Chernova’s Take: Online Lenders Bailing Out From Sunk Costs

In a rush to grab market share last year, online lenders elbowed each other to get new borrowers, as The Wall Street Journal reported, paying a pretty penny to lead generators, sales teams and brokers, and for loads of direct mail. “They barely break even, if they break even at all on the first loan,” Brock Blake, chief executive of Lendio, a startup that lets small businesses shop for loan offers, said in an interview last year.

The market changed, and companies that curb loans are unlikely to recoup the costs already sunk into sales and marketing, showing the pitfalls of spending a lot upfront based on some theoretical lifetime value of a customer.

More here:

One clap, two clap, three clap, forty?

By clapping more or less, you can signal to us which stories really stand out.