Think Differently, Think By First Principles: Elon Musk

“If you have a choice between a lower valuation with an investor you like versus a higher valuation with someone you don’t care for, take the lower valuation”, Elon Musk of Tesla Motors and SpaceX says, when asked what entrepreneurs should do while raising venture capital.

Why should one opt for lower valuation?

Because, “It’s better to have a higher quality venture capitalist who you think would be great to work with than to get a higher valuation with someone where there’s even a question mark, really.”

Elon Musk encourages entrepreneurs (and others) to think differently. And think differently in all aspects of the business.

“Where many think by analogy, entrepreneurs (and everyone) need to think by first principles”.

elaborating on the importance of thinking fom first principles, he says, ““Instead of reasoning from first principles, [people] will tend to…do things because others are doing them because there is a trend or they just see everyone going in that direction so they think that direction must be a good direction to go. Which is sometimes correct but then sometimes you’re going to run off a cliff or something. So it’s really better to look at things…from a first-principles standpoint.”

In this video he talks about fund raising, why he isn’t going to be doing another Internet startup, and he also shares his thought on CleanTech, the launch of SpaceX, and finally, his plans for the future.