How To Solve Any Complex Problem

A nugget from Elon Musk

Hello Friend!

For today’s edition I picked a very interesting insight from Elon Musk (in a conversation with Lex Fridman).

Elon’s most popular thinking framework is the “First Principles Thinking” approach (which I talked about in the "Reflections" of the previous newsletter edition — link here). But he has another thinking framework (which he borrowed from the Physics field) for solving problems → “Thinking in Limits”—He argues it can be applied to anything, not only engineering problems. This is the framework I’m bringing you today (in Elon’s own words).

👤 Authors

💡Nugget

✦ Elon Musk:

… Another good physics tool is thinking about things in the limit.

If you take a particular thing and you scale it to a very large number or to a very small number… How do things change?

From this point on, Elon illustrates this framework by applying it to a common problem in Manufacturing: Mistakenly attribute to a specific variable/component (e.g./ Volume, Design...) as the main reason for the state of a dependent variable (e.g./ the unit cost of the product).

Take the example of Manufacturing—which I think is a very underrated problem.

So let’s say you are trying to figure out Why is this product expensive?

[1] Is it because of something fundamentally foolish that we're doing?

[2] Or is it because our volume is too low?

So then you say: What if our volume was a million units / year? Is it still expensive? That’s what I mean by thinking about things to the limit.

If it’s still expensive at a million units / year… then volume is not the reason why your thing is expensive. There's something fundamental about the design.

Because of Economies of Scale, the more volume/quantity you produce the lower should be the unit cost of the product. But, this might not be always the case (such as in this example) when there are other variables/components that have a much bigger impact on the unit cost of the product.

In Elon's example, the design of the product has a much bigger impact than the volume, thus making Economies of Scale irrelevant (at least until the design issue is solved).

So [then] you change the design/part to be something that is not fundamentally expensive.

That's a common thing in Rocketry. Because the unit volume is relatively low and so a common excuse would be:

“Well it's expensive because our unit volume is low. And if we were in the Automotive [industry] or Consumer Electronics then our costs would be lower.”

And I'm like…

“Okay. So let’s say that now we are making a million units / year. Is it still expensive? If the answer is yes, then Economies of Scale are not the issue.”

(Source → Clip where Elon explains to Lex the “Thinking in Limits” Framework)

💭 Reflections

I made a thought experiment in which I applied this framework to gain more clarity about the relationship between Happiness and Wealth (you can absolutely skip this part).

Let’s say that Happiness/Satisfaction is the “variable” that we want to optimize, and we want to see how it changes in function of different levels of Wealth. What I can see is that on a range of $0 to $5 million (high number, but also not absurdly high), Wealth would approximately correlate with my levels of Happiness—as it offers me safety and also the opportunity of being financially independent for likely all of my life (a sense of control and independence has been shown by scientific research to correlate with satisfaction).

But let’s say I start at the level of $5M. How does my Happiness change if I go from $5M to $10M? Probably it wouldn’t increase very much (at least for me), but my “dependence on wealth” might increase—which would decrease my Happiness, because it would make me emotionally fragile to losing it.

The stoic philosopher Seneca even simulated being in a shipwreck (once in a while) to not feel dependent of his wealth—as he was the wealthiest man in the world. Taking “only” one or two slaves with him.

On top of that, with a fortune of $10M I would not be particularly loved by a significant portion of my country’s population (or almost any country) who believe in equality of outcomes (the foundation of any Communist System) as opposed to equality of opportunities (what I believe in).

Thus, if I had $5M, I would be conscious that Wealth stops being a relevant variable for significant increases in my Happiness. And thus, I would instead allocate more of my time to other variables (that also contributes to Happiness) such as my physical health, nurturing good relationships, finding new sources of personal meaning (such as volunteering in projects), or just keep doing business as usual or start new entrepreneurial ventures if that’s what I intrinsically enjoy doing (and keep making money but only as a natural byproduct of the value I create for others).

Right now I feel very lucky because, even though I’m not financially independent, I’m making money from things I intrinsically love doing—for the most part—and I would still do even if I had $5M. I think that’s truly the ultimate hack. And thank you for reading this far :)

💥 Stuff I Loved

This was a very interesting conversation.

I took some notes on the chapter of the “5 Principles for career happiness” (time range → 34:47 - 41:15), which you can find directly in this video url. My notes below:

🚨 Everything that goes after the symbol "@", comes from my own reflections (rather than from the podcast episode).

1. Challenge. Things gotta become incrementally more difficult. That’s why in Games every level must get harder, otherwise people would lose interest.

   • @ Not so easy that you get bored.

   • @ Not so hard that you don’t know what to do or overwhelms you.

   • @ Flow state is in the middle point.

2. The Progress Principle (”sense of forward motion”)

   • You have to have a sense of progress. Make 1% marginal changes, not only because they compound but because you will feel a sense of progress every time you complete every 1% goal!

     “We felt like we were going somewhere”. Humans need that sense of “going somewhere”.

3. Pursuing a goal that is meaningful to you

   • It doesn’t matter WHAT your reason is, as long as you HAVE ONE.

   • Find your reason.

     • @ Simon Sinek → “Start with Why”

4. Autonomy and Control

   • “Feeling like you have autonomy and control of your work. If people don’t have that in their work… they are physiologically more prone to disease, psychological challenges.

     • @ David Ogilvy → “Hard work never killed a man. Men die of boredom, psychological conflict, and disease. They do not die of hard work.”

       (PD: Im a fan of hard work because it gives me more meaning and it’s more fun, but I do acknowledge smart work >> hard work. There are also many nuances, as of for instance what really constitutes “working hard”, so don’t take it without more context about the life of David).

     • Control / Autonomy → Integral to feel like a free animal that is not in a cage.

       • Gives you POWER. And when you have POWER, you start taking agency over your life to live the way you genuinely want to.

       • @ “Don’t talk about “progress” in terms of longevity, safety, or comfort before comparing zoo animals to those in the wilderness.” - Nassim Taleb

5. You gotta be working with a supportive community of people that you like.

📁 All the ideas in this article are saved and classified in a searchable Database, which (as of July 2024) contains nearly 2,000 timeless ideas (sourced directly from the most influential doers and entrepreneurs — captured on books, interviews/podcasts and articles).

I call this Database the Doers Notebook, and I’ve recently opened it for anyone who wants it.

🤔 Why did I build this?

Well, as the Latin motto goes, “A chief part of learning is simply knowing where you can find a thing.” And since it’s all 🔎 searchable, we only need to type a keyword to immediately get a list of insights related to it!

For instance, if I’m unsure about how to get more sales in my business, I can simply type the word “sales” and immediately get 88 search results! In this case from Jim Edwards, Peter Thiel, Naval Ravikant, Paul Graham, Sam Altman, Balaji Srinivasan, Nassim Taleb, and many other remarkable individuals.

It’s like having a 🧠 second brain from which we can pull wisdom on demand.

And this is super valuable because it can significantly decrease the error rate in our judgment.

“In an age of infinite leverage [code and media], judgment is the most important skill.”

- Naval Ravikant

I actually made a video where I went through the list of insights I got for the keywords “sales” and “creative”.

So, if you wanna get better at sales and learn to be more creative (and also see all the features of the database and how you can get access) then definitely check out the video 👇

Wishing you a lovely weekend!

Julio xx

P.S. If you liked this article, you'll definitely enjoy my free 80-page ebook. It’s packed with 23 big ideas (from top influential doers and entrepreneurs) to become better, richer and wiser. Download your copy here!