The builder’s real superpower

Unearthing the principles behind “first principles”

It’s often said in Silicon Valley that building a successful startup requires generating “important truths” that are “non-consensus and right”. But where do such ideas actually come from?

That, too, has a well-established answer: first principles thinking.

But what is first principles thinking? That’s much less clear. Here’s my first pass at clarifying what this approach fundamentally boils down to—the first principles of first principles thinking, as it were. 

Whence “first principles thinking”? 

As best I can tell, the term “first principles” originated as a translation of the ancient Greek term “archē,” literally meaning “first-thing” or “beginning,” used by Aristotle to refer to the fundamental truths within a discipline: the truths that cannot be deduced from any prior truths within that discipline, and that cause or explain most of the other truths within it. This principles-focused approach to science featured prominently in Enlightenment thought and in the Scientific Revolution, as epitomized by Newton’s aptly named Principia. 

The person who seems to have played the largest role in popularizing this term in Silicon Valley was Elon Musk, who defined it similarly: “first principles is a kind of a physics way of looking at the world. You boil things down to the most fundamental truths and say, ‘What are we sure is true?’… and then reason up from there.”

Asking the right questions

If you search the internet for examples of “first principles in entrepreneurship,” what you’ll mostly find are examples of the deep and penetrating questions that first-principles thinkers ask themselves. 

For instance, LinkedIn founder Reid Hoffman describes it this way: “Instead of blindly following directions or sticking to a process, a first-principle thinker will constantly ask, ‘What’s best for the company?’ and, ‘Couldn’t we do it this other way instead?’” Likewise, this Medium article suggests three questions for entrepreneurs to ask themselves when looking for potential product opportunities: What is the customer’s fundamental problem? Is the market big enough? What would a 10x solution look like? 

That said, we can learn a lot by examining the kinds of answers that first-principles thinkers actually generate in response to such questions, and how these answers guide their decisions about what and how to build.

First principles thinking in action

Customer obsession drives business success

Jeff Bezos famously built Amazon around the value of “customer obsession”—a shorthand for the first principle above. How did he arrive at this principle? According to his own account, he got there by asking himself: “What will remain true over the long-term?” This question led him to the following insights: 

“In our retail business, we know that customers want low prices, and I know that's going to be true 10 years from now. They want fast delivery; they want vast selection. It's impossible to imagine a future 10 years from now where a customer comes up and says, ‘Jeff, I love Amazon; I just wish the prices were a little higher.’ ‘I love Amazon; I just wish you'd deliver a little more slowly.’ Impossible. When you have something that you know is true over the long term, you can afford to put a lot of energy into it."

In other words, the value of good customer service (or the “need [for] happy customers,” as another company puts this principle) is a “fundamental truth” because it can be counted on to stand the test of time, and to be widely applicable across many different situations and decisional contexts that Amazon and its employees might encounter. Indeed, so fundamental is this principle that it might seem obvious: of course a company whose survival depends on attracting and retaining customers needs to prioritize its customers! And yet we can plainly see that most consumer-facing companies don’t consistently uphold or “think from” this principle. Part of the reason, I suspect, is that the long-term business consequences of treating customers badly are harder to see, and to keep fresh in one’s mind, than the shorter-term considerations that might get prioritized instead. After all, a company like United Airlines, to take one notorious example, can get away with treating customers quite badly and still remain in business for a long time, even if a closer analysis would reveal how these practices are injuring its reputation and profitability over the long-term. 

Keeping the inexorable but complex effects of customer experience in mind as a constant guide to one’s decision-making takes an effort of imagination and deep causal reasoning. Invoking the principle that “customer obsession drives success” doesn’t obviate the need for this work, but it guides and accelerates it by focusing one’s mind on the essential variables at play.

What rockets are made of

Musk illustrates “first principles thinking” with reference to his thought process when first inquiring into the cost of a rocket, and being quoted prices in the ballpark of $65 million. Most people would have taken these prices as a given, perhaps after some attempts to negotiate or tweak particular specifications, and would thus have abandoned the idea of privately-funded space flight as unaffordable. Instead, Musk describes breaking down the problem thus:

“What is a rocket made of? Aerospace-grade aluminum alloys, plus some titanium, copper, and carbon fiber. And then I asked, what is the value of those materials on the commodity market? It turned out that the materials cost of a rocket was around 2 percent of the typical price—which is a crazy ratio for a large mechanical product." 

Let’s break down what Musk actually did here. First, he recast his problem not in terms of the concrete goal of “purchasing a rocket,” but in terms of the more fundamental goal of acquiring one. Then, instead of taking the current price of rockets as set by the aerospace industry as an irreducible starting point for his decision-making, he identified the fundamental causal determinants of the cost of any large mechanical object. In so doing, he brought to bear his general knowledge about the inherent nature of such objects, including the fact that their physical materials necessarily make up a large proportion of their cost.  Thus he could estimate the cost of building one’s own spacecraft in-house—which turned out to be about 1/10th of the going price. His in-house solution was SpaceX: the first private enterprise to send humans successfully into space.

The first principle behind “first principles”

Across these various questions and examples, the fundamental principle that emerges is: go as deep as you can go. Thinking in first principles about a given field or endeavor means working to identify the most general, fundamental forces at play—be that the core problem that causes and explains many of the particular symptoms you’ve observed, or the core customer need on which your long-term success as a company depends, or the inherent nature and composition of a rocket in virtue of its being a large mechanical object—and then bringing them to bear on every decision you make, rather than letting superficial, short-term, or incidental considerations drive your decision-making.

Getting down to the fundamentals of a domain or discipline is really hard. Normally we think in “formulas” or “proxies”: ideas or frameworks in which we have reasonable confidence, and which we thus take as starting points for further decision-making. For instance, if we want to buy a certain kind of vehicle, we do our research on the relative costs and fuel efficiencies of different models, but we don’t usually consider deconstructing the vehicle into its basic constituents and taking it upon ourselves to build it from scratch. This is not a functional way to go about most of our day-to-day decisions, nor would it leverage the benefits of living in an advanced division-of-labor society. But it is the kind of thinking we need to do within our chosen domain if we want to conceive and create something game-changingly new. 

If this is something you want, then the most important thing you can be doing is constantly seeking to articulate and bring to bear the deepest underlying causes of everything you know and observe within the relevant domain. This assumes, of course, that you’ve gathered your own observations and built your own knowledge from the ground up, and that you’ve done so in good faith—with the genuine intent to identify and understand what’s true. So building and maintaining a good deal of self-trust will be mission-critical.

First-principles thinking is the difference between making small tweaks to an existing recipe, and developing an entirely new sort of dish from scratch—taking nothing but your knowledge of the tastes and interactive chemical properties of different ingredients as your starting point. 

This way of thinking is much harder work (as anyone knows who has ever tried developing an original recipe from scratch) and often higher risk (at least you won’t accidentally poison someone if you follow the existing recipe!). It means putting a lot more responsibility on your own shoulders. But, in helping you arrive at important, non-consensus truths, it sets the limit on the greatness and novelty of what you can build.