Tag: Elon Musk

First Principles: The Building Blocks of True Knowledge

First-principles thinking is one of the best ways to reverse-engineer complicated problems and unleash creative possibility. Sometimes called “reasoning from first principles,” the idea is to break down complicated problems into basic elements and then reassemble them from the ground up. It’s one of the best ways to learn to think for yourself, unlock your creative potential, and move from linear to non-linear results.

This approach was used by the philosopher Aristotle andsup is used now by Elon Musk and Charlie Munger. It allows them to cut through the fog of shoddy reasoning and inadequate analogies to see opportunities that others miss.

“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!”

— Richard Feynman

The Basics

A first principle is a foundational proposition or assumption that stands alone. We cannot deduce first principles from any other proposition or assumption.

Aristotle, writing[1] on first principles, said:

In every systematic inquiry (methodos) where there are first principles, or causes, or elements, knowledge and science result from acquiring knowledge of these; for we think we know something just in case we acquire knowledge of the primary causes, the primary first principles, all the way to the elements.

Later he connected the idea to knowledge, defining first principles as “the first basis from which a thing is known.”[2]

The search for first principles is not unique to philosophy. All great thinkers do it.

Reasoning by first principles removes the impurity of assumptions and conventions. What remains is the essentials. It’s one of the best mental models you can use to improve your thinking because the essentials allow you to see where reasoning by analogy might lead you astray.

The Coach and the Play Stealer

My friend Mike Lombardi (a former NFL executive) and I were having dinner in L.A. one night, and he said, “Not everyone that’s a coach is really a coach. Some of them are just play stealers.”

Every play we see in the NFL was at some point created by someone who thought, “What would happen if the players did this?” and went out and tested the idea. Since then, thousands, if not millions, of plays have been created. That’s part of what coaches do. They assess what’s physically possible, along with the weaknesses of the other teams and the capabilities of their own players, and create plays that are designed to give their teams an advantage.

The coach reasons from first principles. The rules of football are the first principles: they govern what you can and can’t do. Everything is possible as long as it’s not against the rules.

The play stealer works off what’s already been done. Sure, maybe he adds a tweak here or there, but by and large he’s just copying something that someone else created.

While both the coach and the play stealer start from something that already exists, they generally have different results. These two people look the same to most of us on the sidelines or watching the game on the TV. Indeed, they look the same most of the time, but when something goes wrong, the difference shows. Both the coach and the play stealer call successful plays and unsuccessful plays. Only the coach, however, can determine why a play was successful or unsuccessful and figure out how to adjust it. The coach, unlike the play stealer, understands what the play was designed to accomplish and where it went wrong, so he can easily course-correct. The play stealer has no idea what’s going on. He doesn’t understand the difference between something that didn’t work and something that played into the other team's strengths.

Musk would identify the play stealer as the person who reasons by analogy, and the coach as someone who reasons by first principles. When you run a team, you want a coach in charge and not a play stealer. (If you’re a sports fan, you need only look at the difference between the Cleveland Browns and the New England Patriots.)

We’re all somewhere on the spectrum between coach and play stealer. We reason by first principles, by analogy, or a blend of the two.

Another way to think about this distinction comes from another friend, Tim Urban. He says[3] it’s like the difference between the cook and the chef. While these terms are often used interchangeably, there is an important nuance. The chef is a trailblazer, the person who invents recipes. He knows the raw ingredients and how to combine them. The cook, who reasons by analogy, uses a recipe. He creates something, perhaps with slight variations, that’s already been created.

The difference between reasoning by first principles and reasoning by analogy is like the difference between being a chef and being a cook. If the cook lost the recipe, he’d be screwed. The chef, on the other hand, understands the flavor profiles and combinations at such a fundamental level that he doesn’t even use a recipe. He has real knowledge as opposed to know-how.


So much of what we believe is based on some authority figure telling us that something is true. As children, we learn to stop questioning when we’re told “Because I said so.” (More on this later.) As adults, we learn to stop questioning when people say “Because that’s how it works.” The implicit message is “understanding be damned — shut up and stop bothering me.” It’s not intentional or personal. OK, sometimes it’s personal, but most of the time, it’s not.

If you outright reject dogma, you often become a problem: a student who is always pestering the teacher. A kid who is always asking questions and never allowing you to cook dinner in peace. An employee who is always slowing things down by asking why.

When you can’t change your mind, though, you die. Sears was once thought indestructible before Wal-Mart took over. Sears failed to see the world change. Adapting to change is an incredibly hard thing to do when it comes into conflict with the very thing that caused so much success. As Upton Sinclair aptly pointed out, “It is difficult to get a man to understand something, when his salary depends on his not understanding it.” Wal-Mart failed to see the world change and is now under assault from Amazon.

If we never learn to take something apart, test the assumptions, and reconstruct it, we end up trapped in what other people tell us — trapped in the way things have always been done. When the environment changes, we just continue as if things were the same.

First-principles reasoning cuts through dogma and removes the blinders. We can see the world as it is and see what is possible.

When it comes down to it, everything that is not a law of nature is just a shared belief. Money is a shared belief. So is a border. So are bitcoins. The list goes on.

Some of us are naturally skeptical of what we’re told. Maybe it doesn’t match up to our experiences. Maybe it’s something that used to be true but isn’t true anymore. And maybe we just think very differently about something.

“To understand is to know what to do.”

— Wittgenstein

Techniques for Establishing First Principles

There are many ways to establish first principles. Let’s take a look at a few of them.

Socratic Questioning

Socratic questioning can be used to establish first principles through stringent analysis. This a disciplined questioning process, used to establish truths, reveal underlying assumptions, and separate knowledge from ignorance. The key distinction between Socratic questioning and normal discussions is that the former seeks to draw out first principles in a systematic manner. Socratic questioning generally follows this process:

  1. Clarifying your thinking and explaining the origins of your ideas (Why do I think this? What exactly do I think?)
  2. Challenging assumptions (How do I know this is true? What if I thought the opposite?)
  3. Looking for evidence (How can I back this up? What are the sources?)
  4. Considering alternative perspectives (What might others think? How do I know I am correct?)
  5. Examining consequences and implications (What if I am wrong? What are the consequences if I am?)
  6. Questioning the original questions (Why did I think that? Was I correct? What conclusions can I draw from the reasoning process?)

This process stops you from relying on your gut and limits strong emotional responses. This process helps you build something that lasts.

“Because I Said So” or “The Five Whys”

Children instinctively think in first principles. Just like us, they want to understand what’s happening in the world. To do so, they intuitively break through the fog with a game some parents have come to hate.




Here’s an example that has played out numerous times at my house:

“It’s time to brush our teeth and get ready for bed.”


“Because we need to take care of our bodies, and that means we need sleep.”

“Why do we need sleep?”

“Because we’d die if we never slept.”

“Why would that make us die?”

“I don’t know; let’s go look it up.”

Kids are just trying to understand why adults are saying something or why they want them to do something.

The first time your kid plays this game, it’s cute, but for most teachers and parents, it eventually becomes annoying. Then the answer becomes what my mom used to tell me: “Because I said so!” (Love you, Mom.)

Of course, I’m not always that patient with the kids. For example, I get testy when we’re late for school, or we’ve been travelling for 12 hours, or I’m trying to fit too much into the time we have. Still, I try never to say “Because I said so.”

People hate the “because I said so” response for two reasons, both of which play out in the corporate world as well. The first reason we hate the game is that we feel like it slows us down. We know what we want to accomplish, and that response creates unnecessary drag. The second reason we hate this game is that after one or two questions, we are often lost. We actually don’t know why. Confronted with our own ignorance, we resort to self-defense.

I remember being in meetings and asking people why we were doing something this way or why they thought something was true. At first, there was a mild tolerance for this approach. After three “whys,” though, you often find yourself on the other end of some version of “we can take this offline.”

Can you imagine how that would play out with Elon Musk? Richard Feynman? Charlie Munger? Musk would build a billion-dollar business to prove you wrong, Feynman would think you’re an idiot, and Munger would profit based on your inability to think through a problem.

“Science is a way of thinking much more than it is a body of knowledge.”

— Carl Sagan

Examples of First Principles in Action

So we can better understand how first-principles reasoning works, let’s look at four examples.

Elon Musk and SpaceX

Perhaps no one embodies first-principles thinking more than Elon Musk. He is one of the most audacious entrepreneurs the world has ever seen. My kids (grades 3 and 2) refer to him as a real-life Tony Stark, thereby conveniently providing a good time for me to remind them that by fourth grade, Musk was reading the Encyclopedia Britannica and not Pokemon.

What’s most interesting about Musk is not what he thinks but how he thinks:

I think people’s thinking process is too bound by convention or analogy to prior experiences. It’s rare that people try to think of something on a first principles basis. They’ll say, “We’ll do that because it’s always been done that way.” Or they’ll not do it because “Well, nobody’s ever done that, so it must not be good. But that’s just a ridiculous way to think. You have to build up the reasoning from the ground up—“from the first principles” is the phrase that’s used in physics. You look at the fundamentals and construct your reasoning from that, and then you see if you have a conclusion that works or doesn’t work, and it may or may not be different from what people have done in the past.[4]

His approach to understanding reality is to start with what is true — not with his intuition. The problem is that we don’t know as much as we think we do, so our intuition isn’t very good. We trick ourselves into thinking we know what’s possible and what’s not. The way Musk thinks is much different.

Musk starts out with something he wants to achieve, like building a rocket. Then he starts with the first principles of the problem. Running through how Musk would think, Larry Page said in an

interview, “What are the physics of it? How much time will it take? How much will it cost? How much cheaper can I make it? There’s this level of engineering and physics that you need to make judgments about what’s possible and interesting. Elon is unusual in that he knows that, and he also knows business and organization and leadership and governmental issues.”[5]

Rockets are absurdly expensive, which is a problem because Musk wants to send people to Mars. And to send people to Mars, you need cheaper rockets. So he asked himself, “What is a rocket made of? Aerospace-grade aluminum alloys, plus some titanium, copper, and carbon fiber. And … what is the value of those materials on the commodity market? It turned out that the materials cost of a rocket was around two percent of the typical price.”[6]

Why, then, is it so expensive to get a rocket into space? Musk, a notorious self-learner with degrees in both economics and physics, literally taught himself rocket science. He figured that the only reason getting a rocket into space is so expensive is that people are stuck in a mindset that doesn’t hold up to first principles. With that, Musk decided to create SpaceX and see if he could build rockets himself from the ground up.

In an interview with Kevin Rose, Musk summarized his approach:

I think it's important to reason from first principles rather than by analogy. So the normal way we conduct our lives is, we reason by analogy. We are doing this because it's like something else that was done, or it is like what other people are doing… with slight iterations on a theme. And it's … mentally easier to reason by analogy rather than from first principles. First principles is kind of a physics way of looking at the world, and what that really means is, you … boil things down to the most fundamental truths and say, “okay, what are we sure is true?” … and then reason up from there. That takes a lot more mental energy.[7]

Musk then gave an example of how Space X uses first principles to innovate at low prices:

Somebody could say — and in fact people do — that battery packs are really expensive and that's just the way they will always be because that's the way they have been in the past. … Well, no, that's pretty dumb… Because if you applied that reasoning to anything new, then you wouldn't be able to ever get to that new thing…. you can't say, … “oh, nobody wants a car because horses are great, and we're used to them and they can eat grass and there’s lots of grass all over the place and … there's no gasoline that people can buy….”

He then gives a fascinating example about battery packs:

… they would say, “historically, it costs $600 per kilowatt-hour. And so it's not going to be much better than that in the future. … So the first principles would be, … what are the material constituents of the batteries? What is the spot market value of the material constituents? … It’s got cobalt, nickel, aluminum, carbon, and some polymers for separation, and a steel can. So break that down on a material basis; if we bought that on a London Metal Exchange, what would each of these things cost? Oh, jeez, it's … $80 per kilowatt-hour. So, clearly, you just need to think of clever ways to take those materials and combine them into the shape of a battery cell, and you can have batteries that are much, much cheaper than anyone realizes.


After studying the psychology of virality, Jonah Peretti founded BuzzFeed in 2006. The site quickly grew to be one of the most popular on the internet, with hundreds of employees and substantial revenue.

Peretti figured out early on the first principle of a successful website: wide distribution. Rather than publishing articles people should read, BuzzFeed focuses on publishing those that people want to read. This means aiming to garner maximum social shares to put distribution in the hands of readers.

Peretti recognized the first principles of online popularity and used them to take a new approach to journalism. He also ignored SEO, saying, “Instead of making content robots like, it was more satisfying to make content humans want to share.”[8] Unfortunately for us, we share a lot of cat videos.

A common aphorism in the field of viral marketing is, “content might be king, but distribution is queen, and she wears the pants” (or “and she has the dragons”; pick your metaphor). BuzzFeed’s distribution-based approach is based on obsessive measurement, using A/B testing and analytics.

Jon Steinberg, president of BuzzFeed, explains the first principles of virality:

Keep it short. Ensure [that] the story has a human aspect. Give people the chance to engage. And let them react. People mustn’t feel awkward sharing it. It must feel authentic. Images and lists work. The headline must be persuasive and direct.

Derek Sivers and CD Baby

When Sivers founded his company CD Baby, he reduced the concept down to first principles. Sivers asked, What does a successful business need? His answer was happy customers.

Instead of focusing on garnering investors or having large offices, fancy systems, or huge numbers of staff, Sivers focused on making each of his customers happy. An example of this is his famous order confirmation email, part of which reads:

Your CD has been gently taken from our CD Baby shelves with sterilized contamination-free gloves and placed onto a satin pillow. A team of 50 employees inspected your CD and polished it to make sure it was in the best possible condition before mailing. Our packing specialist from Japan lit a candle and a hush fell over the crowd as he put your CD into the finest gold-lined box money can buy.

By ignoring unnecessary details that cause many businesses to expend large amounts of money and time, Sivers was able to rapidly grow the company to $4 million in monthly revenue. In Anything You Want, Sivers wrote:

Having no funding was a huge advantage for me.
A year after I started CD Baby, the dot-com boom happened. Anyone with a little hot air and a vague plan was given millions of dollars by investors. It was ridiculous. …
Even years later, the desks were just planks of wood on cinder blocks from the hardware store. I made the office computers myself from parts. My well-funded friends would spend $100,000 to buy something I made myself for $1,000. They did it saying, “We need the very best,” but it didn't improve anything for their customers. …
It's counterintuitive, but the way to grow your business is to focus entirely on your existing customers. Just thrill them, and they'll tell everyone.

To survive as a business, you need to treat your customers well. And yet so few of us master this principle.

Employing First Principles in Your Daily Life

Most of us have no problem thinking about what we want to achieve in life, at least when we’re young. We’re full of big dreams, big ideas, and boundless energy. The problem is that we let others tell us what’s possible, not only when it comes to our dreams but also when it comes to how we go after them. And when we let other people tell us what’s possible or what the best way to do something is, we outsource our thinking to someone else.

The real power of first-principles thinking is moving away from incremental improvement and into possibility. Letting others think for us means that we’re using their analogies, their conventions, and their possibilities. It means we’ve inherited a world that conforms to what they think. This is incremental thinking.

When we take what already exists and improve on it, we are in the shadow of others. It’s only when we step back, ask ourselves what’s possible, and cut through the flawed analogies that we see what is possible. Analogies are beneficial; they make complex problems easier to communicate and increase understanding. Using them, however, is not without a cost. They limit our beliefs about what’s possible and allow people to argue without ever exposing our (faulty) thinking. Analogies move us to see the problem in the same way that someone else sees the problem.

The gulf between what people currently see because their thinking is framed by someone else and what is physically possible is filled by the people who use first principles to think through problems.

First-principles thinking clears the clutter of what we’ve told ourselves and allows us to rebuild from the ground up. Sure, it’s a lot of work, but that’s why so few people are willing to do it. It’s also why the rewards for filling the chasm between possible and incremental improvement tend to be non-linear.

Let’s take a look at a few of the limiting beliefs that we tell ourselves.

“I don’t have a good memory.” [10]
People have far better memories than they think they do. Saying you don’t have a good memory is just a convenient excuse to let you forget. Taking a first-principles approach means asking how much information we can physically store in our minds. The answer is “a lot more than you think.” Now that we know it’s possible to put more into our brains, we can reframe the problem into finding the most optimal way to store information in our brains.

“There is too much information out there.”
A lot of professional investors read Farnam Street. When I meet these people and ask how they consume information, they usually fall into one of two categories. The differences between the two apply to all of us. The first type of investor says there is too much information to consume. They spend their days reading every press release, article, and blogger commenting on a position they hold. They wonder what they are missing. The second type of investor realizes that reading everything is unsustainable and stressful and makes them prone to overvaluing information they’ve spent a great amount of time consuming. These investors, instead, seek to understand the variables that will affect their investments. While there might be hundreds, there are usually three to five variables that will really move the needle. The investors don’t have to read everything; they just pay attention to these variables.

“All the good ideas are taken.”
A common way that people limit what’s possible is to tell themselves that all the good ideas are taken. Yet, people have been saying this for hundreds of years — literally — and companies keep starting and competing with different ideas, variations, and strategies.

“We need to move first.”
I’ve heard this in boardrooms for years. The answer isn’t as black and white as this statement. The iPhone wasn’t first, it was better. Microsoft wasn’t the first to sell operating systems; it just had a better business model. There is a lot of evidence showing that first movers in business are more likely to fail than latecomers. Yet this myth about the need to move first continues to exist.

Sometimes the early bird gets the worm and sometimes the first mouse gets killed. You have to break each situation down into its component parts and see what’s possible. That is the work of first-principles thinking.

“I can’t do that; it’s never been done before.”
People like Elon Musk are constantly doing things that have never been done before. This type of thinking is analogous to looking back at history and building, say, floodwalls, based on the worst flood that has happened before. A better bet is to look at what could happen and plan for that.

“As to methods, there may be a million and then some, but principles are few. The man who grasps principles can successfully select his own methods. The man who tries methods, ignoring principles, is sure to have trouble.”

— Harrington Emerson


The thoughts of others imprison us if we’re not thinking for ourselves.

Reasoning from first principles allows us to step outside of history and conventional wisdom and see what is possible. When you really understand the principles at work, you can decide if the existing methods make sense. Often they don’t.

Reasoning by first principles is useful when you are (1) doing something for the first time, (2) dealing with complexity, and (3) trying to understand a situation that you’re having problems with. In all of these areas, your thinking gets better when you stop making assumptions and you stop letting others frame the problem for you.

Analogies can’t replace understanding. While it’s easier on your brain to reason by analogy, you’re more likely to come up with better answers when you reason by first principles. This is what makes it one of the best sources of creative thinking. Thinking in first principles allows you to adapt to a changing environment, deal with reality, and seize opportunities that others can’t see.

Many people mistakenly believe that creativity is something that only some of us are born with, and either we have it or we don’t. Fortunately, there seems to be ample evidence that this isn’t true.[11] We’re all born rather creative, but during our formative years, it can be beaten out of us by busy parents and teachers. As adults, we rely on convention and what we’re told because that’s easier than breaking things down into first principles and thinking for ourselves. Thinking through first principles is a way of taking off the blinders. Most things suddenly seem more possible.

“I think most people can learn a lot more than they think they can,” says Musk. “They sell themselves short without trying. One bit of advice: it is important to view knowledge as sort of a semantic tree — make sure you understand the fundamental principles, i.e., the trunk and big branches, before you get into the leaves/details or there is nothing for them to hang on to.”


Members can discuss this on the Learning Community Forum.

End Notes

[1] Aristotle, Physics 184a10–21

[2] Aristotle, Metaphysics 1013a14-15

[3] https://waitbutwhy.com/2015/11/the-cook-and-the-chef-musks-secret-sauce.html

[4] Elon Musk, quoted by Tim Urban in “The Cook and the Chef: Musk’s Secret Sauce,” Wait But Why https://waitbutwhy.com/2015/11/the-cook-and-the-chef-musks-secret-sauce.html

[5] Vance, Ashlee. Elon Musk: Tesla, SpaceX, and the Quest for a Fantastic Future (p. 354)

[6] https://www.wired.com/2012/10/ff-elon-musk-qa/all/

[7] https://www.youtube.com/watch?v=L-s_3b5fRd8

[8] David Rowan, “How BuzzFeed mastered social sharing to become a media giant for a new era,” Wired.com. 2 January 2014. https://www.wired.co.uk/article/buzzfeed

[9] https://www.quora.com/What-does-Elon-Musk-mean-when-he-said-I-think-it%E2%80%99s-important-to-reason-from-first-principles-rather-than-by-analogy/answer/Bruce-Achterberg

[10] https://www.scientificamerican.com/article/new-estimate-boosts-the-human-brain-s-memory-capacity-10-fold/

[11] Breakpoint and Beyond: Mastering the Future Today, George Land

[12] https://www.reddit.com/r/IAmA/comments/2rgsan/i_am_elon_musk_ceocto_of_a_rocket_company_ama/cnfre0a/

Fiction that Influences and Inspires

Reading nonfiction is a fantastic way to expand your mind and give you an edge in this world. It’s especially useful when we have a specific idea or concept that we’d like to learn more about. However, it’s important not to over-look everything we can learn from fiction.

Fiction resonates with us because it shows us truths about the human condition through great storytelling and compelling narratives. Through an engaging story we can be introduced to big ideas that just don’t resonate the same way in nonfiction: the medium allows for freedom of thought through creativity.

With this short book list, we’d like to take a look at a handful of novels that have inspired some truly extraordinary thinkers, especially today's leaders in technology. Some of these you're probably already aware of. Some not. But they're all worth a look.


The Great Gatsby by F. Scott Fitzgerald

Considered one of Fitzgerald’s greatest works, the novel follows the story of the wealthy Jay Gatsby and his love for Daisy Buchanan during the roaring 1920s. With its focus on wealth, excess, status and privilege some have called this a cautionary tale regarding the great American dream.  It's also just a hell of a yarn.

This is one of Bill and Melinda Gates favorite books. Mr. Gates says it's “the novel that I reread the most. Melinda and I love one line so much that we had it painted on a wall in our house: ‘His dream must have seemed so close that he could hardly fail to grasp it.’”

It’s not only the Gateses who adore this book, the author Haruki Murakami has called it one of his favorites and Chuck Palahnuik has said it was a source of inspiration for Fight Club. “It showed me how to write a ‘hero’ story by using an apostle as the narrator. Really it’s the basis of the triangle of two men and one woman in my book, Fight Club. I read the book at least once a year and it continues to surprise me with layers of emotion.”

The Remains of the Day by Kazuo Ishiguro

The story paints a spiritual portrait of the quintessential English butler as his world changes from World War I era to the 1950s. The themes of professionalism and dignity versus authenticity are prevalent throughout the novel.

This is Jeff Bezos favorite book. “If you read The Remains of the Day, which is my favorite book of all time, you can’t help but come away and think, I just spent 10 hours living an alternate life and I learned something about life and about regret.”

Actress and UN Goodwill Ambassador Emma Watson has also cited this book as one of her favorites. “When I was growing up, my family, particularly my father, were very stoic. Part of me is very resentful of this British mentality that it's not good to express feelings of any kind – that it's not proper or brave.” She has said she appreciates the book for how it expressed the consequences of this type of discretion.

Catcher in the Rye by J.D. Salinger

The book that introduced us to the ever loved and ever hated Holden Caulfield. The unique narrative gives us a glimpse into the mind of a 16 year old boy and the events surrounding his expulsion from prep school.

Bill Gates has said, “I read this when I was 13. It’s my favorite book. It acknowledges that young people are a little confused, but can be smart, and see things that adults don’t.”

Salman Khan, founder of Khan Academy, also lists this as one of his favorite books.

A Wrinkle in Time by Madeleine L'Engle

The second book centered around a teenager is A Wrinkle in Time, which brings us into Science Fiction. Some of the most innovative ideas of the last two centuries (trains, planes, robots) were considered science fiction at one point and made appearances in stories before they came about in real life. Science fiction is thus a window into our visions of the future, and tells us a great deal about what people of certain eras were both looking forward to and afraid of.

A Wrinkle in Time follows high schooler Meg Murry as she travels through space and time on a quest to save her father. The novel uses Meg’s extreme/out of this world situations as a way to explore the very real trials of teenagers.

Sheryl Sandberg, COO of Facebook, has called A Wrinkle in Time her favorite book as a child.

I wanted to be Meg Murry, the admittedly geeky heroine of “A Wrinkle in Time,” by Madeleine L’Engle. I loved how she worked with others to fight against an unjust system and how she fought to save her family against very long odds. I was also captivated by the concept of time travel. I keep asking Facebook’s engineers to build me a tesseract so I, too, could fold the fabric of time and space. But so far no one has even tried. Jeff Bezos also loved the book. “I remember in fourth grade we had this wonderful contest — there was some prize — whoever could read the most Newbery Award winners in a year. I didn't end up winning. I think I read like 30 Newbery Award winners that year, but somebody else read more. The standout there is the old classic that I think so many people have read and enjoyed, A Wrinkle in Time, and I just remember loving that book.”

Seveneves / Snow Crash / Cryptnomicon by Neal Stephenson

The sci-fi author Neal Stephenson comes up multiple times in the reading lists of some incredibly successful individuals. Above are three that seemed to come up the most.

Bill Gates has said that Stephenson’s novel Seveneves rekindled his love for sci-fci, a genre he thinks can be used as a vehicle to help people think about big ideas. With Seveneves in particular, he was struck by “the way the book pushes you to think big and long-term. If everyone learned that the world would end two days from now, there would be global panic, plus a big dose of hedonism. But what if it were ending two years from now? Would people keep going to work? Would kids go to school? If they did, what would you teach them?

The novel gives us an idea of what might happen if the world were ending and we were forced to escape to space. If that idea wasn’t interesting enough, the book also shoots forward 5,000 years and has the humans going back to what once was Earth.

Larry Page, co-founder of Google, has Stephenson’s Snow Crash in his list of favorite books.

That story takes place in a future America where our protagonist Hiro is a hacker/pizza delivery boy for the mafia in reality and a warrior prince in the Metaverse. Stephenson gives us a glimpse of a what a world would look like where much of our time and definition of self is explored in a shared virtual space and effortlessly weaves together concepts of religion, economics, politics, linguistics and computer science.

Meanwhile, Samuel Arbesman, the complexity scientist and author of The Half-Life of Facts (whom we interviewed recently), told us that Stephenson's Cryptnomicon is one of the best books he's ever read, saying:

The idea that there can be a book that weaves together an amazing plot as well as some really really profound ideas on philosophy and computer science and technology together, that was, I think one of the first times I had seen a book that had really done this. There were these unbelievably informational pieces. It’s also an unbelievable fun read. I’m a big fan of most of Stephenson’s work. I love his stuff, but I would say Cryptonomicon was one in particular that really demonstrated that you could do this kind of thing together.

The Foundation Trilogy by Isaac Asimov

Isaac Asimov was another author who appeared on multiple lists, his Foundation Series in particular has influenced an extraordinary number of people. The novel centers on a group of academics (The Foundation) as they struggle to preserve civilization during the fall of the Galactic Empire.

In more than one interview, Elon Musk has expressed that he was greatly influenced by the Foundation Series. He said the books taught him, “The lessons of history would suggest that civilizations move in cycles. You can track that back quite far — the Babylonians, the Sumerians, followed by the Egyptians, the Romans, China. We're obviously in a very upward cycle right now and hopefully that remains the case. But it may not. There could be some series of events that cause that technology level to decline. Given that this is the first time in 4.5bn years where it's been possible for humanity to extend life beyond Earth, it seems like we'd be wise to act while the window was open and not count on the fact it will be open a long time.”

The series also influenced the likes of George Lucas and Douglas Adams. Speaking of…

The Hitchhiker’s Guide to the Galaxy by Douglas Adams

The story chronicles earthling Arthur Dents’ amazing voyage through space after he escapes the destruction of Earth.

Elon Musk considers Douglas Adams one of the great modern philosophers. It was Adams that taught him that “The question is harder than the answer. When we ask questions they come along with our biases. You should really ask, ‘Is this the right question?’ And that’s hard to figure out.

It’s interesting to note that Musk happened upon the book at a time that he says he was going through and existential crisis (between the ages of 12 to 15). He first turned to Friedrich Nietzsche and Arthur Schopenhauer but found what he needed through Douglas instead. Salman Khan, founder of Khan Academy also lists this as one of his favorite books.


This is in no way an exhaustive list of fiction that has influenced people whom we admire, but we hope that it has inspired you to find more places for those big ideas. Happy Reading!

If you enjoyed this post, check out a few other book recommendation lists we've put out recently:

Book Recommendations by the Legendary Washington Post CEO Don Graham – Among his answers are his favourite fiction and non-fiction books and the book that will stay with him forever.

A Short List of Books for Doing New Things – Andrew Ng thinks innovation and creativity can be learned — that they are pattern-recognition and combinatorial creativity exercises which can be performed by an intelligent and devoted practitioner with the right approach. He also encourages the creation of new things; new businesses, new technologies. And on that topic, Ng has a few book recommendations.

Hares, Tortoises, and the Trouble with Genius

“Geniuses are dangerous.”
— James March

The Trouble with Genius

How many organizations would deny that they want more creativity, more genius, and more divergent thinking among their constituents? The great genius leaders of the world are fawned over breathlessly and a great amount of lip service is given to innovation; given the choice between “mediocrity” and “innovation,” we all choose innovation hands-down.

So why do we act the opposite way?

Stanford's James March might have some insight. His book On Leadership (see our earlier notes here) is a collection of insights derived mostly from the study of great literature, from Don Quixote to Saint Joan to War & Peace. In March's estimation, we can learn more about human nature (of which leadership is merely a subset) from studying literature than we can from studying leadership literature.

March discusses the nature of divergent thinking and “genius” in a way that seems to reflect true reality. We don't seek to cultivate genius, especially in a mature organization, because we're more afraid of the risks than appreciative of the benefits. A classic case of loss aversion. Tolerating genius means tolerating a certain amount of disruption; the upside of genius sounds pretty good until we start understanding its dark side:

Most original ideas are bad ones. Those that are good, moreover, are only seen as such after a long learning period; they rarely are impressive when first tried out. As a result, an organization is likely to discourage both experimentation with deviant ideas and the people who come up with them, thereby depriving itself, in the name of efficient operation, of its main source of innovation.


Geniuses are dangerous. Othello's instinctive action makes him commit an appalling crime, the fine sentiments of Pierre Bezukhov bring little comfort to the Russian peasants, and Don Quixote treats innocent people badly over and over again. A genius combines the characteristics that produce resounding failures (stubbornness, lack of discipline, ignorance), a few ingredients of success (elements of intelligence, a capacity to put mistakes behind him or her, unquenchable motivation), and exceptional good luck. Genius therefore only appears as a sub-product of a great tolerance for heresy and apparent craziness, which is often the result of particular circumstances (over-abundant resources, managerial ideology, promotional systems) rather than deliberate intention. “Intelligent” organizations will therefore try to create an environment that allows genius to flourish by accepting the risks of inefficiency or crushing failures…within the limits of the risks that they can afford to take.

We've bolded an important component: Exceptional good luck. The kind of genius that rarely surfaces but we desperately pursue needs great luck to make an impact. Truthfully, genius is always recognized in hindsight, with the benefit of positive results in mind. We “cherrypick” the good results of divergent thinkers, but forget that we use the results to decide who's a genius and who isn't. Thus, tolerating divergent, genius-level thinking requires an ability to tolerate failure, loss, and change if it's to be applied prospectively.

Sounds easy enough, in theory. But as Daniel Kahneman and Charlie Munger have so brilliantly pointed out, we become very risk averse when we possess anything, including success; we feel loss more acutely than gain, and we seek to keep the status quo intact. (And it's probably good that we do, on average.)

Compounding the problem, when we do recognize and promote genius, some of our exalting is likely to be based on false confidence, almost by definition:

Individuals who are frequently promoted because they have been successful will have confidence in their own abilities to beat the odds. Since in a selective, and therefore increasingly homogenous, management group the differences in performance that are observed are likely to be more often due to chance events than to any particular individual capacity, the confidence is likely to be misplaced. Thus, the process of selecting on performance results in exaggerated self-confidence and exaggerated risk-taking.

Let's use a current example: Elon Musk. Elon is (justifiably) recognized as a modern genius, leaping tall buildings in a single bound. Yet as Ashlee Vance makes clear in his biography, Musk teetered on the brink several times. It's a near miracle that his businesses have survived (and thrived) to where they're at today. The press would read much differently if SpaceX or Tesla had gone under — he might be considered a brilliant but fatally flawed eccentric rather than a genius. Luck played a fair part in that outcome (which is not to take away from Musk's incredible work).


Getting back to organizations, the failure to appropriately tolerate genius is also a problem of homeostasis: The tendency of systems to “stay in place” and avoid disruption of strongly formed past habits. Would an Elon Musk be able to rise in a homeostatic organization? It generally does not happen.

James March has a solution, though, and it's one we've heard echoed by other thinkers like Nassim Taleb and seems to be used fairly well in some modern technology organizations. As with most organizational solutions, it requires realigning incentives, which is the job of a strong and selfless leader.

An analogy of the hare and the tortoise illustrates the solution:

Although one particular hare (who runs fast but sleeps too long) has every chance or being beaten by one particular tortoise, an army of hares in competition with an army of tortoises will almost certainly result in one of the hares crossing the finish line first. The choices of an organization therefore depend on the respective importance that it attaches to its mean performance (in which case it should recruit tortoises) and the achievement of a few dazzling successes (an army of hares, which is inefficient as a whole, but contains some outstanding individuals.)


In a simple model, a tortoise advances with a constant speed of 1 mile/hour while a hare runs at 5 miles/hour, but in each given 5-minute period a hare has a 90 percent chance of sleeping rather than running. A tortoise will cover the mile of the test in one hour exactly and a hare will have only about an 11 percent chance of arriving faster (the probability that he will be awake for at least three of the 5-minute periods.) If there is a race between the tortoise and one hare, the probability that the hare will win is only 0.11. However, if there are 100 tortoises and 100 hares in the race, the probability that at least one hare will arrive before any tortoise (and thus the race will be won by a hare) is 1– ((0.89)^100), or greater than 0.9999.

The analogy holds up well in the business world. Any one young, aggressive “hare” is unlikely to beat the lumbering “tortoise” that reigns king, but put 100 hares out against 100 tortoises and the result is much different.

This means that any organization must conduct itself in such a way that hares have a chance to succeed internally. It means becoming open to divergence and allowing erratic genius to rise, while keeping the costs of failure manageable. It means having the courage to create an “army of hares” inside of your own organization rather than letting tortoises have their way, as they will if given the opportunity.

For a small young organization, the cost of failure isn't all that high, comparatively speaking — you can't fall far off a pancake. So hares tend to get a lot more leash. But for a large organization, the cost of failure tends to increase to such a pain point that it stops becoming tolerated! At this point, real innovation ceases.

But, if we have the will and ability to create small teams and projects with “hare-like” qualities, in ways that allow the “talent + luck” equation to surface truly better and different work, necessarily tolerating (and encouraging) failure and disruption, then we might have a shot at overcoming homeostasis in the same way that a specific combination of engineering and fuel allow rockets to overcome the equally strong force of gravity.


Still Interested? Check out our notes on James March's books On Leadership and The Ambiguities of Experience, and an interview March did on the topic of leadership.

Elon Musk on Regulators

The Federal Aviation Administration had a meeting with Elon Musk they won't forget. Musk met with them to discuss some approvals for the work one of his companies, SpaceX, was doing. The meeting reads like an episode of Dilbert. The FAA responded in the type of double-speak that only governments seem to master. So what did he do? He told one of the experts they were wrong.

“His manager sent me this long email about how he had been in the shuttle program and in charge of 20 launches or something like that and how dare I say that the other guy was wrong,” Musk says in Ashlee Vance's book Elon Musk: Tesla, SpaceX, and the Quest for a Fantastic Future.

“Not only is he wrong,” Musk says, “let me rearticulate the reasons. We're trying to have a really big impact in the space industry. If the rules are such that you can't make progress, then you have to fight the rules.

And then he nails the fundamental problem with regulators.

There is a fundamental problem with regulators. If a regulator agrees to change a rule and something bad happens, they can easily lose their career. Whereas if they change a rule and something good happens, they don't even get a reward. So, it's very asymmetric. It's then very easy to understand why regulators resist changing the rules. It's because there's a big punishment on one side and no reward on the other. How would any rational person behave in such a scenario?

The asymmetry he's talking about is loss aversion. And it doesn't stop at regulators, it extends into other areas as well. The same principle applies to most CEOs, managers and leaders. If you want to predict behavior, take a close look at the incentives.

As Keynes said: “Worldly wisdom teaches that it is better for reputation to fail conventionally than to succeed unconventionally.”


Elon Musk on How to Tell if People Are Lying


Great tidbit from Elon Musk at the Ignition Conference on how having job applicants explain their thinking at multiple levels helps him figure out if they really worked on the problem.

If you just talk to the people on your team you can learn a tremendous amount. As you iterate through problems … when you struggle with a problem that's when you understand it. Once you've done that for (years), then you have a pretty good grasp of it. In fact, that's one of the ways, when I interview someone … is to ask them to tell me about the problems they worked on and how they solved them. And if someone was really the person that solved it, they will be able to answer at multiple levels — they will be able to go down to the brass tacks. And if they weren't, they'll get stuck. And then you can say, “oh this person was not really the person who solved it because anyone who struggles hard with a problem never forgets it.”

This connects for me a bit with the false record effect:

A group of managers of identical (moderate) ability will show considerable variation in their performance records in the short run. Some will be found at one end of the distribution and will be viewed as outstanding; others will be at the other end and will be viewed as ineffective. The longer a manager stays in a job, the less the probable difference between the observed record of performance and actual ability. Time on the job increased the expected sample of observations, reduced expected sampling error, and thus reduced the chance that the manager (of moderate ability) will either be promoted or exit.

It's also a good trick for the batesian mimicry problem — that is, separating those who know from those who act like they know.

Elon Musk: A Framework for Thinking

Elon musk
In this brief video, Elon Musk, who previously brought us how to build knowledge and 12 book recommendations, talks about a framework for thinking.

I do think there is a good framework for thinking. It is physics – you know the sort of first principles reasoning. … What I mean by that is boil things down to their fundamental truths and reason up from there as opposed to reasoning by analogy.

Though most of our life we get through it by reasoning through analogy, which essentially means copying what other people do with slight variations. And you have to do that, otherwise mentally you wouldn’t be able to get through the day. But when you want to do something new you have to apply the physics approach. Physics has really figured out how to discover new things that are counter-intuitive, like quantum mechanics … so I think that’s an important thing to do. And then also really pay attention to negative feedback and solicit it, particularly from friends. This may sound like simple advice but hardly anyone does that and it’s incredibly helpful.