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The main components of the first principles concept used by Elon Musk are:
1. Identify and define the problem: In Musk's case, it was the high cost of buying a rocket.
2. Break down the problem into its fundamental truths or principles: Musk realized that the raw materials for a rocket only cost around two percent of the price of a rocket.
3. Create new solutions from scratch based on these truths or principles: Musk decided to buy the raw materials and build a rocket himself, significantly reducing costs.
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In 2002, Elon Musk wanted to buy a rocket to begin his dream to send humans to Mars. However, the price to buy one cost as high as $65 million dollars. Musk used a concept called "first principles" to think about how he could reduce costs enough to solve the financing problem. It turns out the raw materials only cost around two percent of the price of a rocket, so he purchased the raw materials and built one himself. Musk was not only able to cut the cost to launch a rocket by 10x, but did it at a profit. As a result, SpaceX is now worth roughly $74 billion as of September 2021.
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Have you ever wanted to run a project like Elon Musk? What about the ability to predict a project’s success like a financial analyst at Goldman Sachs?...
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