Super-successful macro hedge fund Bridgewater Associates is secretive even by industry standards.
But there’s one good way to get a window into the firm, other than snooping around Westport, CT: Founder Ray Dalio’s “Principles,” the 100+ page philosophy of success distributed to every employee.
The Principles are public, so we combed through them to learn how to be a high-performing employee at the world’s largest macro fund.
That’s possible because the Principles aren’t your typical company handbook, gathering dust in desks. New York Magazine reported that “Dalio’s axioms are studied with Talmudic intensity at the firm.”
So let the Principles guide everything that you do at Bridgewater, and you will succeed.
From Principle 5: 'If you talk behind people's backs at Bridgewater you are called a slimy weasel.'
Bridgewater's most important operating philosophy is 'radical transparency.' To avoid being a slimy weasel, employees regularly call each other out for almost any imaginable mistake. That process is known as 'issue logging.'
NYMag reports that 'one employee is said to have been issue-logged for failing to wash his hands after a trip to the bathroom.'
From Principle 131: 'When people are 'without a box,' consider whether there is an open box at Bridgewater that would be a better fit. If not, fire them. ... We are trying to select people with whom we'd like to share our lives.'
Bridgewater is often derided as a cult. In this Principle, Dalio doesn't hide the level of commitment he expects.
Principle 177: 'Constantly think about how to produce leverage.'
Given Bridgewater's investment success, it's no surprise that Dalio thinks about every possible leverage opportunity.
Here, he encourages managers to use technology and smart hiring to delegate almost everything.
From Principle 36: 'If you can't understand or reconcile points of view with someone else, agree on a third party to provide guidance.' That third party could be 'your manager.' Transparency goes both ways.
A New Yorker writer who recently profiled Dalio said people didn't seem to be actually calling out their bosses: 'In the time I spent at the firm I saw senior people criticising subordinates -- but not the reverse.'
But Dalio insists that anyone can criticise their managers. He told Dealbreaker, 'People challenge my views about just about everything just about all the time, and they are rewarded for it.'
From Principle 31: 'Don't make the mistake of being a dumb shit with a confident opinion.'
Here Dalio stresses the importance of doing your own research before making a point. This is a philosophy everyone would benefit from adopting, but it also explains something about Bridgewater's infamously brutal interview process.
The phrase 'dumb shit' appears three times in the document in total.
Bridgewater's heavy research informs their macro strategy. When Dalio says macro, he means macro.
From Principle 67:
Higher-level thinking doesn't mean the thinking done by higher-level beings. It means seeing things from a top-down perspective -- like looking at a photo of Earth from outer space, which shows you the relationships between the continents, counties, and seas, and then going down to a photo of your country, then down to your neighbourhood, then down to your family. If you just saw your family without the perspective of seeing that there are millions of other families, and there have been many millions of other families over thousands of years, and observing how your family compares and how families evolve, you would just be dealing with the items that are coming at you as they transpire without the perspective.
Get out in nature regularly and talk about it with your colleagues. Take a science class in your spare time.
This is where Dalio gets grandiose, giving fuel to some of the cult-leader accusations. In a section called 'My Most Fundamental Life Principles,' he lays it all out.
'I have found that by looking at what is rewarded and punished, and why, universally -- i.e., in nature as well as in humanity -- I have been able to learn more about what is 'good' and 'bad' than by listening to most people's views about good and bad.'
'I also love to study nature to try to figure out how it works because, to me, nature is both beautiful and practical. Its perfection and brilliance staggers me.'
Dalio looks to the natural world for the 'radical truth' that guides Bridgewater -- and its $100 billion assets under management. Given the fund's success, looking to Gaia has yielded a lot of green.
From Principle 106 (subsection b): 'At Bridgewater, because we always seek excellence, more time is spent discussing weaknesses.'
The biggest lesson for running a business that Dalio draws from the natural world is the centrality of evolution. Over and over, he stresses the crucial importance of constant improvement, for both the company and individual employees. Apparently, that means a lot of focus on people's shortcomings.
In practice, this takes the form of 'drilldowns.' NYMag defines the term:
'Intense sessions--one insider compares them to a cross between a white-collar deposition and the Spanish Inquisition--during which managers diagnose problems, identify responsible parties ('RPs,' in Daliospeak), and issue blunt correctives.'
Not for the faint of heart.