How Operating from First Principles Improved My Entrepreneurial Work
“It’s important to reason from first principles rather than by analogy.” — Elon Musk
What does it take to be a successful entrepreneur?
As the CEO of a startup for the last 4 years and a part-time advisor for 2 others, I think about this question multiple times a day.
From my experience — and also that of my fellow entrepreneurial friends — the biggest areas budding founders struggle with (and even seasoned vets) is decision-making and execution.
We either don’t know what to focus on or we aren’t able to get sh*t done.
At the end of the day, though there are exceptions and the challenges sometimes run deeper than that, if you struggle with making decisions and your execution is suboptimal, you’re not going to get very far.
When faced with these challenges, though simple, what helps me is looking at things from the first principles. Here is what Elon Musk has to say about it:
I think it’s important to reason from first principles rather than by analogy. The normal way we conduct our lives is we reason by analogy. [With analogy] we are doing this because it’s like something else that was done, or it is like what other people are doing.
To increase my performance I attempted to reason from the first principles about my work as a startup entrepreneur.
The best way to accomplish this from what I’ve learned is by dividing my work into 2 categories: strategy (decision making) and tactics (execution).
The system presented in this article will allow you to define what is important while making consistent and systematic improvements.
Strategy Layer 1: Define your world
Strategy starts with sensemaking.
Ask yourself: What is real? Do you have a materialistic worldview or do you prefer a more spiritual perspective?
Asking yourself these questions will serve as your map. While questions like- 'What is good?' and 'What are your values and goals?' will act as your North Star.
Strategy Layer 2: Choose which game to play
The next layer of strategy is which area or industry you decide to get involved in — or which “table” you sit at. Here is what Tony Hsieh of Zappos says about this:
“In business, one of the most important decisions for an entrepreneur or a CEO to make is what business to be in. It doesn’t matter how flawlessly a business is executed if it’s the wrong business or if it’s in too small a market. In a poker room, I could only choose which table I wanted to sit at. But in business, I realized that I didn’t have to sit at an existing table. I could define my own, or make the one that I was already at even bigger. (Or, just like in a poker room, I could always choose to change tables.)”
Consider asking advice from people who understand the industries or areas you are considering to work in.
Strategy Layer 3: Strategy of the game
After that, it’s all about the strategy of the game at the chosen table. Point A is your current situation, point B is your North Star. How do you get from point A to point B most efficiently? Playing the game is all about the 80/20 rule, finding the lever that, when pushed and executed well, brings disproportional results.
Start with an easy prioritization exercise. The day before, look at your to-do list and arrange the tasks in the order of importance. Next day, wake up and start with the most important and unpleasant one.
Strategy Layer 4: Learning
The last layer of strategy is learning. To me, learning is about iterating and broadening horizons. My main tool for broadening horizons is reading books. Here is what Charlie Munger, the partner of Warren Buffett has to say about reading books:
“In my whole life, I have known no wise people (over a broad subject matter area) who didn’t read all the time — none, zero.”
As for iterating, I have a document where I write down everything that seems most important to me: current strategy, tactics, values, goals, projects, strengths, questions, etc. Not just for my startup, but for my life in general. This allows me to consciously revisit this file from time to time and edit it whenever I find a way to improve my thinking.
© Photo by Dima Syrotkin
If you want to try it out, start by checking the book “Principles” by Ray Dalio. But for the purpose of this article, in a nutshell, here is what I do: I have a simple Google Doc, currently 6 pages.
I started by adding anything that I thought is important, concisely, and clustering those things under headlines. I.e. I listed my top 7 values, my 5 current projects and what I want to get out of them, 10 of my personality strengths, etc.
I believe that the format is not important, the important part is putting the most significant things down, concisely.
Once that is done, it’s easy to review the list once per month and reflect on what you have learned that month.
At least in my case, it served as a private document that I don’t share but it could probably also serve as a tool for building a mutual understanding between co-founders.
The following might seem almost like general advice for life. Nonetheless, for me, it was crucial to nail the following tactical questions. You can probably go a long way just with superb strategy, but I believe that managing your execution will make you go further and, often, also go a lot faster.
Tactics Layer 1: Physical Health
The main tactical consideration for me is health. I divide it into physical and mental health for convenience. On the physical side, I discovered that the basics are most important: food, exercise, and sleep.
And to nail the basics you need to develop robust habits: recommend checking the book ‘Atomic Habits’ by James Clear.
Tactics Layer 2: Mental Health
On the mental side, my main cornerstone principle is facing my feelings head-on. I find that as soon as I indulge in escapism (i.e. movies and TV series in my case), my problems only tend to accumulate.
If I sit with myself, in anger, sadness, and boredom, I tend to digest my emotions a lot faster and find needed solutions.
Tactics Layer 3: Work Ethic
The next important part of tactics for me is work ethic. I always aim to work more. Should you work hard or smart? Depends on your goals, but if you are ambitious, I would say both. There are probably examples of success stories of people who’ve worked only 4-hour workweeks, but at least to me, those seem more of an exception.
A piece of advice on working hard. What worked wonders for me lately is (1) changing where I work as a way to break procrastination habits and (2) planning the next day hour by hour in the evening and visualizing what I am going to do.
Tactics Layer 4: Relationships
Lastly, I pay a lot of attention to relationships. Friends and family, but not only. Having a support group has always been crucial for me. Having a mentor, therapist or coach seems to be helpful. Currently, a big part of my relationship boost comes from being a member of an online community of founders called GrowthClub.
It might be helpful to think from the ground up about the work you do, both from strategic and tactical standpoints. In terms of strategy, I try to make sense of the world, choose the table I want to sit at, find the leverage, and constantly learn. On the side of tactics, my considerations are physical and mental health, work ethic, and relationships.
I hope some of these first principle suggestions work for you as well as they have worked for me.
Success comes to those who get the basics right.
Originally published here.
My aim is to contribute to humanity's development through the levers of (1) personal development and education, (2) human longevity, and (3) political and economic systems. Interests: coaching, developmental psychology, self-managing organizations (Teal, Holacracy), longevity, aging, politics, economics, history, philosophy, metamodernism, China, AGI, meditation. I love meeting highly ambitious people. Are you one? Let's connect!