Musk: First principles are the best way to think.

Source: Red and Green

In 2014, at the University of Southern California's business school graduation ceremony, Elon Musk delivered a five-minute inspiring talk, summarizing his reflections on work and life into five key points, one of which addressed his decision-making approach:

"Perhaps you've heard me say that you should approach problems from a physics‑based perspective—this is the first‑principles thinking method. In other words, avoid analogical reasoning. Break things down into their most fundamental, imaginable components, and then build your reasoning from there. This is an excellent way to determine whether something makes sense."

This kind of thinking isn't easy; you may not be able to apply it to every situation, as it demands considerable effort. However, if you aim to generate new knowledge, it is the most effective approach. This framework was conceived and refined by physicists, who thereby uncovered counterintuitive phenomena, such as those in quantum mechanics. Consequently, it is an exceptionally powerful and highly effective method. In any case, you should strive to adopt it whenever possible.

This isn't the first time Musk has publicly referenced the decision-making framework he so fervently champions: first principles.

01. How do first principles work?

Earlier, in a TED interview, Musk offered a more detailed explanation of this concept. He said: "There's a powerful mental framework—rooted in physics—that's akin to first‑principles reasoning. When we start with the fundamentals, we simply work from there. This approach tends to yield only small, incremental advances. First‑principles thinking is a way of viewing the world through the lens of physics: you strip away the surface layers of any problem, uncover its underlying essence, and then build upward from that core. It demands a tremendous amount of mental effort."

Specifically, how do first principles inform real-world decision-making?

Take Elon Musk's vacuum‑capsule high-speed rail as an example. If one approaches the design of a new‑generation train through comparative or experiential thinking, most people would focus on enhancing existing features—boosting power and improving aerodynamics. However, applying first‑principles reasoning to analyze product needs requires returning to the fundamental purpose of transportation: moving large volumes of cargo from point A to point B. This is the original raison d'être of trains and other transport vehicles—not merely relying on traction to achieve incremental improvements. Guided by first principles, Musk proposed a hybrid system combining magnetic levitation with low‑vacuum technology to create a vacuum‑capsule high-speed rail.

In the interview, Musk also cited an example: during Tesla's development of electric vehicles, the company encountered a major challenge—battery costs remained stubbornly high. At the time, the market price for energy-storage batteries was $600 per kilowatt-hour, a level that was remarkably stable and unlikely to change significantly in the short term.

However, Musk approached the problem from a first-principles perspective: What materials are battery packs actually made of? What are the market prices of these raw materials? If we were to purchase these materials and assemble them into batteries, how much would it cost? The answer is that it would come to just $80 per kilowatt-hour.

Starting from the most fundamental level, he examined what materials make up a battery and then calculated the aggregate cost of those raw materials, thereby determining the battery's minimum price. By adopting this line of thinking, Musk made the commercialization of electric vehicles possible. Most people approach problems by accepting the status quo as an immutable fact that they cannot change, but Musk's mindset is: if something is physically feasible, then I can make it happen too.

02. Think with First Principles

The renowned biographer Walter Isaacson also frequently mentions the concept of "first principles" in his book, "Elon Musk." He first introduced it in the book when Musk was just beginning to enter the field of space exploration.

At the time, his first plan was to build a small rocket and send a mouse to Mars.

But later, Musk began to worry that if all we ended up witnessing was the rather absurd sight of a little mouse slowly dying aboard a small spacecraft, that would be far from ideal. So he eventually came up with the idea of sending a miniature greenhouse to Mars. The greenhouse would land on the Martian surface and transmit images of green plants thriving on the Red Planet back to Earth.

He believes the public will be so excited that they'll eagerly want to send more spacecraft to Mars and carry out additional missions. This plan is called "Mars Oasis," and Musk estimates it could be accomplished for less than $30 million.

He had enough money on hand, and the biggest challenge was building an inexpensive rocket capable of carrying a small greenhouse to Mars. As it turned out, there was one place where he could secure such a rocket at a low cost—Russia.

Musk planned a trip to Russia to see whether he could actually procure some launch pads or rockets. But the journey turned out even worse than expected. On one occasion, as Musk began discussing the need for humanity to become a multiplanetary species, the Russian reportedly spat at them.

In early 2002, Musk made another trip to Russia. This time, his primary goal was to purchase two Dnepr launch vehicles—modified versions of older ballistic missiles. However, the more he negotiated, the higher the price the sellers demanded. Eventually, he believed he had secured a deal, agreeing to pay $18 million for both Dnepr rockets—only to be told later that the correct price was $18 million per rocket. "I was furious at the time," Musk recalled, "but as my anger mounted, I began rethinking how to solve the problem."

Frustrated by the Russians' outrageous bids, he began to think in terms of first principles, delving into fundamental physical realities and painstakingly constructing a mental model of rocket launch, step by step. From this, he developed a concept known as the "Idiot Index," which measures how much the cost of a finished product exceeds the cost of its raw materials.

If a product has a very high "idiot index," then it can certainly be made much more cost‑effective through clever design and manufacturing processes. The rocket's "idiot index" is extremely high. Musk began calculating the costs of carbon fiber, metals, propellants, and other materials: using current manufacturing methods, the finished product would cost at least 50 times as much as the raw materials themselves.

If humanity is to travel to Mars, it must fundamentally overhaul rocket‑manufacturing technology. Relying on secondhand rockets—especially those from Russia—will not advance spaceflight capabilities. Consequently, on the return flight, Musk pulled out his laptop and began compiling a detailed spreadsheet, itemizing every material and cost involved in building a medium‑sized rocket.

Coincidentally, during Tesla's design and production process, "first principles" also play a crucial role. Starting in early 2017, Musk and Franz von Holzhausen repeatedly discussed the idea of a Tesla pickup truck.

Von Holzhausen began with a traditional design approach, using the Chevrolet Silverado as a reference—and even placed a Silverado right in the center of the studio to help them study the vehicle's proportions and components. Musk said he wanted to create a pickup truck that would be more exciting, even breathtaking. So they examined some of the most iconic vehicles in automotive history, with the Chevrolet El Camino—a retro‑futuristic coupe from the 1960s—standing out as particularly inspiring. Von Holzhausen sketched a pickup with a similar vibe, but as the two walked around the model, they agreed it felt "too soft" in style. "It had those graceful, curvy lines," von Holzhausen said, "rather than the solid, robust presence of a true pickup."

Musk later added another design that had inspired him: the wedge‑shaped, pointed‑nose British sports car from the late 1970s—the Lotus Esprit. Specifically, he was particularly fascinated by a Lotus Esprit that appeared in the 1977 James Bond film "The Spy Who Loved Me." Musk purchased that very car, which had been used during filming, for nearly one million dollars and placed it on display in Tesla's design studio.

The brainstorming session was engaging, but it still failed to yield a concept prototype that truly excited them. To spark inspiration, they visited the Petersen Automotive Museum, where they made some unexpected discoveries. "We realized that the pickup truck's styling and manufacturing processes had remained largely unchanged over the past 80 years," said Von Hozhausen.

This led Musk to shift his focus to more fundamental questions. He began applying "first principles" to tackle the issue: What materials should Tesla use to build the truck's body? By rethinking materials and even revisiting the physics of vehicle structure, Tesla could unlock new possibilities for an entirely new design.

Von Holzhausen said, "At first we considered aluminum and even titanium, because durability was truly paramount." But around that time, Musk became fascinated by the possibility of building a rocket ship out of high‑gloss stainless steel. He realized this material could also work for a pickup truck: a stainless‑steel body would require no paint and could even bear some of the vehicle's structural loads. This idea was genuinely unconventional, reimagining what a vehicle could be.

After several weeks of discussion, on a Friday afternoon, Musk walked in and announced succinctly: "We're going to build a pickup truck out of stainless steel." Charles Kuehmann is the vice president of materials engineering at Tesla and SpaceX. One of Musk's advantages is that his various companies can share engineering expertise with one another. Kuehmann developed an ultra‑hard stainless steel alloy using a "cold‑rolling" process that eliminates the need for heat treatment, and Tesla has filed a patent for it. This material is both strong enough and affordable enough to be used in manufacturing trucks and rockets.

The decision to use stainless steel on the Tesla Cybertruck has a significant impact on the vehicle's engineering design. A steel body can serve as the vehicle's load-bearing structure, whereas previously the chassis performed this function. Musk suggested, "We can concentrate all the strength in the outer perimeter, turning the body into the vehicle's exoskeleton, and then mount everything else inside it." The use of stainless steel also opens up new possibilities for the truck's exterior appearance.

Compared with using stamping presses to carve carbon fiber into elegantly curved body panels, stainless steel is better suited for straight lines and sharp angles. This gives the design team the opportunity—and, in a sense, the necessity—to explore more futuristic, avant-garde, and even seemingly discordant design concepts at first glance.

03. Start from the essence of things and do not be constrained by past experiences.

Musk's reverence for "first principles" is also reflected in his meticulous control of costs.

Musk places an extremely high priority on cost control—not only because he's footing the bill himself, but also because every dollar must be spent wisely to advance his ultimate goal: colonizing Mars.

The component prices offered by aerospace suppliers failed to meet his expectations, prompting him to question them—since such parts typically cost ten times as much as comparable components in the automotive industry. His keen focus on costs, combined with his innate desire for control, led him to adopt a strategy of manufacturing as many components in-house as possible rather than sourcing them from external suppliers—a practice that was standard in both the rocket and automotive industries at the time.

Müller recalled that once, when SpaceX needed a valve, the supplier quoted $250,000. Musk said the supplier was being overly greedy and told Müller they should manufacture it themselves. Within a few months, they accomplished the task at a fraction of the cost.

Another supplier was tasked with providing a drive mechanism capable of rotating the nozzle of the upper-stage engine, with a quoted price of $120,000. Musk remarked that the device was hardly more complex than a garage-door opener, so he instructed one of his engineers to build it at a cost of $5,000 per unit. Jeremy Holman, a young engineer working for Müller, discovered that a valve used in car‑wash systems to mix cleaning solutions could be modified to operate with rocket fuel.

Another supplier delivered a batch of aluminum fairings mounted on top of the fuel tanks, then promptly hiked the price for the next order. "It's like a painter who, after painting half your house, suddenly raises the price and demands three times as much to finish the other half—Elon isn't buying that," said Mark Juncosa, one of Musk's closest colleagues at SpaceX. Musk remarked that such extortionists were no different from the guys in Moscow selling rockets, and told Juncosa, "We'll just do it ourselves."

So a new section was added to the assembly facility to build the fairings. A few years later, SpaceX was already handling 70% of rocket component manufacturing in-house. When SpaceX began producing its first batch of Merlin rocket engines, Musk asked Müller how much they weighed; Müller replied about 1,000 pounds. Musk then said that the engine of a Tesla Model S weighs roughly 4,000 pounds and costs around $30,000 to manufacture. "If a Tesla engine is four times as heavy as yours, why does your engine cost so much?"

One reason is that the manufacture of rocket components is governed by hundreds of specifications and requirements imposed by the military and NASA. At large aerospace firms, engineers adhere strictly to these sacrosanct guidelines, whereas Musk takes a contrarian approach, urging his engineers to question those very specifications—what would later become the first step in his five‑step methodology, internally known as "questioning," and a mantra he repeatedly invokes throughout the product‑development process.

Whenever engineers cite a "requirement" as the rationale for doing something, Musk would press them: "Who came up with this requirement?" If they replied, "The military requires it" or "The law requires it," that still wouldn't satisfy him. Musk insisted they name the individuals who had made those demands. "When we were discussing how to assess engine performance and how to determine whether a fuel tank meets specifications, he'd ask everyone, 'Why do we have to do this?'"

Tim Buzza said he used to be an employee at Boeing and later became SpaceX's vice president in charge of launch and test operations. "We'd say, 'It's what the military specifications call for.' And he'd ask, 'Who drafted it? Why is it required?'"

Musk repeatedly emphasizes that all requirements should be treated as suggestions; the only immutable principles are those dictated by the laws of physics. As he puts it, one must start from the essence of things, free oneself from the constraints of past experience, avoid over‑relying on analogies with similar phenomena, and, through layers of confusion, discern the true nature of matters.

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Editor/rice