Edward Conard

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Dollar Shave Club Wins the All-or-Nothing Lottery

The New York Times’ Steven Davidoff Solomon makes the same point about the success of Dollar Shave Club that I make in the first chapter of my upcoming book The Upside of Inequality: How Good Intentions Undermine the Middle Class. Today, startups can often scale to economy-wide success with little need for capital or investors. For innovators, entrepreneurialism increasingly represents all-or-nothing lotteries. Lottery-like outcomes with large payouts attract more risk-takers, which, in turn, accelerates growth, all other things being equal. More lottery-like outcomes, produce more outsized success, which increases income inequality, whether the risk-adjusted returns are good, on average, or not.

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