7 ms·

It's pretty simple. 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.o

It's pretty simple. 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_Wealth,_2007.jpg 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.

overgard 13y ago
http://en.wikipedia.org/wiki/List_of_largest_companies_by_revenue http://en.wikipedia.org/wiki/List_of_largest_companies_by_re... 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.
- csallen 13y ago
  True, but very few of the companies in that list are in industries that entrepreneurs feel confident about entering.
  - pvdm 13y ago
    Why would you want to enter the Oil/Gas industry when you can disrupt them thru Green industries ala Elon Musk ?
    - kyllo 13y ago
      When is Elon Musk going to make an electric car that costs < $30,000 new though?
      - Crake 13y ago
        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. http://www.teslamotors.com/fr_CH/blog/secret-tesla-motors-master-plan-just-between-you-and-me http://www.teslamotors.com/fr_CH/blog/secret-tesla-motors-ma... ^--This is from way back in 2006. You'll notice that they've since produced the Model S, and seem to be following the plan pretty well so far.
        jvoorhis 13y ago
        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.
      - T-A 13y ago
        Musk says in 3-4 years: http://www.bloomberg.com/video/tesla-repays-u-s-early-musk-wants-affordability-jVvVhuchQuGkYJeyp4RSDw.html http://www.bloomberg.com/video/tesla-repays-u-s-early-musk-w...
      - bdavisx 13y ago
        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.
      - ebiester 13y ago
        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.
ippisl 13y ago
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.
- shadowcats 13y ago
  Somewhat controversial idea: a startup that focuses on cognitive enhancement (IQ, mood, impulse control, mindfulness, stuff like that). Supplements, meditation, and brain training can probably have a non-negligible impact, but I don't see the "underclass" partaking in those currently. IQ and income: https://en.wikipedia.org/wiki/Intelligence_quotient#Income https://en.wikipedia.org/wiki/Intelligence_quotient#Income Victorians smarter than us: http://www.telegraph.co.uk/science/science-news/10053977/The-Victorians-were-smarter-than-us-study-suggests.html http://www.telegraph.co.uk/science/science-news/10053977/The... Anyone want to brainstorm more on this? Email me: lolcatrampage@gmail.com
  - VLM 13y ago
    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).
gadders 13y ago
Yeah, but there are a LOT of poor people. For reference: http://en.wikipedia.org/wiki/The_Fortune_at_the_Bottom_of_the_Pyramid http://en.wikipedia.org/wiki/The_Fortune_at_the_Bottom_of_th...
- ctdonath 13y ago
  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. Just trying to get a sense of scale here.
  - lilsunnybee 13y ago
    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.
jasey 13y ago
100% this. 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.
- ebiester 13y ago
  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.
  - lilsunnybee 13y ago
    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.
- lilsunnybee 13y ago
  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.
pnathan 13y ago
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.
eli_gottlieb 13y ago
I want to argue this. A bunch of years ago I read about "Passivhaus" insulation in the New York Times. The wiki page is here: http://en.wikipedia.org/wiki/Passive_house http://en.wikipedia.org/wiki/Passive_house 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.)

overgard 13y ago

http://en.wikipedia.org/wiki/List_of_largest_companies_by_revenue http://en.wikipedia.org/wiki/List_of_largest_companies_by_re... 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.

csallen 13y ago
True, but very few of the companies in that list are in industries that entrepreneurs feel confident about entering.
- pvdm 13y ago
  Why would you want to enter the Oil/Gas industry when you can disrupt them thru Green industries ala Elon Musk ?
  - kyllo 13y ago
    When is Elon Musk going to make an electric car that costs < $30,000 new though?
    - Crake 13y ago
      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. http://www.teslamotors.com/fr_CH/blog/secret-tesla-motors-master-plan-just-between-you-and-me http://www.teslamotors.com/fr_CH/blog/secret-tesla-motors-ma... ^--This is from way back in 2006. You'll notice that they've since produced the Model S, and seem to be following the plan pretty well so far.
      - jvoorhis 13y ago
        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.
    - T-A 13y ago
      Musk says in 3-4 years: http://www.bloomberg.com/video/tesla-repays-u-s-early-musk-wants-affordability-jVvVhuchQuGkYJeyp4RSDw.html http://www.bloomberg.com/video/tesla-repays-u-s-early-musk-w...
    - bdavisx 13y ago
      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.
    - ebiester 13y ago
      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.

ippisl 13y ago

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.

shadowcats 13y ago
Somewhat controversial idea: a startup that focuses on cognitive enhancement (IQ, mood, impulse control, mindfulness, stuff like that). Supplements, meditation, and brain training can probably have a non-negligible impact, but I don't see the "underclass" partaking in those currently. IQ and income: https://en.wikipedia.org/wiki/Intelligence_quotient#Income https://en.wikipedia.org/wiki/Intelligence_quotient#Income Victorians smarter than us: http://www.telegraph.co.uk/science/science-news/10053977/The-Victorians-were-smarter-than-us-study-suggests.html http://www.telegraph.co.uk/science/science-news/10053977/The... Anyone want to brainstorm more on this? Email me: lolcatrampage@gmail.com
- VLM 13y ago
  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).

gadders 13y ago

Yeah, but there are a LOT of poor people. For reference: http://en.wikipedia.org/wiki/The_Fortune_at_the_Bottom_of_the_Pyramid http://en.wikipedia.org/wiki/The_Fortune_at_the_Bottom_of_th...

ctdonath 13y ago
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. Just trying to get a sense of scale here.
- lilsunnybee 13y ago
  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.

jasey 13y ago

100% this. 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.

ebiester 13y ago
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.
- lilsunnybee 13y ago
  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.
lilsunnybee 13y ago
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.

pnathan 13y ago

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.

eli_gottlieb 13y ago

I want to argue this. A bunch of years ago I read about "Passivhaus" insulation in the New York Times. The wiki page is here: http://en.wikipedia.org/wiki/Passive_house http://en.wikipedia.org/wiki/Passive_house 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.)