Andrew Yang thinks the next big startup opportunity is lowering the cost of living

Entrepreneur and former presidential candidate Andrew Yang believes the next big opportunity for startups lies in a question many founders overlook: what if businesses prioritized giving money back to customers rather than extracting it?

Yang found inspiration in Mark Cuban—not for his fame or fortune, but for Cost Plus Drugs, Cuban’s venture that offers pharmaceuticals at cost. This led Yang to compile a list.

“Housing, education, food, fuel, transportation, media, and wireless,” Yang shared with JS on a recent episode of Equity, referring to the essential expenses in people’s lives.

Focusing on wireless, Yang launched Nobile Mobile last September, a mobile virtual network operator that offers cell service at significantly lower rates than traditional carriers and rewards customers with money back for using less data.

As artificial intelligence threatens to reduce wages and displace jobs, Yang sees an opportunity to lower living costs. Companies like Cost Plus Drugs, Noble Mobile, Light Phone, and Misfits Markets exemplify a new type of business that returns value to customers.

Yang expressed concern, saying, “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?’” He sees addressing these needs affordably as a significant opportunity.

Yang’s perspective was shaped by his 2020 presidential campaign where he promoted Universal Basic Income to combat AI-driven job losses and wealth disparity. The campaign didn’t succeed, but the ideas behind it have become more pertinent.

Yang continues to advocate for UBI, suggesting that AI-generated wealth should be redistributed to the average American. However, he is uncertain whether the government will facilitate this redistribution effectively or use the funds inefficiently.

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

Yang argues that when policy falls short, market incentives can step in. Noble Mobile is his effort to demonstrate this concept. Since its launch, the company has attracted “thousands and thousands” of customers and generated “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.

Yang highlighted a straightforward pitch: saving an average of $50 monthly, compounded over 40 years, could yield $24,000—sufficient for a retirement down payment. In today’s economic climate, everyone is looking for ways to enhance their financial situation.

Whether investors will embrace this model remains uncertain. With significant investment focused on AI, consumer-oriented businesses with narrow profit margins and social missions face challenges.

Yang recalled an investor’s words: “Love you, Andrew, want to work with you — if you could just make this an AI company, we’ll invest.”

However, the landscape might be shifting, as even the wealthiest companies need consumers with adequate 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 remarked. “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 urged founders and investors to pursue issues they care about and build valuable enterprises 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 advised.