Break Down Complex Problems with First Principle Thinking

An instrument for decomposing complex problems into simplified solutions, is the strategy of first principles thinking, often otherwise known as reasoning from first principles, and is often leveraged by self-made geniuses such as Elon Musk. In other words, a form of mental reverse engineering.

Techtello best puts it as realigning your mindset to demarcate from conventional wisdom, questioning and validating one’s beliefs. Humans are inherently governed by values and perceptions, belief systems that we learn to reasons with, influencing our minds to apply shortcuts in the form of conclusions learned previously.

Something a product manager should have ingrained in her or his mind, this hypothesis-driven thought process advocates breaking down a complex problem into its fundamental building blocks, down to its pure essence, diving down to the basic truths, and separating facts from assumptions. You then reconstruct your view from the ground up with those validated truths.

It requires understanding that our experience may be different from reality and true knowledge can be attained by learning to integrate different ideas together. It fills the gap between the incremental mindset to opening ourselves to the beautiful world of possibilities.

Techtello

In Amazon, we employ as part of Correction of Error (COE) investigations, a mechanism employed to discover the root cause, the five why’s, a tool that helps us discover the essence of a problem, or in this case, the fundamental pillars of a component.

Children inherently think in first principle because they inquisitively question everything, from why do you go to work, why do you need to eat, why do you need to sleep. A fundamental leadership principle of Amazon, the learn and be curious principle, encourages questioning perception and opening yourself to an alternative reality. Breaking the autopilot trap your mind inclines to follow.

In his quest to getting a rocket to Mars, Elon Musk concluded upon first investigation that the cost of buying a rocket is extremely cost prohibitive, over $65m. With that fundamental problem as a barrier of entrant into the space race, Elon embraced physics to employ first principles reasoning:

Physics teaches you to reason from first principles rather than by analogy. So I said, okay, let’s look at the first principles. What is a rocket made of? Aerospace-grade aluminum alloys, plus some titanium, copper, and carbon fiber. Then I asked, what is the value of those materials on the commodity market? It turned out that the materials cost of a rocket was around two percent of the typical price.

Elon Musk, 2022 interview.

Breaking down his problem into the fundamental components a rocket, instead of buying a finished rocket, he created his own rocket from raw materials, and that is what resulted in the founding of SpaceX. The company successfully cut the price of launching a rocket by 10x, decomposing a problem into fundamental components, and rebuilding.

It’s Always Day 1 at Amazon

It’s Aways Day 1 at Amazon

Another fabric of Amazon’s DNA, injected all the way from Jeff B, is the mantra of Day I. It’s a simple yet profound war-cry, no matter whether Amazon is 25 years or 5 years, whether your organization within Amazon is 2 years or 12 years, everyone acts as if we are in the first day of a brand new startup. You know that feeling you get, that excitement, motivation, and drive to go from zero to 100 in 7 seconds, that is the mentality and culture that is demanded of you.

Why is it important to always be at day-one mentality? It instills a sense of passion combined with energy, with a bearing on customer needs, not stuck in processes and other bureaucracies befitting mature organizations, often referred to as organizations in Day 2.

The outside world can push you into Day 2 if you won’t or can’t embrace powerful trends quickly. If you fight them, you’re probably fighting the future. Embrace them and you have a tailwind.

Jeff Bezos

Reading between the lines, new startups with fresh mentalities are nimble enough to sense new trends and pivot as needed, and not be stuck in the past. Ensure we don’t stay stuck in the past, and putting customers first.

Co-Founder Conflict is the #1 Startup Killer. How Can You Protect Your Startup

Conflict Resolution Management is a skill that many trained project managers learn, when working with stakeholders, but something that young entrepreneurs never learn, until it really happens. In fact 62% of startups fail because of co-founder conflicts, and it’s something that really scares venture capitalists. In fact, there’s a saying in Silicon Valley that it’s better to have an A team with a B idea, than a B team with an A idea

The composition of co-founders vary, from two best friends who decide to work on an idea together, to ex-college classmates who decide to form a company, to colleagues at work who decide to co-found a company. Picking a co-founder is critical to the success of a project, and in most cases, you pick someone you really know and can work with, with a proven track record of collaborating together, but still, conflicts inevitably happen sooner or later, so what can you do about? Firstly, let’s identify the types of conflicts that co-founders commonly get suckered into, and the common conflict resolutions to solve those. 

Delegation of decisions

Say one co-founder may like an idea, but the other doesn’t, we suddenly have conflict. This usually occors when you don’t divvy up the duties and responsibilities clearly enough, to have boundaries that you can each respect. Usually a good composition of co-founders is one where each of their skills are complementary, say one is more tech-savvy whereas the other is more business-savvy. 

By setting clear deliniation of responsibilities, you should trust in the other’s capabilities to make decisions. You should of course provide a diplomatic mentality to set out your reasons why you may disagree, but ultimately, once you’ve done your best to convince, show your faith and trust in the other co-founder by letting him have ownership over his decisions. The worst that can happen is, you try the decision and if it doesn’t work out, pivot, because one thing startups have over larger companies, is that they can pivot more rapidly because they are far more in-tune with their markets. 

A Co-founder works harder than the other

So, we aren’t really going to envisige a modern startup with punch-cards right? I don’t think in any scenario you will find each co-founder working the exact amount of hours, all the time, consistently. So get that expectation out of your heads right away!

Comparing a technical co-founder and her programming efforts, up against a marketing co-founder that is working on cultivating a user-base, is like comparing apples and oranges. There may be quiet times for business co-founders, or designers, whereas the coding effort is still going at full-steam, but the next week things may change, and they may end up doing crazy hours trying to reel in new deals. 

This goes back to the first point above, where co-founders need to trust each other, and delegate responsibilities appropriately, and if it seems like there is a continual uneaveness in workload, discuss that and see if you can offload anything to even out the work. 

Equality in Equity

Related to the previous point, discussing who gets how many shares in the company. This is a very contentious issue and something that really riles up co-founders. Does the co-founder that came up with the idea get more than the rest? Does the CTO get more than the CFO? 

Well, I can tell you, if you all started out at the same time, divide it up equally, it’s that simple! It won’t matter in the end if you distrust each other, or let greed give one person more equity, because you won’t even have a product, and venture capitalists won’t even want to touch your toxic environment.

When Diplomacy Fails

When all things fail, seek outside counsel. I always recommend companies have at least 5 mentors, as well as board directors outside of the company, because it adds an outsider’s perspective, balance and wisdom that you definitely don’t have. 

Getting an outsider to broker your disagreement will allow you to move on, so think of it as couples therapy for co-founders. You hate to be in this situation, but you have to agree to the outcomes, and going through the tough times with respect and civility will make you greater negotiators. 

In Conclusion

Nothing venture capitalists hate more is co-founders who cannot get along, and if they sense anything like that, they will pull-out as soon as they can. Maturity and conflict resolution are not attributes that young co-founders have instilled in themselves, but something that needs to be learned quickly. Being civil, open-minded and remembering that you don’t convince with authority but rather by selling your points makes for a healther debate, than being abrasive. 

Everyone co-founders options should matter, but you should also have a structure in place where responsibilities are delegated clearly, and co-founders lean on each other for consel. Ideas will change, and companies pivot many times, but if you turn your relationship with your other co-founders into a toxic one, it will eventually break your company, and will be part of your resume when you work on another startup. 

Startup 101 – Composing your board of advisors

We have just talked about how to compose your board of directors, last post, but what about composing your board advisors? Broadly speaking, board of advisors serve to counsel you on matters based on their experience, whilst not being financially invested the same way your board of directors are. 

An advisory board is a body that provides non-binding strategic advice to the management of a corporation, organization, or foundation. The informal nature of an advisory board gives greater flexibility in structure and management compared to the Board of Directors. (source: Wikipedia)

You lean on to your advisors for solid advice, and receive equity in the form of common stock (rather than preferred, which your investors would get), and something around 0.25-0.5%. But they shouldn’t act like directors, as they don’t have any binding power to vote. So, when composing your board of advisors you should have the following in mind:

EXPAND YOUR BOARD OF ADVISORS LIBERALLY

Unlike the board of directors which function better when smaller, you should let your board of advsors expand largely, but composed of those in the industry that are smart and capable, with insight and even networking/connections, like you would do with your board of directors. 

Having 7-9 advisors on your board is a good number. 

JOIN ADVISORY BOARD PROGRAMS

According to Entrepreneur, if you don’t have many candidates that are willing or capable of serving usefully on your board of advisors, you can look at joining an advisors membership program. Companies like Vistage and CEO Clubs of Americacan help assign advisors, or even staff your board completely. 

SEEK DIVERSITY

In addition to size and quality, you need diversity in your counsel. Those that have worked as founders in other startups (hopefully successful ones, but even failed ones) can teach you the ropes based on their experiences and knowledge-learned. Your peers, founders who have been there and done that, serve best to advise you on quarterly or monthly advisory meetings. 

I would even think of having consumer advocates sit on the board, and have a direct bond with the grassroots of your company. For instance, a college representative if you are building a social media app for colleges (or they represent a high market segment of your product) so they can be your person on the ground and provide advice based on their daily interactions with their other peers. 

LET THEIR EQUITY VEST OVER TIME

ReadWrite suggest giving your advisers equity that vest over time, so you can utilize them over a longer period of time, rather than having them cash and run. This also provides mutual interest ans assurity over a longer period of time, that the project will succeed.