SoFi Makes its Emphatic Mark
At some point along the timeline of a successful enterprise’s development, considerations about name recognition, and otherwise marketing effectively, must be discussed. When the firm in question has reached the highest levels of prosperity, its executive offices might focus the conversation on the granddaddy of corporate exposure in American culture: naming rights. It is this relatively new tradition that has brought us the likes of MetLife Stadium, home of the New York Giants and New York Jets, Minute Maid Park in Houston, and Los Angeles’s Staples Center, along with hundreds of other prominent venues.
If you’re now thinking that was a lead-up to an exciting announcement related to your favorite private equity investment fund, we are sorry to disappoint you. As much as we love the sound of “Iron Edge Arena”, we are not quite there yet. Most companies that indulge in this level of advertisement have been around for several decades, and often for more than a century. Every rule has its exceptions, though, as demonstrated in grand fashion by SoFi Stadium, formerly known as Los Angeles Stadium at Hollywood Park. That’s right: at the tender age of eight years, SoFi boldly slapped its name on the crown jewel of naming opportunities: the future home of the Los Angeles Rams and the Los Angeles Chargers. To ice this $400 million (over 20 years) cake, SoFi Stadium will host the 2022 Super Bowl and the 2028 Summer Olympics opening and closing ceremonies and soccer events. The stadium admittedly needs a lot of work before its opening kickoff next season; this really cool video [ https://www.youtube.com/watch?v=V4lWBlmxXTs ] from a couple of days ago gives a drone’s eye view of construction progress.
When AT&T bought the right to rename Cowboys Stadium, it seemed that their intention was to keep the momentum going for its high-recognition brand, and to propel its image into a new direction for years to come. SoFi’s motivation is clearly different. This is a company that would be in the second grade if it were a human being; a bank that literally nobody in the world had heard of until the end of the first Obama administration — and there they go plunking down nearly half a billion dollars for bragging rights. SoFi is employing a nuclear jumpstart to ensure that very soon, the whole world will know their name.
Aside from the high-profile connection to the country’s second largest sports market, the Super Bowl, and the Olympics, not to mention innumerable entertainment events (the Stones? U2? Springsteen?), WrestleMania, FIFA, and who knows what else, there is another huge factor. The site of SoFi Stadium is just over three miles away from Los Angeles International Airport. LAX serves 63 million passengers annually. That is a lot of eyeballs gazing down at the brash presence of SoFi’s logo you see in the photo above.
More fiscally conservative voices might criticize such an extravagance, especially one executed by a company whose years register in the single digits. They might argue that a more solid financial foundation should be established before writing such a sizable check for a marketing effort. Nevertheless, SoFi CEO Anthony Noto offers a different, and perhaps a more thoughtfully considered perspective. Noto points out that the same $400 million would have been spread across multiple platforms if this were the late 20th century. Over the course of twenty years, that sum might have been allotted to billboards along the highway, magazine and newspaper ads, prime time network television commercials, and broadcast radio spots. With the exception (for now) of the billboards, those means of publicity have been rendered all but obsolete by advancements in how we consume our news and entertainment. Gone are the days when a 30-second pitch in the middle of Magnum, P.I. or a full-pager in Newsweek are the way to get your name out there. Consider it this way: If you were the CEO of a rapidly growing financial institution and you were tasked with allocating a sizeable marketing budget for the next quarter century, would you set your sights on radio and newspapers, or would you opt for a highly visible partnership with the world’s most trusted and respected sports entities? And forget about billboards: the sixty-acre, illuminated SoFi logo atop the 5-billion-dollar stadium will seize the attention of every man, woman, child, and service animal flying in or out of Los Angeles.
Far from recklessness, this massive expenditure is looking more like the work of a true visionary. This brings us to a glance at SoFi CEO Noto. His personal and professional accomplishments paint quite the impressive picture. He was a star linebacker at West Point, where he earned All-East and Academic All-American honors. He trained as an Army Ranger at Fort Benning. After the close of his military career, he attended business school at the University of Chicago and later received an MBA from the Wharton School of Business in 1999. Immediately after Wharton, Noto started working for Goldman Sachs, where he was promptly voted Institutional Investor Magazine’s top analyst for research on the developing internet industry. After nine years at Goldman, he assumed the CFO role at the NFL for a couple of years. Then it was back to Goldman to head the company’s global media group. In 2013, thanks to Noto, Goldman landed the envy of Wall Street: the lead underwriter position for Twitter’s IPO. Twitter CEO Dick Costolo was so impressed with Noto’s work as lead banker, he hired him away to become Twitter’s CFO. Finally, in January 2018, Noto left Twitter to take the top spot at SoFi. You might agree that the man has a decent resume, and that any company under such leadership likely has a bright future. Or, to put it more bluntly, make no mistake about it: SoFi’s potential for growth, expansion, and domination of the financial services industry appears boundless at this point.
What does SoFi (an abbreviation of “Social Finance”) do? Its mission at the time of its founding was simply to connect well-funded entities with cash-strapped students to offer them a more sensible academic loan program while allowing someone other than the world’s largest financial institutions to benefit from the interest payments. In the eight years that have followed, SoFi has extended its services to include personal loans, home loans, financial management and investment advisory, among other related offerings. Essentially, they are marching toward the status of a universal financial services provider, with no consumer’s need unattended. And, importantly, people commonly refer to SoFi as the “Bank for the Millennials”. Love them or hate them, millennials are undoubtedly the most important American demographic from a commercial standpoint, and apparently SoFi has these folks nestled securely in their technobanking universe. That should make those naming rights payments a lot easier.
SoFi is not yet a publicly traded company, but there is a way to claim a piece of this rising star before any IPO. We at Iron Edge VC are very proud to have pre-IPO access to SoFi shares. If you would like to learn more, or if you know of anybody else who would, please do not hesitate to contact us by clicking “Get in Touch” below.
As always, shares are available on a first come, first served basis.