Elon Musk (even if he is controversial) is known for pushing his companies to excel at manufacturing, and one of the methods he uses is thinking in first principles. Here are a couple of examples.
When SpaceX began developing Starship, they found that aerospace-grade materials were extremely expensive and slow to source due to supplier markups and certification overhead. Instead of relying on that system, they switched to relatively common stainless steel and began buying it in large industrial coils, then cutting, forming, and welding it themselves. This approach dramatically reduced material costs and, more importantly, allowed them to iterate quickly—building and testing hardware in days rather than waiting months on suppliers.
Early designs for Starship called for large carbon fiber fuel tanks, but SpaceX ran into major challenges when testing full-scale composite tanks at cryogenic temperatures, including structural failures and manufacturing complexity. Rather than forcing the design to work, they pivoted to stainless steel tanks, which are cheaper, easier to manufacture, and actually perform well in extreme cold. While heavier on paper, steel proved more reliable and far better suited for rapid prototyping and iteration, ultimately accelerating the development of Starship.
Thinking from first principles is another one of those phrases that is thrown around a lot, but I am not sure exactly how to implement it.
Here is what an LLM gave me on it:
What it actually means (in plain terms)
Most people think like this:
- “Everyone prices this service at $X, so we should too.”
- “Hiring more people is how you scale.”
- “Customers won’t pay for that.”
That’s thinking by analogy.
First principles thinking forces you to ask:
- What are the fundamental facts here?
- What assumptions am I blindly accepting?
- If I had to rebuild this from scratch, what would I do?
A simple example
Take pricing a service:
Typical thinking:
“Competitors charge $100/hr, so we will too.”
First principles thinking:
- What does it actually cost me to deliver this?
- What value does it create for the customer?
- What outcome are they buying, not the hours?
You might end up at:
- $300 flat fee (value-based)
- Or a subscription
- Or performance-based pricing
Completely different model—because you didn’t inherit assumptions.
How to implement it (practically)
Here’s where most people fall short—they like the idea but don’t apply it rigorously.
1. Identify the assumption you’re blindly accepting
Start with something in your business that feels “fixed.”
Examples:
- “We need meetings to stay aligned”
- “We need X margin to survive”
- “Customers won’t switch providers easily”
Write it down plainly.
2. Break it down to facts (not opinions)
Ask:
- What do I know for sure?
- What is measurable or observable?
Example:
- Customers want reliability and speed (fact)
- They hate delays and unclear communication (fact)
- They don’t actually care how many employees you have (fact)
You’re stripping away tradition and ego here.
3. Rebuild from scratch
Now ask:
“If none of the current industry norms existed, how would I solve this?”
This is where creativity actually matters.
Example:
- Instead of weekly meetings → async updates + dashboard
- Instead of hiring → automation or outsourcing
- Instead of selling hours → sell outcomes
4. Pressure-test it
This is where you avoid getting lost in theory:
- Does it actually work in the real world?
- What would break first?
- What’s the smallest way to test it?
Don’t overthink—run a small experiment.
Where this really pays off
First principles thinking is most useful when:
- You’re stuck or plateauing
- Costs are rising and you don’t know why
- You’re copying competitors but not winning
- You want a real edge (not incremental improvement)
It’s less useful for:
- Routine execution
- Things that are already optimized and working
The trap to avoid
Here’s the honest part: most people use “first principles” as an excuse to overcomplicate things or sound smart.
If you’re not actually changing decisions or testing new approaches, you’re not doing it—you’re just labeling your thinking.
A quick exercise you can use this week
Pick one:
- Hiring
- Pricing
- Meetings
- Customer acquisition
Then do this:
- Write down your current belief
- List 3–5 facts that are undeniably true
- Design a new approach ignoring industry norms
- Test it in a low-risk way within 7 days