Elon Musk and the Secret Behind First Principles Estimating



Creating A Revolution In Global Innovation.

First-principles estimating is a powerful way of building up a project estimate from individual component costs to create an accurate final budget. It’s ideal for bespoke projects where uncertainty is certain. It’s extremely accurate and highly adaptable to project changes, plus it factors for risk and opportunity.

Civil construction, energy, engineering, marine, mining, manufacturing, water, rail and electrical are sectors that enjoy the benefits of first-principles estimating. Pronamics has advanced this estimating technique by further developing a system within Expert Estimation for estimators that want to build off their historical estimating methods. To find out more, ask us how using Data Relay can help improve your estimating.

First Principles Thinking is Changing The World… Forever.

It is how, and not what, innovators, engineers and scientists think that is creating a contemporary phenomenon – a revolution of exponential growth in global innovation across multiple intersecting industries including Artificial Intelligence (AI), robotics, automation, 3D printing, battery technology, DNA / genetic technology, renewable energy, autonomous driving, financial systems, crypto currency, real estate, rockets, space travel, interplanetary supply chains and terraforming.

This tsunami of change has infiltrated the construction industry with increased automation, digital twins, smart cities, BIM, Artificial Intelligence (AI), Machine Learning (ML), Virtual Reality (VR), Augmented Reality (AR), onsite safety checking robot ‘dogs’, 3D printing and a plethora of data analytics.

It might seem overwhelming, but the way to stay sharp, adapt, innovate and evolve is to be skilled at how you think.

Estimators – you are smarter than you realise.

First-principles thinking is not new. The ancient Greek philosophers Socrates and Aristotle sought solid conclusions and truth by removing limiting assumptions to get to the source or truth, and then build up from there.

Aristotle defined first principles as “the first basis from which a thing is known.” If your foundation is not correct then what you think or build will be based on ignorance. It may be flawed, inefficient, and less likely to succeed.

When you think and estimate using first principles thinking you are building up from a genuine solid foundation of truth. When done well, it can give you super-like powers to innovate design, significantly cut costs, develop super-efficiencies, and achieve results previously thought impossible.

Innovation is Key

The great contemporary champion of this method is none other than Elon Musk (The Boring Company, Tesla, SpaceX, SolarCity, OpenAI, Neuralink, and Hyperloop). He is a rare person in history changing the world by rapidly innovating spectacularly different and ambitious projects at scale“. Elon is leading a revolution reinventing the aerospace, auto, renewable energy, utilities, transport and their related industries.

Other people have money, power, planes, fame, ambitions, minions, scientists, or sharks with laser beams, but Elon is a systems-level thinking engineer who can synthesise technology, design and business with amazing success. He has a ‘secret sauce’ that we can learn, and it’s a secret ingredient used in estimating! You are probably already doing it.

The Fundamental Principle to Elon Musk’s Engineering Success

“A good framework for thinking is physics… first principles reasoning. Boil things down to their fundamental truths and reason up from there, as opposed to reasoning by analogy [copying what other people do with slight variations] … When you want to do something new you have to apply the physics approach.”

Elon’s audacious achievements stem from applying first principles thinking to his bold dreams of producing technologies that can positively impact humankind. In his own words, it is his key tool for his success.

“People’s thinking process is too bound by convention or analogy to prior experiences. It’s rare that people try to think of something on a first-principles basis. They’ll say, ‘We’ll do that because it’s always been done that way.’ Or they’ll not do it because ‘Well, nobody’s ever done that, so it must not be good.’ But that’s just a ridiculous way to think. You have to build up the reasoning from the ground up – ‘from the first principles’ is the phrase that’s used in physics. You look at the fundamentals and construct your reasoning from that, and then you see if you have a conclusion that works or doesn’t work, and it may or may not be different from what people have done in the past.”

Does this sound familiar to you as an estimator?

How Elon’s A ‘Jedi Master’ of First Principles Thinking

His scientific approach starts with:

  1. Apply first-principles strategies to discover the fundamental truths of what you want, what already exists (including your abilities, inabilities, and limitations), and how things work.
  2. Get clear on the essentials and price them where possible.
  3. Build up from what you know are foundational truths and essential costs.
  4. Engineer, experiment, test and discover what is possible (and what isn’t).
  5. Repeat steps 1 to 4 with the new knowledge gained from step 4.

It’s common to hear Elon say he didn’t expect his project or company to succeed. He takes small achievable steps continually testing with the purpose to find both small success and failure (not to reach instant finished outcomes). Then he (and his team) adapt by taking in new data, adjusting, improving, testing and eventually succeeding.

Really pay attention to negative feedback, and solicit it, particularly from friends. This may sound like simple advice but hardly anyone does that and it’s incredibly helpful.”

The Key To Elon’s Results Is Human Thinking ‘Software’ Strategy

For Elon, accomplishment is many small, significant, evolving steps; a key part of his effective strategy loop, until eventually, he has developed mind-blowing technology and a final ‘successful’ result. Then he keeps improving, as per his personal operating system software (thinking).

There are all kinds of tech companies that build software. They think hard, for years, about the best, most efficient way to make their product. Musk sees people as computers, and he sees his brain software as the most important product he owns—and since there aren’t companies out there designing brain software, he designed his own, beta tests it every day, and makes constant updates. That’s why he’s so outrageously effective, why he can disrupt multiple huge industries at once, why he can learn so quickly, strategize so cleverly, and visualize the future so clearly.”

“But the more I learn about Musk and other people who seem to have superhuman powers… the more I’m convinced that it’s their software [what they know and HOW they think… their belief systems, thought patterns and reasoning methods], not their natural-born intelligence or talents, that makes them so rare and so effective.”

How Elon Explains First-Principles (Rocket Example)

In his own words, here is an example of how Elon used first-principles thinking to assess if it was possible to build rockets, significantly reduce the cost of space travel, and make it possible to populate Mars to save a ‘back-up’ of humanity.

“Historically, all rockets have been expensive, so therefore, in the future, all rockets will be expensive. But actually, that’s not true. If you say, what is a rocket made of? It’s made of aluminium, titanium, copper, carbon fibre. And you can break it down and say, what is the raw material cost of all these components? And if you have them stacked on the floor and could wave a magic wand so that the cost of rearranging the atoms was zero, then what would the cost of the rocket be? And I was like, wow, okay, it’s really small—it’s like 2% of what a rocket costs. So clearly it would be in how the atoms are arranged—so you’ve got to figure out how can we get the atoms in the right shape much more efficiently. And so I had a series of meetings on Saturdays with people, some of whom were still working at the big aerospace companies, just to try to figure out if there’s some catch here that I’m not appreciating. And I couldn’t figure it out. There doesn’t seem to be any catch. So I started SpaceX.”

The Way Estimators Approach Problem Solving and How You Think Is A Big Deal

Start by asking yourself, “What’s really going on here?”

Then take the 5 steps outlined above… and change the world.


At Pronamics, we say what we mean, and we mean what we say. We value honesty and encourage all stakeholders to present their case in a friendly, professional manner.

We agree to work cooperatively to find the best possible solutions. We always remain open to dialogue and change.