First Principles: How to think like Tesla CEO Elon Musk [Video]

Posted on November 29, 2016 by Matt Pressman

We've reported on what it's like to work for Elon Musk. We've even curated some key Elon Musk quotes for a glimpse into the Tesla DNA. But, perhaps the real million dollar question is: how do you think like Elon Musk? Well, according to Life Hack*, you'll need to: "practice the thinking approach of Elon Musk, founder of PayPal and owner of Tesla Motors [NASDAQ: TSLA], SpaceX and SolarCity. What is the thinking approach? It’s called First Principles Thinking."

 

Above: Tesla Motors CEO Elon Musk (Source: Motley Fool via Tesla)

So what is this all about? It turns out that, "there are two types of thinking when it comes to brainstorming and tackling problems; one is comparison thinking and the other is first principles thinking." Here's a quick snapshot of each:

Comparison thinking is when you come up with a solution using a mixture of pre-existing ideas. We tend to do this because our minds... [try] to find the easy way out by building on or tweaking an idea that is already out there. The problem with this is we begin the brainstorming or problem-solving [process] from a space of assumption rather than questioning – we build on what has already been established rather than finding and questioning [things] from a new, basic level.

First principles thinking is about starting from a clean slate... free from any pre-existing ideas — making it a much better approach to problem-solving and creating innovative ideas. It’s about starting with the core fundamental basics [or "truths"] and working your way up from there.

 

Above: Musk discusses his approach to critical thinking using a "First Principles" framework (Source: TieCON 2008)

So what are the benefits of using a first principles framework? "By following first principles thinking, it helps you gather a better understanding of complex problems... [In contrast] comparison thinking leads us to think in terms of analogy." The questions you could ask are:

  • • How can you apply first principles thinking?
  • • What am I trying to accomplish?
  • • What is the fundamental problem?
  • • What really matters?

Asking these questions, "allows you to get to your core motivation." For example, Musk faced enormous criticism starting an electric car company. So-called industry experts and naysayers dismissed Tesla because they assumed battery costs were far too expensive. According to Business Insider, Musk said: "Someone could — and people do — say battery packs are really expensive and that's just the way they will always be because that's the way they have been in the past. They would say, 'It's going to cost $600 / kilowatt-hour. It's not going to be much better than that in the future.'"

Above: Tesla Model S battery pack (Image: InsideEVs)

Instead, Elon Musk challenged that notion: "What are the material constituents of the batteries? What is the spot market value of the material constituents? It has carbon, nickel, aluminum, and some polymers for separation, and a steel can. Break that down on a materials basis, if we bought that on a London Metal Exchange, what would each of these things cost? Oh jeez, it's $80 / kilowatt-hour. Clearly, you 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 cheaper than anyone realizes."

Above: A look at the Tesla / Panasonic 18650 lithium-ion battery cell that currently goes into the Model S and X (Image: EV World)

Wired reports the same at Musk's SpaceX. When faced with the prospect of outrageously expensive rockets, Musk challenged the price — he explained: "I tend to approach things from a physics framework. And physics teaches you to reason from first principles rather than by analogy. So I said, OK, let’s look at the first principles. 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."

Above: Elon Musk at SpaceX (Image: Tesla Club Sweden)

In conclusion, Business Insider notes that although first principles thinking is based on a physics framework, the approach actually goes back, "Over 2300 years ago, [as] Aristotle said that a first principle is the 'first basis from which a thing is known' and that pursuing first principles is the key to doing any sort of systemic inquiry." That said, it's helpful to put a first principles framework into practice for yourself. "The takeaway: With first-principles thinking, you attack problems from a different angle, potentially making much better decisions."

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*Source: Life Hack

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Posted in Elon Musk, SpaceX, Tesla, TSLA


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