Thinking like a billionaire…with Elon’s favorite

Written by John Kuder

Table Of Contents

Video transcript:

Hi! So, today, today, let’s talk about mental models and one in particular that’s Elon Musk’s favorite. First principal’s thinking, well, I kind of like his, his success, so let’s go with that. I think he’s done well. Yeah, . Sure. Okay. Especially with the SpaceX. So yes.

Let’s start with mental models, just a quick review. Okay. A mental model is basically something we all do all the time, and it’s a simplified representation of how something works. So, okay.

You’ve probably got mental models. of, I don’t know how something, , works in the kitchen or where, you know, like you’ve got a, maybe a red, a very simplified model of where stuff is in your kitchen. Like, you don’t try to remember it where every pot and pan and every knife. Okay you’ve got a knife drawer, you’ve got a, cabinet that’s got your big pans and frying pans and whatever.

Another mental model that I think a lot of us use is in terms of how we understand our, the workings of our body and in relation to medicine. So true medicine.

And this gets to where I want to go. Specialists… medicine has become a very, very specialized field. And so there’s a doctor… basically I’m gonna oversimplify it right now. Okay? There’s a doctor for like each organ or organ system in your body. That’s true. So you’ve got a doctor that’s for your lungs and you’ve got a doctor for your heart and you’ve got a doctor for your stomach and…

Mm-hmm. . And so we get the idea that these are all separate things. And then even like taking the heart, for example, we, a simplified model of of the heart is that it’s like a pump, right? You know that’s just pump, like a pump that’s pumping water or whatever. Right? Well, it’s way, way more complicated than that.

Right? But it’s really simple and reason easy. We know that because we know some neuroscience , but it’s really easy to understand. Yeah. That, yeah. It pumps their blood around her body. Right. And, and for, for most of the time, that’s a really, that’s enough. Right? Okay. It’s a very much generalist That’s mental modelization right now.

That’s a, that’s a, a generalization of a mental model. Okay. The mental models that we’re talking about, which were made famous by, A fellow named Charlie Munger. Mm-hmm. , his name is not as well known as Warren Buffet, but he’s Warren Buffet’s partner. Right. And the two of them use mental models to make their amazing investments and, and they’ve become rather successful at that.

Yeah. Another one. So Charlie, you know, is he’s written, you know, he wrote a book called Poor Charlie’s Almanack. He’s spoken about mental models. Yeah. First principles thinking is, Right. Favorites. And, and also Elon Musk has talked about it, right? So, so tell me about this.

There are other billionaires that also mental models like Bill Gates. And, and so, you know, I just, it’s it. So tell me about the first it’s good way to go. First principle here. Okay. First principles thinking, let, first Principle’s Thinking is the idea of getting down to the very basic. Fundamentals. I’m sorry. The granular, the not well granular implies tiny things, and this is more big things.

Oh, okay. So I want to, I don’t want to, but, but the base, like the fun, the really fundamental stuff that, that you can’t, the foundation, you basically can’t break it down any, any simpler. Okay. Okay. That would be first principles thinking and, and to get to that in any particular area, it, first of all, it requires us to slow down and, and think and not take shortcuts.

Second of all, it requires us to go through some kind of a process of, of identifying what we think we know and then starting to question that and, and then, you know, how do I know that? What’s my evidence? What if I’m wrong? Who, who disagrees with me? You know who that, that knows what they’re talking about.

Another thing would be, what are my assumptions? Big one, big one about assumption. So recently one example of of assumptions not being questioned and and kind of be dogmatize was again, in the medical field for many years they were not able to successfully treat people with ulcers. Yeah, and they believed there was an assumption.

Mm-hmm. that, that our stomach was a sterile environment because of the stomach acid, that that bacteria couldn’t live in our stomachs. So they didn’t even consider that a bacteria could be causing ulcers. But they didn’t think that, that the, the flu and things like that, which is back there, not in our stomach, they thought it was elsewhere.

I don’t know a lot of detail there. It was just, that was the, that was the assumption that was unquestioned because it was accepted as, as truth. And that’s, that’s a real key to getting to, to to first principles thinking is what are assumptions, what have we accepted as truth, that, that really are just assumptions because that distinction is huge.

So there was a, to finish that story, there was a pathologist that that figured out there, oh my gosh. There really are bacteria living in this person’s stomach and, and other people’s, and oh my goodness! What if that’s the case? Then what are… if we take away that assumption, then what can we learn? He ended up getting a Nobel Prize.

They discovered that H. pylori bacteria was the primary cause of ulcers, and now people are able to easily treat, doctors are able to easily treat ulcers with a combination of antibiotics and, and other stuff. So like Pepto-Bismol. Anyway who knew So. That was, that’s an example of questioning assumptions, but first principles thinking.

Is there’s two levels. First of all, it’s in, in any one field. Getting down to the, to the basics, questioning the assumptions and, and that thought process. And you know, more detail the Socratic questioning method or the Socratic method is, is a process of, of going through those que some of those questions that I listed another popular.

Thing in, in the corporate world is called the five wise method, right? And that’s called getting down to root cause. Again, first principles, root cause, very similar, right? So that’s, you know, we would modify that with our language to, to avoid the question why, but, you know, what, what caused that?

But still, you know, taking it down. There’s nothing, there’s nothing below that. So first principles thinking in one area. Now, the next thing is we talked about specialists. So in, in any field, people, we, we all tend to be specialists, right? Some people specialize in, you know, in proc, prog. Project management, right?

Other people specialize in customer service or marketing or whatever. And so when we specialize in a field, we tend to have a, a kind of a narrow set of tools, think, especially our thinking tools that we use and our models that we use. .

So if we, and, and, and so that, that limits us, that limits what we can do in terms of mm-hmm of finding novel solutions. Our create limits, our creativity, basically. Well, that’s true. That’s true. Because we already make decisions based on that. Yeah. Yeah. We, we, we stick to what we know, right.

If we can expand that and learn some of the first principles from other fields, then we can come at a problem from many different angles and, and look at it through, basically through others and others’ eyes and, and other subtle.

By combining maybe two or three of these, we, we come up with much more creative and innovative solutions than we would by sticking in one field. Oh, that’s true. So that’s, B, both a benefit of having multiple mental models cuz they, they, Charlie Munger talked about having a lattice work of mental models from different, that encompass all these different areas, but then also in the first principles thinking, you know, using that same concept and learning first principles from, for example, physics.

Yes. Okay. Some of the very basic physics law laws of physics are the, the mechanical laws of Newton, like the, the laws of momentum and things like that. How many, how many times have you heard the idea of momentum applied to, you know, your activity? Like, you know, getting momentum in your business or getting momentum in building up momentum in sales?

Yeah, momentum in physics. Strictly limited to physical objects with mass. So, ah, we are all applying. When we use that concept, we are applying a mental model, a simplified representation. Okay. To something outside where it was created. Ah-huh . So that’s an example of how we might be doing this already. Now if we do it more consciously and then we expand our library.

Vocabulary. Voca. Thank you. That’s the word I was searching for. You read my mind. Psychic. I’m very good at that. And so yes, yes. We expand our vocabulary to to include a, you know, a larger set than, than we, we can speak and think much more innovatively. Right. So, because, because that’s the whole, the whole point right, is to, is to think outside that box.

Yes. To get to come. A, a solution that, that or, or a finding resources. Let’s do. Right, because that’s what we, let’s, let’s do that. Yeah. A cuz a solution again is a is a trap. Oh, that’s true. One solution because we’re locked Now if that doesn’t work, we’re stuck. True. Oh true. So yeah. Finding, getting resourceful.

That’s what we, we are in a world that is changing so rapidly. And we can’t even imagine what’s, you know, coming Well, yeah. I mean, in a couple of years. That’s right. So we, we need, rather than trying to find something that’s gonna work today and forever, we need to develop processes that allow us to adapt to whatever happens.

And that’s where mental models is happening. And first principles thinking. , how quickly? Oh, well by the time, you know, this is a year old. It’ll sound silly if I, if I even go to examples. Right. So I won’t. Okay. So thank you so much for spending some few minutes with us.

Leave a Reply

Your email address will not be published. Required fields are marked *

This site uses Akismet to reduce spam. Learn how your comment data is processed.

Comments:

© 2023 Kuder Consulting Group. All rights reserved.