Frankly, it doesn't make sense to target anyone but the top 40% of the country. Roll a 20 sided die. If you roll a 1, put in the pile that goes to the bottom 60%. If you roll a 2-20, put it in the money that goes to the top 40% of the country.
Which market are you going to get money from? I can tell you which market I'm looking at.
Now, the distribution of income isn't as disparate, but there's a reason that the bottom 60% isn't generating wealth, and it's partially because they're spending all of their money on essentials and small, low overhead luxuries.
Is it true that you can make a good amount of money in making things more affordable to these segments? Sure, but these don't seem to be the grand problems people are talking about.
First, people do talk about healthcare costs and education costs and housing costs as grand problems.
And startups can do something about those. For example:
1. Co-Abode.com which connects single moms to share houses , while getting cheaper prices and better support from each other.
2. A recent YC startup , which helps people who are getting a divorce, settle without lawyers in a relatively peacefull and much cheaper process.
3. All those new education startups who make college more affordable.
And there are plenty more , and plenty more that's could be done. One such example:
Making dental crowns is costly. There are some few large companies who built a small cnc machine who automates this, which can reduce the costs of the whole process by a lot. But they are expensive to acquire.
Find a way to make this available for cheap for every dentist in u.s./world.
Now the question is how does get into those opportunities ?
Well, i don't think it's hard. just focus on the right area , and try to join the communities which try to think about those things. I'm pretty sure they are willing to share problem and ideas in order to see solutions being made.
Your assumption that poor people are dumb and don't know how to help themselves is insulting. I'm a part of the unexotic underclass; I was doing pretty good in my life till serious health problems started in college. Being transgender played a large role too. I've been homeless, broke, been a housemaid and a sex worker, exchanged sex for housing. Before that I was top of my International Baccalaureate program class, and a National Merit scholar. I attended a well ranked state school. I just didn't have any golden parachutes when I had health problems.
From being poor though what I've ended up discovering is just how hard it is to come up from being homeless and broke, or not being from money and having serious health problems, or being black and getting a felony record from an asshole cop. There are a lot of decent poor people, that just can't come up in the world anymore. Their jobs work them like dogs, the world treats them like shit, and their spare energy left at the end of the day is zip. There's nothing left to better yourself with because everyone takes and takes from you and gives back nothing but disrespect.
Sure there are people that are just lazy too. But even among those people there's only a small number that are purposely taking advantage. The silent majority have either disabilities holding them back, or trauma from their life (PTSD). Or the simple lack of anyone parenting them properly and encouraging them to explore their dreams and interests.
Drugs, alcohol, junk food, tv and other vices are a coping mechanism for a shitty life. Make people's lives the least bit better in substantial ways, and those people will start to flower and bloom into more capable and wonderful people.
The disrespect, patronizing, and superior attitudes of the privileged upper class are a huge part of the problem.
I like this idea quite a bit, although I'm not exactly sure it would be a startup in the end because the willingness (ability?) to pay amongst the target market here must be quite low, I imagine. Just free styling here, but the way to go about it would be to bundle a sort of 'package' of tools into a couple of various tiers, from easy (low input of time/funds) to challenging (more pricey/difficult). One wrinkle is that I think there is a spectrum from pretty clearly verified IQ boosters.. such as psychologically verified games like n-back, and proper nutritions (EPA+DHA, etc etc), to ones that are much more speculative or carry some baggage that 'underclass' folks (that sounds sort of bad ha) might be extremely reluctant to participate in.. eg meditative practice, nootropics, etc. (Brain) food for thought.. :P
With regards to the Victorian study, I read through that last week and it is not immediately clear to me from the literature that reaction time is really a reliable indicator of g. Conversely, the Flynn affect suggests that IQ has really been going up. And if you've read any of Flynn's stuff you'll find that he has quite a nice explanation here, which is that the more brilliant heuristics/words/thinking tools pioneered amongst scientists, inventors, so on are slowly filtering down into the masses generation by generation. Perhaps what this suggests is that education in a new way- introducing folks to a library of new 'thinking tools' rather than just memorization etc- might have to go hand in hand with the sort of biophysical/training ideas above. I highly recommend this video by Dennett to hear a bit more about this concept- minutes 5-14 specifically: http://www.youtube.com/watch?feature=player_embedded&v=4...
How about show your fellow human beings a modicum of respect. They aren't your lab rats. Maybe if your upper-class, power-heavy minority would reevaluate all the patronizing aspects of their philanthropic efforts, poor folks wouldn't have learned helplessness from the futility of their situation, and would actually have the energy to lift themselves up.
Drug dealing, crime, and prostitution are sometimes seemingly the only way to actually move up in the world anymore.
I'm not interested in respecting and not-patronizing people. I'm interested in a better world and fixing the problems.
A big part of why people are poor (and/or delinquent) is, let's face it, because of how their brains work. Sure, there are lots of socio-economic factors keeping people down, but it's never an either-or issue. And I'm not saying that we should stop trying traditional poverty-bootstrapping tactics, but rather that cognitive enhancement is worth looking into also.
For instance, there was a study done in a prison that showed that fish oil can reduce violent tendencies[1]. It's also known to help with child ADHD[2].
(Actually, the interventions I have in mind would focus more around positive psychology, metacognition/mindfulness training, and applied rationality aka scientific self-help. Just using the fish oil as an example since it's well studied and is a very simple measure to take.)
Also, poor people should be happy that the "upper class" take an interest in raising them up. What do you prefer, patronizing philanthropists or corrupt elites who don't give a rat's ass as to their wellbeing at all?
To quote the article: "a cultural disregard for intelligence, empathy and respect"
Not to say its impossible. Its just going to have to be very covert. Part of a game of some sort, but not K-12 ridiculously blatant educational game like space invaders where you have to solve an addition problem to fire the anti-missile missile (I think I actually had to play that one in school...) (Edited to add EVE Online is basically a spreadsheet with a 3-d screensaver, at least as of when I played back in '05 or so... this might be the correct direction...)
Another option is it might be easier to sell to superior societies where intelligence is not considered a social disability requiring treatment. For example, Japan is a smaller market than the USA, but still pretty big and profitable. Or lets say it only sells well in Asia and Europe... well that's OK, looking at population figures, (Asia + Europe) >>>> (USA).
Given the low quality diet of many poor people, particularly the urban poor who live in "food deserts", nutritional supplements probably would be helpful. The information on those isn't really packaged for the low income consumer, or even the middle-income consumer who doesn't think about it.
Prenatal vitamins are almost certainly the low-hanging fruit, though, although with 10-30 year lag.
Judging by that list, the notion that you can't make money off the unexotic underclass seems suspect. Even excluding Oil and Gas, the vast majority of the companies are not exactly luxury brands for the upper class.
He's actually working on it. You'll notice that the Roadster was super expensive ($90,000), but they rolled the money over into R&D to make the Tesla S ($60,000), money from which they will then roll over into R&D for an even cheaper vehicle. Elon's goal is to bring affordable EVs to the masses, which I think is pretty cool.
A Tesla representative gave a talk at my company recently, and supposedly the plan is to produce an EV at around $30,000. Tesla's supply-side partnership with Toyota still gives me hope for more affordable, ubiquitous EVs.
Less than $30k? You're going to need less than $15 for the underclass that this article is talking about; and even then those people are going to have to buy used.
One too many zeroes. The unexotic underclass would not even be able to afford the $3,000 dollar hybrid battery (Prius) replacement, much less a full EV battery.
My family and my wife's family are, to a certain degree, I suppose, part of the "unexotic underclass". They usually don't live check to check, but they don't have months and months to live on saved up, usually. And the fact is, they don't have piles of disposable income, and never have.
So in order to sell to my family, you need to make things cheaper and/or more reliable and/or unneeded. For product ideas, examine these sorts of stores: Cabela's, Walmart, Costco. The target demographic is one which drives everywhere; it's wholly suburban to rural. Biking doesn't really happen, and cell coverage can be spotty. Computers might well have been bought last in 2003 and be using Windows Me.
If you can figure out how to make essentials cheaper or non-essential (by redesigning how other things work), then their standard of living goes up and their income effectively increases.
So. Things you can think about include: grills; furniture; carpets; clocks; microwaves; vacuums; cleansers; etc.
Things You Buy At Walmart, in other words. The challenge to the American businessperson is to be able to sell to the Walmart crowd, things they buy at Walmart.
I would bet that you can charge a bit more for things than Walmart, if you can double to quintuple the quality. Imagine not having things that break quickly. Or, like I said, a new product that obviates other products would also be good.
Basically, invest 14% more in construction up-front, and save 86% on space-heating costs over the long term. THAT'S FUCKING HUGE! These things are a major hit in new construction in Central and Northern Europe.
More, these things are pretty much exactly what you would want as a new, high-tech business for the bottom 60%, or at worst the bottom 80% or bottom 90%. I mean, everyone wants to save 86% on heating, and America has a whole lot of people who live in cold, temperate climates.
So here's a Big Idea for the Unexotic "Underclass", and the middle class, too: how do we bring down the up-front cost to the point where people start being able to afford investing in energy-efficiency, particularly in cold areas that can really use this kind of thing?
(Because this kind of stuff doesn't even really matter to the capitalist/upper class: their utility bills are negligible versus everything else they do.)
As per the laws of free market capitalism if a niche in the market is underserved the market will step up and supply to the markets demand.
On Wall st where the author has worked, any market inefficiency is arbitraged away. Where there is profits to be made the market will find them.
I just don't think there's any big viable markets there, it would be nice if the author could identify at least 1 product idea... As she identifies that the allergy problem stretches across all demographics so this is not really a 'unexotic underclass' problem.
The other issue I see here is allot of the b2c opportunities in the tech industry are based on having customers with "disposable income". In theory a struggling single mum probably doesn't/shouldn't have a iPhone.
Finally I'm not sure that the "unexotic underclass being uninteresting is the problem" argument holds water. Again wall street is arguably not that interesting either but they are not crying about a skills shortage.
These issues are government issues. If the government put money into solving these problems im sure the startup community would happily come and help out.
There are ways, of course. As one example, find more inexpensive ways to make goods already marketed to a higher segment. For example, 300 dollar laptops that look better, especially if you can get a few reality TV stars using them and bravo pimping it. Start a brand that is perceived as high end by the middle class, show it to them in conspicuous consumption avenues, and then tread downmarket. You can only do this so many times.
But if I'm looking at a startup, it sure wouldn't be my first market of choice.
The poor already have a more effective, less wasteful way of acquiring these goods. It's called buying used and old, either at a thrift shop or on ebay. Used old laptops are already abundant.
Most poor problems are government problems. The problem is most of the money goes towards bloat and bureaucracy and war than actually providing services for poor people as well as the rich.
Total USA household wealth is somewhere around $50T, GDP $15T. Per parent post, the bottom 60% has 4.2% of wealth: that's $2.1T, or average $11,150 per person - most of which is not "disposable" (tied up in home, car, and other nonliquid essentials). Assuming same distribution for income, that's averaging $3,343 - again, most of it not "disposable" (rent, gas, food).
Yes, there are a lot of them ("poor" still being a debatable moniker when you're making more than 15x income of half the people on the planet). A lot of money can be made there, and many manage to. To the point of the lead article, a little bit from a lot of people can add up nicely for a business. To your point, there are indeed a lot of people sitting on a cumulative lot of money. To the point of the post in between, eliciting a lot of tiny slices from a lot of small piles of money is a lot harder than eliciting the same sum from a few piles orders of magnitude bigger.
How about do something to uplift poor people, rather than just siphoning more money away. Affordable medical, dental, and legal help would be great focuses.
The Unexotic Underclass Doesn't Have Cash.
In 2007, the bottom 60% of the country had 4.2% of the country's wealth. https://en.wikipedia.org/wiki/File:U.S._Distribution_of_Weal...
Frankly, it doesn't make sense to target anyone but the top 40% of the country. Roll a 20 sided die. If you roll a 1, put in the pile that goes to the bottom 60%. If you roll a 2-20, put it in the money that goes to the top 40% of the country.
Which market are you going to get money from? I can tell you which market I'm looking at.
Now, the distribution of income isn't as disparate, but there's a reason that the bottom 60% isn't generating wealth, and it's partially because they're spending all of their money on essentials and small, low overhead luxuries.
Is it true that you can make a good amount of money in making things more affordable to these segments? Sure, but these don't seem to be the grand problems people are talking about.