First-principles Thinking in Building Products and Startups

For any startup, the goal is to build products that will solve the problems that users face every day. Those people who create products have to quickly make decisions with the available data. They have to do so daily to make sure that the product has value for users.

With limited resources and ever-changing trends, it is difficult for product creators to always make the right decisions. Using first-principles thinking can help product creators to make faster and more accurate decisions!

Understanding the Fundamental Principles

What exactly is first-principles thinking? Here is the simplest explanation: it is all about examining every possible known assumption of a problem and creating a solution from the ground-up. Elon Musk is a strong promoter of first principles thinking. Musk describes it as “boiling things down to the most fundamental truths and then reasoning up from there”.

Let's take a closer look at how to think from first principles. There are three main important things to remember about this concept:

• Question everything
• Do not make assumptions
• Adopt this culture in your team

1. Question Everything

As exciting as it is to come up with a functioning product, that is not the only thing to think about. It is wrong to assume that people will use your product just because you feel satisfied with your results.

With first principles thinking, you can ask yourself a series of questions that can help you to make better business decisions. This can help you to build a product that would be as valuable to users as it is to you. This can help you to learn how to build your own business that will keep growing over time. General questions you can ask include:

• Why would anyone want to use my product?
• What will I offer that other competitors do not provide?
• Is my product going to significantly impact people’s lives?
• Will people be willing to pay to use my product?
• Would they still use my product if they did not know me?

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These questions apply to both brand new or existing products. But it doesn’t end here. After you have answered these questions, you have to go deeper. Breaking down each problem will help you create better solutions. Seeing potential problems early on will help you to create solutions early on. Additional questions you can ask yourself about different aspects of your product are as follows:

Market

• What is the current size of the market?
• What is the right audience for our product?
• Do we have the attention of enough people?
• Are we reaching the right people?
• Is this product going to be successful on the market?
• Is the market slow or too mature for our product?

Product

• Is our product going to be of any use to users?
• Will it be easy to use?
• Does it function smoothly at all times?
• Are users happy with it?
• Will users encourage others to use our product?
• How many stars would users give the product?
• How would users feel if the product was taken away?
• Is the product what we promised users?
• Can users trust us to build a product that helps them solve problems?

Pricing Model

• Are users willing to pay for it?
• What do users think about the cost of the product?
• Why are users willing to pay for the product?
• Is the product too expensive?

Development

• Is it possible to create an MVP without wasting a lot of time?
• How will building a framework impact the final product?
• How can we adapt our product to ever-growing changes on the market?
• Does our budget allow us to hire Python developers?

2. Do Not Make Assumptions

It is very easy to make assumptions that are what many startups do. Common assumptions include:

• The market size
• Business growth
• Users will like the product
• Users will bring in more users
• Users will pay for the product

The problem with making assumptions is that they are usually far from the truth. First-principles thinking shows that each problem can be broken down into smaller solvable parts. However, this is a very complex and mentally draining process. This is a great responsibility as being unprepared can lead to unwanted results.

It would be wrong to assume that ideas would automatically solve problems. For example, saying that a solution is correct just because it has worked in the past. Also using methods that competitors might have used to tackle a problem is not a good approach. Instead, you should focus on coming up with a solution, specifically for the problem you are dealing with.

The concept of first principles thinking gives you an idea of what would happen if you did certain things. It also applies to startups that faced rapid growth. The fact that you achieved fast growth doesn’t necessarily mean that the same will happen whenever you use the same approach to solve problems. The only way to achieve growth is by using different approaches to solving problems.

Information changes things significantly. So always try:

• To gather information to create and test hypotheses.
• Learning about what others used (and how it turned out can help you come up with something better).
• Making detailed research, it will be easier for you to avoid mistakes that other people made.

It will also help you to find better alternatives to dealing with the problems you may be facing. This helps you to create a product that people will use not only now but even when there are new trends on the market.

3. Adopt the Culture in Your Team

The only way you can make sure you keep using this approach is to encourage everyone on your team to use it. Culture is not taught. It is what people do on a daily-to-day basis. There are two ways of adopting the first-principles thinking culture on your team:

1. Creating an environment where team members are held accountable. This forces people to be more ready to handle problems should any occur. Having a faster way to predict potential problems leads to fewer errors.
2. Making sure that team leaders use first-principles thinking. People will have to use this approach especially if leaders are constantly demanding this from them. Because this becomes the norm, everyone on the team will gradually learn and improve their ability at using first principles thinking.
3. First-principles thinking is all about promoting a working environment where everyone on the team is free to ask questions. This can only happen if the leaders trust their teams to come up with great ideas. It is the only way for people to ask questions that would improve the final product. If there is no trust, it is the same as having the leaders come up with ideas and telling the other members to execute the given orders.

Another way of adopting this culture is by promoting a practice where everyone on the team understands how to set goals. For higher chances of success, make sure that the goal-setting process is transparent and doesn’t move too fast.

Many startups have trouble with setting goals. Thinking that creating parameters for setting goals is only for huge corporations is a wrong assumption. So setting goals should not be done randomly. It should be done after researching a product, the market, and the cost of development.

Final Thoughts

First-principles thinking can help product managers to ask the right questions when pursuing new products. Instead of working on a hunch or what has been done before, this concept forces leaders to approach problems from the ground up.

Asking the right questions allows you to create smaller solvable problems. It becomes easier to predict and prepare for future problems. It is important to never make assumptions. Try to make your research, see what others have done so that you can come up with more effective solutions.

Lastly, you have to adopt a first-principles thinking culture on your team. This improves overall results. For more information, you may contact StarNavi and find out how to succeed despite building the most impossible startups. Our approach will help you solve complex problems and exhibit ubiquity by breaking down anything to its most basic and primary elements!

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