Entrepreneur and former US presidential candidate Andrew Yang is championing a new approach for startup innovation: businesses designed to actively lower the cost of living for consumers. Yang's theory posits that instead of solely focusing on profit extraction, the next generation of successful companies will build models around giving money back to customers, addressing the increasing financial pressures faced by households.
Yang's inspiration stems from ventures like Mark Cuban's Cost Plus Drugs, which sells pharmaceuticals at a significantly reduced cost. He has compiled a list of sectors where consumers frequently overpay, including housing, education, food, fuel, transportation, media, and wireless services. Last September, Yang put his theory into practice by launching Noble Mobile, a mobile virtual network operator (MVNO) that offers cellular services at a fraction of the price of traditional providers and refunds customers for unused data.
This philosophy is particularly pertinent given the growing discussion around the impact of artificial intelligence (AI) on the economy. Yang suggests that as AI technology advances, potentially leading to wage stagnation or job displacement, there will be an even greater need for services that help individuals meet their basic needs more affordably. He views companies like Noble Mobile, along with 'dumb phone' manufacturers suchers as Light Phone and online grocers like Misfits Markets, as early examples of this emerging business category where customer value is derived from shared margins.
Yang's focus on affordability is not new; during his 2020 presidential campaign, he advocated for Universal Basic Income (UBI) to counteract AI-driven workforce changes. While UBI remains a core belief, he now sees a significant role for market mechanisms where governmental policy might not fully address wealth redistribution. Noble Mobile, which has attracted thousands of customers and generates millions in revenue since its launch, aims to demonstrate the viability of this market-led approach, sharing profits with subscribers to foster loyalty and word-of-mouth growth.
Despite the clear consumer benefit, securing investment for such ventures can be challenging, as capital is currently heavily concentrated in AI. Yang recounted an instance where an investor expressed interest in his concept but suggested turning Noble Mobile into an AI company to attract funding. However, Yang believes that even highly profitable, extractive companies ultimately depend on an economy where consumers possess sufficient buying power, suggesting a broader recognition of the need for more equitable economic models.