When Elon Musk  and his team were trying to estimate how much the first SpaceX rockets would cost, they could have just looked at the products on the market. Instead, they figured out what the necessary parts of a rocket are and then found out how much the raw materials of those parts would cost. The result was startling – SpaceX could build a rocket for about 2% of the typical price.

Elon Musk’s approach to solving problems is to always start with the first principles. He says that often we go with analogies  – “They did it this way OR nobody has done it yet”. But with first principles, he boils it down to fundamentals – the first principles. What are the physics of it? How much time with it take? How much will it cost? Why will it not be possible?

Ashlee Vance mentions how Musk wanted to revamp the very idea of the automobile and build an energy network at the same time with a budget equivalent to what Ford and ExxonMobil spend on their annual holiday parties. Or how similarly SpaceX created avionics parts at the cost of the food at meetings about the cost of avionics parts at traditional firms. Similar stories were shared by Sergey Brin & Larry Page when they first started with Google and people said it was impossible, but they worked out the numbers and figured it could be done. As Larry Page quotes “Good Ideas are always crazy until they are not”. 

When you start with a large task or challenge – conventional wisdom usually answers that it is not possible to solve such a challenge. However, if you were to work out the basics and the numbers underlying the challenge – it is often doable. Next time you hear something like “Thats how it is” – try switching to first principles.