Bridgewater Associates, the $169 billion hedge fund led by Ray Dalio, just sent out a client note announcing a big shakeup at the management level.
Accompanying the announcement, the hedge fund included another note criticising the media for its “mischaracterization” of the firm when it comes to its succession process, culture, and views on China.
Here’s the full note:
Our Challenges with the Media
We are now in the awkward position of having some in the media mischaracterize what we are doing and what we are thinking. Rather than let these mischaracterizations stand, we want to clarify our thinking. But first, we would like to explain our challenges in dealing with the media.
While we have always tried to stay below the radar, as we’ve grown, the media has given us increased attention. Because we originally refused to deal with them and because of their tendency to sensationalize, their pictures of Bridgewater were distorted. We sought professional advice and were told that we could no longer stay below the radar and it was best for us to clarify inaccurate pictures and to try to be understood. While we found that approach to be better than having no contact, we also found that some distortions continued, though there were fewer of them than otherwise would have been.
Recently there have been three big areas of distortion:
1) The first is about our succession process.
We have been progressing as we’ve conveyed to you. As explained in our last quarterly letter to clients: “we’re in the midst of a planful transition from a founder-led boutique to a professionally managed institution. We expected that this journey would be challenging, and that is why we planned for a ten-year process . . . We’re learning a lot through this process and continue to struggle with our gaps.” In other words, as a management team, we have been and still are working through who is best suited to do what.
As you know, we have a radically transparent culture so that everyone in the company can see our deliberations. This led to our deliberations being leaked to the media, which resulted in an inaccurate picture being painted and us getting unwanted attention. It also made it appear that something unique was happening. While it was correct that we were deliberating our next steps, how these deliberations were going was distorted in a way that failed to convey key dimensions of what was going on. At the same time, we were in the process of determining next steps and negotiating the employment arrangement with Jon Rubinstein (see accompanying announcement) and we’re not yet in a position to share our next steps.
We now can share these steps, and the announcement that accompanies this message conveys them and how they were determined. In a nutshell, we concluded that it made the most sense to have Greg spend less time on management and more time on investments and that we needed to bring in an exceptional co-CEO with a strong tech focus to supplement the existing leadership. We assure you that, as always, we will be as prompt as is practical in conveying such key developments to you.
2) The second is about our culture.
Those who know us know that we strive to have meaningful work and meaningful relationships through radical truth (especially about our mistakes and weaknesses) and radical transparency (so there is no spin). They also know that this approach is the reason for our success. Some people in the media who don’t know us mischaracterize that culture, either because of lack of knowledge of it or because of the intent to sensationalize it. While we have not let people from the media in to study our culture, we have let preeminent organizational psychologists and researchers examine us. You can read the analysis of Robert Kegan (William and Miriam Meehan Professor in Adult Learning and Professional Development at Harvard Graduate School of Education) in the Harvard Business Review; that of Edward D. Hess (Professor of Business Administration at the Darden Graduate School of Business) in his book “Learn or Die” (Columbia Business School Publishing, 2014); and that of Wharton School professor Adam Grant in “Originals: How Non-Conformists Move the World” (Viking, 2016).
3) The third concerns our thinking about China.
To reiterate, we believe that China is going through the same sort of debt and economic adjustment processes that all countries have gone through at one time or another. These adjustments are healthy and China will come out of them stronger, though it will be weaker while it is going through them. We believe that to characterise China either as not having significant challenges or as facing a terrible situation would be inaccurate. Yet, because many in the media prefer to use more dramatic characterizations, they distort and take our comments out of context.
Hopefully you know us well enough to assess us directly rather than through media.