Principles
I would not be surprised if you hadn’t heard of Ray Dalio — he is not some celebrity businessman like Musk, Zuckerberg, or Bezos. But what he lacks in fame he makes up for in wealth. He came from a middle class, Long Island family. He founded Bridgewater Associates — the largest hedge fund in the world — in his two-bedroom apartment. Forbes suggests his net worth is $18.1 billion. He epitomises the American dream.
His book, Principles, is a manual for all his employees. In it, he explores what has made him successful, and provides principles that anyone can use to achieve their ambitions. The purpose of the book is to provide radical transparency.
Transparency and failure are the two important tenets of Principles. Everything is recorded at Bridgewater, even executives meeting to discuss whether an employee deserves a raise. This opens everyone up to vulnerabilities. If a trader thinks his Portfolio Manager’s idea is stupid, he should tell him bluntly. This goes for Mr. Dalio himself: he does not want his employees to follow his ideas just because he is the boss. Dalio hires smart people so they can catch mistakes, not so that they can follow his every move — he often admits he is a “dumbshit.” He requires that they challenge him.
Transparency is necessary for growth. People need to know what others dislike about them so they can address those problems. If their ideas are mistaken, they need to be corrected straight away — not allowed to bolster false confidence. This office environment may sound dystopian, everyone at each other's throats and throwing each other under the bus at the smallest misstep. Indeed, many suffer under the intense scrutiny and leave. Even when it is understood logically that this no-holds-barred programme works, we still feel the urge to reject it. Dalio insists this is all done in kindness.
A similarly important component of success, according to Dalio, is failure. As he will readily admit, he fears boredom and mediocrity much more than he fears failure. To him, failure is not the end of the road: “The key is to fail, learn, and improve quickly. If you’re constantly learning and improving, your evolutionary process will look like the one that’s ascending.” In the face of our generation’s ethos — an ethos of necessary perfection — Dalio hopes to remind us that if we do not fail, we will never learn, and never improve.
Failing is not enough, however. According to Dalio, we must learn to fail openly and honestly — and not attempt to hide our shortcomings from others. “Having nothing to hide,” he says, “relieves stress and builds trust.” Ultimately, we should accept that we need not be perfect: “It’s more important to do big things well than to do the small things perfectly.”
A larger picture now comes into view: the rumoured wolf-pack culture at Bridgewater is not one designed to forcibly weed out the failures, but rather, to encourage people to engage with their colleagues openly and honestly — and to keep growing. Perhaps, then, this book circuitously aims to dispel the rumours of a cut-throat company and an unforgiving leader (‘history is written by the victors’). But the purpose of the book is not exceedingly relevant: everyone who reads it will gain something — perspective, nuance even — that will help them succeed.
The take-aways: it is important to learn to embrace failure, and to talk about it. If you hide failure or do not challenge yourself, you will never grow. Most of all: do not be afraid to be ambitious.
For more information on the book, see Principles by Ray Dalio.