Peer-2-Peer lenders’ dishonest tactics

Peer-to-peer lending has emerged as one of the big Fintech trends in the recent years. It aims to get banks out of the lending and borrowing equation. It is, however, not without it’s problems.

The big issue with peer to peer lending is that it relies on consumers to provide the credit. Which is fine when the economy is in recovery, or something akin to it, but what happens when the economy takes a downturn?

Companies like Lendify and FundedByMe offer the lenders a rate the banks would not offer during a hyperinflation. That’s is good and it gives companies and individuals the possibility to borrow cheaper than at banks who may not lends them anything at all.  The problem with these companies is that their advertisement make it sound like lending is risk free, which of course, it isn’t.

One clear example is the recent Lendify advertising I saw on Twitter their services,  tagged with the Swedish hashtag #sparpodden. This was their tweet:


It translates into: today’s questions: Pay to have money at the bank or get good return at @LendifySE with #p2ploans?

When I questioned the tweet, as it compares alternatives with vastly different risk,  they just laughed it off.

The fact that an apparently serious financial provider would dismiss the risks of lending is sad and does not bode well for the alternative finance companies.  There is a, not insubstantial, probability that the company or individual that borrows money from these P2P lenders will default. Especially considering the relative high interest rates charged. If a loan has an interest rate over 10 percent you can be sure that it has that rate for a good reason.

I welcome any reforms or companies that make it easier for SME to borrow but it should not do so while being coy about the risks involved in these types of loans. Consumers are notoriously bad at accounting for risk and these types of schemes market themselves as safe while being exceedingly risky in some cases.

If you want to invest in lending products, invest in baskets of many loans rather than those that are loans to specific individuals and companies as these are riskier propositions.

-P

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BCG’s Strategy for Sweden

BCG (Boston Consulting Group) held a seminar at the Stockholm School of Economics on their National Strategy for Sweden report. The seminar was held yesterday (25th November) and the recording was uploaded to Youtube just afterwards. The first half of the seminar consists of Johan Öberg, BCG Managing Partner) presenting their report and the second half is a panel discussing the report and issues surrounding it.  The panel  includes Laurent Leksell (Chairman of Elekta), Gustav Radell (Country Marketing Manager, Google), Ulrika Steg (Head of Mobility Services Sweden, TeliaSonera) and Johan Öberg. A reasonably diverse panel with high focus on technology and innovation.

The video is well worth a watch, I have embedded it below, start at 11 minutes into the presentation when Öberg starts talking about Sweden’s specific situation.

Big props to BCG for publishing the video and hosting the seminar. The seminar was (apparently) broadcast live and they encouraged the use of Twitter to ask questions via the hashtag #BCGSFS and discuss the seminar. Very social, as one expects it to be done these days. 🙂

I think Sweden will face some very tough decisions in the future and if we are not acting pro actively it will be hard to maintain the lifestyle we have today.

-P

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Reddit & Hacker News: The New, Social, Recruitment Tools?

Can Reddit, Hacker News and the likes become the new social recruitment tools for modern companies?

Recruiting staff is hard

Recruiting staff is never easy, especially for new startups. Hiring the wrong person can turn out to be a very expensive affair, especially if your budget is limited to start with. Another problem that companies face is that there is a lack of suitable employees. In Silicon Valley the salary for a relatively green CS graduate can exceed $100,000 per year. I get that it is expensive to live in that area but such high wages shows that the companies have trouble finding the right people to hire.

Skilled software engineers can often times pick and choose what companies they want to work at and the companies have to brand themselves as attractive employers. Easier said than done. However, over the past few years I’ve seen an increase in ‘alternative’ recruitment avenues.

Reddit

Reddit has a multitude of niche subreddits, communities with a special theme – everything from cat pictures to country specific communities and information security. The latter is the interest in this case.

/r/netsec is a “A community for technical news and discussion of information security and closely related topics.”. It is a rather specialized niche with a very specific set of competencies. Information Security is hard. Very hard. Think of all the leaked databases with usernames and passwords you’ve seen. Finding employees is therefore bound to be troublesome.

Every quarter /r/netsec moderators create an Information Security Hiring Thread. It can look something like this:

/r/netsec Recruitment Thread

/r/netsec Recruitment Thread, Q4 (Click on the image for large size)

The ability to list positions for these, often times smaller companies, can be invaluable. It is a niche industry so the traditional recruitment sites (Monster and so forth) may not provide many leads. It is also more personalized as users who are interested can reply to the post and ask questions. The following is a post from iSEC partners in the hiring thread:

iSEC Partners in /r/netsec

iSEC Partners in /r/netsec (Click on the image for large size)

Another example of recruitment via Reddit comes from /r/consulting. Yesterday I noticed a thread there: I want to hook up Redditors with entry level consulting jobs.

 My Project Management Consulting company is hiring for entry level associates. You need not have experience, and you’d get promoted up starting after the first year.

I remember being a job hunter in this subreddit and wanting to find places that would take my application. I didn’t want to forget where I came from and hope someone here finds this helpful.

If this is of interest to you, message me. We’ll talk and then I’ll hand walk your resume into HR.
*some prerequisites apply

This is an example of helping the community out, a lot of people are looking to enter consulting and it is never fun or easy to go to all those interviews (with hilariously fun cases…). Consulting is also a special case in that the large consultancies (McKinsey, BGC, et al.) tend to vacuum up a lot of the talent. Definitely troublesome for smaller firms. By generating good will the company can be sure to get some potential employees who otherwise wouldn’t have applied.

Hacker News

Hacker News is the community around the startup incubator Y Combinator (wiki). Hacker News works in roughly the same was as a subreddit. Each month there is a ‘Who is hiring’ thread. The one posted for November currently has 400 comments, with most being companies advertising positions.

Hacker News: Who Is Hiring

Hacker News: Who Is Hiring (Click on the image for large size)

The companies advertising are everything from big multinationals to small startups. The companies are mostly located on the west coast of USA. It is a bit unfortunate that the European startups have not taken advantage of communities like Hacker News to the same extent as their American counterparts.

Below is a post from an employee at Bloomberg, it is currently the most upvoted comment in that thread. He describes in-depth what they do and in a very personal way attempts to woo potential employees. He’s asked several questions the thread and does his best to answer them. Very good attitude to recruitment and really helps branding Bloomberg as an exciting place to work.

Who Is Hiring: Bloomberg

Who Is Hiring: Bloomberg (Click on the image for larger size)

So what lessons can be learned from this? Look beyond the conventional job boards and try to recruit from other sources. It is not guaranteed to work but if nothing else, you get a chance to build up some good will with the community.

I think this type of recruitment activities will become increasingly important for companies. Dealing with faceless HR departments without any personal connections may become a thing of the past. The unrealistic job requirements listed by HR should become a thing of the past. Let’s not kid ourselves, most companies don’t need rockstars for most of their positions.

Honorary mention: Twitter

These communities are rather niched and therefore you might not find the type of employees you need so, in some cases, Twitter is a better choice. You can do like MTGx (See previous mentions: 1 2) and simply spread the word of your CMO position via Twitter. Any self-respecting (digital) marketeer will have a Twitter account these days.

That previous sentence is validated by first line of the need to have section in their job listing:

You are an active member of the online world – not just a spectator or a fan. If you don’t have a Twitter account and don’t spend an excessive amount of your personal time online, you are not for this job

Are these the recruitment tools for the future? I don’t know, maybe. They are a nice complement to other things and adds human aspect to the whole job seeking/employee hunting process.

[ShamelessSelfPromotion] Got any tips for jobs in the Stockholm Region, throw me an email at Patrik[at]pathy.se or on LinkedIn.  [/ShamelessSelfPromotion]

-P

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