Andrew Yang: The Next Startup Boom Is Lowering Living Costs

Andrew Yang, an entrepreneur and former presidential candidate, posits a compelling theory regarding the next significant wave of startup opportunities. His premise challenges conventional thinking by asking a fundamental question most founders overlook: what if a business model prioritized returning value to customers rather than extracting it?

This innovative perspective was sparked by Mark Cuban, specifically by his venture, Cost Plus Drugs, which offers pharmaceuticals at their base cost, rather than by Cuban's personal wealth or fame. Inspired, Yang began cataloging essential services.

As he shared with TechCrunch on a recent episode of Equity, Yang identified core areas: "Housing, education, food, fuel, transportation, media, and wireless. The things we all spend money on."

Choosing wireless as his initial focus, Yang launched Noble Mobile last September. This new mobile virtual network operator (MVNO) delivers cellular service at a significantly lower cost than traditional providers, further rewarding customers with monetary rebates for using less data.

Amid concerns that artificial intelligence could suppress wages and displace segments of the workforce, Yang perceives a substantial business opportunity in actively reducing the cost of living. He points to ventures like Cost Plus Drugs, Noble Mobile, "dumb phone" manufacturers such as Light Phone, and even the online grocery Misfits Markets as pioneering examples of an emerging business category. In these models, the core value proposition for the startup is the margin it effectively returns 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 articulated. He firmly believes that addressing people's essential requirements "less expensively" represents "a very rich vein of opportunity."

This vision is not new; it stems from Yang's 2020 presidential campaign, where he gained public prominence by advocating for Universal Basic Income (UBI) as a strategic response to AI-driven workforce displacement and escalating wealth concentration. While his campaign did not achieve its ultimate goal, its underlying thesis has only intensified in relevance.

Yang continues to champion UBI, asserting that the immense value generated by AI companies must be redistributed to benefit average Americans. However, he expresses uncertainty regarding whether the government will serve as an effective vehicle for this redistribution, or if it might merely "plug a hole and do something not terribly productive" with any collected wealth.

"There is room for a direct connection between the money and the people," he stated.

This is precisely where the market plays a crucial role. Yang contends that when policy falls short, market incentives can effectively intervene. Noble Mobile serves as his tangible demonstration of this principle. Since its launch last September, the company has attracted "thousands and thousands" of customers and is now 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 proposition is straightforward: Yang highlights that an average monthly saving of $50, when consistently invested and compounded over 40 years, could accumulate to $24,000 — a sum potentially sufficient for a retirement down payment. In the current economic climate, the appeal of such incremental personal finance improvements is undeniable.

A separate and critical question remains: whether investors will embrace this enthusiasm. Despite the potential validity of the opportunity, capital is currently heavily concentrated in artificial intelligence. Consequently, consumer-facing businesses characterized by thin margins and a social mission often face significant challenges in attracting investment.

"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 recounted.

Nevertheless, there are indications that this trend might be shifting. Even the most affluent and extractive corporations ultimately depend on an economy where consumers possess sufficient buying power to purchase their products.

"The value being concentrated in the hands of a handful of folks and firms is just bad for everybody," he asserted. He added, "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."

Yang concluded by encouraging both founders and investors to pursue problems they are genuinely passionate about, and then to innovate ways to construct valuable enterprises upon those foundations.

"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 advised.