This book is a brain dump of Ray Dalio’s principles on running his company. It can be a bit dry at times, as Ray Dalio goes through his various principles, listing and describing them one at a time. I found his principles on life, earlier in the book, and his principles on management, later in the book to be the most insightful.
He started Bridgewater Associates in 1975 in his own home. As he grew the company to be one of the top five hedge funds in the U.S, he has been through many failures in business, including a period where he had to fire many of his employees. These failures helped him develop various principles to hold him and everyone in his company accountable, and to prevent them from repeating the same mistakes.
As he begins to step down from his role as CEO, he wanted to leave his employees with his vision for running Bridgewater, and the reasoning behind his principles. Hence, he wrote this book with his employees in mind, but also as a way to share his ideas with the world.
The book mainly contains the principles, and rules that Ray developed to guide him through his personal life while running his hedge fund, Bridgewater Associates. He delves into his financial principles briefly, i.e on investing in markets, but has another book dedicated entirely to understanding the economy.
Here are some of my key takeaways from the book.
Pain + Reflection = Progress
Ray’s principles are developed through his various failures, and he urges the reader to do the same, to constantly reflect on their failures, and use these failures to develop principles and processes, to boost them on an upward spiral. He has a great graph that shows how someone should conduct their personal/professional life: an upward trajectory with many failures along the way, where failures are used for self-reflection and improvement.
Getting Out of Your Way
Many times, we get in our way when understanding the truth. The “little self” or the “ego” can have certain beliefs that we unconsciously cling to. When building a business, or working in teams, it is essential that everyone: become aware of the larger goal, their roles, and to want to get to the truth, to see reality as it truly is. Ray stresses that radical truth and transparency are key to this. In business and personal relations, it is important for everyone to want to get to the truth instead of wanting to be right.
He delves into several principles such as “evaluate accurately not kindly”, and “recognize that tough love is both the hardest and the most important type of love to give”. I’d summarize these set of principles as being aware of our ego barriers and wanting to get past them to see the truth clearly.
An idea meritocracy is the result of these various principles that help people get past their ego barriers and operate in radical truth and radical honesty. An idea meritocracy is where everyone wants to get to the truth, by providing their input, in order for the best ideas win. He has many principles on how to weigh in everyone’s input based on their past track record, and personal knowledge. All in all, Ray doesn’t run his company from the top down, instead, ideas are generated by everyone, and everyone is held accountable. He has also created algorithms where everyone’s ideas are weighted and taken into consideration when making decisions. No one is above the meritocracy process.