Market Risk vs Technical Risk

Tom Perkins’s framing — surfaced via the wiki’s Pricing page and sourced to The Power Law — Venture Capital & the Making of the New Future — that market risk is inversely proportional to technical risk. A startup tackling a genuinely hard technical problem faces less market risk: if you can solve something others can’t, demand is comparatively certain, and you can keep prices low and win on volume. Conversely, a venture with little technical risk competes on a crowded field where market uncertainty dominates.

The idea connects directly to Pricing strategy: solving the hard technical problem is what lets a company charge less and compete on scale rather than on premium positioning — placing it alongside the Costco/Walmart/Amazon “charge less” lineage that page traces.

Context: Tom Perkins co-founded Kleiner Perkins; the market-risk-vs-technical-risk heuristic is a classic venture-capital framework for deciding which kind of risk a startup is actually being paid to take.

Where this appears

• Pricing — Perkins’s claim that solving hard technical problems (high technical risk, low market risk) lets a company keep prices low and win on volume.