What are Naval's views on "First Principles Thinking"?

Okay, let's talk about how Naval, that wise sage of Silicon Valley, views the trendy term "First Principles."

First Principles According to Naval: Architects, Not Parrots

When "First Principles Thinking" is mentioned, many immediately think of Elon Musk, who famously used this method to break down rocket costs and build cheaper rockets himself.

While Naval doesn't constantly drop the phrase, his entire philosophy is essentially built on the cornerstone of First Principles. For him, this isn't just a problem-solving tool; it's a fundamental way of viewing the world and pursuing truth and happiness.

Let me break it down for you in simple terms.

1. Reach the Underlying "Physical Essence" Through Relentless Questioning

Imagine that our everyday thinking is often like "copying homework."

"Others are doing it this way, so I'll follow suit." "This industry has always had this rule." "The experts say it should be done like this."

This is "Thinking by Analogy." It's convenient, but it means you'll always be a follower, unable to surpass what came before.

First Principles Thinking, however, is like a wildly curious child or a rigorous physicist, constantly asking "Why?":

"Why does this industry have this rule? What problem was it originally solving? Does that problem still exist? Is there a better solution?"

In short, it means taking a complex problem and peeling it back, layer by layer like an onion, stripping away all the conventional wisdom, received "common sense," and "rules" that others tell you, until you uncover the core, most fundamental, irreducible "facts" or "truths." This is the "physical essence" of the problem.

For example:

Thinking by Analogy: I want to start a business. I see Old Wang next door making good money with his restaurant, so I'll open a restaurant too.
First Principles Thinking: I want to start a business. What is the essence of starting a business? It's providing scarce value to society in exchange for rewards. So, what value can I provide that others can't? What are my unique skills? What does the market need most right now? How can I combine my skills and market needs to create an entirely new solution?

See the difference? The first is replication; the latter is creation.

2. Why Does Naval Value This Thinking So Highly?

To Naval, First Principles is the foundational code for attaining wealth, wisdom, and happiness.

First, it's a weapon for pursuing truth and combating foolishness.

Naval is deeply averse to "social consensus" and "groupthink." He believes that what most people believe is often just a way to get along, not because it's necessarily true. For example, "You need a good college education and a secure job to have a good life." This is a widely accepted "recipe," but is it truly the only path to happiness?

Examining this with First Principles, you would ask:

What is the essence of happiness? (Perhaps inner peace and freedom).
What is the essence of financial freedom? (Owning assets that generate income greater than your expenses).
What is the essence of acquiring assets? (Creating something valuable and owning it).

Thinking this way, you realize that the "standard path" is just one possibility among many, and likely not the most efficient or suitable one for you. First Principles jolts you awake from the "default program" society has set for you.

Secondly, it's key to creating unique value and building wealth.

Naval has a famous viewpoint: "Wealth creation is about building something society wants but doesn’t know how to get — at scale."

How do you create something "society doesn't know how to get"? Definitely not by copying. You must think with First Principles.

Airbnb didn't think, "How do we build better hotels?" (Analogy). They went to the fundamental question: "What is the essential need for people traveling? It's needing a place to stay temporarily. What unused resources exist in society that can meet this need? — Empty rooms."
Bitcoin didn't think, "How do we improve the banking system?" (Analogy). They went to the root questions: "What is the essence of trust? What is the essence of a transaction? Can we use mathematics and cryptography, instead of relying on a centralized institution, to create a trustless transaction system?"

These start from the most fundamental "meta-questions" and rebuild entirely new solutions. This is where true value creation happens and the source of wealth generation.

Finally, it helps you build robust "Mental Models."

Naval often advises studying "fundamental disciplines" like Math, Physics, and Philosophy. Why? Because they contain the foundational "First Principles" describing the world.

Once you master these basic "Mental Models," you can assemble them freely, like Lego blocks, to understand and solve novel problems in any field. You no longer need a new set of "rules" for every new situation.

For instance, understanding the First Principles of "supply and demand" in Economics allows you to grasp why movie stars earn high salaries, why Bitcoin prices fluctuate, and why downtown housing is expensive. You gain the ability to apply knowledge broadly and draw analogies.

Summing Up Naval's View

For him, First Principles Thinking is not an occasional "trick," but a worldview ingrained in his very being.

It demands that you:

Stay Skeptical: Question all taken-for-granted "common sense."
Pursue Essence: Ask "why" relentlessly until you find the root.
Build from the Ground Up: Construct your understanding and solutions based on the foundations you discover.

Think of a chef: A chef using Analogy merely follows recipes, but one who understands First Principles—grasping the essence of sour, sweet, bitter, salty, umami; understanding heat, timing, and the chemistry of ingredients—can create entirely new dishes.

Naval wants each of us to be the "master chef" who can create new recipes, not just a "parrot" who recites them.