What the Hell Are First Principles? Breaking the Buzzword

This is the next piece on first principles and my attempt to understand them. Some of the terms are introduced in the previous post, Nature, Nurture, and Niceties if you care to give that a read.

The culture grabs hold of these terms and twists them up. They get inserted into every conversation, and we’re left with confusion.

Gaslighting.

Literally.

Optionality.

And now, first principles.

As Peter Thiel has pointed out, most people reason by analogy—copying what’s already been done—but true innovation comes from first principles. Thiel argues that asking, “What is fundamentally true?” allows entrepreneurs to break free from conventional wisdom and create something new. Yet, we see people using the term loosely, which has me feeling like Inigo Montoya, “You keep using that word. I do not think it means what you think it means.”

Princess Bride meme: You Keep Using That Word... — Princess Bride

First principles strip things to their core truths, but when most people say they are working from first principles, what they really mean are guiding principles. Values.

When Amazon was getting started, they agreed on five core values. Customer obsession, frugality, bias for action, ownership, and a high bar for talent. They later added a sixth value, innovation.

Values are important. They are helpful. And they are not first principles. Amazon didn’t thrive because they used old doors as desks.

The first principle that allowed Amazon to be a success was the elimination of physical constraints. You would no longer walk the aisles looking for “that one business book by the Harvard professor.” You could search, find, and order exactly what you needed.

Barnes & Noble didn’t understand this principle. They looked at the world of books and retail as a linear bet. Open one more store, make it slightly larger, add a Starbucks, and increase sales as a percentage of the total. But, as Ty Webb said in Caddyshack, “In one physical model of the universe, the shortest distance between two points is a straight line, in the opposite direction.”

That’s what Bezos could see that other retailers couldn’t. The physical model of the universe, at least the retail universe. Instead of more stores, he wanted no stores. Bezos has often spoken about this approach, emphasizing first principles over reasoning by analogy. For Amazon, reasoning from an immutable truth helped them reshaped retail.

And like Ty Webb, he made the putt. Well, he made all but one.

Barnes and Noble was left on the sidelines, staring, like Danny Noonan, in disbelief.

In the non-physical world, we are told of first principles like “story is king” from Pixar’s Ed Catmull. This is a guiding principle, a value, that he is calling a first principle. Ed is a genius, Pixar is amazing, but we all know that story isn’t king. After all, Cocaine Bear exists.

No, Pixar’s real breakthrough was creating the machine that makes the movies. They had terrific writers, but so did Disney. Pixar created tools like RenderMan, that turned their imagined ideas into code, and then pixels. A system that allowed animation to scale. In their set of tools were the physical laws of light, motion, and shading. They created animated worlds that followed the laws of nature.

But yes, story is still important—it’s just not the bedrock principle Pixar might think it is. Their value of “story is king” guided their culture, but their success came from grounding their work in the fundamental truths of technology and physics.

Most households operate via story, describing a principled hierarchy, and they are better for it. We teach our children principles. Not just a chore, taking the garbage cans to the curb, but keeping a tidy house. Why a tidy house? Clarity of mind and improved mood, not to mention sanitary living quarters.

Stephen Covey advocates for this type of parenting. Teach the kids intention rather than recipes and compliance.

In The 7 Habits of Highly Effective People, he tells a story about his son’s growth as he learned to take care of their yard. Covey didn’t give his son a step-by-step guide to yard care, he didn’t try to inspire a particular outcome with a stack of Sunset Magazines, he just gave him the general guideline; keep the yard “green and clean.” He left the recipe up to him.

Some of us might be tempted to tell the kid, “Monday, weed for 30 minutes. Tuesday, rake the leaves, Wednesday, mow the lawn,” and so forth. But when kids learn the principle, rather than just the recipe, they become more adaptable. They take ownership, they get creative, and if you really teach them well, they start to see things differently.

They can move to the high deserts of Prescott, to the jungles of Hilo, and that principle holds true. Green and clean.

In Covey’s terminology, you’ve equipped them with a compass. In First Things First, Covey writes, “The clock represents our commitments, appointments, schedules, goals, activities—what we do with, and how we manage our time. The compass represents our vision, values, principles, mission, conscience, direction—what we feel is important and how we lead our lives.”

The compass, guiding principles, fall somewhere around those Laws of the Tribe. They provide direction while allowing flexibility in execution.

But even more potent than these stories, are fundamental truths.

Amazon didn’t just innovate—they rewrote retail’s recipe. Next, we’ll see how Elon Musk took first principles into orbit.