Andrew Yang: Lowering cost of living is next startup opportunity
▼ Summary
– Andrew Yang believes the next wave of startup opportunity lies in business models that return money to customers rather than extracting it.
– Yang was inspired by Mark Cuban’s Cost Plus Drugs and launched Noble Mobile, a wireless carrier that charges less and refunds customers for unused data.
– As AI threatens wages and jobs, Yang sees a business opportunity in reducing the cost of living, with startups like Cost Plus Drugs, Noble Mobile, and Misfits Markets as early examples.
– Yang remains an advocate for Universal Basic Income but argues that market incentives can also redistribute value directly to people when policy fails.
– Noble Mobile is unit profitable and shares profits with subscribers, aiming to save customers an average of $50 monthly, which could grow to $24,000 over 40 years.
Former presidential candidate and entrepreneur Andrew Yang sees the next major startup frontier not in flashy new technology, but in something far more fundamental: reducing the cost of living. His central premise challenges the typical founder mindset , what if a business’s core model was designed to return money to customers rather than extract it?
The inspiration struck Yang while observing Mark Cuban’s Cost Plus Drugs, a pharmaceutical startup that sells medications at cost. That model prompted Yang to compile a list of essential expenses: “Housing, education, food, fuel, transportation, media, and wireless,” he told TechCrunch on an episode of Equity. “The things we all spend money on.”
He zeroed in on wireless. In September, Yang launched Nobile Mobile, a mobile virtual network operator offering cell service at a fraction of traditional carrier prices. The twist? Customers get cash back when they use less data. It’s a direct reversal of the typical profit-maximizing approach.
As AI continues to threaten wage compression and job displacement, Yang positions the lowering of living costs as a genuine business opportunity. He points to Cost Plus Drugs, Nobile Mobile, minimalist phone makers like Light Phone, and online grocer Misfits Markets as early examples of a new category: startups whose primary value proposition is the margin they give back to the customer.
“AI is going to suck up a lot of the value and the jobs, and then Americans are going to look up and say, ‘How do I meet basic needs?’” Yang said. He believes that meeting those needs “less expensively” represents “a very rich vein of opportunity.”
This perspective is rooted in Yang’s 2020 presidential campaign, where he championed Universal Basic Income as a response to AI-driven workforce disruption and wealth concentration. While the campaign fell short, the underlying thesis has only gained urgency. Yang still advocates for UBI, arguing that the value generated by AI companies must flow back to average Americans. But he is skeptical that government will be the effective vehicle for that redistribution, worried that collected wealth might be used to “plug a hole and do something not terribly productive.”
“There is room for a direct connection between the money and the people,” he said.
That’s where market incentives enter the picture. Where policy falls short, Yang argues, businesses can step in. Nobile Mobile is his proof of concept. Since its launch last September, the company has grown to “thousands and thousands” of subscribers and is generating “millions in revenue.”
“We’re unit profitable per customer, but we just share the profits with our subscribers with the idea that it’ll make you happy, you’ll stay around, and maybe you’ll tell your friends and family,” Yang explained.
The math is straightforward. Yang notes that $50 in average monthly savings, invested and compounded over 40 years, could grow to roughly $24,000 , enough for a meaningful retirement boost. In today’s economy, small improvements to personal finance resonate widely.
Whether investors will embrace this model is less certain. Capital is overwhelmingly concentrated in AI right now. Consumer-facing businesses with thin margins and a social mission are a tough sell. “I had at least one investor say to me around Noble Mobile, ‘Love you, Andrew, want to work with you , if you could just make this an AI company, we’ll invest,’” Yang said.
But the tide may shift. Even the most extractive, profitable companies depend on an economy where consumers have enough purchasing power to buy their products. “The value being concentrated in the hands of a handful of folks and firms is just bad for everybody,” Yang said. “There are some folks I know in Silicon Valley who are open to that for a variety of reasons… [like] they just don’t want to have to hire private security.”
His advice to founders and investors is straightforward: take on problems you care about and find a way to build a valuable enterprise around them. “Think bigger and more broadly about trying to tackle problems and don’t subscribe so much to groupthink, because there are some valuable opportunities out there,” he said.
(Source: TechCrunch)
