How does a man who wanted to be a doctor end up running a peer-to-peer lending service?
For Ron Suber – president of Prosper Marketplace, a company that pairs everyman lenders with everyman borrowers – it’s a tale of changing vision, bottom-of-the-ladder jobs, family priorities and the inevitable failures and successes that come with a life in business.
“Life is not a straight line, and neither is your career,” Suber told a group of Fordham University students last week. “Don’t worry about your first job. It’s not going to be your last job.”
Suber, who visited Fordham to talk with students interested in alternative investments and finance, gave his audience a thumbnail review of his career, which included stuffing envelopes at a financial firm, working his way up the ladder at Bear Stearns, joining a failed startup and working at Merlin Securities before the financial technology firm was sold to Wells Fargo in 2012. He peppered his story with bits of wisdom gained from a life in finance and entrepreneurship.
“Just find out what you like; find out what you’re good at. Then go to a company where there’s a problem, where there’s an opportunity,” Suber said. “That’s really where the big win is – where you love it and there’s a challenge.”
Suber is now bullish on Prosper, a unique firm that helps to match individuals seeking to borrow money for a variety of purposes with those seeking to lend (and make money in interest). The borrowers are vetted by Prosper and assigned a rank that identifies their risk. Then lenders can opt to loan them money through the platform.
“We’re only going after the super-prime and prime borrowers in the country,” Suber said.
Because of that, the average rate of return on a lender’s investment is 6.8 percent. The company makes money by charging between 1 percent and 5 percent in origination fees to borrowers and a 1-percent servicing fee on the outstanding balance of the loan per year on lenders.
While Prosper is not a bank and does not actually issue loans, it is registered with the federal Securities and Exchange Commission.
Forget banks, Suber said. Companies such as Prosper, he predicted, are the way people will borrow and lend in the future. He and his partners grew Prosper from a company with a valuation of $40 million to one with a valuation of $1.9 billion in three years, he said.
The company has been a place where individuals could consolidate debt with a new lower-interest loan, but Prosper also has begun to move to point-of-sale lending, Suber said, which opens up new opportunities.
“[HomeAdvisor.com] is the largest home-improvement site in the country. They now have a “borrow now” button for the merchants and the people, and it comes to us,” Suber said. “We’re powering all the borrowing on that big website.”
Where will it end? Suber said he does not know. The company could be purchased, or it could continue to grow under the leadership of Suber and his partners.
“And I guess that’s another lesson,” Suber said. “You can build your dream, you can see the opportunity and not know what the exit is … You have to be open.”