layoffs Archives - Lend Academy

LendingClub Cutting 460 Staff in Response to Reduced Loan Volume

The cuts are across every department and include C-suite executives

April 21, 2020 By Peter Renton 7 Comments

Back in October last year LendingClub executives ran an exercise where they had to game plan how the company would react to a pandemic. In hindsight, this was a very timely exercise that has helped the company react quickly in today’s unprecedented times.

They were one of the first fintech lenders to issue the work from home order as well as provide the ability for borrowers to self-serve when it comes to loan forbearance. Now, they are one of the first to announce a sweeping round of layoffs.

According to an 8-K filed by LendingClub today the company is laying off 460 people or around 30% of its workforce. A LendingClub spokesman told me that the cuts were across every division of the company as they are adjusting the size of the company to reflect a business environment that is dramatically different from just a couple of months ago.

The C-suite was not spared in the downsizing. Steve Allocca, president of LendingClub for the past three years, will be exiting the company on May 12 as his position has been eliminated for now. Also eliminated is the Chief Marketing Officer so Alexandra Shapiro, who had been in the role for less than a year, will be leaving. With no need to pursue growth marketing costs will be reduced substantially as many paid programs are put on pause.

Additionally, executives are taking a 25% pay cut with Scott Sanborn, CEO of LendingClub, taking a 30% cut. Sanborn said this in a statement:

It’s never easy to lose people who are not just colleagues, but teammates and friends. These are amazing, innovative, and committed people who have helped to build LendingClub into a great company. However, it was necessary to realign our staffing to the current business environment. With these actions, we believe we are well positioned to achieve our long-term strategic goals and better serve our members, who will need us more than ever, once the economy stabilizes.

Origination volumes have tumbled across the consumer lending industry as companies have pulled back in marketing and many institutional investors no longer adding in new capital. On this latter front LendingClub is fairly well positioned given it has worked so hard in recent years to diversify its funding sources. Interestingly, some funding sources have not declined, and some have even increased in volume. I was told that retail investment is actually up which I thought was interesting.

My Take

While initially shocking, it is not that surprising that LendingClub has made this move. With originations down they needed to cut costs and, while painful, a large round of layoffs is essential for any significant cost containment program. The company entered this crisis in a strong financial position with over $500 million in cash on their balance sheet at the end of Q4.

While I have been assured that completing the Radius acquisition is a top priority for the company, if the economic malaise continues for a long time I will be surprised if it stays on track. It is such a shame really, as I felt with this move LendingClub had turned a corner this year and was finally on offense after many years of defense. But now the name of the game is weathering this crisis as the whole world has hit the pause button.

You will be able to learn more on LendingClub’s next earnings call scheduled for May 5. We will be covering that here as usual.

A Bad Quarter for Prosper and Avant Parts Ways With 30% of its Workforce

Two of the leading online consumer lending platforms are still struggling to regain their footing in this difficult environment

August 18, 2016 By Peter Renton 2 Comments

Two of the leading marketplace lending platforms reported some more bad news this week as the industry continues to struggle to gain any positive momentum.

First, we had Prosper. Late Monday Prosper released their results for the second quarter. As expected it was not pretty. Originations were down more than 50% from Q1 as they were hit hard by the general pullback from investors. Total originations in Q2 were $445 million down from $973 million in Q1 and also down from $912 million in Q2 2015. Prosper laid off 28% of its workforce in May and at that time management said that Q2 would be a significantly down quarter. But to be down more than 50% was more than most people expected. Below is a chart showing the quarterly originations back to the beginning of 2013 when the current executive team took over.

[Read more…]

Prosper Lays Off 28% of its Workforce and Closes Salt Lake City Office

In more bad news for marketplace lending Prosper announces the first layoffs in their history letting go 171 people.

May 3, 2016 By Peter Renton 47 Comments

May 3 will go down as a dark day in the history of this industry. First, we had OnDeck’s stock down 34% today after disappointing earnings announced last night. Now we have the first ever major round of layoffs as Prosper announced today they are letting go 171 people or almost 28% of its workforce.

I spoke with representatives from Prosper this afternoon about this big news. But before I get into that conversation below is the official statement from CEO Aaron Vermut:

It’s very difficult to say goodbye to our colleagues, and we’re grateful for their many contributions. Over the past year we invested for growth, but with the recent tightening of the capital markets we are refocusing on our core consumer loans business and building more resiliency into the company. This includes our key asset Prosper Daily. The Prosper loan portfolio continues to perform and meet investor expectations, and as we move forward, our priority remains on underwriting and servicing a high-quality loan product. We’re making these changes now from a position of strength to ensure we continue on our path to long-term success.

Early last year Prosper made their first acquisition that of healthcare lender, American Healthcare Lending. Soon after they announced a new point-of-sale product that they would be trialling through this new healthcare division. This new product did not work out as planned and the majority of layoffs are coming from this division. [Read more…]