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Career Success
NOV 18, 2020

Teaching the Finesse of Finance to Free Young People from Lifelong Loans

By Melissa McIvor, With David Adefeso
iStock/FabrikaCr

David Adefeso stepped off the plane from Nigeria, arriving in New York on his twenty-first birthday with $250 in his pocket, no friends, and no job. The year was 1990, and he was the very picture of the American Dream: an immigrant seeking a new life in a new land with few concrete prospects, but plenty of hope. In the years that followed, he would go from waiting tables to being a successful Wall Street financial advisor with a Harvard MBA in his pocket.

But success came with a catch: $125,800 in student loans.

Luckily, Adefeso’s work in finance brought him to some of the world’s top companies and multi-billion-dollar M&A deals that helped him out of what could have been a life-long financial struggle. But that, he realized, was just the problem: he was lucky. And others weren’t.

“Student loans hold our young adults back,” says Adefeso. “Forty-six million people, ranging from those just out of college to those who are surprisingly old, are stuck with student loans today.”

After some soul searching, Adefeso has taken up a crusade against what he calls the “economic pandemic” of student loans.

The stakes: nearly 100 million children (and parents) who will be impacted by student loan debt over the next two decades.

The goal: eliminating student loans—forever.

The means: an app that combines financial planning, community, and education.

GLOBIS Insights spoke with Adefeso about his new company Sootchy and how he is pursuing his mission to change the way people think about finance.

David Adefeso, Founder of Sootchy | ©Sootchy

A Bygone American Dream

You arrived in the United States with $250 in your pocket and decided that you were going to pursue an MBA. Do you think that would have worked today?

I don’t think so, and for a couple of reasons. For one, Nigeria is one of the seven countries Donald Trump has banned from coming into the US. So by default, I wouldn’t even be able to come in, even to visit.

Second, when I came, I was able to get from New York to LA on $198. There is no way you can do that now.

Third is the cost of education, which has been rising between 6% and 8% for the last 25 or 30 years. It’s really outpaced inflation. So while I still paid through the nose, I don’t think I’d have been able to afford Harvard today. Even back then, I had three jobs, I worked as an accountant, a waiter, and a barista at Starbucks, and I saved enough money to go to school. I don’t think that would have been possible now. The American dream, unfortunately, has declined significantly.

What advice would you give to people starting out in this environment?

A couple of things. One: Never give up. I’ve been through a lot. I was homeless for a while, and it would have been easy to give up and go back home, where at least I had a bed and a family. But you can’t give up.

Number two: Education is invaluable. It’s the one thing that can take you from wherever you are now to wherever you want to go. The average American who gets a college degree makes about a million dollars more than someone with a high school diploma. So by default, you know, education pays for itself. And you meet so many amazing people. It teaches you how to deal with adversity and differences—ethnicity, race, sexuality. That part of education is invaluable.

Number three: Don’t get caught up in identifying with one group. Don’t think of yourself as just a black guy, a gay guy or gal, or even, “I’m from California, I’m a Republican, I’m a Democrat.” Inclusion is important. When I built Sootchy, and even my prior company, The Pacific Group, I built it with diversity. We have people who are gay, lesbian, black, white, Hispanic, Asian—and that just enriches the culture. The same is true for yourself.

A Farewell to Student Loans

What was the greatest challenge getting Sootchy off the ground?

Let me tell you, people say it’s all about money or technology, but no. It’s your team. Your team is critical. We spent the most amount of time putting that together, and they do magic. We have an engineering team that is spectacular. We have a marketing team that’s spot on.

The challenge was that it wasn’t easy or quick. It took us five months to get the right front-end developer. We interviewed him multiple times. We needed to find the right person, and that was more time consuming than anything else we’ve done so far. But it was also worth it.

How do you manage social impact expectations while also monetizing the business?

Sootchy was birthed out of our need—my need—to try to make a difference. I worked as a financial advisor for seventeen years, and many of my clients were behind on student loans. It wasn’t the mortgage—they could pay that off. It wasn’t retirement—that was still twenty years away. It was the fact that they were burdened with 50, 60, 80, $100,000 and paying $800 or $900 a month.

So what we did with Sootchy was combine a purpose-driven mission with the fact that we can make money in the economics of this space. We’re anticipating that this is an $11 trillion market. In a market that big, somebody needs to manage that money, and that’s how we make money.

A Personal Mission for Positive Change

The founder of GLOBIS University, Yoshito Hori, discovered his kokorozashi (personal mission) after receiving his Harvard MBA and pivoted his career to education. When did you know you wanted to switch careers to support education?

You know, his story is similar to mine. When I graduated from business school, I went to Wall Street to become an investment banker. And I was making money, but I was unhappy with the Wall Street lifestyle—the money, money, money. I didn’t enjoy it. My kokorozashi, as you call it, was off.

So I left the big, billion-dollar conglomerates and went smaller. I wanted to work with people, to help people. And for a while, it was very fulfilling, and we were making a lot of money, but again it became about getting more clients and making more money.

Then I had this realization when I was speaking about finance at an event a few years ago. This young woman came up to me—her dad was literally dragging her, saying, “You gotta talk to him!” As soon as she got to me, she started crying and said:

“Look, I make $53,000 a year. I have a postgraduate degree from a liberal arts school, and I have $120,000 in student loans. My credit is bad because I can’t afford to pay $900 a month, which means I can’t buy a house. I tried to rent an apartment, they checked my credit, and I didn’t get it. My fiancé’s in the audience, but we can’t get married because I don’t have any money. Nobody told me going into college that I would have this problem.”

I just thought, “Here’s this young woman who’s supposed to be in the best phase of her life, exploring life, and she feels like she’s defeated at 23!” I decided to do some research, and I found out this problem is monumental: $1.5 trillion and 46 million people. It was sickening to me.

That’s when I decided to solve this problem. I found my kokorozashi.

David Adefeso, Founder of Sootchy | ©Sootchy

A Mission to Reach Everyone

You’re very committed to supporting financial literacy. What are your main channels for sharing knowledge?

There are so many people, from 23-year-old college grads to 55-year-olds heading to retirement, who know nothing about financial literacy. They don’t know about credit budgeting, paying bills on time to maintain credit, spending less to save for retirement… They don’t teach people any of this in school.

So one thing I did was start my YouTube channel to help the average person from the most basic level. What’s a stock? What’s a bond? How can you protect your assets?

Then there’s Sootchy, which combines AI-enhanced financial planning, the power of community, and tax-efficient incentives to remove the need for student loans. The app (which just launched!) is designed to help parents save for their kids’ college. It teaches families and friends how to efficiently invest in a child’s education.

In the future, we’re also planning to develop a whole suite of tools and content to help children. Kids, too, really need to learn early on how to value money. We know they can be financially independent by selling lemonade, washing a car, doing housework for neighbors, and things like that. So we’re developing programs to actually teach children what’s a stock, what’s a bond. Which one would you buy: Apple, Google, or Facebook? It’ll be for very young kids, so happy and funny, but still teaching them about money.

Speaking of children, why did you choose a cartoon dolphin for the Sootchy mascot?

There’s an old fable about Poseidon, the Greek god of the sea. His son was drowning, and he sent a dolphin to rescue him. And that’s very similar to what we do. We rescue kids from drowning in student loans.