Long ago, your parents might have advised you against borrowing money from friends, emphasizing that letting them borrow from you can lead to complications. Movies often portray that mixing finances and friendships typically results in conflict and regret.
Skylar Woodward aims to change that narrative. As the CEO of Puddle, a newly launched platform, he believes in harnessing the power of your social network for financial support instead of relying on banks or credit cards. Here’s how it works: contribute a sum to a digital pool, and you can access five times that amount when needed. For instance, by putting in $10, you gain a credit of $50 available for use; a $100 contribution translates to $500, and $500 to $2,500. Borrowers can repay through manageable monthly installments over three or six months, with only a fixed fee applicable—no interest, which encourages quicker repayment, according to Puddle.
While informal money pooling has existed for as long as cash has circulated, these arrangements are typically centered around trust rather than credit scores. Woodward, who previously worked with micro-funding organization Kiva.org, observed this trust-based lending model in action abroad, where communities pooled resources to address their financial challenges without needing external capital.
In the U.S., the absence of such an open system has frustrated individuals caught between not qualifying for bank loans and avoiding predatory alternatives like payday lending. To address this gap, Woodward and his co-founders, Matt Flannery and Jean Claud Rodriguez-Ferrera Massons, set out to create an accessible online alternative.
"The main challenge was translating that offline model into a digital format," Woodward explains. Online group lending allows for quicker capital accumulation, but establishing trust among users who interact solely through avatars poses a significant hurdle. To navigate this challenge, Puddle collaborated with the design studio Ammunition to enhance user engagement.
Building trust within a virtual environment can be difficult, as it often develops naturally through in-person interactions. To overcome this, Puddle integrated social media features that foster a sense of community. The platform functions on a model that combines elements from both Facebook and Reddit—leveraging social connections and a reward system for positive behaviors. Users can browse profiles, assess repayment histories, and join themed groups like “Photog Puddle” for photography gear or “Travelers” for those embarking on journeys. The objective is to cultivate a “Trust Network” where members can share resources effectively.
The social dynamics inherent in this model encourage responsible borrowing and prompt repayment. Users face penalties for late payments, yet the motivation to uphold one’s reputation within their network is a key factor that Puddle’s founders believe will prevent misuse. With promising early indicators—repayment rates exceeding 98% during two years of trials—the concept could very well redefine how we approach lending among our circles, making one think twice before lending a few dollars to a relative.