How Does First Principles Thinking Enhance Persuasiveness in Startup Financing?

Let's put it this way, let's simplify things.

First principles thinking, in plain terms, means "getting to the bottom of things," breaking down an issue into its most basic, irreducible "building blocks," and then, starting from these "blocks," constructing your own "house" anew.

When seeking investment, how do most people operate? They use "analogy thinking." For example: "We are the Airbnb for pets," or "We are the TikTok for seniors." An investor hears this and thinks, "Okay, I get the general idea." But their next thought is: "How do you compare to Airbnb/TikTok? What makes you special? Does the pet market really need an Airbnb?" They will use the existing "analogies" in their mind to find flaws. You're playing within someone else's framework, making it hard to convince them.

But if you use first principles, the whole dynamic changes.

You sit down with the investor, not to discuss "who we are like," but to talk about the "fundamental facts" of the world.

For example, let's say you want to create a new social product:

• An ordinary person using analogy thinking would say: "We're building a photo-sharing social app to challenge WeChat and TikTok, it's the Instagram of China."

  • Investor's reaction: (rolls eyes internally) Another one. Why? How will you compete? No chance.

• You, using first principles, would say:

  1. Deconstruct to 'building blocks' (fundamental facts):

     • "Humans are social animals, with a fundamental need to share and be noticed, which hasn't changed for tens of thousands of years." (This is a human nature building block)
     • "Current social platforms, like WeChat, have overly heavy social ties; posting on Moments requires considering bosses, colleagues, and relatives, leading to significant pressure to express oneself." (This is a problem with existing solutions)
     • "TikTok is purely entertainment; you scroll and leave, making it hard to form genuine 'relationships' and 'retention.'" (This is a problem with another solution)
     • "Smartphone cameras are getting increasingly powerful, making the barrier to creating photos and videos almost zero." (This is a technological building block)

  2. Rebuild your 'house' with these 'building blocks' (your solution):

     • "Therefore, based on these facts, we've identified a huge gap in the market: a place where people can 'express themselves without pressure' and 'form new relationships based on shared interests.' Our product is built around this core need. Through mechanism XXX, it allows users to share only with like-minded strangers, and through algorithm YYY, it precisely matches interest groups..."

You see, why is this persuasive?

• 1. You're not imitating, you're creating. You tell the investor that you're not copying homework, but deeply understanding the essence of the problem and, based on that essence, designing a brand new, superior solution. This makes you appear profound, not an opportunistic follower.

• 2. You define the battlefield, instead of being passively attacked. You don't fall into the trap of "how to compete with WeChat." You redefine the problem: "People need a pressure-free space for expression." In this new battlefield you've defined, you are the sole king. The investor must think according to your logic, rather than questioning you with their preconceived frameworks.

• 3. Your narrative is robust and hard to challenge. When an investor questions a certain feature, you can always refer back to your "first principles." "Why did we implement this feature? Because it solves the core pain point of 'high pressure to express oneself.'" All your decisions aren't arbitrary; they are derived from the most fundamental logic, forming an unbreakable logical loop.

• 4. It showcases your potential. A founder who can think this way implies that when encountering other challenges in the future, they will also be able to cut through the fog, see the essence, and find innovative solutions. Investment is not just about projects; it's about people. The thinking ability you demonstrate is inherently valuable.

In summary, using first principles for fundraising is like not selling a copied painting, but rather showing how you started from the most basic elements like pigments and canvas to create an unprecedented masterpiece. This confidence and insight, stemming from the very origin, is what truly impresses investors.