Perkins’s law

Perkins’s law is the venture-investing maxim that “market risk is inversely proportional to technical risk,” credited to Tom Perkins in The Power Law — Venture Capital & the Making of the New Future. The logic: if you solve a truly hard technical problem, you face minimal market competition, because few others can do what you’ve done — so the harder the engineering, the safer the market. Mallaby draws the principle from Perkins’s Kleiner Perkins bets on Tandem Computers and Genentech, where attacking problems most investors thought impossible left the resulting companies with little competition. It is one strand of Perkins’s broader “entrepreneurs ourselves” school of activist venture capital — backing genuinely hard technical bets rather than passively picking among safer ones.

Where this appears

• Tom Perkins — the framework he originated; the technical-vs-market-risk inversion is one of his signature contributions
• The Power Law — Venture Capital & the Making of the New Future — states the law and ties it to the Tandem and Genentech bets, where solving a hard technical problem left minimal competition