For makers and artists grappling with the economic squeeze of an AI-driven future, Andrew Yang points to a counter-intuitive business model: returning value to the consumer rather than extracting it. As artificial intelligence compresses wages and threatens to displace workers, the most significant startup opportunity may lie in drastically lowering the cost of living. Yang, inspired by Mark Cuban’s Cost Plus Drugs initiative, identifies essential services like housing, education, food, fuel, transportation, media, and wireless as fertile ground for new ventures.
The rise of the “Cost-Plus” economy
Last September, Yang launched Nobile Mobile, a mobile virtual network operator offering cell service at a fraction of traditional carrier rates. The model goes further by refunding customers money if they use less data than their plan allows. This approach mirrors a growing category of businesses where the value proposition is the margin given back to the user. Examples include Light Phone, which champions dumb phones, and Misfits Markets, an online grocery store.
“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 told TechCrunch. He argues that meeting people’s needs “less expensively” represents a “very rich vein of opportunity.”
From political theory to market reality
This perspective is rooted in Yang’s 2020 presidential campaign, where he advocated for Universal Basic Income (UBI) to combat AI-related workforce displacement and wealth concentration. Although the campaign failed, the underlying thesis has gained traction. Yang remains an advocate for UBI, suggesting that value generated by AI companies should be redistributed to the average American. However, he is less certain whether government policy will facilitate this or merely use collected wealth to “plug a hole and do something not terribly productive.”
“There is room for a direct connection between the money and the people,” he said, suggesting that where policy falters, market incentives can step in.
Nobile Mobile serves as his proof of concept. Since its launch, the company has attracted “thousands and thousands” of customers and generated “millions in revenue.” The strategy is straightforward: the business remains unit profitable per customer but shares those profits with subscribers. The goal is to create happiness, ensure customer retention, and encourage word-of-mouth referrals.
The financial potential is significant. Yang notes that an average monthly saving of $50, if invested and compounded over 40 years, could amount to $24,000 — enough for a retirement down payment. In an economy defined by financial anxiety, such a proposition appeals to anyone looking to upgrade their personal finance.
Investor hesitation and shifting tides
Despite the logical appeal, securing capital remains difficult. Investment is currently concentrated heavily in AI, while consumer-facing businesses with thin margins and social missions are a hard sell.
“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.
However, the dynamic may be shifting. Even the wealthiest, extractive companies require an economy where consumers possess sufficient buying power to purchase their products. Yang argues that concentrating value in the hands of a few is “bad for everybody.” He suggests that some Silicon Valley figures are becoming open to this shift, perhaps driven by practical concerns like avoiding the need to hire private security.
Yang urges founders and investors to tackle problems they are passionate about and build valuable enterprises on top of them. He advises against succumbing to groupthink, noting that “there are some valuable opportunities out there.”
Key takeaways
- As AI threatens to erode wages, the next major startup opportunity lies in business models that return value to customers rather than extracting it.
- New ventures like Nobile Mobile and Cost Plus Drugs demonstrate that profitability can coexist with a social mission of lowering essential costs.
- While current capital flows heavily into AI, the long-term viability of extractive industries depends on consumers retaining enough purchasing power.
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