Entrepreneur and former presidential candidate Andrew Yang has a theory about where the next wave of startup opportunities lies. It starts with a question that most founders don’t ask. What if the business model was giving money back instead of taking it out?
Yang was inspired by Mark Cuban. Not because of his wealth or celebrity, but because of Cost Plus Drugs, a Cuban start-up that sells medicines at cost price. Mr. Yang made a list.
“Housing, education, food, fuel, transportation, media, wireless,” Yang told TechCrunch on a recent episode of Equity. “The things we all spend money on.”
He chose wireless and launched Nobile Mobile last September. Nobile Mobile is a new virtual mobile carrier that offers mobile phone services at a fraction of the cost of traditional carriers and refunds customers when their data usage decreases.
As AI threatens to compress wages and displace workers, Yang sees opportunity in lowering the cost of living. Dumb phone makers like Cost Plus Drugs, Noble Mobile, and Light Phone, as well as online grocer Misfits Markets, are early examples of an emerging business category where the value proposition of startups is the margin they pass on to customers.
“AI is going to suck up a lot of value and jobs, and Americans are going to look up and say, ‘How can we meet our basic needs?'” Yang said. He believes that meeting people’s needs “at a lower cost” is a “very rich vein of opportunity.”
That instinct didn’t come out of nowhere. Yang first came to public attention during the 2020 presidential campaign, when he advocated universal basic income as a way to combat AI-related labor displacement and wealth concentration. Although the campaign was not successful, the paper’s relevance continues to grow.
Yang remains a supporter of UBI, arguing that the value created by AI companies needs to be redistributed into the hands of average Americans. But Yang isn’t sure whether the government will be the vehicle for that redistribution, or whether it will simply use the wealth it collects to “plug holes and do things that are not very productive.”
“There is room for a direct link between money and people,” he says.
That’s where the market comes in. If policies fail, Yang argues, market incentives can intervene. Noble Mobile is his attempt to prove that point. Since its founding last September, the company has grown to “thousands” of customers and generates “millions of dollars in revenue.”
“We make money on each customer, but we just share the profit with our subscribers with the idea that it makes you happy, that it keeps you around, and maybe that’s what you’ll tell your friends and family about,” Yang said.
The pitch is simple. Yang pointed out that an average monthly savings of $50, invested over 40 years and compounded, could add up to $24,000, enough for a down payment for retirement. And in this economy, who wouldn’t think of small ways to improve their personal finances?
Whether investors share that enthusiasm is another matter entirely. Even if the opportunity is real, capital is currently heavily focused on AI, making consumer businesses with thin profit margins and a social mission difficult.
“At least one investor around Noble Mobile said to me, ‘Andrew, we love you, we want to work with you, and if you turn this into an AI company, we’ll invest,'” Yang said.
But the tide may be turning, simply because even the wealthiest mining companies need an economy where consumers have enough purchasing power to buy their products.
“The concentration of value in the hands of a handful of people and companies is bad for everyone,” he said. “There are some people I know in Silicon Valley who embrace it for a variety of reasons… (for example) they just don’t have to hire private security.”
Yang encouraged founders and investors to work on issues they are passionate about and find ways to build valuable companies on top of them.
“Think wider and broader about tackling the problem. Don’t subscribe too much to group think, because there are some valuable opportunities there,” he said.
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