Preface

Andrew Yang, entrepreneur and former presidential candidate, proposes a shift in how founders design business models: instead of maximizing extraction, what if companies returned value to consumers by lowering essential costs? This article examines Yang’s argument, the examples that inspired him, and how that perspective connects to broader economic trends like automation and AI-driven displacement. The goal is to explain why reducing the cost of living can be a durable startup strategy and what that might mean for founders, investors, and consumers.

Lazy bag

Yang argues the next wave of startup opportunity is in making everyday essentials cheaper and sharing margins with customers. He points to models such as Cost Plus Drugs, low-cost wireless services, and discount grocery platforms as early signs. The core idea: when AI compresses wages, businesses that return value to users rather than extracting it can build loyalty and societal resilience.

Main Body

Andrew Yang’s thesis centers on a simple but powerful question: what if a business model prioritized giving money back to customers instead of extracting as much as possible from them? This perspective reframes how startups measure success. Instead of focusing solely on revenue growth and margin expansion, a new category of companies could compete on how much they lower consumers’ everyday costs. Yang credits part of his inspiration to Mark Cuban’s Cost Plus Drugs, a company that sells generic pharmaceuticals at cost plus a small transparent markup. That model flips the usual pharmaceutical playbook and demonstrates that consumer trust and loyalty can be built by returning margin to buyers.

Yang made a list of the major categories where people spend their incomes: housing, education, food, fuel, transportation, media, and wireless services. He specifically chose to act in the wireless sector, launching a mobile virtual network operator that offers cell service for a fraction of typical carrier costs and even returns money to customers who use less data. Noble Mobile, launched last September, is intended as a proof of concept: a service that is unit-profitable but shares profits with subscribers to encourage retention and word-of-mouth growth.

There are several reasons this approach resonates now. First, rapid advances in AI and automation threaten to compress wages and displace workers in multiple industries. As more productive output becomes concentrated in algorithms and platforms, fewer people will capture the economic gains unless mechanisms exist to redistribute value. Yang has long advocated for Universal Basic Income as one such mechanism, arguing during his 2020 campaign that a direct cash transfer could help blunt the destabilizing effects of technological disruption. Whether redistribution comes from government policy or market innovation, the underlying problem remains: Americans will still need affordable ways to meet basic needs.

Second, there is increasing consumer appetite for transparent, value-driven business models. Companies like Cost Plus Drugs, online grocery sellers that reduce food waste and prices, and manufacturers of minimalist phones that deliberately eschew expensive feature bloat are signaling a new commercial category: firms that compete on shared savings. These businesses turn margin into a sales and retention tool. For many consumers, a modest monthly saving—Yang cites an average of around $50 per month—can translate into substantial long-term wealth when invested over decades.

Third, the market incentive can sometimes compensate for policy inaction. Yang suggests that if governments fail to design robust redistribution measures, entrepreneurs and investors can step in with models that create direct connections between company margins and consumer benefit. Noble Mobile’s early traction—growing to thousands of subscribers and generating millions in revenue—indicates there may be consumer demand for this proposition. The company claims to be unit-profitable while returning some of the upside to subscribers, banking on the idea that customers who see tangible savings will remain loyal and refer others.

Despite the promise, there are obstacles. Capital markets are currently fascinated with AI-first companies, and investor appetite for low-margin, socially motivated consumer businesses can be limited. Yang recounts investors encouraging him to rebrand ventures as AI companies to attract funding. Additionally, scaling businesses that intentionally offer low prices while sharing margin requires disciplined unit economics, operational efficiency, and a transparent value proposition that customers understand and trust.

Yet there are strategic reasons investors might eventually embrace this category. For many high-value, product-driven companies to thrive, a broad consumer base with sufficient purchasing power is necessary. When value becomes overly concentrated among a few firms or wealthy individuals, overall demand can weaken. In that sense, enabling broader economic participation through cheaper access to essentials is not only socially beneficial but also supports a healthier market ecosystem that benefits many businesses.

For founders, Yang’s message is both practical and philosophical: identify problems you care about and explore business models that build real value into people’s lives by lowering recurring costs. That can mean rethinking pricing, supply chains, distribution, and margins. It may also require innovative financing or partnership structures that align incentives between shareholders and consumers. In some cases, companies can be explicitly designed to return a share of profits or savings to customers as a retention and acquisition tool; in others, the value comes from offering a fundamentally lower-cost alternative to incumbent services.

Operational approaches might include vertical integration to reduce costs, transparent pricing strategies to build trust, targeted subsidies for lower-income customers, and product designs that intentionally remove expensive features consumers don’t need. Marketing narratives that emphasize long-term savings and financial resilience can resonate strongly in uncertain economic times. Importantly, measurement matters: startups must show clear, verifiable ways consumers save money and how those savings compound over time.

Yang’s broader civic argument also plays into this startup thesis. He continues to advocate for policies like UBI while acknowledging uncertainty about whether government will act effectively. By demonstrating market-based solutions that directly channel value back to customers, entrepreneurs can create tangible alternatives or complementary measures to public policy. In doing so, they can address immediate consumer pain points while contributing to a more equitable distribution of economic value.

Ultimately, the proposition is straightforward: if AI and automation centralize value, the most durable consumer-facing businesses of the next decade might be those that deliberately give value back. Whether through lower prices, profit-sharing, or other redistributive mechanisms, companies that help households meet basic needs less expensively could create both social benefit and durable economic returns. For founders willing to challenge groupthink and reimagine traditional extraction-driven models, this represents a significant and underexplored opportunity.

Key Insights Table