What is first-principles thinking?

“…like on rockets for example one could say oh you know that you could Reason by analogy and say the Rocket's going to cost a certain amount because that's what prior Rockets have cost or you can say well what is a rocket made of what the material constituents what are those M what do they weigh what's the cost per unit mass and that sets the limit ASM totically for what a rocket can be so if you can figure out some creative way to rearrange those elements into a rocket shape then you can achieve a much better outcome that's the first principles approach…”

— Elon Musk, 8 October 2014 · Watch: Elon Musk | Vanity Fair New Establishment Summit 2014 · 30:06 ↗