SubscribeInterview With Co-Founder of PPdai, The P2P Lending Service
Shanghai based PPdai is a new service to enable online person-to-person lending. The kind of service makes small amount of loan between individuals available without being bridges by banks. And it also has its own approach to reduce the risk of dead loans. For example, your loan splits into large amounts of bids to be taken by many individuals.
There’re similar service like Zopa and Prosper. And there’s also non-profit organization like Kiva. PPdai is definitely the first this kind of online service in China.
PPdai is co-founded by Jack Gu, who is also the founder of Podlook, a podcast directory, which has been covered lots of times in this blog. Currently PPdai is in closed beta testing. It will launch formally in this month. Following is our interview with Jack Gu.
1) How does money flow in the system? Do you rely on any third party financial tools? If no, how do you distribute money automatically?
No, we don’t deal with money directly. We rely on third party payment platform. The problem we are dealing with is not the flow control of money, but the standardization and simplification of small amount of loan. If necessary, we encourage users to transfer funds directly through our system, not only it saves cost, but also it leaves record, and PPdai will provide electric credential to ensure the authority.
2) In your eyes, which features of Prosper aren’t suitable for China? Among the policy, society, economic background that Prosper is rely on, which of them isn’t available in our country?
Lots of Prosper’s features aren’t suitable for China. For example, as you mentioned below, it weakens real identity of users. And also it’s group feature. These are the places we have made the most improvements. In China, we are lack of conditions which are available in the West, such as complete credit system and data, developed electric payment platform, habit of transfer funds online, etc. But there’s also something good for us, for example, our country is full of humanity, P2P lending is oriented in China in the history.
3) PPdai intends to reduce the risk through lending between friends or friends of friends. At the same time, this could be used as a spreading approach. But in foreign P2P lending services, the real identity of users are weakened, instead they are replaced with network identity and its credit ranking. How is PPdai designed on this point?
Lacking of reliable credit data, it’s full of risk to lend money to strangers, so we encourage lending between friends or friends of friends. It’s common in China that people often loan small amount of money in casual way. PPdai hopes to make it standardized and more efficient. SNS will be an important part, but it’s the approach, not the final goal.
4) Does PPdai’s credit ranking has anything to do with personal credit assessment system of our country?
The personal credit assessment system is being developed. There’s not enough data source yet. We will completely record credit of our users, which can be used as an important data source. We will make the effort to join the personal credit assessment system in the future.
5) Have you received any investment in this project?
A friend from investment bank has provided us some seed funding. But we mainly depend on our own funds in this stage.
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27 Responses to “Interview With Co-Founder of PPdai, The P2P Lending Service”
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I noticed Prosper ever since it was first reported on TechCrunch, probably in 2005. PPdai is indeed the first Chinese copy cat of this service I ever saw. I did not know what exactly PPdai would come out, but the biggest difference I saw so far is that Prosper takes position during a lending activity. That’s to say, Prosper actually lends money to those individuals and sells the loan to the ‘lenders’. It seems to me PPdai did not take any position. The loan was extended to borrowers directly by individual lenders. I assume this is to avoid some regulation barriers, right?
PPdai the service looks quite premature to me and the prospective looks dimming… Anyway, it is a good try and let’s see.
Seems I couldn’t revise my comment here…
This is to clarify that ‘PPdai the service looks quite premature to me and the perspective (instead of ‘prospective’) looks dimming’. This is a result of the lack of a credit system in China. Prosper is going to be prosperous in the US, however.
I used to read people’s stories (meaning their narrations in a borrowing request) on Prosper. It is surely interesting. But if you read it often enough, you will find almost nine out of ten reasons borrowing on Prosper are to repay credit card loans or other high-interest loans like Pay Day loan. I can’t imagine for what kind of reasons people will borrow on PPdai, though, given the very different spending habits here in China… Again, let’s see.
It’s certainly a very positive and encouraging attempt. However I wonder whether it will conflict with Chinese culture. Borrowing money is seen as a shame to most Chinese people, not to mention do it in public. However I believe it has its potential to the new generation, especially to those who are in IT sector and have accepted the idea of receiving money from VC to start up business.
How about legal issues in China? Taking people’s money with a promise of high interest rate is regarded as illegal unless you are a bank. This could also the reason why PPDai doesn’t want to get involved in transactions.
Thanks for the comments. Well, as many mentioned, there are many issues in China which is different in other countries. p2p lending concept is exciting but many works to do, especially in China.
Can someone invite me to try this service out? Thanx.
Great interview Luyi! I mentioned it on my blog, and I’ve added PPdai to my article, “Small Loans, Big Bucks: The World of Social Lending”.
http://socialstrategist.com/2007/06/08/small-loans-big-bucks-the-world-of-social-lending
PPdai is a sham and a complete copy/paste of Prosper… just look at this page which includes information about Prosper’s friends and endorsements system, mentioning “Prosper” by name:
http://www.ppdai.com/Help/friends_endorsements.aspx
Great questions to PPdai! We also spoke with Jack Gu recently and posed our own set of questions to PPdai; have a look at the interview: http://www.sociallendingwatch.com/2007/07/02/slw-authoritative-report-4-jack-gu-ceo-of-ppdaicom/
[...] Peer-to-peer lending for 1.3 billion peers SLW Authoritative Report #4: Jack Gu, CEO of ppDai.com Interview With Co-Founder of PPdai, The P2P Lending Service Ppdai - p2p lending reaches China [...]
[...] If you’re new here, you may want to subscribe to my RSS feed. Thanks for visiting! SLW had an interview with the Co-Founder of PPdai a few months back, however we wanted to provide some more content on PPdai. SLW presents a short interview developed by Luyi Chen from China Web 2.0 Review: [...]
[...] And it is not the fist P2P lending site in China. A broader one called PPDai offers P2P loans across many categories (see this write-up in English). But Chin thinks that starting with student loans is the better strategy in China because of the need to stay in the good graces of the government. Anything that helps promote education is popular with government bureaucrats. [...]
[...] BrothersJudd Blog wrote an interesting post today on Comment on Interview With Co-Founder of PPdai, The P2P Lending…Here’s a quick excerptAnything that helps promote education is popular with government bureaucrats. […] [...]
[...] And it is not the fist P2P lending site in China. A broader one called PPDai offers P2P loans across many categories (see this write-up in English). But Chin thinks that starting with student loans is the better strategy in China because of the need to stay in the good graces of the government. Anything that helps promote education is popular with government bureaucrats. [...]
[...] And it is not the fist P2P lending site in China. A broader one called PPDai offers P2P loans across many categories (see this write-up in English). But Chin thinks that starting with student loans is the better strategy in China because of the need to stay in the good graces of the government. Anything that helps promote education is popular with government bureaucrats. [...]
Chinese Stealth Startup Qifang Wants to Bring P2P Lending to the Mainland…
Peer-to-peer lending is coming to China. This morning I interviewed a Chinese-American entrepreneur living in Shanghai named Calvin Chin working on a stealth P2P lending site for Chinese student loans called Qifang. (The name, which translates to “…
[...] And it is not the fist P2P lending site in China. A broader one called PPDai offers P2P loans across many categories (see this write-up in English). But Chin thinks that starting with student loans is the better strategy in China because of the need to stay in the good graces of the government. Anything that helps promote education is popular with government bureaucrats. [...]
[...] And it is not the fist P2P lending site in China. A broader one called PPDai offers P2P loans across many categories (see this write-up in English). But Chin thinks that starting with student loans is the better strategy in China because of the need to stay in the good graces of the government. Anything that helps promote education is popular with government bureaucrats. [...]
[...] ところで、Qifangは中国初のP2P融資サイトというわけではない。より規模の大きいものはPPDaiで、さまざまな分野でP2P融資を提供している（この英語の記事を参照）。しかし、中国では、政府に気に入られなければならないため、学生ローンから始めることはより良い戦略だ、とChinは考えている。教育を促進する手助けとなるものなら何でも官僚に人気があるのだ。 [...]
[...] ところで、Qifangは中国初のP2P融資サイトというわけではない。より規模の大きいものはPPDaiで、さまざまな分野でP2P融資を提供している（この英語の記事を参照）。しかし、中国では、政府に気に入られなければならないため、学生ローンから始めることはより良い戦略だ、とChinは考えている。教育を促進する手助けとなるものなら何でも官僚に人気があるのだ。 [...]
[...] And it is not the fist P2P lending site in China. A broader one called PPDai offers P2P loans across many categories (see this write-up in English). But Chin thinks that starting with student loans is the better strategy in China because of the need to stay in the good graces of the government. Anything that helps promote education is popular with government bureaucrats. [...]
[...] And it is not the fist P2P lending site in China. A broader one called PPDai offers P2P loans across many categories (see this write-up in English). But Chin thinks that starting with student loans is the better strategy in China because of the need to stay in the good graces of the government. Anything that helps promote education is popular with government bureaucrats. [...]
[...] And it is not the fist P2P lending site in China. A broader one called PPDai offers P2P loans across many categories (see this write-up in English). But Chin thinks that starting with student loans is the better strategy in China because of the need to stay in the good graces of the government. Anything that helps promote education is popular with government bureaucrats. [...]
[...] And it is not the fist P2P lending site in China. A broader one called PPDai offers P2P loans across many categories (see this write-up in English). But Chin thinks that starting with student loans is the better strategy in China because of the need to stay in the good graces of the government. Anything that helps promote education is popular with government bureaucrats. [...]
[...] We have an interview with Jack Gu in July last year. [...]
51give is already up in a closed beta mode for loans for the poor via microfinance and for student loans.
http://www.51give.com
[...] And it is not the fist P2P lending site in China. A broader one called PPDai offers P2P loans across many categories (see this write-up in English). But Chin thinks that starting with student loans is the better strategy in China because of the need to stay in the good graces of the government. Anything that helps promote education is popular with government bureaucrats. [...]