Andrew Yang thinks the next big startup opportunity is 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 gave money back instead of taking it out?

Yang was inspired by Mark Cuban. Not because of his wealth or his celebrity, but because of Cost Plus Drugs – the Cuban startup that sells drugs at cost. Yang made a list.

“Housing, education, food, fuel, transportation, media and wireless,” Yang told TechCrunch in a recent episode of Equity. “The things we all spend money on.”

He opted for wireless and last September launched Nobile Mobile, a new mobile virtual network operator that delivers mobile services at a fraction of what traditional carriers charge and gives customers money back if they use less data.

As AI threatens to depress wages and displace workers, Yang sees a business opportunity to drive down the cost of living. Cost Plus Drugs, Noble Mobile, dumb phone makers like Light Phone and even online supermarket Misfits Markets are early examples of an emerging business category where the startup’s value proposition is the margin it gives back to the customer.

“AI is going to eat up a lot of value and employment, and then Americans will look up and say, ‘How can I meet basic needs?’” Yang said. He believes meeting people’s needs “more cheaply” is “a very rich source of opportunity.”

That instinct didn’t come out of nowhere. Yang first thrust himself into the public eye during his 2020 presidential campaign, in which he advocated a universal basic income as a means to combat AI-related labor displacement and wealth concentration. The campaign was not a success, but the thesis has only become more relevant.

Yang is still a proponent of UBI, arguing that the value generated by AI companies should be redistributed into the hands of average Americans. But Yang is less certain about whether the government will be the vehicle for that redistribution, or whether it will simply use the accumulated wealth to “fill a gap and do something that is not very productive.”

“There is room for a direct connection between the money and the people,” he said.

That’s where the market comes into the picture. Where policy fails, Yang argues, market incentives can intervene. Noble Mobile is his attempt to prove that point. Since launching last September, the company has grown to “thousands and thousands” of customers and generates “millions in sales.”

“We’re profitable on a per-customer basis, but we just share the profits with our subscribers, with the idea that it will make you happy, you’ll stick around and maybe you’ll tell your friends and family,” Yang said.

The pitch is simple. Yang noted that the average monthly savings of $50, invested and accumulated over 40 years, could amount to $24,000 – enough for a down payment for retirement. And in this economics, who doesn’t think about small ways they can improve their personal finances?

Whether investors will share that enthusiasm is an entirely different question. Even if the opportunity is real, capital is currently heavily concentrated in AI, while consumer-oriented companies with thin margins and a social mission are difficult to sell.

“I’ve had at least one investor close to Noble Mobile say to me, ‘I love you, Andrew, I want to work with you — if you can just make it an AI company, we’ll invest,’” Yang said.

However, the tide could be turning simply because even the richest mining companies need an economy in which consumers have sufficient purchasing power to buy their products.

“The value concentrated in the hands of a handful of people and companies is simply bad for everyone,” he said. “There are a number of people I know in Silicon Valley who are open to that for different reasons…[like] they just don’t want to hire private security.”

Yang encouraged founders and investors to tackle problems they are passionate about and find a way to build a valuable business on top of them.

“Think bigger and broader about tackling problems and don’t subscribe so much to groupthink, because there are some valuable opportunities out there,” he said.