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Productive First Principles

In this edition of Hey Rebekah we're covering what first principles thinking is, and how the concept of first principles yields a 13,000% ROI! 👏🏽 🤯

By Rebekah Radice

3 min read

In 2009, Stanford business professor Teena Seelig gave her class an assignment. She divided the group into teams and handed each team an envelope with $5 of seed funding. They had 5 days to complete the assignment.

They could take as much time as they wanted to plan within the assignment period. However, once they opened the envelope, they were on the clock and had 2 hours to make as much money as possible from the seed funding. ⏱️

The results were to be shared by each team in a 3 minute, one-slide pitch on the last day.

Go to Vegas? Buy a lottery ticket?

Not quite, but that's the typical—significant risk vs. low probability of return—response from most people when presented with the same challenge.

Another common response includes setting up a low-fi business, like a lemonade stand and using the $5 for startup costs. Not a wrong answer, but one that statistically will yield a limited and diminishing rate of return.

Nevertheless, in this experiment, Dr. Seelig's students were "remarkably inventive":

  • One group sold restaurant reservations for $20 and turned the $5 into several hundred
  • Another group did well using a freemium model to check air pressure on campus bikes and then charged $1 for refills

The power of first principles

The group that took home the prize approached this experiment differently than the rest.

They used the concept of "first principles" to break down the problem to its most fundamental truths or assumptions. Looking at the problem through the lens of first principles helped them understand the resources at their disposal, from a completely different perspective.

They realized that the most valuable asset they had in this experiment wasn't the $5 or the 2 hours. It was the time slot for the 3 minute presentation.

They sold that 3 minute time slot for $650 to a company that was trying to recruit students from that class. Then, they used that time slot to show a commercial about the company. 🤯

🤖 First Principles Thinking by ChatGPT

First principles thinking is a way to solve problems by breaking them down into their most basic components and using logical reasoning to arrive at a solution. This approach emphasizes independent thinking and critical analysis, rather than blindly following established beliefs or assumptions.

Let's say someone is trying to make a grilled cheese sandwich, but they don't have any bread. Instead of giving up and settling for something else, they could use first principles thinking to come up with a new solution. They might start by asking themselves: "What is a grilled cheese sandwich made of?" The answer: cheese and heat. So, instead of bread, they could use two slices of cheese as the outer layers and grill them until they're melted and crispy, creating a delicious "grilled cheese" without any bread.

Shameless, but relevant plug?

When we started exploring our options to launch Hey Rebekah, we used the power of first principles to help break down our thinking too. Here's what we came up with:

Knowledge should be free. Experience, priceless.
Rebekah Radice

About Rebekah Radice

Rebekah Radice, co-founder of BRIL.LA, has traded narcissism for purpose. When not driving growth, you'll find her tricking family into thinking she's Emeril Lagasse - likely covered in marinara. The spotlight was fun, but impact is better. These days she's using 20+ years of brand brilliance for good.