Principles by Ray Dalios

Mid-Week Geek Peek #2

“Above all else, I want you to think for yourself—to decide                                                                         1) what you want,                                                                                                                                           2) what is true and                                                                                                                                          3) what to do about it.

I want you to do that in a clear-headed thoughtful way, so that you get what you want. I wrote this book to help you do that. “

Ray Dalios is an American businessman and founder of the world’s biggest hedge fund, Bridgewater Associates, with $160 billion in assets. But that’s not why I’ve become a big fan of Ray. I’ve become a big fan because of the “different kind of company” he has created.

Unlike other hedge funds that climb the skyscrapers of Wall Street, Bridgewater Associates

Bridgewater Associates

Workplace or Retreat?

headquarters, located in Westport, Connecticut, is described as retreat-like and is surrounded by the trees of a former nature reserve.

Bridgewater is perceived as almost cult like and he attributes its success to its people and culture. A culture that’s built around what Ray Dalio calls ‘radical transparency’ to the point where cynics call the workplace creepy.

Creepy or not (Bridgewater is under constant surveillance – all meetings, all interviews and all interactions are taped), clearly his practice and philosophy is working.

And his philosophy is what he spells out through over 200 principles that Dalio shares with the hope that it will help not only his employees, but anyone interested in achieving success inside or outside the workplace.

But then what is success?

Dalio’s version of success is: “I believe that it is nothing more than getting what you want—and that it is up to you to decide what that is for you. I don’t care whether it’s being a master of the universe, a couch potato, or anything else—I really don’t. What is essential is that you are clear about what you want and that you figure out how to get it.”

This “success is achieved by people who deeply understand reality and know how to use it to get what they want. The converse is also true: idealists who are not well-grounded in reality create problems, not progress.”

He breaks up his book into 3 distinct parts that can be read either independently or as a connected whole.

Part 1 is about the purpose and importance of having principles in general,

Dalio believes that having principles that work is essential for getting what we want out of life. He also believes that to understand each other we have to understand each other’s principles. He begins by examining the following questions –

1) What are principles?                                                                                                                                2) Why are principles important?                                                                                                               3)  Where do principles come from?                                                                                                          4)  Do you have principles that you live by? What are they?                                                                 5) How well do you think they will work and why?

While taking you through his internal journey and philosophy, he urges you to answer these questions by yourself and when considering each principle, please ask yourself, “Is it true?”

Part 2 explains Dalio’s most fundamental life principles that apply to everything he does.

Very early in his life Dalio learned how important and how liberating it was to think for himself. He developed an approach for himself that he believes will work for you to accomplish great things. Dalio’s approach was –

1) I worked for what I wanted, not for what others wanted me to do

2)  I came up with the best independent opinions I could muster to get what I wanted

3) I stress-tested my opinions by having the smartest people I could find challenge them so I could find out where I was wrong.

4) I remained wary about being overconfident, and I figured out how to effectively deal with my not knowing.

5) I wrestled with my realities, reflected on the consequences of my decisions, and learned and improved from this process

This led him to his most fundamental principle: Truth —more precisely, an accurate understanding of reality— is the essential foundation for producing good outcomes.

He further talks about the 5 choices we need to make as we head towards our goal and his 5 step process to getting what you want out of life.

Part 3, explains his management principles as they are being lived out at Bridgewater. There are over 200 of them logically broken down. Some of my favourites, that transcend into life as well, in random order are –

  1. Trust in truth – realize that you have nothing to fear from truth
  2. Don’t worry about looking good – worry about achieving your goals
  3. Be assertive and open minded at the same time
  4. Recognize that conflicts are essential for great relationships because they are the means by which people determine whether their principles are aligned and resolve their differences.
  5. Recognize that people are built very differently
  6. Don’t act before thinking. Take the time to come up with a game plan
  7. Logic, reason, and common sense must trump everything else in decision-making. However, while logic drives our decisions, feelings are very relevant
  8. Avoid the “theoretical should”
  9. Embrace the power of asking: “What don’t I know, and what should I do about it?”
  10. Remember that your goal is to find the best answer, not to give the best one you have

Like most people who’ve made their billions, Dalio didn’t set out chasing the number of zeroes.

“Yes, I started Bridgewater from scratch, and now it’s a uniquely successful company and I am on the Forbes 400 list. But these results were never my goals—they were just residual outcomes—so my getting them can’t be indications of my success. And, quite frankly, I never found them very rewarding. What I wanted was to have an interesting, diverse life filled with lots of learning—and especially meaningful work and meaningful relationships. I feel that I have gotten these in abundance and I am happy. And I feel that I got what I wanted by following the same basic approach I used as a 12-year-old caddie trying to beat the market”

 “Principles by Ray Dalio” is his approach and fundamental principles he learnt along the way, elaborated in this gem of a manifesto (if I can call it so) for not only anyone building a company, but also for everyone looking for answers to live a better and more “successful” life.

Do you have any life principles? What’s your definition of success?

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