First Principles Thinking: How to Solve Problems Like a CEO

First Principles Thinking

Have you ever looked at a challenge and thought, “There has to be a better way”? That’s the exact mindset that separates good entrepreneurs from the great ones. And the foundation of this mindset lies in First Principles Thinking.

This problem-solving framework empowers you to break down challenges into their most fundamental truths, stripping away assumptions and rebuilding solutions from the ground up. It’s not about copying what others do—it’s about understanding why things work and reimagining what’s possible.

What Are First Principles, and Why Do They Work?

The idea of first principles thinking comes from physics but is one of the most powerful tools for entrepreneurs. By focusing on the fundamental truths of a problem, you avoid the trap of “this is how it’s always been done.” Instead, you open up opportunities to create entirely new solutions.

Some of the world’s most transformative leaders use this approach:

• Elon Musk revolutionized industries with first principles. Instead of accepting high costs for batteries or rockets, he asked: “What are the basic materials needed, and how can we optimize their cost and performance?” This approach led Tesla to build more efficient batteries and SpaceX to slash launch costs by rethinking rocket reuse.

• Jensen Huang, the founder of NVIDIA, took a similar approach when GPUs weren’t even a mainstream concept. He asked: “How can we fundamentally improve computing for graphics and AI?” By focusing on the raw needs of emerging technologies, he built the hardware that now drives the AI revolution.

3 Steps to Apply First Principles to Your Business

1. Challenge Every Assumption
   Begin by identifying the problem you want to solve. Write down every assumption you have about it and ask:

   • Is this really true?

   • What would happen if this assumption no longer applied?

   Example: If you assume you need a large sales team to scale, question it. Could technology or partnerships achieve the same results with fewer resources?

2. Break the Problem Into Core Elements
   Deconstruct your challenge into its simplest components. This allows you to see the raw truths that are often hidden by complexity.

   • Ask yourself: What is this problem fundamentally about?

   • What factors truly influence the outcome?

   For instance, if your product isn’t selling, instead of blaming the market, consider its fundamental value proposition. Is it solving the right problem for the right audience?

3. Rebuild Solutions From the Ground Up
   With the basic truths in hand, reconstruct your solution. Use this process to innovate, eliminate inefficiencies, or find entirely new approaches.

   • Think creatively: How can you achieve the goal with fewer steps or resources?

   • Look outside your industry for inspiration—often, breakthroughs come from applying methods used elsewhere.

Why First Principles Thinking Matters Now

In today’s world, industries are being disrupted faster than ever. What worked yesterday might not work tomorrow. Entrepreneurs who rely on first principles thinking are the ones who consistently adapt, innovate, and lead.

This mindset gives you the ability to outthink competitors, find opportunities in unexpected places, and build businesses that endure.

Learn How to Build Wealth in 2025

This Thursday at 5 PM CST, I’m hosting a live training in my private business community. I’ll be covering how to build wealth in 2025 and manage your capital effectively using proven strategies and first principles thinking.

👉 Click here to join the community and reserve your spot for the training.

Let’s rethink, rebuild, and thrive—together.

To your success,
Grant Mitt