⚡️ How Elon Musk Uses First Principles To Make Decisions

I read his interviews so you don't have to

Author

Michael Houck
November 06, 2022

By definition, founders need to think for themselves. When you build things that do not yet exist, you run into problems that don't yet have established solutions.

However, this doesn't mean you need to spend years figuring out the solution to every roadblock. Instead, you can rely on what you know to be true as guiding principles to make quick, iterative decisions.

Whether you agree with all of his decisions or not, it would be hard to believe that Elon Musk doesn't approach problems with original thinking — just consider tesla batteries, reusable rockets, and hyperloop.

In fact, he talks about first principles thinking quite a bit in interviews. Here's a breakdown of what he's said about it and why it's essential for founders:

What is a First Principle, Anyway?

Elon says that first principles "boil things down to their fundamental truths and reason up from there, as opposed to reasoning by analogy".

Simply put, a first principle is an undeniable truth. It is something that you can safely assume to be true based on provable evidence.

A first principle is the answer to the question "what do we know for sure?".

How First Principles Improve Your Thinking

By understanding what is known with absolute certainty, you will have better direction for your own thoughts and ideas.

Without them, you do one of two things:

  1. You waste time wandering around in the dark hoping to stumble onto a good idea.

  2. You spend a lot of time making small improvements to ideas that already exist.

First principles thinking is the fastest and most efficient path to original ideas.

Why Founders Need to Think from First Principles

True innovation requires many iterations and experiments. The more often you're able to test ideas, the more you'll shorten the feedback loop you have.

For a founder, speed is the primary advantage you have over existing companies. You can't afford to waste time wandering around or making small improvements — you have limited runway to aim really big.

First principles thinking helps keep you on that path.

A 3 Step Guide to Use First Principles Thinking

Identify Today's Assumptions

Elon says that most people accept that something "is not going to be much better in the future" and that common assumptions of this nature are worth challenging — and where big opportunities exist.

So, if you're running into a problem with your startup, identify what the problem is and what people believe to be true about it today.

Break the Problem Down Into Fundamental Components

This is the hardest part of first principles thinking. Identifying fundamental components requires deep knowledge of the problem and what causes it.

The key is to keep digging deeper — much like a kid who will ask "why?" over and over until their parent has nothing else to say except "because!"

When you find the "because" of a problem, you know you've hit a fundamental component that you can now challenge and think about better solutions for.

Here's a great example of first principles thinking in action from Elon in a 2012 interview:

Somebody could say, “battery packs are really expensive and that’s just the way they will always be… historically, it has cost $600 per kilowatt hour. It’s not going to be much better than that in the future.”

With first principles, you say, “what are the material constituents of the batteries? What is the stock market value of the material constituents?”

It’s got cobalt, nickel, aluminum, carbon, some polymers for separation and a seal can. Break that down on a material basis and say, “if we bought that on the London metal exchange what would each of those things cost?”

It’s like $80 per kilowatt hour. So clearly you just need to think of clever ways to take those materials and combine them into the shape of a battery cell and you can have batteries that are much, much cheaper than anyone realizes.

It's not always true that a "clever way" will exist that hasn't been implemented already, but with the speed of innovation across all industries today it's likely that legacy products or systems are being used somewhere in the process.

Iterate Towards Original Ideas

Good ideas are always crazy until they're not.

- Elon Musk

Now that you've identified the fundamental building blocks to solve the problem with, look at what has and hasn't been tried before.

If something has been tried, it should tell you something regardless of whether it succeeded or failed. Use the knowledge to try new things and experiment faster.

Keep a record of results so that you can improve your list of first principles over time as you learn new things.

It will not be straightforward or even easy, but by creatively testing new ideas quickly based on fundamental truths, you will have the highest likelihood of finding an original idea.

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Homework

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