The Power Law—and Why It’s Handing the World to China

Why venture capital’s winning doctrine for software breaks at the factory gate—and why China’s phase-based approach is scaling the bioeconomy while the U.S. struggles.

Stand at the gate of the Shanghai Chemical Industry Park and the argument makes itself.

The scale is difficult to absorb all at once. Miles of pipe rack. Integrated utilities. On-site power. Trains queued for loading. Feedstocks arriving continuously, products leaving just as steadily. Capital measured not in rounds, but in concrete, steel, and decades. This is not a pilot. It is not a demonstration. It is a system built to endure.

By its very existence, it represents the quiet defeat of Western assumptions about how industrial leadership is regained. Not because Western science is weaker—it isn’t—but because the West spent a generation believing that ideas mattered more than systems, and that scale would somehow take care of itself once the breakthrough arrived.

China did not make that mistake.

It is worth remembering that this outcome was not foreordained. In the 19th and early 20th centuries, Western firms operated more industrial capacity along the Huangpu River—what is now Pudong—than China itself. The infrastructure was there. The capital was there. The engineering expertise and global trade networks were already in place.

China dominates global petrochemicals manufacturing. It produces more than half of the world’s petrochemicals and has built integrated, phase-aligned industrial systems—chemical parks, manufacturing zones, and logistics infrastructure—that enable rapid, durable scale across chemicals, materials, and industrial biotechnology.

What was missing was continuity—what we might now call the disciplined practice of designing each stage of industrial growth for the next.

“Who lost China?” is the old question. In industrial terms, the answer is simpler and less ideological: misapplied thinking did.

The Doctrine That Built Empires—and Graveyards

For two decades, venture capital has been governed by a single, enormously successful doctrine: the Power Law. Make many bets. Expect most to fail. Rely on a small number of outliers to return the fund.

In software, this doctrine built empires. In industrial biotechnology, it has built graveyards. The Power Law works when the world looks structurally the same at every scale—when what succeeds small can succeed large with little more than time and users. Code behaves that way. Mistakes are cheap. Iteration is fast. Failure is reversible.

Factories do not behave this way. This is not a new mistake. The historical loss of industrial continuity along the Huangpu mirrors the modern error of treating industrial progress as if it were a continuous, pivot-friendly loop. Lab, pilot, demo, and commercial scale are not iterations of the same thing; they are gated transitions. The Power Law ignores those gates — and in doing so, institutionalizes the very discontinuity that once ceded industrial leadership.

Industrial biotechnology advances through distinct, unforgiving stages: lab, pilot, demo, commercial, global deployment. Each is a different system, governed by different physics, economics, and risks. What works in a flask can fail catastrophically in a fermenter. What looks elegant upstream can collapse downstream. What clears scientific review can become unfinanceable once steel and concrete are poured.

Yet for years, U.S. industrial biotech tried to scale as if it were software—spraying capital, celebrating pivots, stacking risk at precisely the moment when risk becomes lethal.

And while the United States kept betting on probability, China kept building systems.

The Phase Law

Industrial biotechnology does not obey the Power Law. It obeys something closer to a Phase Law.

The Phase Law starts from a simple premise: scale is not continuous. Industrial ventures do not scale continuously. They advance through distinct, gated phases—lab, pilot, demo, commercial, and global deployment—and each phase is a different system with different physics, economics, risks, and financing needs. Success depends on deliberately designing each phase for the next and aligning technology, operations, capital, and markets at every step. Skipping phases, or treating them like software-style iterations, leads to failure regardless of how strong the underlying idea may be.

This is why the Power Law plays Texas Hold ’Em. You place bold bets, read the cards, trust the odds, and hope for an outlier. The Phase Law plays Go. Territory is built patiently. Position matters more than bravado. The win is rarely visible until it is inevitable.

Operationally, the Phase Law demands vector alignment across phases. Technology, downstream processing, capital structure, supply chains, markets, and policy must all point in the same direction—not eventually, but at each step. When those vectors align, progress compounds. When they don’t, failure is delayed, expensive, and often misunderstood.

First Bight: Practicing the Phase Law

This is where First Bight Ventures enters—not as a fund chasing fashion, but as a practitioner of the Phase Law.

A bight is a deliberate curve in a rope, designed to manage force without breaking. It is also a broad coastal cove—a place where ships gather, provision, and prepare before committing to open water. First Bight’s thesis is built on the same idea: success at scale is not improvised. It is prepared.

Led by founder and Managing Partner Veronica Breckenridge, First Bight begins where most venture stories end—not with the idea, but with the system required to make that idea endure. The firm’s Unicorn Hunter Handbook and widely circulated Graveyard of Biomanufacturing Startups read less like marketing documents than field reports: catalogs of what happens when brilliance is mistaken for readiness.

The playbook is explicit:

• Operator DNA early. Plant builders, process engineers, downstream specialists, and supply-chain veterans are at the table from the start—not after the science is “done.”
• Design for Manufacturability. Downstream processing, unit economics, and ten-year operating realities are addressed before large checks are written.
• Milestones, not narratives. Progress is underwritten in risk retired at each phase, not in PowerPoint projections.
• Equity efficiency. Expensive equity is reserved for early science and differentiation. Once technical and commercial risk has been engineered down, the heavy lifting — steel, concrete, and capacity — is financed with cheaper capital: project finance, debt, strategic balance-sheet money, and non-dilutive sources. This requires thinking like operators and project financiers, not pattern-matching from prior SaaS wins.

This is not asset-light thinking. It is system-correct thinking.

Not One Factory, a System

Shanghai’s advantage does not come from one factory. It comes from alignment.

The Shanghai Chemical Industry Park anchors large-scale chemical production. Zhangjiang Hi-Tech Park clusters biomedicine, advanced materials, and IT so ideas do not have to travel far to become products. Jinqiao Economic & Technological Development Zone hardens prototypes into volume manufacturing—automation, AI, automotive, electronics.

These are not separate bets. They are phases, deliberately sequenced.

Together, they form the physical expression of Made in China 2025—not as a slogan, but as a systems strategy. Research feeds pilots. Pilots feed manufacturing. Manufacturing feeds global deployment. Each phase looks different, is financed differently, and is governed differently—because it must be.

This is walk-walk, not talk-talk.

Why the Outlook Is Brighter Than It Looks

The United States does not lack ideas. It lacks systems equal to them.

That is why the emergence of Phase-Law practitioners like First Bight matters. Across its portfolio, the pattern is visible: technologies chosen for real markets, scale pathways designed in advance, capital stacks aligned to physics rather than fashion. Increasingly, those markets are defined not just by cost or carbon, but by a clear health premium — materials that are non-toxic, microplastic-free, or safer by design. Systems built correctly at scale can command that premium, de-risk adoption, and win on attributes consumers immediately understand.

These are not moonshots launched in hope. They are slow builds toward inevitability. The Power Law will continue to win software. But the industrial world—chemicals, materials, energy, manufacturing—belongs to those who respect phases, align vectors, and build systems that endure. The gate is still open. But not forever.

What is the “Phase Law” premise?

Who is First Bight Ventures’ founder?

Which nation dominates petrochemicals manufacturing?