This story is about Bridgewater Associates, the world’s largest and most successful private hedge fund. But first I want to talk about the Buddha.
In the 13th century, the Japanese Buddhist philosopher Dogen wrote a famous series of precepts called the Genjo-Koan. In them, he preached that there was no such thing as an “abiding self.” “The buddha way is, basically, leaping clear of the many of the one,” he wrote. “To study the Buddha way is to study the self. To study the self is to forget the self.”
This koan sprung to mind during a conversation with Bridgewater founder Ray Dalio, about his fascinating new memoir-cum-management tome Principles: Life & Work. Dalio was describing Dot Collector, a tool his company built to inform its decision-making process. Bridgewater employees carry iPads into every meeting; as their coworkers speak, they register real-time feedback, grading one another on such criteria as assertiveness and open-mindedness, creativity, and maintaining high standards.
Over time, all those data points reveal the collective wisdom of the group—and, the thinking goes, expose each employee’s strengths and weaknesses. At first, Dalio says, receiving such candid feedback can be difficult. But eventually, he says, it challenges you to detach from your own ego. “It forces you to recognize that you are just one of those dots,” he says, “and now you have to make a choice: Do you want to be stuck with your opinion, or go above it all? It’s an out-of-body experience.”
For Dalio, this is not a spiritual exercise but an attempt to achieve what he calls an “idea meritocracy.” By embracing this kind of radical transparency, Dalio says, his company can surface ideas that would otherwise remain locked inside his employees’ brains. And by constantly measuring what those employees are good or bad at, Bridgewater can determine how much weight to give each individual idea or opinion. For instance, if I’m more detail-oriented but less visionary, you should listen to me when I discuss the meticulous work a task might require, but not my grand strategy for the company as a whole.
‘Do you want to be stuck with your opinion, or go above it all? It’s an out-of-body experience.’ —Ray Dalio, Bridgewater Associates Founder
The Dot Collector is just one way that Bridgewater learns, in Dalio’s words, “what people are like.” The company uses a variety of tools and methods to create psychographic assessments of each of its employees. Every meeting is video-recorded and archived, accessible to anyone inside the company. Coworkers are encouraged to openly criticize one another’s ideas and behaviors. When they experience distress, they record their feelings in an app called the Pain Button, which later reminds them to find a way to solve the problem. If they are stuck in a disagreement, they can use the Dispute Resolver, which asks a series of questions to guide them through the quandary, then point them to the best person within the company to help settle it. Some of these and other inputs are logged and analyzed and crunched to create detailed profiles of each employee, which are distributed (in the form of digital “Baseball Cards”) to everyone in the company.
To put it another way, Bridgewater allows its employees to see themselves through the same lens that Facebook or Google sees them, as a collection of data points that add up to a harshly complete picture of their interests, talents, and psychologies. The difference is that right now Facebook uses all that data to give you more of what you like, to confirm your biases, to put you at the center of the digital universe. Bridgewater uses that data to highlight your weaknesses and blind spots, and to show you just how small a part of the bigger picture you actually are.
This all sounds a bit like the Hitchhiker’s Guide to the Galaxy’s Total Perspective Vortex, a torture device that destroys its victims by explaining their cosmic insignificance. So it’s no surprise that fully one third of Bridgewater’s new employees drop out after the first two years. “We call it getting to the other side,” Dalio says. “If they can de-addict themselves to their egos and their blind-spot barriers and make it to the other side, it’s great. They understand that intellectually when they come in, but it’s like being addicted to coffee or something. It takes a while.”
The results, though, may be worth the journey. Bridgewater was one of the few funds to correctly predict the 2008 market correction. Its Pure Alpha fund returned its clients a reported $45 billion between its inception and 2015, making it the most profitable hedge fund in history. And its innovative workplace culture has become something of a case study. Author Adam Grant wrote about the company in his book Originals, calling it a “highly-cohesive, close-knit community.”
Now 68 years old, Dalio is steeping down as co-CEO post at Bridgewater (though he will remain as an investor and co-CIO). The publication of Principles is part of a kind of farewell tour—one that kicked off with a TED Talk in April, and that will continue through the publication of a second volume, focused on his economic and investment principles, some time in the next year or two. He also plans to release versions of the software he’s built for Bridgewater, so that other people and companies can use them to create their own radically transparent idea meritocracies. “My objective is to pass along anything that’s of value,” Dalio says.
Here’s something of value that I, at least, took from Principles: the notion that we are fallible, that our most deeply held beliefs might be wrong, and that we should investigate our own ideas as rigorously as anyone else’s. That’s something that companies like Facebook, Google, and Twitter—under fire for their hands-off approach to spreading bad information and building epistemically-air-tight filter bubbles—might learn from. Dalio turns cagey when asked if he’s considered consulting with those companies, but it sounds like the idea has at least crossed his mind, especially since those companies have long built the kind of detailed user profiles that his company leveraged to such success. “Algorithms are being used to know what you’re like,” he says. “It’s not done openly, but it is happening. And now the question is, how best to use it?”
Right now, internet companies use those algorithms to sell us targeted advertising and curated news feeds, trapping us inside a digital world that reflects our own desires and biases back at us. But there’s another way to use them: Let us see what’s happening behind the screen. Show us ourselves, in all our imperfect and insignificant glory. Expose all the dots, and force us to answer the same questions Bridgewater asks of its employees. Do we want to be stuck with our opinion? Or do we want to recognize that we are just one of those dots, and go above it all?