At SXSW 2018, Ray Dalio, the best-selling author of “Principles” and one of the most successful investors and entrepreneurs of our time, will discuss the unique principles that helped him build his company (Bridgewater Associates) from his two-bedroom apartment to the fifth most important private company in the U.S. and made him one of the 100 richest people in the world. In “How to Build a Company Where the Best Ideas Win Out” (9:30 am Monday, March 12, at the Hilton Austin, Salon DE) he will describe “a believability-weighted idea meritocracy” in which people strive for “meaningful work and meaningful relationships through radical truth and radical transparency.” He’ll also explain the innovative technologies his firm uses to make sure that the best ideas win out. Dalio (who will also sign copies of his book at 11 am Monday, March 12, at the Austin Convention Center, Room 10C) gave us a preview of his talk.
You’re known as a private person. Why did you choose to share your personal story — and your principles?
Until recently, I didn’t want to share these principles outside of Bridgewater because I don’t like public attention and because I thought it would be presumptuous to tell others what principles to have. But after Bridgewater successfully anticipated the financial crisis of 2008-09, I got a lot of media attention and so did Bridgewater’s unique way of operating. Because most of those stories were inaccurate because I didn’t communicate with the press, in 2010, I posted our principles on our website so people could judge them for themselves. To my surprise, they were downloaded over three million times and I was flooded with thank you notes from all over the world. I decided to pass them a long in a book now because at 69 years old I’m in a transition from trying to be successful to trying to help others be successful without me. I feel a responsibility to pass along the principles that helped me. I was faced with the choice of whether I would let my dislike of public attention stand in my way of what I knew would be the right thing to do. I decided that I couldn’t let my last and probably my most important decision be driven by my discomfort, so I decided to do it. I also know that I could disappear from public attention after I passed them along, which I plan to do.
In your book “Principles,” you write, “This is a time when it is especially important for us to be clear about our principles.” Why? And why have principles in the first place?
Being clear on one’s principles is important because it helps individuals make better decisions and it clarifies their values and their ways of operating. They help people be clear about what they are going after and how they will get it. That makes them more effective and it helps them build better relationships. It’s a fact that people who have shared values and principles get along while people who don’t suffer through constant misunderstandings and conflicts. So clarifying one’s principles is very important. But today, people’s principles are especially unclear and uncommunicated. That is because of the decline of religion and other ways of focusing on principles and making them shared. For example, I don’t think that we as Americans now have agreed-upon values and principles and, as a result, we have lots of disorderly conflict. I believe that any people who have disorderly conflict should step above their conflicts to see if they can agree on what they are going after and how they should be with each other so that they can to resolve their disagreements to effectively go after what they want.
Can people with different principles work together?
Not if they disagree on the most important principles about how they should deal with each other. On the other hand, they certainly don’t have to agree on all of their principles, because some are not sufficiently important to separate people when they agree on the most important ones.
How do you balance having faith in your convictions while staying open to change?
It’s natural if you want to get at the right answer wherever it comes from (without a bias that you think yours are the best). It’s natural if you’re curious and want to stress test your thinking to improve your chances of making good decisions. But it’s a habit and skill that you have to cultivate, which I explain in the book.
How much does lack of courage impact people’s success?
Hugely. I think people worry too much about getting bruised by failures and don’t give enough attention to the longer-term learning and the strength that comes from making mistakes. There is a section in my book “Principles” about the psychological reasons for that and how these worries can easily be overcome by changing one’s habits thoughtfully.
Most of us fear failure. You argue that it is one of the keys to success. Why do you think some people are better at failure than others?
It’s largely because the opposite is taught and rewarded from childhood, through schools and in most careers. Most people are taught to think of their failures as their inferiorities and they try to deny them rather than learn from them. Those people who treat them that way don’t do it intentionally to undermine their success — they do it because they focus on first-order consequences of failure (of having a less desireable outcome) rather than the second- and third-order consequences of it (which are learning and getting stronger).
Your philosophy promotes systemizing your decision-making. Do you put any faith in gut decisions?
Gut decisions can be either invaluable or bad because they reflect the messages from the subconscious mind. For that reason, I believe that it is best to reconcile one’s conscious, logical thinking with one’s subconscious, intuitive thinking.
Your talk at SXSW at 9:30 am on Monday, March 12 is titled: “How to Build a Company Where the Best Ideas Win Out.” What is the biggest obstacle to doing this?
People’s egos and their blind spots, which leave them emotionally attached to their own perspectives.
What are you most looking forward to at SXSW 2018?
Interacting with young entrepreneurs who are at the stage of life that I was 30 or 40 years ago and brainstorming on the best ways to handle what will be coming at them.
Radical truth and radical transparency can make people uncomfortable. How do you suggest people deal with that?
First, ask them to really think through whether they are making a smart choice to let their discomfort stand in the way of their operating with radical truthfulness and radical transparency. When they do the calculations, most conclude that the costs are too great, so they want to push through the initial discomfort to do it and derive the benefits. Once they intellectually want to do it, it’s important to help them emotionally get used to it. Then, once they get used to it, they find it uncomfortable operating with others in their old untruthful and nontransparent ways.
Which new technology — introduced over the last five years — are you most excited about?
Algorithmic decision making.
If you want to see Ray Dalio and the thousands of other innovative speakers at SXSW 2018, then it is not too late to buy a badge. There is also still lots of great, convenient lodging available for the event. For more important information about March March 2018, visit these eight helpful links.
Hugh Forrest serves as Chief Programming Officer at SXSW, the world’s most unique gathering of creative professionals. He also tries to write at least four paragraphs per day on Medium. These posts often cover tech-related trends; other times they focus on books, pop culture, sports and other current events.