How to Differentiate Between Fact and Hypothesis?

Hey, this is a fascinating and crucial question. Let me try to explain it with a simple analogy.

Imagine you're building a house.

A "fact" is the solid foundation beneath your feet, the hard, objectively existing bedrock. It's just there, regardless of whether you like it or believe in it. You can hire engineers to drill and test it, measuring its load-bearing capacity, density, and composition. These data are objective; anyone who measures them will get essentially the same results. That's a fact—it can be repeatedly verified, supported by concrete evidence, and does not change based on your personal will.

For example, "water boils at 100 degrees Celsius under standard atmospheric pressure" is a fact, because anyone who conducts this experiment will get the same result.

An "assumption" is when you stand on that foundation, look up, envision what the future house will look like, and believe that "this house will definitely sell well once built." The idea of it "selling well" is an assumption. It might be a reasoned inference or prediction based on some information (e.g., a subway line being built nearby, a famous school relocating), but ultimately, it's not a fact. Because until the house is sold, you cannot 100% prove it. What if policies change? What if a black swan event occurs?

Therefore, an assumption is a premise we temporarily accept as "true" in order to take action. It's based on the assumption that "the house will sell well" that we decide to invest in building it.

How to quickly distinguish between them?

Just ask yourself one core question: "Can I currently provide objective evidence that convinces everyone to prove this statement?"

• If yes, then it's a "fact." (For example: "Our company's financial report for the last quarter shows a profit of 5 million." — This can be verified by auditing the accounts.)
• If no, and it relies on future predictions, personal judgment, or unproven premises, then it's an "assumption." (For example: "Our company's profit will reach 8 million next quarter." — This is a prediction based on market trends and current business, hence an assumption.)

You brought up "first principles," and that hits the nail on the head. First principles thinking, in essence, is about forcing yourself to break down a problem, discarding all "industry conventions," "mainstream opinions," and "conventional wisdom" (which are often assumptions disguised as facts), until you unearth the most core, undeniable "fact" (the bedrock foundation), and then, starting from this foundation, re-derive and rebuild.

For instance, everyone says "batteries are expensive" (which is a widely accepted assumption), but Elon Musk, applying first principles, would ask: "What is the 'fact' about batteries?" The fact is: batteries are composed of basic materials (lithium, nickel, graphite, etc.). He then looked up the market prices of these raw materials and found that the combined cost of these materials was far lower than the price of a finished battery. The raw material prices are "facts," while the high price of a finished battery is the result of a series of "assumptions" including production, logistics, brand premium, and so on. Thus, starting from the "facts," he discovered the possibility of significantly reducing battery costs.

To summarize:

• Facts are the starting point, the cornerstone; they are objective and verifiable.
• Assumptions are bridges to the future, our subjective judgments and predictions based on facts.

A truly capable person is someone who can clearly distinguish between the solid facts in their mind and the assumptions that need to be validated.