Information markets are quite interesting. (Also known as prediction markets, depending on which academic you want to make happy). The academic literature is fun to read and intellectually quite interesting. The general idea is that a diverse crowd of humans is better at aggregating information and selecting the “correct” outcome than is a group of deliberating experts.
For a quick introduction to the concept read James Surowiecki’s Wisdom of the Crowds. More in-depth literature is available on the web, a good starting point is Chris Masse’s prediction market vortal. Foresight Exchange, the oldest online information market, also provides an open source platform for generating customized solutions.
So GroupCredit has an official logo! Tijan and I wore this on our T-shirts tonight while we pitched our concept to the HBS Entrepreneurship Conference this evening. We had a great time, and enjoyed chatting with interested parties afterwards. The logo came out of classroom doodling, and was thrown together in the nick of time ;-).
Tijan and I have been working on a social credit card - putting together a business based upon the theory of social peer monitoring of credit as evidenced recently in micro-finance in the developing world. We plan to apply this model to the US consumer finance market (credit cards) to significantly reduce the APR to consumers by helping them reduce their strategic default rates through peer monitoring and management of their credit positions.
Shortly after Tijan and I completed our first draft of a business plan including market analysis, revenue model, and strategic analysis, Prosper launched. We were already familiar with Zopa in the UK which instituted a peer-to-peer lending system which provides significant value to borrowers but seems to destroy value for lenders (read it depends upon stupid lenders). Nevertheless an interesting concept. We also knew that Benchmark Capital, who funded Zopa, was preparing a US-version of the service. However we were unprepared for the addition of the group credit principle to the model. Basically, Prosper is Zopa, however lenders and borrowers can join groups which will vouch for and monitor one another. Portions of their website read as if they were lifted directly from our business plan.
Nevertheless, we are enthusiastic about the potential of our idea. Prosper has still missed the boat, replicating Zopa’s failure to generate value for the lenders. Our model will drive real revenues backed by deep markets while sharing the benefits obtained through group credit management with the consumer. And in our mind, the existence of Prosper only serves to validate our potential market segment and the concept of group credit management itself. (The Economist even published an article on the topic!)
I applied for and was accepted into Harvard Business School, so this signals the end of my time at BAE SYSTEMS and the continuation of my trip down entrepreneurship lane! Francesca and I are very excited - we hope this makes it easier for us to build our ideas into reality for businesses and life. Special thanks for Francesca for supporting me through this time ;-).
Going back in time to document the facts… graduated from URI with a degree in Computer Engineering, and went to work at BAE SYSTEMS (remember, the bubble had burst, and the only people who wanted engineers were the ones making weapons… for which the post 9/11 world thirsted) in Nashua, NH.
Spent three years in Nashua, working full time, also participating in their Engineering Leadership Development Program wherein I met exciting people, my wife, and obtained an additional degree in engineering through WPI.
