Andy Swan
andyswan.com · Personal blog · on HN since 2008
Andy Swan, an entrepreneur who has started and sold two companies and invests in startups, writes about startup rules and pitching.
What HN saysHN commenters cite him as a multiple-exit founder and seed investor, linking his "Revenues First" post and his lending strategy.
17HN people shared it
3linked it in comments
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What HN people wrote when they linked it
messel · 2010-08-06
Background for other HN'ers:
The author Andy Swan is a successful multiple exit entrepreneur and seed investor. From the site:
"I've started and sold two companies.
I have investments in 7-8 others.
I love helping passionate people create wealth.
Win."
Andy's one of the regulars on AVC, has an extraordinarily sharp business sense, and he's also a connoisseur of Pappy Van Winkle Bourbon: http://andyswan.com/blog/?s=pappy
supershazwi · 2010-10-31
Maybe this is a good article to read. The author's opinions on why earning revenue first is better.
http://andyswan.com/blog/2010/06/03/revenues-first/
Just another point of view =P
JayNeely · 2008-01-28
I commented to Allen, the post author, that I think it's very important that he include Andy's stated loan-making strategy before he starts casting doubt on Prosper's, or peer to peer lending in general's, effectiveness:
"We focus our lending efforts on people who [...] Have a lower credit score (and are thus willing to pay higher interest rates)"*
While Andy does try to mitigate that risk, he's still purposely lending to the highest-risk group available.
Using Prosper's own (very useful) dynamic statistics page, we can see that of all loans made since March 28th(when Andy made his first loan)^, 8.17% are late. BUT, only 4.53% are over 1 month late. Furthermore, out of the total number of late loans, ~60% are loans made to D, F, and HR credit ratings, the low credit score group Andy loaned to.
When you loan to a high risk group, you have to be willing to accept the potential negative consequences of that risk. Andy decided to limit that risk, but I think he staked too much importance on loaning to people with no delinquencies on their credit report, forgetting that past performance is not always a good indicator of future actions.
By Andy's own admission, he's gained 10% on the 5k he loaned. Hardly cause to start waving the bad debt flag, especially if the 2/3rds of his bad debt that are 1 month late or less come back to current, with late fees.
I've been keeping my own coverage of social lending services updated. I hope you'll find it…