Aaron Strout:     

Hi, my name is Aaron Strout. Welcome to the We Show.

[music]

Aaron Strout:    

Thank you for joining us on the We Show today. My name is Aaron Strout, and I’m the VP of marketing for Mzinga, a leading provider of workplace and customer community solutions.  This podcast is one in a series and can be found on the WeAreSmarter.org site, Mzinga.com, and iTunes under "We Are Smarter."

And of course, we do appreciate your comments. You're welcome to dial me at (781) 328-2824, or e-mail me: aaron@mzinga.com.

Today I’m speaking with the CEO and founder of Prosper.com, Chris Larsen. Chris, you have an impressive background as the CEO and one of the founders of financial giant E-LOAN, and now with your latest endeavor, Prosper.com, as the CEO and founder. We’re honored to have you as today’s guest. With that, I’d love to get a little bit of background on you, and sort of how you got started with maybe E-LOAN and then fast-forward to your current role at Prosper.

Chris Larsen: 
Great. Well, first of all, Aaron, thanks for having us today. We really appreciate it. Yeah, so we’re pretty excited about Prosper. It’s sort of a second generation of Internet financial sort of lending products for consumers, so we’re kind of building on a lot of the things we did at E-LOAN but now combining it with really the social networking sort of trend, or kind of benefit, that I think has just emerged just in the last couple years. Actually, it wasn’t really at a place where we could really harness that at E-LOAN, and frankly that was sort of a little bit of the frustration I think we had. We had sort of the technology of lending online at E-LOAN, and I think we did some great things, but at the end of the day, we never had that sort of eBay sort of community-blessed technology, which we think is really the secret sauce here to really do all the things that the Web was really meant to do. I think at the end of the day, that’s to empower people to really take the reins from the elite that control so much of our society – one of those key areas being money and the distribution of money and the allocation of money.

What Prosper is trying to do is really be that infrastructure that allows regular people, who are both buyers and sellers of money, to be the ones that are driving the value and determining how things are going to go. Whether that be for making a good return on their investments – obviously an important, probably the No. 1 driver – but other things as well. All the things that humans do to think about all the things that people want to be engaged with, we think are the exciting things about this new wave of the Web; [it] is that sort of every waking moment, everything you do in life becomes engaging. Whether that be things you do in business and socially. Again, like investing and allocating money. Money is always connected with exciting things that go on in people’s lives. A place like Prosper is a way to capture that, and allow people to exercise sort of this new power that they now have. That’s sort of broadly what we’re trying to do, and sort of the continuation of some things we tried to do at E-LOAN [inaudible].

Aaron Strout: 
I think it’s great. I was mentioning to you as we were talking before we started the podcast that I did get a chance to see John Witchel, your CTO, speak out at Web 2.0. I have to say I was very impressed. I knew a fair amount about you guys already. I don’t know if our CEO, Barry Libert, had mentioned this to you prior, but we have a book that we’re putting together with Pearson right now called We Are Smarter Than Me, and Prosper.com is one of the case studies in there. We had known a little bit about you guys from that, but it was fascinating to hear John talk. I loved that analogy of really sort of bringing the finance world into the eBay world, this power of peers in the social networking.

To that end, John was kind enough to talk a little bit about some of the community activities that do go on with Prosper, both offline and online. I think one of them was similar to an activity that eBay actually has, where eBay has this sort of eBay user conference. And I think John had mentioned that you had a group that got together recently, and it was 300 strong. And beyond that you have a lot of other activities that go on that you guys do or don’t have any real say in, but you have such passionate users. These people love to get together. Can you talk a little bit about that?

Chris Larsen: 
Yeah, sure. John does do a great job of describing it. He is really a great kind of technologist and thinker of service, economic democracy, and almost a libertarian of free markets and solutions to the world’s problems. I get too far afield of that, but he had a great way of framing it. That’s something I think we really connected on, was, again, sort of how do you take this technology – stuff we had at E-LOAN was a good start – but, again, it makes such a difference if you can have a community behind that who is actually calling the shots. Again, we really look at ourselves as that infrastructure. The power and the value is coming from people. He always did a great job of, how do you tell whether or not you have a Web 2.0 company or a social networking company? But if you just take all the people out of that, would there be anything on the site really across where there would just be nothing there? On eBay, there’d be nothing to do if you didn’t have people there.

That’s the not the same thing at an E-LOAN or Wal-Mart.com; you’d still have the products that were placed there by a small group of elites that were trying to drive value. So the community is really key. We did do our first Prosper Days, which is really our version of an eBay Live. We’re going to do that every year, where we’re brining the community members together to meet each other, to help them educate each other. Again, if you get that sense of ownership, that really is as much their product. It’s really their call to decide where this is going to go. We are clearly there to bring some order, but hopefully with the lightest touch possible.

This obviously can’t be anarchy. We have to provide some structure of what is allowable, what the tools need to be. But if you look at our product cycle now – we try to come up with a new version of the site every month or so – 80 percent of the feature set that we have now is driven by what the community wants, and by what people are posting on our discussion forums – we have almost 300,000 posts now – about what people are saying at things like Prosper Days, and even by the meetups that we have now by our community members all around the country. We think that’s the critical element here. It’s really hard to get right. It’s really hard and very fragile to get a community going. I think we’re off to a good start, but we’ve got obviously a long way to go. We need to stay pure to that view that we are a servant infrastructure; we’re not the sort of command-and-control, “Here’s the product; you will take it or leave it,” and that’s a really tricky balance.

Aaron Strout: 
So to that end, I’m going to ask you a little bit of a curveball question, but you said something that triggered this in my mind. You’ve probably heard about this whole interesting phenomena going on at Digg, where there was a user that put up the codec to basically open up the guts to a DVD and be able to record a DVD even if they’ve anti-piracy’d it. The long and the short of it, for anyone that’s not familiar with the story, is that Digg was asked to take it down by the media companies. They took it down. The user put it back up. Basically the Digg community said, “We are going to keep this up, whether you guys like it or not.”

Now they may have ultimately put Digg out of business by doing this, but it’s an interesting occurrence in the sense that for the first time really, the community spoke louder than the management team of one of these new Web 2.0 companies. Does that scare you at all, and any thoughts on that in terms of how your community – how you walk that fine balance between listening to them versus letting them dictate where you guys are going?

Chris Larsen: 
Yeah, this is the –

Aaron Strout: 
You can punch on that question if you want to. That’s a tough one.

Chris Larsen: 
This is the thing we think about all the time. This is the most – you just got to the very core of the difficulty and the challenges of Web 2.0 because at the end of the day, Web 2.0 is sort of this libertarian – it’s pure economic democracy. People can do what they want to do, and that’s the power of it, right? But from a company perspective, you’re always going back and forth between sort of freedom and safety.

You also know – eBay talks about this all the time – if it’s not viewed as a safe place – like I can hurt there or I can get ripped off there or I can get just blamed and my reputation ruined – people won’t come. So it’s a very, very fine balance, that people need to feel like they have the freedom but also feel safe enough to engage. There’s just no easy answers there.

I think probably we’re at this very primitive stage of social networking where yes, we’ve got the tools out there and everybody’s being able to participate. But at the end of the day – to the point of I think with what Digg have to struggle with – is there has to be some rule making. How do you make those rules? Right now, frankly, it’s sort of a [inaudible] dictatorship of the owners of these Web 2.0 companies, and that’s probably ultimately a flawed model. I’m not sure exactly where we’re going to go next with that, but right now it’s this sort of libertarian [inaudible] ideal, where it’s a very small group still, of people. It’s a step down from command and control, but it still is not in its purest sense libertarianism or total free market. Again, maybe for better or for worse, I think ultimately 50 years from now we’ll have better structures. But now it’s sort of this small group of tired people that are faced with these really fine lines. The code is a great example. We have other issues like that, as well. If somebody has crossed the line on privacy or credit data that’s used inappropriately, but it’s the ultimate problem. We don’t want to become like the Friendster police. That’s how, I think, Friendster –

Aaron Strout: 
Right.

Chris Larsen: 
– lost it. We don’t want to be unsafe and [have] too much anarchy.

Aaron Strout: 
Well, so far, you guys seem to have done a great job. I have to tell you, after learning more about you and listening to John, I am tempted to go out and join up and actually participate in the borrowing or the loaning of money on Prosper.

I do have two more quick questions for you. Along the lines of engaging your community and really talking about that senior leadership team, how much do you guys go out? Like does the leadership team participate in any of these 300,000 discussion posts, or how actively do you blog and things like that? I know the founders of Flickr were rumored to go out and individually greet people coming in as they were getting started. Now obviously, that would be an impossibility these days with a company your size or their size, but maybe you could speak a little bit about that?

Chris Larsen: 
Yeah, we struggle with this a little bit. Frankly, when we first started we thought, “Let’s not blog.” We kind of thought a lot of blogging is sort of – it’s sort of BS marketing and smells fake. A lot of companies, they have their blog, and it just looks like marketing. So we kind of initially said, “If people want to blog, there’s lots of places where they should be doing it. The voice should be coming from them.” Just recently, though, we’ve had some squabbles on our discussion forums, and there was a point where maybe we were being so hands-off that the community – I think we still have this right now; in fact, we were just talking about it this morning – is the community thinking we’re not listening to them, so like we’re just ignoring them. So John and I –

Aaron Strout: 
That’s an interesting point.

Chris Larsen: 
Yeah, he just started blogging offsite though, not on Prosper but on one of the third-party sites. We’re still kind of cautious about that, to be honest with you. We don’t want to look like we’re trying to manipulate too much or trying to, again, command and control it too much.

Aaron Strout: 
Yeah, it is a fine line. That’s a great point. I guess my last question, just to wrap things up, what do you guys see over the next six to 12 months in terms of direction? More of the same? I know you mentioned that you really work hard to co-create, product co-create, with your community and customers. Anything that you can sort of let us know about that’s coming?

Chris Larsen:  There’s just a big backlog of feature requests from the community [inaudible]. We know the group leaders – the groups are big – they need some more features. They’re screaming for them. We know lenders very much want some additional tools that we’re providing, secondary market being a big key one we hope to come out with later. Also, borrowers need some more choices. It’s pretty much just blocking and tackling this long list of community wants and desires that we can execute on, and so I think we’ve got our work cut out for us for the next couple of years on that.

Aaron Strout: 
I’m sure. Now I know I told you that was the last question, but you also piqued my interest on this one: Do you guys have a specific tool where you allow the community to sort of log ideas or log bug fixes, feature functionality, and then let the community rate that so you know what to choose next? Or is it sort of a collaboration between your team and what you see out there, and you guys pick and choose what you think is going to have the biggest bang for the buck?

Chris Larsen: 
We run mostly by the product designers who go heavily on the discussion forums, summarize them and really try to capture, bubble up the top things, as well as – the community hits us directly on that. So yeah, it’s not quite so ratings sophisticated. I think that’s good, though. We’d like to move in some direction like that, but right now it’s been more using our judgment and just trying to read a lot of – sometimes you get so much feedback, you almost can’t read it all. But that’s really what –

Aaron Strout: 
Yeah, especially if you have 300,000-plus posts. That’s a lot to digest. Well, thank you for your time today, Chris. This was great. I could certainly spend another hour with you, but I know time is precious and maybe we could do another one of these in the future.

For those of you listening to this podcast with Prosper.com CEO and founder, Chris Larsen, thank you, Chris. This was great. I really appreciate it.

Chris Larsen:  Thanks for having us. We really appreciate it.

We appreciate you listening in to this series of the We Show podcasts. To find other podcasts like this, you can check out WeAreSmarter.org, Mzinga.com, and also iTunes under "We Are Smarter."

Thanks so much for joining us. We look forward to seeing you next week.