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LAP20: Renaud Laplanche, CEO and Founder of Lending Club

by Peter Renton on July 21, 2014

We have a very special guest for the 20th edition of the Lend Academy Podcast: Renaud Laplanche, the CEO and founder of Lending Club. I first met Renaud in the spring of 2011 just after Lending Club moved from Redwood City to downtown San Francisco. In those days Lending Club had about 50 people and a lot of extra space on the one floor they leased in that building. Back then, Lending Club was a company with a lot of potential and today they are realizing some of that potential.

Recently I was able to sit down with Renaud for 30 minutes to conduct this wide ranging interview. In this podcast you will learn:

  • How Renaud came up with the name Lending Club.
  • When he first realized that Lending Club was likely going to be a success.
  • What a typical work day looks like for him today.
  • What the four key metrics for Lending Club are that Renaud looks at on a regular basis.
  • How Lending Club has been able to grow so consistently now for many years.
  • How the hiring needs have changed at Lending Club over the years.
  • Why Renaud believes it is going to be hard for any investor to beat the averages based on the risk they are taking.
  • Why investors needs to be careful when analyzing the historical data to make investment decisions.
  • The way that Lending Club thinks about the setting of interest rates.
  • The status of the partnership with Union Bank.
  • An update on the relationship between Lending Club and Google.
  • Why Renaud is very excited about Lending Club’s small business lending operation.
  • The possibility for average investors to participate in the Lending Club IPO.
  • The role of Lending Club in the future of the broader banking industry.

I have had a few requests from readers for transcripts of these interviews, so starting with this episode every edition of the Lend Academy Podcast will come with the full transcription in a PDF document. Just click on the link below.

Download the transcription of LAP20: Interview with Renaud Laplanche of Lending Club

You can subscribe to the Lend Academy Podcast via iTunes or Stitcher. To listen to this podcast episode there is an audio player directly below or you can download the MP3 file here.

{ 21 comments… read them below or add one }

Rob L July 22, 2014 at 8:02 am

Nicely done interview.
I especially appreciate the the transcriptions you are now providing.
Thanks!

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Peter Renton July 23, 2014 at 6:59 am

Thanks Rob. A transcription service was overdue and glad to make it available now.

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JJ Hendricks July 22, 2014 at 10:25 am

This is great interview. I really liked the discussion about setting interest rates.

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Peter Renton July 23, 2014 at 7:00 am

Thanks JJ.

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Frank Chiu July 22, 2014 at 4:33 pm

I would think that LendingClub is seriously considering Loyal3.com as a distribution channel to regular retail investors for their IPO. GoPro just had a successful launch there a month ago. One important aspect of how Loyal3 works is that they work directly with the company. However, one of the issues so far with some of the IPOs were that demand might far outnumber allocated IPO shares to Loyal3, so despite the public forum Loyal3 provides, it’s a first-come, first-serve environment that may result in 99% of retail investors still shut out of IPO shares. (Examples: GoPro had 2% of IPO shares allocated to Loyal3, Globant’s enrollment was over within 30 minutes).

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Peter Renton July 23, 2014 at 7:05 am

I have heard Loyal3 mentioned by many people (outside of Lending Club) and they do seem like a good way to go. And you could well be right about the number of shares made available. If they go this route, and I believe they will, I expect it will be for a similar small percentage of shares.

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Scott July 23, 2014 at 4:59 am

I would have liked to know when, if ever, Lending Club plans on having a bankruptcy remote vehicle to protect retail investors (institutional investors are already protected by such) like Prosper does. Until then, investing in Lending Club notes regardless of how many notes you hold is not true diversification; it is the same as betting all of your money on Lending Club junk bonds if they existed.

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Peter Renton July 23, 2014 at 7:08 am

Good point Scott. I have heard (off the record from a securities attorney) that if LC put a bankruptcy remote vehicle in place for all investors it could jeopardize their blue sky filings that will allow them to become available to investors in all 50 states. I am guessing that is why you have not heard anything from them in this regard.

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Simon Cunningham July 23, 2014 at 4:25 pm

Fascinating

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Simon Cunningham July 23, 2014 at 4:25 pm

Wow, really great article Peter. This was one of my favorites so far.

I really liked the way he spoke about filtering his platform for loans. I would enjoy hearing his thoughts on why some simple pockets for higher returns (IE: zero prev. inq.) seemed like they continued to exist for years, despite Lending Club’s underwriting folks knowing they were there. I would assume that these credit factors are just so simple and efficient that it’s been tough work trying to correct them, but I could be wrong. That said, I do think we’re reaching a time where even these simple efficient filters won’t work anymore, as he mentions in the interview. Do you think it is still worthwhile to include these simple filters? I still do them (IE: Your “Super Simple High Return Strategy”). I mean, at best an investor has a gentle opportunity for arbitrage, and at worst they simply fall in line with Lending Club’s credit model?

I loved the way he outlined Lending Club’s approach to their business loan program, how the focus is *not on pushing its scale, but instead simply on perfecting its credit model and overall strategy, and how they’ll only scale this program and push it forward when everything is dialed in correctly. This mindset is just another example of what I love about Lending Club, how this is a company that is not shortsighted on quick profit, but instead has in mind the long game and the legacy it offers. Lending Club has excelled by being both highly meticulous and highly innovative, a crucial combination for whoever is the trailblazer in a disintermediating industry like p2p lending.

Thanks for your hard work on this. Excellent stuff.

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Peter Renton July 25, 2014 at 6:49 am

Thanks Simon. I do think it is still worthwhile to use filters to invest and I think you hit the nail on the head here. While LC is certainly improving their underwriting, until I see no difference in using the filters I will continue to invest in this way.

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P2P July 23, 2014 at 4:32 pm

Great interview. Very impressive. Curious if their SMB lending will take off. I am skeptical. But consumer – what a rocket!

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Peter Renton July 25, 2014 at 6:50 am

I will be very surprised if LC doesn’t have a robust and significant SMB lending operation within 2-3 years.

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John @ FirstStepFinance July 23, 2014 at 8:17 pm

This is great meeting. I really liked the conversation about establishing attention levels. I appreciate the the transcriptions you are now offering.

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Peter Renton July 25, 2014 at 6:50 am

Thanks John.

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Karen July 23, 2014 at 8:45 pm

Thank you, Peter, for providing this informative interview.
I read the transcript first, and later listened to the podcast as well. Thank you greatly for the transcript because–no offense intended–sometimes I wasn’t sure what either one of you said verbally, lol! I appreciate that the transcript can be read with concentration and then easily referred back to later as desired. I especially like the way you persisted in getting more information about the interest rates. Way to go!

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Peter Renton July 25, 2014 at 6:51 am

Thanks Karen. I think in this interview the transcript will come in particularly useful for people.

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stacey July 24, 2014 at 6:11 pm

Thanks for asking really insightful questions. Your effort is greatly appreciated. Keep up the good work!

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Peter Renton July 25, 2014 at 6:52 am

Thanks Stacey.

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Rufus D. July 24, 2014 at 6:42 pm

Well done, we don’t often hear about time management approaches by busy entrepreneurs like him. His new 30 minute rule is interesting.

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Peter Renton July 25, 2014 at 6:52 am

Thanks Rufus. Yes, that was something I was curious about myself.

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