Mental Models for Founders

First Principles Thinking

Aristotle / Elon Musk

Strip a problem to its fundamental truths and reason up from there — the antidote to reasoning by analogy.

Second-Order Thinking

Howard Marks

Think past the immediate effect to the second and third-order consequences.

Inversion

Carl Jacobi / Charlie Munger

Think backwards: instead of asking how to succeed, ask what guarantees failure — then avoid it.

Skin in the Game

Nassim Nicholas Taleb

Decision-makers must bear consequences to align incentives.

Option Value

Option value is the worth of the right — but not the obligation — to do something later. In finance, an option pays when the underlying moves in your favour; you can let it expire...

Antifragility

Nassim Nicholas Taleb

Some systems gain from disorder — growing stronger from shocks.

Barbell Strategy

Nassim Nicholas Taleb

Concentrate at extremes of safety and risk, avoid the mediocre middle.

Activation Energy

Reactions do not start the instant ingredients touch. They need a minimum energy input — activation energy — to overcome the barrier between initial and final state. In chemistry,...

Feedback Loops

Norbert Wiener / Jay Forrester

Outputs feed back as inputs, creating either amplifying or stabilizing dynamics.

Compounding

Einstein

Exponential growth from consistent small gains over long time horizons.

Opportunity Cost

Frédéric Bastiat

The true cost of any decision is what you gave up to get it.

Sunk Cost Fallacy

Alfred Marshall

Past investments should not drive future decisions.

Survivorship Bias

Abraham Wald

Studying only survivors produces systematically wrong conclusions.

Circle of Competence

Buffett & Munger

You have an edge in some domains and not others — and the boundary between the two is where most catastrophic decisions happen. Knowing where your knowledge actually ends, not where your confidence ends, is the single most protective mental model.

OODA Loop

John Boyd

Cycle through observe-orient-decide-act faster than competitors.

Goodhart's Law

Charles Goodhart

When a measure becomes a target, it ceases to be a good measure.

Narrative Fallacy

Nassim Nicholas Taleb

We compress complex reality into clean stories, mistaking explanation for prediction.

Network Effects

Robert Metcalfe

Value increases with each additional user, creating exponential competitive advantage.

Leverage (Systems)

Donella Meadows

Small shifts at the right point produce outsized systemic changes.

Pre-Mortem Analysis

Gary Klein

A pre-mortem is a decision exercise: assume the project or decision has already failed, then work backward to list why. The team imagines it is twelve months later and the launch...