Most fundamental truths
In his interview with Kevin Rose, Elon Musk described the importance of reasoning from first principles. He contrasts this with what he observes the normal way of thinking which is by analogy, wherein we look at something new as an iteration of something already in existence, and so overlook entirely new ways of doing things.
Instead, with first principle thinking, Musk says you boil things down to their “most fundamental truths” and then reason up from there.
I definitely think by analogy and use the “if it works there, why wouldn’t it work here” line of thinking a lot. Not to put words in Musk’s mouth, but I interpret his admonition to be a warning not to extend analogy thinking into “if it doesn’t work there, why would it work here”.
When analogies fail to unearth a solution, roll up your sleeves and start with first principles.
“Somebody could say, ‘Battery packs are really expensive and that’s just the way they will always be. Historically, it has cost $600 per kilowatt hour. It’s not going to be much better than that in the future.'”
So when people said that electric cars wouldn’t be viable because if you scale the cost of a laptop battery to the size needed in a car, it would be prohibitively expensive. Musk instead asks what are the component metals and materials in a battery? Can they be sourced and assembled economically? In other words, he is starting from scratch in determining the cost of batteries, not scaling from an existing example.