Ray Dalio, founder and chief investment officer of Bridgewater Associates, the biggest hedge fund in the world, recently published a book, Principles which I pre-ordered and have been slowly making my way through for the past one month. The book is a collection of the personal and management principles that have helped him succeed in life and in business. The contents are not entirely new to me, they used to be freely available on a website maintained and infrequently updated by Dalio but then he took them down, expanded them and published them in a book. It’s probably the best $30.00 I’ve spent this year so far.
The brilliance of the book is how it codifies in a very simple and easily digestible way how important principles are to anyone who wants to live a successful life. Ray defines principles as the underlying rules that govern any situation you find yourself, such that when you apply them, you will get the right results. He shares many of the principles he has learned over the course of his life and how he came about them, how to learn from situations and extract the knowledge required and how anyone can build up their own organic set of principles. The goal for him is not to tell you what the right principles are for you, but to help you develop or figure them out for yourself. One of the biggest ways he says you can do this is by writing them down and always going over them. That said, the principles he does share are so applicable and useful that I found myself underlining and taking note of many of them.
Being that I currently went through one of such moments where the principles you’ve carried with you all your life turns out to be vastly wrong and in-congruent with where I want to be, this book was a complete godsend. One of the take-aways, among very many, is the power of radical transparency. Personally, and in business, I typically tell people only as much as I feel they need to know. That might work when things are going well, but it’s awful when things go wrong because no one knows the full picture and moments of crisis are not the best time to try to learn. So even in situations where people could’ve helped you, they wouldn’t know how. Also, while you get a lot of credit when things are going well, by not being open and transparent, when things go wrong, you will also receive the blame.
Another thing he harps on so much is how the ego can prevent you from learning hard lessons or making hard choices that will make you grow and improve. Life is about evolution and most of the time, pain comes with growth, whether it is physical pain or the psychological pain that comes with failure, loss or just confronting your weaknesses. The ego wants to keep you from experiencing this pain therefore it makes you either run away from your problems, refuse to try risky things or work as hard as you need to, or it gives you a sense of overconfidence in your abilities that prevents you from evaluating yourself objectively in order to make the hard decisions required for your success. By forcing yourself to get past your own ego, you can then have more clarity to make better choices.
One other lesson which has always been apparent and true for me but which Ray reemphasizes is that the most successful and often wealthy people are not really driven by money. Whether they have it or not, it’s not really why they do what they do. I’ve often remarked that money is a poor motivator and even if it were not, after a certain point, more money does not necessarily mean a better life. The best motivator as far as I’m concerned is innate passion, ability, usefulness to yourself and society and drive for accomplishment, aka ambition. But money is an external, visible metric for measuring results so I don’t discredit it at all. I love making money, not as the reason for what I do, but as proof that I’m doing it well. Ray Dalio does a good job of spelling this out, although it sounds so much better coming from him since he has billions and I don’t. Oh well.
One of the key points of the book that I also have a problem with is the idea of an intellectual meritocracy, which is what Ray Dalio believes he built at Bridgewater and which he says is part of what makes the hedge fund so successful. It’s the idea of vicious competition on the basis of the best ideas and it’s proponents rising to the top while less smart ideas and their by definition, less smart proponents are cut out in a certain Darwinian fashion. It’s the kind of idea a really intelligent person would propose and while I agree with it in principle, especially when it comes to hiring and building a company, I wonder how well it translates across the board for society. What happens to the people and organizations who do not compete well on an intellectual basis, when they are relegated to the background of things? I don’t have this problem, thank God, but it still gives me pause. It seems too much like codification of certain levels of privilege, which is a word I never thought I’d use unironically, but here we are.
Anyway, this is a book I heartily recommend for anyone who is driven to succeed, and willing to do the necessary work on themselves to achieve that. I have marked up my copy with lines, highlights, scribbles in the margins. It’s hands down my favorite book this year, and I’m only a bit less than half way into it. I can’t wait to finish but I’m really taking my time.
For the people who think everyone is hyping the book because it’s written by a billionaire hedge fund investor, trust me I’d be recommending this book even if it was written by a penniless monk. It’s that good.