First principles thinking (or "reasoning from first principles") is a problem-solving technique that requires you to break down a complex problem into its most basic, foundational elements. The idea is to ground yourself in the foundational truths and build up from there.
Ninja Van is premised on a number of such foundational truths. In this essay, I’ll share how the Ninja Van founders used first principles thinking to build a billion dollar company.
Traditional logistics - pick up from one warehouse, resupply 20 stores once a week. E-commerce logistics - pick up from multiple merchants, deliver parcels to 100 addresses every day. The first principle here is a classic case of disruptive innovation targeting non consumption*. E-commerce merchants are not (well) served by traditional logistics players. A startup designed to suit the needs of e-commerce merchants can disrupt incumbents.
E-commerce wallet share will keep growing at the expense of brick-and-mortar retail. The volume of e-commerce parcels will keep going up. The first principle here: during a gold rush, sell shovels. Last mile logistics is integral to e-commerce. Every e-commerce merchant needs a reliable and cost-effective logistics provider to get parcels into the hands of consumers.
Many e-commerce merchants in South East Asia sell to consumers in multiple countries. Most logistic providers only have a domestic presence. The first principle here: a logistics provider with a regional network can offer services a domestic-only logistics provider cannot. Not only are merchants better served, but merchants also prefer to deal with one logistics provider than to have a different provider in every market.
Merchants are price sensitive. They are not always able to pass on delivery cost to consumers. To beat the competition, a logistics provider needs to offer reliable service at a competitive price.
The first principle at work here: a tech-enabled logistics provider can use software + hardware to cut out lots of inefficiencies, thereby lowering cost per parcel. Out of the 3 founders, 1 is CTO^ and another is CPO^^. Engineering and product first.
The ability to generate new problems to solve is one of Howard Gardner’s definitions of intelligence. Without first principles thinking, young people have a hard time with real world problem-solving, much less problem-spotting. The ability to think from first principles is not just for founders. It's a skill founders look for in prospective hires. It’s important irrespective of roles, job titles etc.
A five year old will keep asking why until they hear an explanation they understand. By age nine, the same child would have been conditioned by school to stop asking questions.
First principles thinking meets school. School wins.
By applying first principles thinking and breaking down a complex system, we understand how the system works. Knowledge without understanding is useless. With understanding, learning becomes easier. Kids become more creative. They get better at problem-solving.
Studying for standardised tests is the antithesis of learning to reason from First Principles. Most kids cannot choose not to take exams. But they can choose to learn critical skills that are not tested. Reasoning from first principles is a gift every child has. But they lose it in elementary school. Let's help them rediscover the ability to ask questions like a five year old. First Principles 101 by Sahil Bloom is a good beginner’s resource.
* See The Innovator’s Dilemma by Clayton Christensen
^ Chief Technology Officer
^^ Chief Product Officer
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