Practising ‘first principles’
Having started my career with management consulting, I’m no stranger to the rallying cry of “let’s think first principles here”, but the term seems to be popping up in conversations, articles, podcasts a lot more of late. Don’t take my word for it, check out the Google Trends screenshot below (it’s actually starker for India alone).
I don't yet understand what’s caused the surge but I definitely find the concept being thrown around abundantly enough to explore its limits and limitations in everyday practice. As an ‘aspiring first principles thinker’, I write here about the generally accepted ‘rules’ of first principles thinking (challenge assumptions, complete the thought) as well as what comes in the way (ego) which leads us to the question of whether ‘first principles’ can truly exist outside of our biases and conditioning. If you’re farther along on the ‘first principles’ journey, suggest you skip forward to ‘ego’ directly.
1- Challenge all assumptions. Smell test: industry jargon, or words with ambiguous meaning, or broad-brush statements, more often than not carry implicit assumptions that need to be independently validated. Asking “what needs to be true for X to happen?” is one way to get to these assumptions. Eg. ‘I should build a new insurance product for this market because insurance is under-penetrated versus other countries with comparable GDP/capita’ — assumes the following (terms in italics need precise definitions):
(i) intrinsic unmet demand for this product’s value prop
(ii) a path to cash-efficient distribution
(iii) a basis to under-write easily for a new player
(iv) supporting infrastructure to service the new segments expected to come on board
(v) no regulatory barrier for a new player
They might all be true but it’s critical to think through and build conviction before committing time or capital to this project. Not all answers will be readily available but any red flags should show up. Laying out the core questions early also helps the team prioritize action items going forward.
2- Complete the thought.
(i) Go deeper to ‘challenge assumptions’ at every level — the Toyota Production System neatly packages this as the “5 whys” while solving a problem and the “5 hows” while creating a solution. Eg. As a founder, I worked on a social commerce platform to make purchase decisions easier with ‘honest’ reviews and ratings. If you’ve tried picking the right product via Amazon reviews in the last few years, you know it’s a complete shitshow. While we had confidence in the pain point we grappled with a big open question on the long-term operating model.
We will have honest video reviews on our platform — how?
We will create an incorruptible community of review creators — how? Creators will have negative incentives for putting up fake reviews — how? Creators will lose revenue when their audience sees repeated inaccurate assessment — how?
Creators will lose their following or have lower conversion rates on the products they recommend (ok, are we recreating Instagram?)
In other words: we had 3 choices of an operating model and none of them seemed likely to yield a large product company. If we democratize content creation that leads to the same ‘review corruption’ issue we see on Amazon today. If we add social circles where users follow ‘influencers’ they trust, we’re essentially recreating Instagram. If we create an in-house editorial team for reviews, that limits both the eventual scale of the company as well as the pace at which it can grow (wirecutter was the obvious analog and it got acquired for $30m in a much larger market!).
(ii) One simple test to ensure there are no gaps in thinking is to build the counter view. Ideally, seek out people with extremely divergent thoughts on the question to understand the roots of this divergence. The objective isn’t to align these views but to be more comprehensive about the knowns and the unknowns: which assumptions are at highest risk of failure? How do we prove/disprove them and get to course correction faster? Separately, the dissolution of ego that occurs while listening to opposing but equally ‘rational’ points of view and not having a clear answer is a reward in and of itself.
3- Don’t let ego get in the way — this is probably the least discussed but in my opinion the most important raw material of the critical thinking process. Thinking Fast and Slow and Influence are two fantastic books for an in-depth 101 on all the biases that the human mind is subject to but I’ll share the ones that have come up the most for me.
‘Fear’ of looking stupid when your initial answer doesn’t tally with what further digging might reveal; ‘Greed’ towards incentives that lie when a certain approach is followed or a certain answer is arrived at; ‘Envy’ that can unconsciously change the goalpost from doing what is right for you to attaining what someone else has. While these are symptoms of being driven by your own ego, another common slip is ‘Deference’ or giving undue weightage to other people’s ego: not critically questioning people we greatly admire or not voicing our disagreement because ‘X would know better’.
Pausing to ask these questions has helped me recognize when I’m being driven by ego: “Why am I chasing this [company, investor, partnership, hire, outcome, metric, conversation, etc]? Why does it matter to me? What happens if it doesn’t turn out the way I originally expected it to?” The other tell-tale sign of ego is shorter reaction times: when saying or doing something at that instant is more important than thinking through to make sure I’m being comprehensive enough in considering all alternatives and scenarios.
As a corollary, I would almost say patience is key to being truly rigorous in our pursuit of first principles. Taking the time to poke holes in our own logic, invite opposing thoughts, and eventually connecting the dots across various threads is what really expands our understanding of the world. The motivation to rush to answers can come from a variety of external or ego-related factors but is never rooted in truth-seeking.*
I wish I had concrete suggestions that were more quick fixes here but — meditation, practising brute-force self-awareness, reading about the history of the universe and trying to internalize our insignificance — are a few habits that have helped, though am still nowhere close to where I want to be on this dimension!
Finally, the most useful offshoot here is the realization that most complex questions don’t have a universal right or wrong answer: one can barely get to a right answer for one individual at a given point of time but almost never get it absolutely right for disparate systems of individuals through an extended period of time. When informed minds looking at the same data come to different conclusions on a narrowly defined question, the difference in opinion is really the difference in your irrational beliefs — or ‘perceived’ first principles!
These ‘irrational beliefs’, specifically as we think about founding or investment theses, range all the way from the more innocuous ‘customers will always pick a cheaper product or faster service, all other things being equal’ to the more contentious ‘all humans want complete financial autonomy’. Most of them can be traced back to conditioning: the religious beliefs in the household we grew up in, the ideological make-up of teachers, friends, relatives, the books we read and the movies/TV we consumed, perhaps even our genetic disposition. And this is truly fascinating because it implies that the most important decisions we make in life are not based on obvious data implications but on leaps of faith that we take basis influences we had little control over or intentionality about.**
Does this mean we are subject to a life governed by prejudice? Yes, unless we choose to proactively address it. The more divergent points of views we intentionally expose ourselves to, the more likely it is that we counter these pre-existing biases. When we start to see the flaws and fallacies in our own thinking is when we truly start listening with an open mind. And while first principles thinking won’t make the questions any simpler and we will all continue taking leaps of faith, knowing exactly why you're making a decision does make the answers more sustainable and resilient to external events.
*[Of course, some of these logic shortcuts exist towards efficiency, we’ve seen the pattern N times and so we won’t waste time rethinking the answer the ‘N+1’th time. As long as we know we are pattern matching at the right level and not just being lazy, leveraging learnings is simply a smart thing to do.]
**[I wonder if this is why the most powerful force on earth is religion — the easiest way to transmit operating principles (or moral codes) across disparate segments of the population and influence the everyday decisions of millions of people across a variety of contexts. It follows that in the absence of strong law enforcement, religion becomes key to maintaining order — where retributive justice is hard to ensure on earth, you need the heavens to step in!]
