First Principles Thinking
Break problems down to fundamental truths and rebuild from there.
Key Principle
Question every assumption until you reach fundamental truths.
Understanding First Principles Thinking
First principles thinking is the practice of breaking down complicated problems into basic elements and then reassembling them from the ground up. It's the opposite of reasoning by analogy, where you solve problems based on what's worked before.
Aristotle defined a first principle as "the first basis from which a thing is known." In practice, this means identifying the fundamental truths that are self-evident and cannot be deduced from other propositions.
Elon Musk famously used this approach with Tesla batteries. Instead of accepting that batteries cost $600/kWh because that's what they cost, he asked: What are batteries made of? Cobalt, nickel, aluminum, steel, polymers. What do those materials cost on the commodities market? About $80/kWh. So the "expensive" battery is really just expensive assembly and margin—problems that can be solved.
Real-World Examples
- SpaceX: Instead of accepting rocket costs, Musk calculated raw material costs were 2% of rocket price, then built manufacturing to close the gap.
- Airbnb: Instead of "people need hotels," they asked "people need a place to sleep" and unlocked existing unused inventory.
- Netflix: Instead of "people rent DVDs," they asked "people want convenient entertainment" and built streaming.
- Amazon: Instead of "retail needs stores," Bezos asked "what do customers actually want?" (selection, price, convenience) and built to those fundamentals.
How to Apply This
When facing a problem, list all assumptions you're making and question each one
Ask "Why?" repeatedly until you reach undeniable truths
Calculate from raw inputs rather than accepting industry "standard" numbers
Ignore "how it's always been done" and ask "how should it be done?"
Common Mistakes to Avoid
- Spending too much time on first principles when analogies would suffice
- Mistaking assumptions for first principles
- Ignoring relevant domain knowledge and learned heuristics
- Analysis paralysis from breaking everything down too far
Notable Quotes
"I think it's important to reason from first principles rather than by analogy. The normal way we conduct our lives is we reason by analogy."
— Elon Musk
"If I had asked people what they wanted, they would have said faster horses."
— Henry Ford