was outlined in the article posted. There is nothing humanitarian about "loaning" someone money. Our society has been programmed to believe that debt is both necessary and beneficial. Just because you are lending money at a good rate does make the loan humanitarian. If you saw someone drunk out of their mind and they asked for alcohol is giving alcohol helping them? It is the same way when you lend someone money who is drowning in debt. Your doing them no good. Ya'll can try and justify your belief in this by telling me I'm wrong or naive and that if you gave away all your money you would have no money to help more people. But you are kidding yourselves.
- russ960, on 10/12/2007, -4/+3Social lending like all debt only serves to further enslave people to debt. It seems these sites attract those who are in desperate situations that have been made possible due to poor financial planning or have not been good with their money. This is not any different than payday loan places. They seek to feed on the weakest and most desperate of our society. I find this to be generally immoral and wrong. If you want to help a mother struggling to feed her children visit your church, temple, or whatever and ask. Then when they tell you of someone give them your money, food, or other assistance. That is real charity. A loan is not.
- ssmith2k3, on 10/12/2007, -4/+3What are the posts going to be like - "Good Day Sir/Madam. I wish to inform you that I am the son of His Majesty King Ahmuuta of Nigeria..."
- ifonly, on 10/12/2007, -6/+3I must say, http://www.zopa.com is a great site.
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