How Does The World’s Richest Man Think…
You need to Understand First Principles Thinking for that…
“I certainly admire the discoveries of the great scientists. They’re discovering what already exists — it’s a deeper understanding of how the universe already works. That’s cool — but the universe already sort of knows that. What matters is knowledge in a human context.
What I’m trying to ensure is that knowledge in a human context is still possible in the future. So it’s sort of like — I’m more like the gardener, and then there are the flowers. If there’s no garden, there’s no flowers. I could try to be a flower in the garden, or I could try to make sure there is a garden. So I’m trying to make sure there is a garden, such that in the future, many Feynmans may bloom.” — Elon Musk (EM)
These few statements characterize EM’s thinking in the broadest manner and this thought process has been central to most of his decisions and choices. And for you to understand this a little deeper, you will need to first grasp the concept of First Principles Thinking (FPT).
In it’s most simplistic form, FPT is exhibited by kids when they play the WHY game. You too would have played this game with your parents or your teachers. This is how it goes -
Kid — Where does daylight come from?
Parent — From the sun.
Kid — Why is the sun yellow?
Parent — Because it is very hot.
Kid — Why is it very hot?
Parent — Because 🤨 … hmmm… it is all lava, molten, heat, etc.
Kid — Why is lava, molten, and heat there?
Parent — 🤯 …hmmm…
I am sure you get the drift but this is how First Principles Thinking Works. It’s like getting to the core of the matter, it’s like peeling the onion — one layer at a time. This is what you visualize scientists, geniuses, and Elon Musk to be. But, if you could think back in time, you too were this way. Filled with curiosity for subjects of your interest. Filled with Why after Why and more…
Let’s have the world’s most renowned physicist and Nobel Prize winner, Dr. Richard Feynman, give you an example of this way of thinking. This is how EM thinks too and you will get a very interesting glimpse of what is the difference between just “knowing” and “understanding”.
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First principles thinking is one of the best ways to reverse-engineer complicated situations and unleash creative possibility. Sometimes called reasoning from first principles, it’s a tool to help clarify complicated problems by separating the underlying ideas or facts from any assumptions based on them. What remain are the essentials. If you know the first principles of something, you can build the rest of your knowledge around them to produce something new. — Shane Parish in Mental Models Book 1
But that thinking needs an environment to sustain its nature, else the curiosity suffocates and dies. It needs happy teachers, who themselves are excited about the subject and curious about it, which is rare to find in our education system. It needs a structure that allows you to pursue subjects that interest you instead of subjects forced upon you, which is what is happening en masse.
When the environment, teachers, and structure aren’t encouraging creativity or curiosity, it’s no wonder that child-like enthusiasm gives way to adulthood’s boredom and lack of zest and zeal for life in general. No wonder you see a would-be happy painter spending their life as a lawyer and a would-be happy lawyer spending their life as a painter (from Tim Urban’s blog and this will show up again).
I will let the legend Seth Godin speak to you about First Principles Thinking and how it’s facing extinction at the hands of the current education and employment system and what needs to be done to preserve this culture —
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Please do watch this video for 3 reasons (in case you didn’t) #
You will realize just WHY you may not be feeling mentally and intellectually stimulated.
You will realize the methodology to put in place for your kids or for your employees in your company so that they show up, rise & shine.
You will be nudged into opening up for exploring and experimenting with ideas that interest you. This is a sure shot jab of energy to your daily existence.
No wonder Dr. Richard Feynman has expressed the following —
You only think you know, as a matter of fact. And most of your actions are based on incomplete knowledge and you really don’t know what it is all about, or what the purpose of the world is, or know a great deal of other things. It is possible to live and not know.
I don’t know what’s the matter with people: they don’t learn by understanding; they learn by some other way — by rote or something. Their knowledge is so fragile!
The cause of this shallow understanding is the Dogma in our prevalent systems. First, the definition as per google —
a: something held as an established opinion especially: a definite authoritative tenet.
b: a code of such tenets pedagogical dogma.
c: a point of view or tenet put forth as authoritative without adequate grounds.
Tim Urban, author of WaitButWhy (Mr. Elon Musk’s favorite Blog), will explain this further —
Dogma, unlike first principles reasoning, isn’t customized to the believer or her environment and isn’t meant to be critiqued and adjusted as things change. It’s not software to be coded — it’s a printed rulebook. Its rules may be originally based on reasoning by a certain kind of thinker in a certain set of circumstances, at a time far in the past or a place far away, or it may be based on no reasoning at all.
But that doesn’t matter because you’re not supposed to dig too deep under the surface anyway — you’re just supposed to accept it, embrace it, and live by it. No evidence needed. You may not like living by someone else’s dogma, but you’re left without much choice.
When your childhood attempts at understanding are met with “Because I said so,” and you absorb the implicit message “Your own reasoning capability is shit, don’t even try, just follow these rules so you don’t fuck your life up,” you grow up with little confidence in your own reasoning process.
When you’re never forced to build your own reasoning pathways, you’re able to skip the hard process of digging deep to discover your own values and the sometimes painful experience of testing those values in the real world and learning you want to adjust them — and so you grow up a total reasoning amateur.
Only strong reasoning skills can carve a unique life path, and without them, dogma will quickly have you living someone else’s life. Dogma doesn’t know you or care about you and is often completely wrong for you — it’ll have a would-be happy painter spending their life as a lawyer and a would-be happy lawyer spending their life as a painter.
There you go, Elon Musk’s secret sauce has been dished out to you in the clearest way possible i.e. His Reasoning Abilities a.k.a. his First Principles Thinking WHICH is lacking in many of us due to the influence of cultures, education, peer group and society we got exposed to or allowed ourselves to be exposed to.
“There’s a tremendous bias against taking risks. Everyone is trying to optimize their ass-covering.” — Elon Musk (EM)
Let’s look at Elon Musk’s journey, provided as snippets below —
Born in South Africa, but was inspired to be in the USA and found a way to reach there through Canada.
Starts ZIP2 during the Dotcom era and sells it to Compaq for USD 300 million, which pocketed EM USD 22 Mio. Sidenote — Was ousted as CEO and made CTO. Attempted a coup but failed.
Starts X.com to bring banking services online, merges it with Peter Thiel’s company Confiniti, to create Paypal. eBay acquires the company and EM pockets USD 180 Mio. Sidenote — Employees ain’t happy and get him ousted as CEO when he was leaving for his honeymoon, and Peter Thiel is made CEO. That’s the same story, repeating twice.
Starts SpaceX, betting a huge chunk of his personal wealth on it, and was almost on the verge of bankruptcy with 3 failed launches but still persists and doesn’t give up. In spite of the high probability of failure with all his capital being wiped off. The small odds pay off and he hits Gold.
TZero, a funny looking battery-charged car inspires him to come on board as an Investor in Tesla, founded by Martin Eberhard and Marc Tarpenning.
Eventually, takes over the company, and the CEO position and steers the company to its present-day success, with the help of a highly talented team.
You will need to read Ashley Vance’s book on Elon Musk and it’s titled ‘ELON MUSK’. Or you could go through Acquired Podcast which provides you 2 hours into the story of Tesla, its origins, its twists, and turns, its lucky breaks, its massive failures, and all the hype & mystery around the brand and its founder.
Some stories that stood out for me were —
Tesla wasn’t allowed to sell cars till they were commercially ready. So they started a club that would cost USD 85,000 for membership. As a part of being a member, the car (Roadster) comes free 😁 So technically, they were not selling the car and that was legally acceptable. We call this Maha Jugaad in India.
During the Great Financial Crisis of 2008, liquidity dries up and he is left with no choice but to go all-in with his personal wealth, almost all of it and he does. In spite of odds still against Tesla coming out as a Survivor. He takes a loan against his SpaceX holdings, sells shares of Solar City, and invests proceeds from his Sale of Ever Dream. And to top it all, he appears in Iron Man with Tony Stark (Robert Downey Jr.) as Elon Musk himself. 💣This reminds me of Buddhist calm in the middle of deafening chaos.
Texas doesn’t allow employees to be present in showrooms as Sales Staff and Tesla doesn’t want car agencies to sell Tesla since they have gone 100% online route. So Tesla owners themselves, take shifts at being volunteers at the Tesla Showroom to educate and guide prospective buyers 🤩 This is epic !!!
He is almost desperate for funding and comes very close to selling Tesla to Google for USD 6 billion. While the formal negotiations and board meetings are going on, he inspires 100s of his employees to do cold calling to take pre-booking orders for Tesla. Only a miracle would have saved the company and A Miracle does happen. The employees secure USD 562 million in Sales in 2013 and the Google deal is put off. 😇 Phew !!!
The list goes about the risk inherent in the company, the absurdity of valuations, lack of cash for operations, the bravado of the founder, the absolute cult-like following for the company and the founder — but the genius of Elon Musk shows up, time and time again.
In a Reddit AMA, someone asked Elon how he’s able to learn so fast. His response? “It is important to view knowledge as sort of a semantic tree — make sure you understand the fundamental principles, ie the trunk and big branches, before you get into the leaves/details.”
First Principles hints at Socratic Thinking, which goes as follows (taken from Shane Parish, Great Mental Models Book 1) —
Clarifying your thinking and explaining the origins of your ideas. (Why do I think this? What exactly do I think?)
Challenging assumptions. (How do I know this is true? What if I thought the opposite?)
Looking for evidence. (How can I back this up? What are the sources?)
Considering alternative perspectives. (What might others think? How do I know I am correct?)
Examining consequences and implications. (What if I am wrong? What are the consequences if I am?)
Questioning the original questions. (Why did I think that? Was I correct? What conclusions can I draw from the reasoning process?)
This is a lot of work, which goes against the grain of an easy life that comes with taking everything on face value, without challenging or questioning the set beliefs / assumptions / lingo in use. No wonder, many feel miserable in spite of having all the perks of a capitalist society at their disposal i.e. fancy car, lovely house, one wife, 2 kids, regular travels. The reason is the agency of being in control and that doesn’t come by accepting the set pattern pushed upon you by what others think is important.
As for Elon Musk — he is willing to put in the time, not just for showing up physically, but to show up mentally and emotionally, with intensity that very few can match up with. Foll. references from WaitButWhy blog posts highlight the intensity —
His brother Kimbal has said Elon would often read for 10 hours a day — a lot of science fiction and eventually, a lot of non-fiction too. By fourth grade, he was constantly buried in the Encyclopedia Britannica.
In college, he thought about what he wanted to do with his life, using as his starting point the question, “What will most affect the future of humanity?” The answer he came up with was a list of five things: “the internet; sustainable energy; space exploration, in particular the permanent extension of life beyond Earth; artificial intelligence; and reprogramming the human genetic code.”
In 2002, before the sale of PayPal even went through, Musk started voraciously reading about rocket technology, and later that year, with $100 million, he started one of the most unthinkable and ill-advised ventures of all time: a rocket company called SpaceX.
He could have retired post the successful exit from his first company i.e. Zip2. USD 22 million could have set him up for good. BUT HE DIDN’T. I am sure, he would have reasoned about the creature comforts that most mortals crave for i.e. House, Car, Family, Good Retirement, etc.
But that did not fit any of the goals he was after i.e. “the internet; sustainable energy; space exploration, in particular the permanent extension of life beyond Earth; artificial intelligence; and reprogramming the human genetic code.”
He could have retired after pocketing USD 180 Mio , post the successful exit of Paypal, BUT HE DIDN’T. He could have retired from the CEO positions at SpaceX or TESLA BUT HE DIDN’T. He didn’t need to work on the Boring Project or the Hyperloop BUT HE DIDN’T stop.
I don’t want to suffer from hindsight bias and give you an impression that I am another die hard fan of Tesla and Elon Musk. I am not, I don’t own Tesla stocks directly, I never have. But all this while, I have heard and read about EM, I just recently took on the subject of Understanding EM and that pursuit has taken me through a rabbit hole of a different kind.
It was equally impressive to hear / read about what others had to say about him —
One senior executive described interacting with Musk like this: “Any conversation’s fairly high stakes because he’ll be very opinionated, and he can go deeper than you expect or are prepared for or deeper than your knowledge goes on a given topic, and it does feel like a high wire act interacting with him, especially when you find yourself in a [gulp] technical disagreement.” The same executive, who had previously worked at a huge tech company, also called Musk “the most grounded billionaire I’ve ever worked with.” — Tim Urban
He is grounded and hence doesn’t mind making appearances in shows he enjoys. One of my favourites is his scene in Big Bang Theory —
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One employee close to Musk told me that after a press conference or a business negotiation, once in private he’d ask Musk what his real angle was and what he really thinks. Musk’s response would always be boring: “I think exactly what I said.” — Tim Urban
I eventually regained the ability to have adult human conversation, and we began what turned into a highly interesting and engaging two-hour discussion.This guy has a lot on his mind across a lot of topics. In this one lunch alone, we covered electric cars, climate change, artificial intelligence, the Fermi Paradox, consciousness, reusable rockets, colonizing Mars, creating an atmosphere on Mars, voting on Mars, genetic programming, his kids, population decline, physics vs. engineering, Edison vs. Tesla, solar power, a carbon tax, the definition of a company, warping spacetime and how this isn’t actually something you can do, nanobots in your bloodstream and how this isn’t actually something you can do, Galileo, Shakespeare, the American forefathers, Henry Ford, Isaac Newton, satellites, and ice ages — 😀 Tim Urban’s first meeting with EM
Now some of you may be thinking that EM is a legend, he is gifted, he is talented, some have even said ‘EM is like an alien from outer space’. But by saying that, you are missing the point, you may be missing the forest for the trees. The fact of this personality is that he is insanely curious about how things work. And it doesn’t stop at a shallow level of “knowing”, having read that few books or watched few videos.
It goes to a level of intensity that it is something to aspire for. How do you define a guy who reads about Rocket Technology from books and then goes on to build them 🤷🏻♂️ Now that’s the power of being willing to learn, willing to seek, willing to explore possibilities and that is only possible if you have the childlike curiosity to look around ask the question WHY ???
The above chart shows the Gold Price (XAU/USD) movements for the last 1 year. How do you think Elon Musk would think about this if he was an investor —
Why is Gold @ this level ?
Does it have to do with inflation/deflation/reflation?
What impact does the Fiscal Stimulus have on Gold?
Is it still an Inflation Hedge?
Is it still a good store of value if Gold was to get debased?
Are Central Bankers buying Gold or selling it?
What’s the status on supply of Gold and demand for it ?
Is it reacting in the same manner as it has earlier, when Fed opened it’s monetary and fiscal taps?
Just one chart on Gold, could invite so many questions. Now, if you were really curious, you might just get onto exploring these questions to get an understanding of the asset class called XAU.
It could take one or more books, few podcasts, one week of learning, expert opinion of 2–3 analysts/fund managers you may have access to and may be an exchange of ideas with few credible people in the industry over a call/Zoom. Put together, this is 2–4 weeks of work put in. And voila, you could become the Go To Man for XAU. Just like EM is for Electric Cars or launching Rockets in Space.
Question is — Are you curious enough ?
It’s easy to be curious about “Who Killed Katappa from Bahubali?” or “How did Michael Scoffield escape in Prison Break” or “What happens to Gaitonde in Sacred Games?” or “What’s the score in Aus vs India Test going on today?”. It’s rather lazy to feed ONLY this curiosity.
But if you had your reasoning faculties on full charge, then you would ask yourself the most fundamental questions —
Are you excelling in what you do ?
Are you upping your skills for the future threats to come?
Is your cash pile strong enough to make you a personal China Wall against adversities?
Have you invested in your relationships?
How am I complicit in making my goals not come true?
What do I need to be doing today/right now , that is in line with my goals 5 years down the line?
How would I want my life to look if a movie was made on me when I am 60?
Have I read anough about the most tragic failures that could have been avoided?
Have I learnt enough from the most successful people to apply those principles/toolkits to my own personal life?
“Brand is just a perception, and perception will match reality over time. Sometimes it will be ahead, other times it will be behind. But brand is simply a collective impression some have about a product.” — Elon Musk
You, Mr/Mrs __________ ___________ are a brand too. And everything you say/do defines the brand that you are building. You are the CEO — making decisions on allocation of your time, energy and money on projects that have long gestation periods.
You are also the CTO — making decisions on which technologies and tools to learn and deploy for your economic and personal gains.
You are also the CMO — making decisions on what would grow your personal brand, what relationships to build upon, what skills to acquire, how to make your online presence on social media.
You are also the CFO — making decisions on what saves you money and what makes you money.
You are also the HR Head — making decisions on prioritising relationships and investing on them so that the journey together is a very long one.
You may not have a spaceship to launch or a car company to challenge Toyotas and Fords of the world. But you have YOU and that’s a lot of work in itself !!!
“I would just question things… It would infuriate my parents… That I wouldn’t just believe them when they said something ’cause I’d ask them why. And then I’d consider whether that response made sense given everything else I knew.” — Elon Musk
He questions and reasons everything that comes below —
Being Elon Musk is all about Thinking Hard about your goals at large and problems at hand at this very moment. It’s not about sulking, worrying, fretting, regretting, grudging — its about ACTION in the NOW for a FUTURE in the TOMORROW that inspires you everyday to wake up and kick ass !!!
“Work like hell. I mean you just have to put in 80 to 100 hour weeks every week. [This] improves the odds of success. If other people are putting in 40 hour workweeks and you’re putting in 100 hour workweeks, then even if you’re doing the same thing, you know that you will achieve in four months what it takes them a year to achieve.” — EM
“I’m interested in things that change the world or that affect the future and wondrous, new technology where you see it, and you’re like, ‘Wow, how did that even happen? How is that possible?” — EM
Elon Musk has become the richest man in the world today and this post was inspired by him, his genius, his attitude and his vision.
Kudos to EM and looking forward to a better world in times to come, only because you and people like you believed in what’s possible !!!
Lot’s of love and luck.
Manish