Andrew Yang’s Vision for the Next Startup Wave: Lowering the Cost of Living
Entrepreneur and former presidential candidate Andrew Yang has a theory about where the next wave of startup opportunities lies, and it starts with a question most founders don’t ask: What if the business model was to give money back instead of taking it out?
Inspired by Mark Cuban’s Innovative Approach
Yang was inspired by Mark Cuban. Not because of his wealth or fame, but because of Cost Plus Drugs – Cuban’s startup that sells medicines at cost price. Yang made a list.
“Housing, education, food, fuel, transportation, media and mobile,” Yang told TechCrunch on a recent episode of Equity. “The things we all spend money on.”
Introducing Noble Mobile
He chose cellular and last September launched Noble Mobile, a new mobile virtual network operator that offers cellular service for a fraction of the fees of traditional carriers and gives customers money back if they use less data.
As AI threatens to depress wages and displace workers, Yang sees a business opportunity in lowering the cost of living. Cost Plus Drugs, Noble Mobile, dumb phone makers like Light Phone, and even online grocery store Misfits Market are early examples of an emerging business category where the startup’s value proposition is the margin it returns to the customer.
“AI will eat up a lot of the value creation and jobs, and then Americans will look up and ask, ‘How do I meet basic needs?'” Yang said. He believes that meeting people’s needs “at a lower cost” represents “a very rich opportunity.”
The Roots of Yang’s Vision
This instinct didn’t come out of nowhere. Yang first came to public attention during his 2020 presidential campaign, when he pushed for a universal basic income as a way to combat AI-related workforce displacement and wealth concentration. The campaign was unsuccessful, but the thesis has only become more relevant.
Yang is still a supporter of UBI, arguing that the value generated by AI companies needs to be redistributed into the hands of average Americans. But whether the government will be the vehicle for this redistribution or whether it will simply use the accumulated wealth to “fill a hole and do something that’s not particularly productive,” Yang is less sure.
“There is room for a direct connection between money and people,” he said.
The Role of Market Incentives
This is where the market comes into play. Where politics fails, Yang argues, market incentives can intervene. Noble Mobile is his attempt to prove this. Since its founding last September, the company has grown to “thousands upon thousands” of customers and generates “millions of dollars in sales.”
“We make a profit per customer per unit, but we simply share the profits with our subscribers with the idea that it will make you happy, you will stay with us and maybe you will tell your friends and family,” Yang said.
The pitch is simple. Yang pointed out that the average monthly savings of $50, invested and compounded over 40 years, could be $24,000 – enough for a down payment for retirement. And in this economic climate, who isn’t thinking about how to improve their personal finances?
Challenges and Opportunities
Whether investors will share this enthusiasm is a completely different question. While the opportunity is real, capital is currently heavily focused on AI, while consumer-focused companies with low margins and a social mission are difficult to sell.
“At least one investor close to Noble Mobile said to me, ‘I love you Andrew, I want to work with you – if you could turn it into an AI company, we would invest,'” Yang said.
However, the tide could be changing, simply because even the wealthiest commodity companies need an economy in which consumers have enough purchasing power to buy their products.
“The concentration of value in the hands of a handful of people and companies is just bad for everyone,” he said. “There are some people I know in Silicon Valley who are open to this for various reasons…[like] They just don’t want to have to hire private security.”
Encouraging a New Approach
Yang encouraged founders and investors to look at the problems they care about and find a way to build a valuable company around them.
“When dealing with problems, think bigger and broader and don’t get so caught up in groupthink because there are some valuable opportunities out there,” he said.
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