Elon Musk reminds me of a special grad school classmate.
He was studying finance and working hard in the hardest class I’ve ever taken. We studied derivatives, financial hedging and all the gross mathematics that accompanies them.
Our teacher routinely put problems on the blackboard that perplexed the brightest among us.
This companion always let the painful silence drag on. Then, very gracefully, he would raise his hand and blurt out the answer.
Like Musk, he could solve seemingly impossible problems.
However, Musk doesn’t rely solely on raw intelligence. Use a simple and systematic approach to solve your most difficult problems.
Elon Musk uses the First Principles method, which is defined as deducing something until it has no more deductions.
Reduce something to its most basic unit: Body → organs → cell (smallest organic unit).
These are the three steps. Then I will give examples.
“Reduce things to their fundamental truths and reason from there, instead of reasoning by analogy”
“Reasoning by analogy” means that we do things because that is how they have been done in the past or how other people do them.
List your assumptions and systematically validate that they are 100% true.
Formulate solutions using 1) the simplest elements of the problem and 2) validated assumptions.
Investors always told Elon: “Battery packs are too expensive and we will never be able to have an electric car.”
Musk immediately connected this assumption to his understanding of history, and the almost identical arguments against cars replacing horses:
- “It would be logistically impossible to supply gasoline to all cars.”
- “Gasoline is too expensive.”
- “Cars are too inefficient and dangerous.”
Elon used first principles with electric cars, identifying the battery as the central problem.
What is the material of a battery? Cobalt, nickel, aluminum, carbon, etc.
What is the market value of each material?
Assumption #1: “We can only purchase batteries from the current list of suppliers.”
Assumption #2: Historically it costs $600 per kilowatt-hour (KwH=100 miles in an electric car). Profits will be marginal.
- Buy raw materials in bulk and learn how to manufacture batteries in-house.
- Secure long-term agreements with suppliers to obtain better prices.
- Hire scientists/engineers to develop new battery technologies
- Build huge manufacturing facilities to build batteries at scale.
This last point is anchored in Wrights Law: the more you invest in building something, the better you will get at it over time.
Use fundamentals to examine a problem, just as a doctor does with a patient or an investor does with a stock. Then go point by point, analyzing it.
Musk did the same with SpaceX.
- “Only the government sends people to space.”
- “Space travel is too expensive.”
He found that both assumptions, unsurprisingly, fed off each other. Government is not historically known for its efficiency.
He attacked the SpaceX problem at the point of greatest tension: the cost per kilo of spaceflight.
However, he blew the cover off by dispelling another assumption: that a new rocket must be built after each launch.
The conclusion is simple: a big problem is a bunch of smaller problems combined. Break it down. Next, identify the most important bottleneck.
First principles are not limited to businesses. Here we have an example with what is perhaps the most common personal problem:
“I can’t meet the right partner.”
- Deconstruct the basics to meet the right partner
- Know your type of viable candidate
- Expose yourself to as many viable candidates as possible
- Behave in a way that makes you desirable
- Look physically desirable
- Examine (faulty) assumptions about meeting the right partner
- Only attractive people or _ they know good couples
- All the men/women around me are perverted and crazy
- Being single is better than a relationship
- Build a solution based on 1) and 2)
There could be a separate essay examining the above issues.
For example, if only attractive people found good partners, wouldn’t the world be full of only attractive people?
The bottom line: use more science in your thinking. When faced with big business and personal problems, take a deep breath and think about first principles.
- Break the problem down into its simplest parts.
- Examine and question your assumptions.
- Build your solution from that starting point.
Not only will an easier solution surface, but much of the anxiety will also disappear.
We tend to make things much more difficult than they need to be.