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What exactly is first-principles thinking?
With examples from Elon Musk, the man who made AI, and a dragon queen.
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Hello again!
A warm welcome to the 5 new readers who’ve joined me over the last week. I’m honored to have you onboard. 🫶
I first encountered the term ‘First Principles Thinking’ when Manan, the founder of Cuemath, mentioned it in one of the town halls. Since then, I have seen the concept being tossed around a lot in startup circles—so often that it has become a sort of buzzword. But what does it even mean?
Beneath the buzzword, lies a powerful concept. 💪
What is first-principles thinking?
First-principles thinking refers to approaching a problem with a beginner’s mind. Instead of working with assumptions from people around you, you do the hard work of going deeper and finding what’s actually true and hence, what’s truly possible.
The way to apply first-principles thinking is by asking why relentlessly, challenging people’s assumptions, digging deeper, and going to the source to find the truth by yourself.
📖History of first principles thinking: Taking back to classical antiquity
The first account of methodical use of thinking from first principles dates back to ancient Greece when it was proposed by Aristotle in Metaphysics. Aristotle defined first principles as “the first basis from which a thing is known” and identified four key types of first causes that contribute to the existence of anything:
Final Cause (telos): This represents the purpose a thing serves, its ultimate goal. Think of it as the "why": Why does a house exist? The final cause of a house is to provide shelter
Formal Cause (eidos): This embodies the essence or defining characteristics of a thing, its "whatness". Imagine the "what": What is a house? The formal cause of a house is a closed space safeguarded from environmental hardships.
Material Cause (hyle): This refers to the basic materials or substances from which something is made. Think of the "from what": From what is a house made? The material cause of a house includes wood, concrete, steel, rubber, plastic, etc.
Efficient Cause (poieton): This identifies the agent or process that brings a thing into existence. Imagine the "how": How is a house made? The efficient cause of a house involves the designing and construction process, including people, machinery, and tools.
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Understanding the 4 key types of causes equips you with a powerful framework to apply thinking from first principles.
On a different note, Aristotle’s work was also applied in practice by his contemporary, Euclid, who used first principles to establish what today are considered fundamental geometrical proofs. These geometrical proofs are also taught in class 9 as axioms and form the basis of hundreds of further geometrical propositions. To give you an example, the axiom - all right triangles are congruent, is the basis of the famous Pythagoras Theorem.
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Axioms (or unconditional truths in our context) are the basis of Pythagoras Theorem
Okay, now that we know the history, let’s look at the framework to apply first principles thinking
The framework to apply first principle thinking into action
At a broad level, there are 5 steps to apply first principles
❔Farm a questioning mindset
Be curious: Actively seek new perspectives and learn from the world around you
✂️Identify and break down the problem into fundamental pieces
Identify the problem: Find the most important part of the problem you are trying to solve. Break it into components such that they make a whole
Ask why, relentlessly until you reach the source
😼Challenge your assumptions
Look for assumptions: Assumptions are foundational to problem-solving. Assumptions can be categorized into 4 parts in business building
Market assumptions (related to market growth)
Problem assumptions (related to the problem at hand)
Solution assumptions (related to the solution and its components)
People assumptions (related to people delivering value to achieve success)
💡Create a new solution from the ground up
Think outside the box: Break free from preconceived notions and explore unconventional methods
Mix and match ideas: Think beyond your discipline. Find similarities across disciplines. Sometimes, solutions are made by remixing things in unexpected ways
🔬Experiment and Iterate
First-principle thinking is an iterative process. Keep refining your understanding as you make discoveries.
Alright, now let’s look at some examples to see the framework in action 🎬
Examples: Big, small, and the one with dragons
As you read through the examples, notice how people cultivate a questioning mindset, identify the problem they are trying to solve, identify the levers that are stopping them from getting there, question every assumption about the lever, do the groundwork to find to go towards fundamentals, and then act.
Example 1: Building SpaceX - Elon Musk
A YouTube search for first principles fills the feed with thoughts from Elon Musk on first-principles thinking. So let’s start from there.
In this 2.5-minute video, notice how Elon Musk finds
Something is not important enough
Broke down something commonly known to it’s fundamental parts
“We get through life by reasoning by analogy, which essentially means copying what other people do with slight variations. And you have to do that. Otherwise, mentally, you wouldn’t be able to get through the day. But when you want to do something new, you have to apply the first-principles approach.
People say battery packs are really expensive and that's just the way they will always be because that's the way they've been in the past. That's pretty dumb you know, because if you applied that reasoning to anything new then you wouldn't be able to to ever get to that new thing. You could say nobody wants a car because horses are great and we're used to them and they can eat grass and there's lots of grass all over the place and you know there's not like a there's no gasoline that people can buy so people are never going to get cars. Similarly, for batteries they would say, oh it's going to cost you know historically it's cost $600 per kilowatt hour and so it's not going to be much better than that in the future. But if you look from first principles, what are the material constituents of batters and what are the spot market value of the material constituents? So, there’s cobalt, nickel, aluminium, carbon and some polymers for separation and steel. Breaking it down on a materials, if you bought it on London Metal Exchange, what would each of these things cost like. You find that it’s $80 per kilowatt hour. So clearly, you just need a clever way of 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
Example 2: The Man who made AI work - Ilya Sutskever
Watch this two-minute clip and notice how the breakthrough that led to GPT was rooted in experimenting with an idea that everyone knew wasn’t going to work
Everybody knew that you cannot train deep networks. It cannot be done. Back propagation is too weak. You need to do some kind of pre-training of some sort and then maybe you’ll get some kind of an oomph. […] Today we take deep learning for granted. Of course a large neural network is what you need. You shove data into it and you’ll get amazing results. Everyone knows that. Every child knows that. How can it be that we did not know that? How could such an obvious thing be not known? People were really focused on machine learning models, where they could prove that there was an algorithm which can perfectly train them, but whenever you put this condition on yourself, and you require to find a simple elegant mathematical proof, you really end up restricting the power of your model.
Example 3: Building the abnormal beauty company- The Ordinary
In this 8-minute clip from CBC News, see how Brandon Truaxe, the founder of The Ordinary, finds that the core chemical ingredients in beauty products cost 10-20% of the product cost, and builds a brand around this core finding.
In the skin care business quality has always meant expensive. The products are marked up you know eighty-ninety percent, ten times the amount of what they cost to make because of marketing and packaging, because you know consumers have the perception that the more expensive something it is the better. Deciem (parent company of The Ordinary) turned that on its head with no fancy packaging no stylized product names. The ordinary comes in utilitarian tincture bottles with plain white labels and names that sound like they belong in a lab.
Example 4: Tim Ferris on mastering Tango
In the article, notice how Tim Ferris learns swimming, foreign languages, and ballroom dancing by deconstructing skills into pieces and tries to master them one by one
So I had a very short deadline for a competition (Tango). I got a female instructor first, to teach me the female role, the follow, because I wanted to understand the sensitivities and abilities that the follow needed to develop. And then, I took an inventory of the characteristics, along with her, of the of the capabilities and elements of different dancers who'd won championships. I interviewed these people because they all taught in Buenos Aires. I compared the two lists, and what you find is that there is explicitly, expertise they recommended, certain training methods. Then there were implicit commonalities that none of them seemed to be practicing. Now the protectionism of Argentine dance teachers aside, I found this very interesting. So I decided to focus on three of those commonalities. Long steps. So, a lot of milongueros -- the tango dancers will use very short steps. I found that longer steps were much more elegant. So you can have -- and you can do it in a very small space in fact. Secondly, different types of pivots. Thirdly, variation in tempo. These seemed to be the three areas that I could exploit to compete if I wanted to compete against people who'd been practicing for 20 to 30 years. That photo is of the semi-finals of the Buenos Aires championships, four months later. Then one month later, went to the world championships, and made it to the semi-final. And then set a world record, following that, two weeks later.
Example 5: Rhaneyra Targaryen and avoiding the imminent war
This example comes from one of my recent series binges 😁
In House of Dragon Season 2, Rhaneyra Targaryen is under immense pressure from her council to wage war against the usurpers. She understands that war would kill thousands and aims to avoid the war.
Now, her problem is that she has less dragon muscle than the usurpers. It is also known that dragons, by and large, define the course of victory in war. So, with some counsel, she deconstructs her dragon problem into parts. Essentially, to show dragon muscle, she requires a dragon and a dragon rider. The caveat - only those with the blood of a dragon (Targeryans) have ever ridden a dragon and hence, it’s a common assumption that only pure Targeryan blood could ride a dragon.
She challenges this assumption and tries to find anyone with traces of Targaryen blood (Targeryan bastards and those who intermarried with others in the realm). By the second last episode, she finds not just one, but three dragon riders with this new approach.
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The bottom three are newly found dragon riders in season 2 of House of Dragons
To summarize, the application of First Principles Thinking has no bounds. Wherever and whenever there are problems to be solved, you should analyze the situation by first breaking down what is already known into fundamental truths. Only by understanding what is true unconditionally, you can hope to discover practical and innovative solutions to the task at hand. First Principles Thinking is not only a tool of the philosopher or the CEO, but a method that can be employed by anyone passionate about a problem and serious about making a change.
If you would like to know more:
Here’s a podcast on First Principle’s thinking where Farnam Street interviews Ozan Varol (former rocket scientist)
Until next week! 👋
Saurabh
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