First Principles Thinking | Reasoning from First Principles – Ultimate Guide
First-principles thinking is what some of the greatest minds such as Elon Musk, Albert Einstein, Jeff Bezos and even YouTube megastar Mr. Beast have leveraged to reach incredible heights.
In this article you will learn how to guarantee massive success through using this ancient powerful thinking framework (mental model).
No problem can withstand the assault of sustained thinking.”
Table of Contents
First Principles Thinking Explained
Thinking from first principles is not new.
It’s a method of thinking that’s been utilised for over 2000 years.
First popularised by Aristotle when he defined it as:
“The first basis from which a thing is known”.
It has resurfaced in popularity after Elon Musk attributed his many successes to this style of thinking.
Here is how he describes it.
“Well, I do think there’s a good framework for thinking. It is physics. You know, the sort of first principles reasoning. Generally I think there are — what I mean by that is, boil things down to their fundamental truths and reason up from there, as opposed to reasoning by analogy.
Through most of our life, we get through life by reasoning by analogy, which essentially means copying what other people do with slight variations…”
Since childhood we have been taught to reason from analogy. Our schooling system largely revolves around this concept, heavily focusing on standardised tests which encourage route learning over authentic creativity.
In school, children are rewarded for how well they can follow instructions; we were told what to read and which exercises to do for homework.
This form of education did not inspire independent and original thinking. Instead it encouraged us to follow that which was already established and not question it.
We live the rest of our lives thinking in this limited way because the neurons that wire during our early years tend to create the strongest pathways and robust neural networks.
First-principles thinking asks that we analyse our assumptions and question them in the same way a scientist would.
It seeks to understand irrefutable truths, and it does this by breaking down a problem into its most fundamental units.
Once facts have been separated from assumptions you can start to build something amazing from the ground up.
In its simplest form first-
First-principles thinking Examples
Jeff Bezos used First Principles Thinking to create Amazon.com
In 1994, Jeff Bezos was working at a quantitative hedge fund when he stumbled upon the jaw-dropping statistic that web usage was increasing at a rate of 2300% per year.
Bezos did some research, then decided to quit his job and place his bets on the now mega-successful Amazon.com.
When deciding what to sell Bezos wrote a list of 20 different item categories.
His final choice was based on the category with the most items which turned out to be books.
Reasoning from first principles allowed Bezos to see that traditional bookstores had a fundamental constraint to their profitability: their limiting factor being physical storage space.
Even the biggest bookstores in the world hold no more than a couple thousand volumes, although impressive, they omit millions of books on the market.
Bezos’ first-principles reasoning helped him see the profitability of what Chris Anderson calls the ‘long-tail‘ effect.
Instead of just focusing on selling the bestselling books of the time, Amazon could sell to the thousands of underserved niches ignored by the mainstream bookstores.
Through the power of the internet, Amazon did not even have to store all of these books in their warehouse at the same time. They only needed to be the middle-man between the wholesalers, niche distributors and the customer.
This breakthrough crushed the fundamental assumption of the time – that books had to be sold in bookstores.
Bezos undoubtedly understood that investing in Amazon would result in a ‘winner takes all’ situation from the economies of scale (due to getting better deals on bulk orders from distributors) and the network effect (from having more users on the platform than other bookstores).
Bezos’ initial reasoning from first principles has served him well. What started as a simple
Elon Musk Revolutionized Space Travel with First Principles Thinking
Elon Musk is perhaps one of the most prolific entrepreneurs of our generation.
He is responsible for starting several multi-billion-dollar companies, most notably Tesla, Space-X and PayPal. His net worth has crossed the 100 billion-dollar mark, and he’s widely regarded as a real-world Tony Stark.
Why is it Musk can have success in several different fields whilst the average person can’t seem to figure out one?
It boils down to his ability to think from first-principles.
The most noteworthy example is his approach to Space-X.
In 2010, NASA officials under the Obama administration predicted it would take 12 years and cost 26 billion dollars to send men back into space.
Recently, Elon and his team at Space-X sent two astronauts into space for two months, and also had the rocket return to Earth for reuse.
This was done in 6 years (half the time predicted by the experts) and at a cost of only 1 billion dollars.
Looking at the reasoning from first-principles was what allowed these innovative measures to happen.
When Elon started Space-X he noticed the price for space travel was heavily inflated.
Most of the cost was distributed between middlemen and expensive spaceship parts.
As Elon broke down each component into its fundamental parts, he saw the cost of the raw materials was reasonable, and by sourcing the required materials himself he could cut the costs dramatically.
Somebody could say, “Battery packs are really expensive and that’s just the way they will always be…Historically, it has cost $600 per kilowatt hour. It’s not going to be much better than that in the future.”
With first principles you say, “What are the material constituents of the batteries? What is the stock market value of the material constituents?”
It’s got cobalt, nickel, aluminium, carbon, some polymers for separation and a seal can. Break that down on a material basis and say, “If we bought that on the London Metal Exchange what would each of those things cost?”
It’s like $80 per kilowatt hour. So clearly you just 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, much cheaper than anyone realizes.”
Space-X has been successful because it did not continue the string of thinking done by others before it.
It did not reason from analogy, instead choosing to apply more energy into uncovering the first principles of space travel.
Often, reasoning from analogy is safe because you create only marginal improvements to something that’s been established.
This type of thinking doesn’t create world-changing breakthroughs.
To create real change you need to dig deeper and break down the problem into its fundamental pieces.
Once this is done, you have room to create something much more effective.
First Principles Thinking was the key to Mr. Beast's Domination of YouTube
Mr. Beast went from 8000 YouTube subscribers to 46 million subscribers in just 5 years, making him one of the fastest growing YouTubers in the last decade.
Let’s break down his secret.
If you ever tried growing a YouTube channel, you would have noticed there are 1000s of informative videos on tips and tricks to manipulate the algorithm to get more subscribers.
There are even dozens of channels, courses and consultants who provide sophisticated strategies for the right price.
Mr. Beast did not need these strategies; all he needed was first-principles thinking to know where to place his focus.
This is what he said during an interview.
When you really boil it down…what do you think YouTube wants? To me, I think YouTube just wants people to click on a video and watch it, right? I mean, that’s how they get their ad revenue.
I’m sure comments, likes, and stuff like that help, but at the end of the day they want you to click watch a video – click, watch a video, and just do that as long as possible.
So to me what’s important is click-through rate (getting people to click on your video) and then average view duration, average viewer retention…
Simplistic as that is, that’s what YouTube wants and that’s how you can be successful.”
YouTube uses a complex algorithm to determine the content which should be pushed out to its users.
At a fundamental level, we know YouTube earns the majority of its money from the advertisers who pay to gain access to its billions of users.
The value of a channel is largely based on how much revenue it can provide for YouTube.
A channel with high-quality videos, which gathers lots of clicks and watch time, is a goldmine for monetization opportunities.
This is why Mr Beast’s content is constantly getting promoted on the trending tab. He has strategically made his content engaging and novel enough to attract the largest number of viewers and keep their attention for the longest time possible.
He does this by creating videos users on the platform are unlikely to have seen thus leveraging the viral nature of the platform.
Most of the videos he uploads are random. This creates the slot-machine dopamine effect in his viewers’ brains, luring them to binge his content and gather a ridiculous amount of watch time.
When you study a problem from the fundamental first principles, you don’t need to know every variable at the higher levels to make a reliable decision.
You don’t need to know the technical aspects or code for the algorithm to become an amazing YouTuber.
All you need to know is the incentive driving the company and its programmers.
Mr. Beast does not deviate from what works nor upload a video just for the sake of it. He doubles down on the levers which produce the greatest output.
Einstein Discovered The Secrets of Time Through First Principles Reasoning
“We all have the same 24 hours in a day”
is a phrase we grew up hearing. However, technically, this might not be true.
Time is not a constant, it’s relative depending on gravity and velocity.
This is what Einstein discovered with his theory of relativity.
To question something as fundamental as time, Einstein had to explore the first principles of physics.
From what he could tell, the most fundamental and true assumption was the speed of light being constant. Everything else could be manipulated. Building up from this first principle with the right mathematics and physics Einstein discovered that time is relative.
This discovery was counterintuitive to what physicists had accepted at the time, however, it turned out to be correct.
The implications of his discoveries are still being felt today. GPS satellites are programmed to correct for the time dilation using Einstein’s equations (time flows around 38 microseconds quicker on a satellite than a clock on Earth).
Although Einstein’s physics is difficult for us mere mortals to grasp, the fundamental principles guiding his discoveries can be used by everyone.
Base your thinking on first-principles by first removing erroneous assumptions.
If I had an hour to solve a problem I’d spend 55 minutes thinking about the problem and 5 minutes thinking about solutions.”
– Albert Einstein
How Reasoning from Principles Ended the Trojan War
In Homer’s epic poem The Odyssey, Odysseus was said to have been the most cunning of Greeks. During the Trojan War, the Greeks had a difficult time breaching the walls of the independent city of Troy.
A city they needed to claim in order to win the Trojan War.
Unfortunately for them Troy was a well-fortified citadel. The walls were impregnable, and a siege could have lasted for years.
The fundamental assumption was that in order to enter Troy, one had to break its walls or wait for its inhabitants to surrender due to a shortage of food supply.
If the Greeks had continued to reason from analogy, this would have been the way forward as this was the way other cities had been sacked.
Odysseus had other plans in mind.
This was war, and the idea of being welcomed into the city gates without massive bloodshed seemed impossible.
A first principle of warfare and combat is to defend yourself from the enemy.
So entering the gates as the enemy would not work.
Odysseys likely thought “What if instead of walking in as soldiers, the Greeks could enter the city in a disguise.”
Thus the idea of the Trojan horse was formed by crushing the assumption that they had to continue fighting as the ‘enemy’.
The Greeks hid a wooden horse which was left outside the gates of Troy.
The horse was meant to be a gift, a token of submission by the Greeks. The horse was allowed into the city walls.
A handful of men came out of it at night and ransacked the city.
The supreme art of war is to subdue the enemy without fighting.”
– Sun Tzu
First Principles Thinking Exercises
The Standard Process
Follow the workflow to arrive at the first principles.
- Define the problem clearly
Without a clearly defined problem you will run into issues. It’s incredibly difficult to hit a target you can’t see!
Outline the problem in as much detail as possible. Write it down as if you are requesting the expert advice of a highly paid consultant.
Take your time with this step because asking the wrong question can lead you astray. Asking the right question is half the battle.
“Give me six hours to chop down a tree and I will spend the first four sharpening the axe.”
- Plot the current process of solving the problem
What is the accepted method of solving the problem? Clearly show the workflow of how the problem is solved. Use visual aids such as flowcharts so you can get a bird’s eye view of the current process. Make sure to separate crucial milestones or components of the process.
- List and question the assumptions
For each part of the process there are a range of assumptions. Things that continue to be done in the same way because no one has bothered to question them. Break these assumptions down to their most fundamental units.
- List the first principles
The things which cannot be reduced any further or refuted based on our current understanding of the world are your first principles. List these because they are the basis from which you will develop your solution to the problem.
- Build back up
Use your first principles whilst ignoring the previous assumptions. Think about how you can organise that which you know to be true to create a solution that is innovative. Be brave and have the courage to experiment – this is how great ideas are formed.
The Five Whys
A good strategy for gaining clarity is called the Five Whys.
You start with a statement and then ask ‘Why’ five times.
Take someone who is struggling to overcome procrastinating studying.
The statement would be:
I struggle with procrastination.
I want to avoid doing work.
Because the work is boring to me.
I can’t wrap my head around it.
I don’t understand the fundamentals properly.
I skimmed over them because I was watching YouTube videos.
Once you discover the fundamental issue, you can choose to address it or dive deeper by using your answer as the next statement for enquiry.
The more iterations you do of this exercise, the closer you will be to finding your first principles.
“Via negativa” is a Latin phrase originally used in Christian theology as a way of understanding God.
The idea was that you can get closer to reaching God by explaining what you know he is not rather than guessing what he is.
As Nassim Taleb points out in his book Antifragile, knowledge grows more from subtraction than addition. It becomes more robust from the negatives than the positives.
Take for instance the notion that all swans are white.
You can see 1000 white swans in a row, but it takes seeing only one black swan to completely destroy the argument.
The same can be said about space travel being incredibly expensive.
Over 200 space missions reinforced this idea, but we needed only one Elon Musk to prove the statement erroneous.
Another example is someone who is trying to lose weight and get healthy.
Instead of buying the latest supplements and joining a new state-of-the-art gym, the person can subtract smoking.
They can also subtract the junk food in their diet, and the need to drive everywhere when they can just walk.
The result will be that they will be much healthier and fitter.
How about the person who can’t get to sleep?
Should they use the sleeping pills recommended by their doctor, thus solving the problem via addition?
No, they should refer to via negativa.
They can subtract the blue light coming from their smart phones, subtract the coffee they are drinking after 12PM, and subtract their anxiety-inducing social media addiction.
Via negativa helps us simplify the problem in front of us through reducing complexity.
The less complex the problem, the easier it is to identify the first principles.
Throughout our lives we have been taught that addition is the key, but for many situations subtraction is more effective.
Socratic questioning was popularised by Socrates and it uncovers objective truths. Usually these questions are used in a dialogue with another person, however, you can ask your own questions and answer them.
Often when we write things down it becomes far easier to see logical flaws.
There are six types of questions you can ask to dig deeper for the fundamental truth:
- Clarification – “What do we mean by…?”
- Probing assumptions – “What could we assume instead?”
- Probing reasons/evidence – “Why do we think this is true?”
- Implications and consequences – “What effect would that have?”
- Different viewpoints – “What is an alternative?”
- Questioning the original question – “What was the point of this question?”
Reasoning from first principles vs reasoning from analogy
Is it always necessary to reason from first principles?
In certain cases it is more practical to reason from analogy.
If you already have a good process and are looking to make incremental improvements, then reasoning from analogy will suffice.
Take for example the company Apple and its flagship iPhone.
Every year they make incremental improvements on the device, which are good enough to still get raving fans to camp outside for days. They hold a large market share of smartphone sales without needing extreme innovation to stay on top.
In many ways it’s safer and much more profitable to cut down on the innovations, gradually revealing new and better features year by year.
Basing the phone design on something that’s already succeeded is more cautious and cost effective.
When Apple first developed the iPhone they went from ‘Zero to One’ (as billionaire Peter Thial would say). They created something brand new which challenged the status quo. This level of innovation demands first-principles thinking.
At the time several other variables were riding in Apple’s favour, such as the increase in internet use, the rise of social media, and other technological advancements. They launched the first iPhone during what Malcolm Gladwell calls a ‘tipping point’ and the rest was history.
Innovation in most cases is a product of the underdog. It’s what happens when people dare to question the accepted assumptions, and as a result see things which most don’t.
Differences between first-principles thinking vs reasoning from analogy
The Church says that the Sun and other planets and stars revolve around the Earth.
Observe the motion of the other planets and stars, apply proven and accepted mathematics and physics, and you will see that the Earth is not the centre.
You need an advanced degree to make good money in life.
Money is a representation of value created. To make lots of money you need to create a lot of value in the marketplace, and this is not contingent on a degree.
The Coronavirus is an incredibly deadly disease and the best course of action is to lockdown and vaccinate the world.
Look at the death rate due to Coronavirus and compare it to other leading causes of death. Look at the second-order consequences of lockdowns such as suicides and economic collapse. You will gain a clearer picture.
The limits of first-principles thinking
Just like any mental model, reasoning from first principles has its limits.
Take for instance our physical world.
When you zoom into something (let’s say your pet cat), you enter the world of the Quantum. In the quantum world you will find subatomic particles such as quarks, leptons and bosons (I promise I’m not making this shit up).
Dig deeper and you will surely find even more fundamental particles and waves.
Having an advanced degree in quantum physics and knowing the first principles of how these particles behave will not help you in understanding how the cat behaves.
Just like knowing how an ant behaves will not help you in understanding the behaviour of the colony.
First principles are domain specific and they can change at different scales.
This change in behaviour is called emergence and it is hard to predict. Emergence is a product of complex systems following simple repetitive rules.
It’s the reason snowflakes have intricate and unique patterns, and why birds such as starlings form complex wavelike patterns in a flock (this is called murmuration).
The way systems behave at different levels is very difficult to predict due to chaos.
This is why news anchors can’t predict with 100% accuracy what the weather will be like in 3 weeks, or why the best economists with sophisticated equations suck at predicting economic crashes.
At times, figuring out the domain range for inquiry can take some guesswork, but at other times it can be straightforward.
Take for example fat loss.
To lose weight you simply need to burn more calories than you consume.
If we reason from first-principles, we can tell that this is an energy balance equation.
For you to move and be alive you need energy.
If the body is not getting enough energy from the food you consume, it will use its stored energy through burning fat and muscle.
This is as fundamental as you need to get to avoid the next fat loss fad diet or magic pill.
You simply need to master counting calories and staying disciplined.
You don’t need to become a physicist or understand thermodynamics to master the first principles of this particular scenario.
The Best First Principles Thinking Books
It is difficult to find a book purely dedicated to first-principles thinking. However, the following books will be sure to help you develop your critical thinking skills, thus making it easier to master this mental model.
1. Seeking Wisdom: From Darwin to Munger by Peter Bevelin
This is a great book by the brilliant thinker Peter Bevelin. It analyses the mental models used by Warren Buffet and his right-hand man Charlie Munger. It explains a range of topics from evolution to cognitive biases and probability. Think of this book as the Swiss Army knife of wisdom. This book clears your thinking so you can make more rational decisions. Remember the wise words of Richard Feynman:
The first principle is that you must not fool yourself- and you are the easiest person to fool.”
2. The Black Swan by Nassim Taleb
An amazing book by Nassim Taleb that deals with the notorious ‘Black Swan’. Black Swans are events that are hard to predict but have the capability to create a disproportionate amount of disruption. When finding the first principles of any system, you need to learn to avoid noise and pay attention to what truly matters. This book will help you with that. Taleb shares a wealth of incredible wisdom based on pure reason and logic.
3. Principles by Ray Dalio
If a billionaire who runs the most successful hedge fund in the world shared the wealth of knowledge he has assimilated over his life, would you read it? This book is essential for those who want to learn how to think differently and make an impact on the world. Dalio uncovers his guiding principles for business and life (you will take lots of notes).
4. Anti-fragile by Nassim Taleb
The solution to the Black Swan problem is anti-fragility. Another amazing book by Nassim Taleb which goes deeper into the issues discussed in The Black Swan. Nassim provides a new mental model for categorising the fragility of different things in our world; this will help you in more ways than you can imagine. Honestly, just read anything by Nassim! The way he looks at problems will inspire you to be a more critical thinker.
5. Zero to One by Peter Thial
Another book by an incredibly successful entrepreneur. Peter Thial breaks down the fundamental differences between mega successes like Google and the average mom-and-pop business. That is the ability to think from ‘Zero to One’. This book is about innovation and the thinking needed to succeed at the highest level.
6. Creative Thinkering by Michael Michalko
A book on creative thinking techniques to help you think outside the box. This book is filled with dozens of thinking exercises and amazing examples of people who succeeded by thinking differently. Michael Michalko is a creative thinking expert who had dedicated his life to studying creativity.
7.The Great Mental Models by Shane Parrish and Rhiannon Beaubien
A beginner’s guide to mental models written by the guys at fs.blog. This book covers a range of thinking principles to help you solve problems. It has a chapter on first-principles thinking plus a range of other thinking tools. Don’t be the hammer guy who constantly looks for nails, develop your toolkit with this gem.
8.Thinking in Systems: A primer by Donella H. Meadows
Remember how I mentioned that you need to specify the domain of inquiry before looking for the first principles? This book will help you with that through teaching you about systems and how they rule our world. Systems thinking is a rare skill but one that the world so desperately needs.
9.Getting Everything You Can Out of Everything You Got by Jay Abraham
A book by the legendary Jay Abraham, one of the most respected business consultants of all time. Jay has worked in over 7000 industries helping businesses maximize their profits. His process focuses on the first principles of business and will help you get the most out of your marketing and sales efforts.
10. The Psycho-Cybernetics by Dr. Maxwell Maltz
I believe that the first principles of human behaviour are derived from your self-image and subconscious mind. If your self-image is not aligned with the success you are trying to achieve, you will end up self-sabotaging your best efforts. This is an incredibly powerful book about our hidden success mechanism. Dr. Maxwell Maltz was ahead of his time.
11.The Almanack of Naval Ravikant
Naval Ravikant is the CEO and co-founder of AngelList. He’s well respected in Silicon Valley, and has invested in more than 100 companies including Uber and Twitter. The Almanack of Navel Ravikant is a collection of wisdom from his notorious Twitter storms and speeches. It distils how Naval thinks regarding making money and his approach to happiness. His thinking style is very logical and a fine demonstration of the first-principles reasoning. You won’t see the world the same way after reading this book.
12.You Are Not So Smart by David McRaney
A book that exposes the many cognitive biases and heuristics to which we all fall victim. If you want to improve your critical thinking skills you need to be a master of your own mind. To master your mind you need to be aware of when it is deceiving you. This book will eliminate lazy thinking.
In this article you have learned how many geniuses have leveraged the power of first-principles thinking to accumulate ridiculous amounts of success.
It’s important to remember this type of thinking is not reserved for intellectual giants. It can be leveraged by anyone to create amazing breakthroughs in our world.
The article showed you four effective ways to find the first principles: the standard process, the Five whys, Via negativa and Socratic questioning.
You also learned the limits of first-principles thinking and when to employ reasoning from analogy.
Ultimately, first-principles thinking is about courage. The courage to seek out the truth and trust in your creative abilities to find new solutions in a complex world.
Do this, and I promise you will be one step closer to living and dying well.