Advocating for Local Empowerment and Education: Insights from Andy Babowski - Part 1

Are you ready to redefine how you view investing, community, and education? Buckle up as we promise an enlightening journey with social entrepreneur and TEDx speaker-to-be, Andy Babowski. We tackle the critical role of local empowerment through housing investment, its potential to ward off inflation, and cooperative ownership's effect on communities. However, we won't shy away from the elephant in the room - the looming national debt and the threat of a market downturn.

The conversation takes an interesting turn as we explore the potential of community investment funds. Andy, with his teaching background and experiences operating in the social enterprise sphere, opens up about how democratizing capital can influence the trajectory of lives in urban public school systems. Using his company, Backers, as an example, we delve into how technology can scale the impact of mentoring. We round off with a thought-provoking discussion on the role of education in social enterprise and how a for-profit, mission-driven approach can be a game-changer. Trust us; you wouldn't want to miss this enlightening conversation!

https://www.linkedin.com/company/backrs/
https://www.linkedin.com/in/andybobowski/

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Transcript

Joel: 0:33

What if investing in each other could change the world? I'm Joel Skeen with bizradious and this is the Mindful Marketplace. Back to another edition of the Mindful Marketplace. Here on BizradioUS. I am your host, joel Skeen.

Joel: 0:50

I am super excited today to be talking with our guest, andy Babowski. Thank you for joining us, especially if this is your first time with us. Just so you know, on this program we talk to the entrepreneurs, advisors, industry leaders, investors and economic experts who are not only solving a market problem to make a profit, but who are also solving a social problem to make an impact. It's where we learn how to connect our money and our businesses to our values, our community and ourselves. Today I will be talking with social entrepreneur, upcoming TEDx speaker and all around wonderful human being, andy Babowski, to learn about what he's doing with his company backers. But first we gotta hit the balance sheet the assets, liabilities, debts and investments. So today in the assets column, I wanna talk about local empowerment through local housing investment.

Joel: 1:47

There was an article written in the Main Street Journal by Michael Schumann and he talks about how recently the New York Times, paul Krugman made an argument that one of the core elements of inflation is not only things like grocery and gasoline, but also housing. Shelter actually compromises a third of the consumer price index and about 40% of core inflation. So if you wanna lower inflation, you should bring down rents and bring down housing prices. One smart way to do this is via cooperative ownership, and he's not actually talking about luxury co-op apartments. Cooperative ownership is actually a smart strategy for something like mobile home buyers as well. For example, in Woodland, california, there is a mobile home park called Leisureville, and back in 1995, it became a limited equity housing co-op, which basically means that it is owned by the residents, and it's been a good move. The rents have only gone up 30% over the last 27 years. Compare that to a nearby mobile home park mobile home park where rents have shot up to over 126%, and it just goes to show that when locals own and invest in their own community, it helps keep those rent prices in check. It's not just some theory. There have been lots of studies showing that consumer co-ops can offer cheaper goods than producer co-ops, and they can negotiate better prices for their businesses. So it turns out, then, that instead of relying on big bureaucracies like the Fed to fight inflation, we can indeed take matters into our own hands and invest in our own communities. It's a faster and better solution and it can help avoid a lot of collateral damage.

Joel: 3:26

In the Liabilities column, I'm gonna talk today about the stock market boom and bus cycle. So Piper Sandler's Michael Cantrowitz hope I'm saying that right has hit this framework for how to assess how the US economy is doing during a hiking cycle by looking at housing orders, profits and employment, and, according to Cantrowitz, housing is feeling the negative effects of higher rates, manufacturing orders are contracting and corporate profits are slowing down. The only thing left is employment, and Cantrowitz believes that this will weaken too. He sees signs of a downturn, like the rising number of unemployed people, and while some on Wall Street are backing off recession calls, cantrowitz is convinced that a recession is on the horizon and if the unemployment rate continues to rise, it could suggest a recession is already starting. Small businesses are cutting back on hiring plans and there's a relationship between home builders sentiment and rising unemployment claims. The October non-farm payrolls report showed weak job growth and other leading recession indicators also point to a downturn. Many market observers see a recession coming in 2024, and Cantrowitz remains convinced that a recession is on the horizon and has a price target range for the S&P 500 that suggests a potential 20% decline. So I don't wanna lose 20% of my money, but the signs are pointing to a weakening labor market, with rising unemployment and other indicators suggesting that downturn In the debts column.

Joel: 5:01

Unfortunately, more bad news the national debt, according to billionaire investor and author Ray Dalio, actually have his book back here. The US is heading for a bit of a turning point in its money situation. The government debt is growing faster than its income and they keep borrowing more just to pay off the debts, while continuing to spend like there's no tomorrow. The whole situation creates a problem with supply and demand and, to make matters worse, we've got political dysfunction and a bunch of other problems going on, which means that the credit rating agencies are even downgrading the US credit rating and lowering their outlook on our debt. What this means is that foreign countries aren't as interested in buying our debt anymore, and about 40% of our debt is sold to foreigners, so this could cause some real trouble.

Joel: 5:48

Now the total US debt has skyrocketed to a whopping $33 trillion Trillions of hard number to wrap your brain around. I always tell people a million seconds ago was about 11 days, a billion seconds ago was about 31 years ago and a trillion seconds ago. You're going back 31,000 years ago and our national debt, as I said, is now over $33 trillion. And even though we don't actually have to pay back that debt all at once, we do need to cover the interest on that. And the problem comes in that the cost of servicing that debt is going up, which is not a good sign. It's making people doubt the future of the treasuries, because demand is going down while the supply keeps going up, and what's causing this is the big central banks around the world. They used to buy a ton of treasuries, but now they are taking a step back and buying less, and even the foreign private sector is slowing down their purchase of things like US bonds, which is creating a domino effect. And, all in all, we've reached a point where we do seriously need to consider the future of our country's finances. It is a big deal and it could have a real impact on our economy and the financial markets. And, as a reminder, in order to help combat this debt crisis, the Mindful Marketplace has partnered with local financial tech company Qwility to provide all of our listeners with a free, customized report on how to best eliminate personal and business debt while protecting your retirement accounts and other assets against market downturn. So you can get a free report on that by going to MindfulMarketplaceShowcom and click on the tab that says eliminate debt. All right.

Joel: 7:28

Lastly, some good news. In the investments column, cutting Edge Capital really cool group has come up with what they call a diversified community investment fund. So Cutting Edge is a company focused on community investment funds and they have introduced this new strategy called diversified community investment fund, or a CDIF DeSIF sorry, desif. This strategy involves a for-profit fund primarily investing in real estate, while also allocating a portion of its portfolio to local businesses. The DeSIF can raise capital publicly by using securities offering strategies. This allows the fund to attract investors from different economic classes, including residents of the community that they serve itself. Really cool. The fund can offer different types of securities and share profits with investors, and it may even provide limited liquidity options for investors. As the US economy faces an aggressive Fed hiking cycle, community investment funds like these DeSIFs offer an alternative approach to capital democratization. The success of this strategy will depend on how well it aligns with regulatory requirements and attracts investors from the community.

Joel: 8:42

All right, there's the balance sheet, so let's get into it here with our guest Andy. I got to see Andy present a few weeks back at a really fantastic, engaging, enlightening and really inspiring presentation about his company, backers. So, andy, welcome to the show. We're glad to have you on today. Mo man, thanks for having me. Joel Appreciate it. Yeah, absolutely so. I want to get into backers. I want to get into your social entrepreneurship, but first I thought it was cool we had a connection that we both had a background in nonprofit work and in teaching. Could you tell people a little bit about how you got started in this world?

Andy : 9:22

Sure, I knew from high school that I wanted to go into education. I wasn't totally sure in what capacity, but I knew I wanted to teach. Initially I started actually as a high school Spanish teacher, and then I frankly wanted to work with younger kids. I wanted to have a longer runway in terms of impact, so I moved down to teaching middle school. I will say going from 12th graders to fifth graders was no joke. I learned a lot about working with middle school. Students loved it. I eventually went on to found and lead a middle school in Memphis, tennessee, where I was the principal of that school for about six years. I then had the opportunity to lead a high school actually connected to the middle school that I founded, and so had the opportunity to then be my high school principal to many of the same students that I led as their middle school principal. And then, as my career progressed, I also had the opportunity to coach and manage and support many teachers and school leaders on their own journeys to leading great schools.

Joel: 10:34

And you said, if I remember correctly, you said that was through Teach for America. Is that right?

Andy : 10:38

Yeah, I actually started my career as a Teach for America core member. Teach for America attracts people from all different colleges and people that want to go into all types of industries, but people are looking to have an initial impact in the public education world. I was one of the rare people that actually was planning on staying in education for a long time, but I saw Teach for America as a really cool way to go where I was needed most. So I grew up outside of Chicago, went to school in Virginia, applied to Teach for America and got placed in Memphis, Tennessee. I'm not kidding, I didn't even know where it was on a map. Of course I knew it was in Tennessee, but I moved there and I didn't abstain for about 13 years.

Joel: 11:17

Yeah, memphis is a cool town. I like it there a lot. I know I considered Teach for America, ended up teaching English overseas in the Peace Corps and yeah, it seemed like a really great opportunity for people who didn't really have a necessarily know exactly what they wanted to do yet, but know that they wanted to do something good in the world. I knew that they wanted to give back. What kind of I guess what kind of issues or what kind of challenges did you see the students that you were teaching and then eventually administering? What were some of the special challenges that they were facing?

Andy : 11:52

Yeah. So I was placed in a pretty traditional urban public high school and one of the first things that I learned is that kids are kids everywhere. They have the same set of challenges, they have the same set of opportunities and depending where you live and depending how you grew up, you have a different set of challenges. So many of my students vast majority of them, qualify for Fridu's price lunch. So many of them relied on the food from that was provided from the cafeteria. Many of them would go on to be, or would have been, the first in their families to go to college, and the community that I taught in was a very economically disadvantaged neighborhood and at the same time, my students were brilliant artists and athletes and future mathematicians and all the things.

Andy : 12:48

And it was that initial two-year experience that really taught me a few things. The first is that you know it's kind of cliche, but I saw it to be so. True is that potential is everywhere, but not equally distributed. Let me say it differently Potential opportunity is everywhere, but not equally distributed. Right Potential is everywhere and I just witnessed so many students that were doing so many of the right things right. They were taking the honors classes, they were leading clubs and sports. They were taking the ACT or SAT a number of times, doing all the things that were promised to them. Hey, if you do these things, if you show up to school, if you get good grades, if you stay out of trouble, you're going to do really well. And for some that was the case, but for the vast majority that wasn't the case, and in fact there are so many other factors that can play a significant role in a young person's trajectory.

Joel: 13:58

Yeah, it reminds me of I'm forgetting the name of the author, but I remember back in college I read a book about Chicago schools called Savage Inequalities, about kind of that disparity where, yeah, there are a lot of times the potential is there but that it doesn't always reflect in the same opportunity for all kids. We can get into a lot of reasons as to why that is, but I guess from your own personal experience and perspective you know how did that? I guess how did that first transition you into? You know, because you obviously it sounds like you were trying to do what you could within the school system to solve that problem. Was there any efforts that you made there and anything you saw happening within the school system before we get into where you went to after that?

Andy : 14:49

I mean for sure in schools, obviously have a remarkable ability to have a huge impact on young people's lives. Of course, a high quality education, surrounded by great teachers in a welcoming environment, can absolutely transform young people's lives. That's true both anecdotally in work with individual students, but we also know that to be true just across the country. Schools and education can absolutely catapult young people into an amazing life of opportunity. I think a few things that I noticed working within the school. Part of first one thing that was really influential for me in my own journey to leadership the school that I started teaching after the first few years in its first year was a stable school. It was safe. It was welcoming. There was a good sense of pride. A lot of teachers have been there for a long time. A lot of the kids in the school were excited to be there.

Andy : 15:54

Between my first year there and my second year there, the principal left. The school in year two was a completely different place than in year one. Our attendance rate went way down. Students were leaving the school. It was much less safe than it was prior to that. Same teachers, same kids, same building, completely different experience.

Andy : 16:21

That taught me just the power of what happens when you have a strong leader and a strong staff within a school and what can happen if that's disrupted. That kind of beamed me into the power of what an individual person and the impact someone can have. I always absolutely loved being a teacher and I could still consider myself a teacher Even when I was a principal in the first few years. I would still try and find ways to teach. I wanted to be able to impact kids at a broader scale. One of the big things that I learned from this is just the impact that an individual person, whether it's in a classroom, whether it's in a school or whether it's in a district, can have, and so that has completely stuck with me.

Andy : 17:02

The second big realization that I had is that schools are expected to be all things to a young person and to their family, and I think even more so as pressures of state testing and we are looking at performance and college access and college matriculation. There's almost this sense of responsibility and expectation that the school doesn't figure out. Who can possibly figure it out? And the best analogy that I can use to describe this is if you think about a few puzzle pieces and schools and teachers and districts are playing with these puzzle pieces all year long to try and put the pieces together to support a group of students whether it's moving a GPA a tenth of a point or improving advanced placement scores, or improving parent satisfaction survey numbers, or creating more clubs and sports and we spent so much time putting together these pieces of the puzzle to put our students on a strong path forward.

Andy : 18:17

And one of the realizations that I had after leading schools for about a decade is that it's actually not just that four or five or six piece puzzle, it's like a hundred piece puzzle. But when we're in schools and leading schools, we get so focused on this narrow set of inputs and outputs that, at least for me and many of those that I work with, we can lose sense of the bigger picture here. And I think that as a society sometimes we lose sense of the bigger picture of what schools can actually accomplish. To be clear, schools can absolutely change young people's life trajectories, but I encourage us to take a few steps back and look at the broader puzzle and all the pieces really that need to be put together to ensure that way, way, way more young people are flourishing and achieving a life of opportunity.

Joel: 19:07

Yeah, because I've often heard say and I agree with this that education really is a great equalizer. You know, when you look at across the board, whenever there are lower levels of all the things we don't want in society, like lower levels of addiction, lower levels of crime, lower levels of family issues, lower levels of poverty, whatever it might be across the board, when you increase education, those things tend to decrease. There's more good and less bad when it comes to more education, and I also think you're right, though, that schools can't, that education doesn't just mean schools. Schools can't be an entire person's education. There's lots of things that I learned that are incredibly valuable to me in school, but a lot of things that I learned incredibly valuable that I learned from individuals, like you said, or from just life experiences in the process. I really am excited to dig into how what backers is, because I think it's really a really remarkable and insightful and kind of ingenious way to attack that problem and to help support what schools are doing. But I think, with the time that we've got left in this part one of this two part episode, I just kind of want to talk to you a little bit about the idea of you trying to solve this social problem with a business.

Joel: 20:30

I think for a lot of times that's kind of a new concept to people. I had on Kevin Jones impact investor a few weeks back and he was talking about this idea of two pocket thinking that people have where it's like well, my money, I have one pocket for my money over here where I make money, and then I have another pocket over here where I do good with that money and those two pockets can't really ever intersect. And I think when I was in nonprofits and when I first got into business I noticed that same sort of thinking for a lot of people that like doing good is over here in nonprofits and in NGOs and in that sort of work and then making money is over here in the business world and never the two shall coexist or shall meet. Could you just kind of explain a little bit from your perspective what social enterprise is and how it has, how you kind of have gotten to where you are in this world of social enterprise, Because I'm sure there's people who talk listening here who don't even know what that means.

Andy : 21:30

Yeah well, we definitely.

Andy : 21:32

We don't see the two worlds as mutually exclusive.

Andy : 21:35

We believe that by having the mission orientation of a nonprofit but having the discipline of a business and the customer service orientation of a business, that we can have a dramatic impact at a much larger scale.

Andy : 21:51

So we made the decision to be a for-profit company, in large part to be able to provide Access to the capital to build something that can actually impact a lot of both young people we call protegees in our community, as well as a lot of adults, mentors, who we call backers in our community, and the key way that we sought to do that was to build a tech platform that can bring people together, and, by and large, non-profit, philanthropic dollars typically don't go towards building things like tech platforms, and so we asked ourselves what are some of the great aspects of mentoring that exist out there and how can we make sure that we can scale those and what isn't scalable, what actually can't currently reach tens of thousands, hundreds of millions of people and our? Our solution to that is to build a business, so so that we can keep our stakeholders, our young people and our backers, front in mind, deliver and delight their, their expectations and their experiences, while having a really big impact on on them and and and the schools and the companies that they're a part of.

Joel: 23:01

I love it. It reminds me of. We had a ghillie from where Asheville and she talked about how part of the reason nonprofits even exist is that because businesses and governments aren't doing their job. And I love seeing you having this business, because not only when you're doing good with a business you don't have to rely on grant funding so much. You don't have to rely on the restrictions that come along with government funding or anything along like that. It gives you more autonomy and ability to truly go after the goal that you have of improving this community.

Joel: 23:32

In part two, we are going to get into what is backers, how does it work, how is it helping people already and what is its vision for the future. So please make sure to tune into that next week here on biz radio us. Also make sure to subscribe on, you know, itunes, spotify, stitcher, iheart radio all of those platforms were on subscribe. Give us a review. Make sure to check out backers and make sure to tune in next week for part two. Oh, and also make sure to listen to all the other hosts on this radio us. We have tons of great entrepreneur hosts on this station and I'm really proud to get to be a part of it. So until next time. Thanks, andy, for your time here today and for all of you out there. Take care of yourself and take care of someone else. Okay, stop and stop, and we're all.