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The online game of borrowing money

Payday lending -- an area of finance with one of the worst reputations -- may get a facelift with new start up LendUp, which takes its inspiration from microlending.

Some bright folks armed with venture capital are plunging into a line of work with one of the worst reputations in all of finance, and that is saying something. The new company launching this week is called LendUp where the hope is to transform so-called payday lending. It will start with online loans up to $250 for 30 days. The fee: $15. LendUp's Jake Rosenberg says the inspiration is microlending, which has worked in very poor parts of the world.

"There’s no comparison between how healthy someone is going to be financially a year from now after starting their first LendUp loan as opposed to going to a corner store and taking out a payday loan," Rosenberg said. "We think they’re simply not comparable."

Here is the key: If customers pay back on time, they can get increasingly better deals on future loans from LendUp as they build a track record. Rosenberg used to work at Zynga, the social media game company. LendUp will try to bring some fun to the process through rewards and challenges. The word is "gamification."

"We offer credit education on the website and if you were to participate in completing those education courses you would get a discount and another badge," Rosenberg says. "We’re trying to use some of those gamification techniques to encourage and promote the right behavior."

Rosenberg is chief technology officer of Lend Up. He took the job after the CEO -- his step brother -- plied him with a grilled cheese sandwich. The step brother used to work at that pioneer of microlending, the Grameen Bank that started in Bangladesh.


Now on to the dark truth about streaming video on a mobile phone or wireless tablet. Let me just come out and say it: the video stalls, or it freezes sometimes or dissolves into the cubist version.

This week, the Massachusetts Institute of Technology is starting an outfit dedicated to fixing these kinds of problems. It's called the Center for Wireless Networks and Mobile Computing. Professor Dina Katabi is working on an approach called Softcast. The results for cleaning up choppy online video are impressive. It is a crucial problem to solve because wireless is the foundation for everything with the word "smart" in front of it. "You want that to work well because everything else depends on it," Kitabi said.

Right now mobile video is like a kitchen renovation where the carpenter, plumber and tile guy all do their own thing without talking to each other. The new technology would integrate the process, so that things like how the radio waves bounce around on the way to your phone, or how your phone decodes the signal are less of a free-for-all.

The concept behind Softcast could affect many kinds of devices, from wireless heart pacemakers to self-driving cars, items you really don't want going haywire.   

"Wireless more generally is in many ways a harder problem because the airways are shared," said another MIT professor, Hari Balakrishnan. "Being able to manage the enormous number of devices in a very high density of these devices and being able to make them secure and provide privacy for users—all of these are themes that our center is going after."

And, when will we see remedies like Softcast fixing the jitters on our phones? Dina Katabi answers this way.  

"This is exactly why we have the center. We would like to make that time as short as possible. We are getting with our industry partners so that we can see such cool technology move into the industry much quicker than it’s happening today. Or actually it’s not happening today."

About the author

David Brancaccio is the host of Marketplace Morning Report. Follow David on Twitter @DavidBrancaccio

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