The Secrets Of Ray Dalio And His Dot Collector Transparency Software

Channel: Alex Kantrowitz

Published at: 2023-11-07

YouTube video id: b3A3z0xFOSU

Source: https://www.youtube.com/watch?v=b3A3z0xFOSU

let's go inside the secrets at
Bridgewater and of its founder Ray doio
in an interview with the author of a
revealing new book all that and more
coming up right after this welcome to
Big technology podcast a show for
cool-headed nuance conversation of the
tech world and Beyond today we're going
to talk all about Ray doio his fun
Bridgewater and his famous computer
system that let his employees rate each
other in real time called The Dot
collector and we're going to do it with
the author of a brand new book Rob
Copeland is here he's a New York Times
Reporter and the author of The fund Ray
Doo Bridgewater Associates and the
unraveling of a Wall Street Legend Rob
welcome to the show thank you for having
me thanks for being here so let's talk
about who r ray doio is and why you were
interested in writing a full book about
him what sort of made him rise to that
level and sparked your interest sure
well first of all I think people should
know that I've known you for a number of
years and that I once ran into you at an
Alaska Airlines Lounge uh what I'll tell
you is I've been a business reporter for
more than excuse me for about a decade
and a half and for some majority of that
time I've been reporting on and around
Bridgewater Associates it's the world's
biggest hedge fund but I'm not super
interested in them just because they're
a hedge fund you know there's a lot of
big important frankly boring companies
and Bridgewater is anything but boring
its founder Ray Delio has become world
famous for for supposedly inventing
these principles these rules he calls
them principles for life and work and he
wrote a best-selling book about it he's
the he millions of people have viewed
his Ted Talk they listen to him on
LinkedIn he was interviewed by freaking
gwenith paltro he's really become this
sort of pseudo
celebrity um he just become a figure far
outside the financial world and I think
he's great fun to write about right and
so the principles are not just about
like how to invest but they are about
how to live your life how to conduct
business within your organization and to
me the thing that put Ray doio on my
radar is that his company practices some
of the most insane uh transparency I've
ever seen including this um dot
collector piece of software that people
sit in meetings with iPads and rate each
other's believability and other
attributes and they get a score to which
you know supposedly they were then
trusted within the organization to make
decisions now we're going to get into
all of this and more but that to me is
like the fact that he tried to go
outside of finance and become this
business Guru really is what makes him
interesting and we don't talk a lot
about a lot of hedge fund managers uh on
this show but it made sense to dedicate
an episode because of that well and
let's be let's be honest as a hedge fund
manager r alio was famous to people like
me people who are Finance reporters at
the New York Times but as the inventor
of the principles and this new way to
live your life and he literally calls it
the Holy Grail he says if I if you do
this you will be rich that has made him
incredibly famous and and put him in
frankly a level that of no other hedge
fund manager I can think of right and
we'll get to the principles but it's
first important to note that Delio got
to where he was initially based off of
some really good calls I mean it didn't
he didn't just apparate Into Thin Air
and become this like you know person
sitting down with paltro and talking
about you know how to live life like he
made great calls uh including about two
significant economic downturns that he
was able to profit off of in particular
the 2008 2009 crash where he himself
pocketed something like $750 million
talk about like before before we get
into the principal stuff and the dot
collector I mean talk about like what
initially propelled diio to business
success sure so there's there's two
versions of this story there's the
version that Ray Delio would tell you
and there's the version that my book uh
I think breaks open let me tell you the
ray doio version which is he starts
Bridgewater he's relatively unsuccessful
son of a jazz musician he did go to
Harvard Business School but he starts
Bridgewater in his apartment in 1975 and
does incredibly deep economic research
he researches how Nations how
governments work how whether the
currencies are going to rise or fall and
he begins to be pretty good at
predicting economic Trends this makes
him world famous in 2008 when he is
credited with being one of the very few
people to see that the subprime mortgage
crisis is uh about to burst and to his
credit Bridgewater's funds do make money
that year and that's a year when the
stock market crashes and that really
propels him into another Echelon of a
figure how was he able to see the crash
before it happened well
he he would say that he had studied for
so many decades how so many countries
work that it was almost obvious in
retrospect he sends he does have
evidence by the way he's not just
claiming that he did he does write a
weekly or a daily newsletter that he
sends out to clients so he was able to
point and say look I was warning about
this sort of wave this letter around and
that got him a lot of attention not just
in hedge funds but invited to the White
House became friends with Ben Bernan Tim
gner these are these were the top uh
economic figures of that era so you're
saying that the reality is a little
different than the story that he's
telling the reality is a lot different
and to be honest Alex it it's something
that even I didn't know until I really
started researching for this book and I
did something that I recommend no one
ever does I went back and I had a
research assistant she's amazing I can I
plug her her name is Abigail Somerville
she is truly the best and we together
read every single news article that Ray
doio had ever been quoted in from 1975
onwards and what we found was nonstop
since the 1980s Ray Delio has been
predicting economic Calamity every
virtually every single year he has
predicted a giant crash and so what
happens in 2008 is he's not lying he W
he did predict an economic crash in 2008
what he doesn't talk about very often is
all the other years before that that he
predicted the same crash that never
happened but but it's not like his fun
lost money in the earlier years and he
was able to make a significant amount of
money in the downturn
so I meanes so I mean even the fact that
he did Cry Wolf a lot like the fact that
he was able to take what he knew put the
strategies into place and avert the
catastrophe and actually make money and
I mean isn't that exactly what you're
supposed to do as a hedge fund manager
look let's give him a ton of
credit in the 1980s '90s 2000s most
people on Wall Street and Beyond still
believe that you made money in the
markets sort of through your gut that
you you could quote unquote read the
tape that called it reading the the
stock tape and that was how many
managers made money people like George
Soros becomes a famous billionaire um
that's how they did it Rey had a
different Outlook Ry said I will make I
will do research and I will make these
written rules and I will follow these
rules even if my gut tells me otherwise
and he was fabulously successful at that
look he made billions of dollars before
anyone really even knew who he was and
and that's a credit to him okay and so
then obviously this stuff works and he's
like well I have the investing
principles down now I'm going to start
applying them to management and life and
this is how the principles start to
emerge is that right exactly so he he's
made his billions he's made more money
than we could ever spend right and he
begins to say what what is out there
besides wealth for me and he realizes
that these rules that he has for
investing they really come from his
overall philosophical Outlook and his
philosophical Outlook can be boiled down
to you should just be honest with one
another you should just we should be
able to stop this interview right now
and I should say Alex professionally
that question didn't work here's how I
would have said it you should be able to
stop me in the middle and say Rob you're
rambling and and that should be
impersonal and that if we could do that
with one another we would we would come
to a better outcome because we would
remove the emotions from it and we would
just we would move on with our day feel
like there might be some spiritual
kinship between you and Ray doio on that
front you're not one to hold back your
opinion well I think here's the main
difference between me and Ray Delia
which we'll get into is I'm not
pretending that this is some high-minded
philosophy there I I can just tell you
what my personality is and I can tell
you on that at that waffle bar at the
Alaska Lounge I can tell you what your
personality is but I'm not getting in
front of millions of people and saying
follow me into the abyss right so let's
talk a little bit about that Abyss right
so the principles are all about
transparency like is there anything else
to them or does it really all boil down
to like tell people how you feel I mean
what's your can you just give us some
examples of what these are how they're
implemented in the firm and what you
know what type of ground they cover so
his overarching philosophy is called
radical transparency which means that
things that could be that would normally
be kept secret should be held out in the
open so for instance any meeting at
Bridgewater should be taped and anyone
should be able to listen into it and to
weigh in on it
later this philosophy basically comes
down to we should find the most
believable person the most trustworthy
person and get them involved in every
decision in their in their remit now the
principles themselves and you know we
could talk about this for hours and we
won't but they they basically boil down
to seeing a natural Order of Things he
makes a lot of comparisons to the to the
Animal Kingdom he says for instance when
the lion I might have the animals here
wrong but the meaning is true when when
the lion eats the hyena that's terrible
for the hyena but it's part of the
natural order of things and it would
fall apart if we didn't let the lion eat
the hyena so there is a an appeal to
that right you you can't listen to what
I'm saying and not say Okay I I see
that yeah and then how did it manifest
itself in The
Firm well the problem is it's very
different um in practice than how he has
described it in in person so at the
beginning in say around that 2008
financial crisis the principles were
really just sort of like one man's word
it was just a few sentences written on a
piece of paper and it was a few nice
metaphors and no one took it all that
seriously um sort of like how you know
you walk into an office you walk into an
office uh an apartment building and you
know it's written on the wall have a
sunny day you know it doesn't mean you
have to like put that into your heart
and and take that with you all day the
problem is he keeps writing more and
more principles and they get less
philosophical and more literally and
they say things like if someone does
something wrong they prescribe for what
he calls public hangings so now we
should learn from each other's Mistakes
by watching us metaphorically execute
someone someone which at Bridgewater
would be firing them he says that we
should diagnose even the smallest
problem so if something goes wrong if
something as small as you know the peas
in the cafeteria are wilted one day we
should haul in the head of the cafeteria
in front of video cameras we should
really probe in his words we should
probe what happened what does the what
thought process led to those peas and we
should frankly humiliate people you
should one of the principles is you
should be willing to humiliate yourself
to get to the
truth now I'd like to skip forward for a
second here which is I'd like to spoil
the book for
anyone there's only one person at
Bridgewater who never really humiliated
thems to get the truth and he's
Ria and okay that's interesting so this
was also like um kind of productized in
some way through an issue collector and
and like ma like real surveillance tools
right you mentioned videotaping every
every meeting but there was like a
transparency library that you could go I
mean talk a little bit about that so
this is what's this is why it's not
really about hedge funds you know it's
about yeah the workplace um of of many
people's nightmares the so he turns all
these cases the P case I'll give you
another case Ry is once uh he's once at
the urinal in the bathroom and he looks
down and he sees P under the urinal I
think every man every every man
identifying person listening to this
podcast has probably had that happen but
Rey thinks something is truly wrong and
he literally sends an email out saying
there's piss on the floor and it's this
huge investigation that is taped and or
case studies made of it and all of these
cases at Bridgewater go into something
called the transparency Li Library so
that anyone at any point can pull it up
and learn from the lesson of that time
that Ry noticed urine under the
urinal let's take this another level now
which is you have all these cases now
you're making people maybe take quizzes
on it saying what should Ry have done at
that urinal maybe we're even ranking
your answers now now we have all this
data right I have this data on are you
the one who peed at the urinal are you
the one who um whose high heels made
loud Anno did they go to the videotape
to try to figure out like KGB style who
it was so they re they actually put they
posted people outside of the bathroom to
go in and investigate every time someone
used the urinal and I talked this is
look this is in the book and what I'll
tell you something that's not in the
book one person several people told me
that they actually sent the pee out for
your
analysis I wasn't able to confirm that I
will just tell you I believe it it
tracks what I know to be true about
Bridgewater I can't imagine they
wouldn't have and the wonderful Ending
by the way of that case is they never
figured out what happened at the urinal
and no one had the stones to tell Rey uh
did you ever consider that maybe you
just you know
missed so the but all of this this
starts to accumulate this huge horde of
data and I know you know and you
appreciate that when there's a ton of
data people want to do something with it
and so Ray starts building these what he
calls the principles operating system
it's a tool it's a collection of tools
in which he can collect all of these
little data points he calls them dots
and the whole thing begins to work a
little
dynamically yeah and so that's gets us
into this collector example where people
basically hold iPads in meetings and
start raing their co-workers based off
of their belief ability and other
attributes and then apparently that's
the way that they wait decisions in The
Firm I want to talk about that at length
when we come back to the break so why
don't we do that we're here with Rob
Copeland the author of the fund uh Ray
Doo Bridgewater Associates and the
unraveling of a Wall Street lesson
Legend we'll be back right after this to
go deep into the dot collector and
realtime transparency at
Bridgewater and we're back here on big
technology podcast with Rob Copeland
author of the fund Ray Doo Bridgewater
Associates and the unraveling of a Wall
Street Legend okay so before the break
we teased a little bit about uh the dot
collector let's just go with an ex can
you tell us a little bit about how this
thing would collect feedback on people
in real time sure so everything we've
been talking about all these ratings
what's happening is Ry and all the
employees are ra in themselves or raing
each other in categories like the
ability to to think clearly things of of
that nature that's not a literal
category and each time I rate you I'd be
rating you right now by the way during
this conversation I might be saying I
might be saying Alex I'm not really
feeling the critical thinking from you I
might be giving you a four out of 10 on
critical thinking literally right now I
just put it into I'd have an iPad with
thatt I I read the book I mean at least
give me a six I mean ability to read
I'll give you a 10 okay uh but uh and
you could do by the way do the same
you'd be able to see that I was doing
that and you could say well like I'd
give you a I'd give you a five on
ability to diagnose truth so all of
these ratings which are called dots
they're all accumulated on something
that Bridgewater called it's baseball
cards so it's essentially every
employee uh all their ratings sort of
just like a you know a baseball player
you'd be able to see their stats their
their RBIs and this is something called
The Dot collector so it's collecting all
of your dots it's ingesting thousands of
ratings in all of these different
categories and the idea being that we've
collected all of these dots and then I
should just be able to pull it up and
say if if Alex and Rob are having a
disagreement I should be able to say
well I can see that in all these other
meetings Alex has actually been judged
to be pretty good at XYZ and Rob has not
so I'm going to side with Alex on this
one how did this not like incite very
vicious internal politics I mean if
you're walking out of a meeting and you
have do you see who's rating you what
like Alex it cited the most vicious
internal politics you do see what people
are rating you you can rate them back
you can also take polls so let's say I
really believe uh Alex this conversation
is going terribly I think everyone
agrees with me I can stop this in its
tracks and I can put up a poll on the
dock collector and I can say do you
think Alex is looking at this right and
people can vote by the way whichever one
of us loses that vote we're going to get
a whole lot of negative dots really I
want to point one other thing that
people might be
thinking okay so you've got this dot
collector but how can you force people
to use it you know I've got a job you've
got a job maybe I just go throughout my
day and maybe the peas in the cafeteria
are wilted but maybe that doesn't I I
don't that doesn't rise to the level of
a DOT for
me what Bridgewater starts doing is it
starts telling employees you have to
rate a certain number of incidents per
day you have to put in dots and not only
that but a certain percentage of your
dots must be negative so they are
forcing you yeah exactly ly they are if
there weren't internal politics before
they they're now guaranteeing there will
be because I can't just walk around and
say great job guys I I have and and I'll
say Ray Doo's defense here is remember
his whole philosophy is trust in truth
is to offer Frank feedback so if you're
not offering a certain amount of
negative feedback then we're never going
to grow then we're just patting each
other on the back
you know rob it seems like this was kind
of like the the distilled essence of the
feedback cultures we've seen like this
doesn't exist in a vacuum the idea of
being harsh with feedback doesn't exist
just in Bridgewater you know it's been
the subject of books it exists within
Netflix to some extent meta has it
though I think a little bit softer than
the Bridgewater like actual constructive
feedback although everybody talks about
feedback I mean do you see this as more
of like a product of a moment and and or
did it influence that
moment I would say yes and yes both
first of all this is definitely the
wildest most extreme example of this of
this idea um Reed Hastings and Ray doio
actually there are a lot of similarities
to their to their culture and Ry has
talked about it inside Bridgewater um
about how how much he admires what Reed
what Reed has done what what I would say
is that technology the ability to have
this dot collector the ability to rate
in real time has sort of poured gasoline
on this right because it's very
different remember it's very different
if you and me we're not alone right now
unless this is the lowest rated episode
in big technology history but the the if
we're alone and I'm saying Alex like let
me just look at you straight straight on
and just say like what you said in that
meeting it I didn't think that came out
of your mouth very well here's how I
would have said it probably the there's
a share trust between us we can move on
it's very different when we start
talking about doing this essentially in
public on a huge scale and Bridgewater
had you know 2,000 employees at um at
Peak when everyone can see what everyone
else is getting rated for in real time
and then it's a snowball rolling down
the hill to hell yeah is it like an Uber
driver where you get a certain low
rating and you're booted off the app
it's it's it's well yes first of all
literally if you don't have high enough
ratings in certain categories you will
get what Bridgewater calls sorted sorted
out they don't call it getting fired
they call it sorting you sounds like a
mafia term you said it not me the uh
what I would say is like an Uber driver
you know if you get an Uber if you see
your Uber driver has what's a bad rating
now by the way it's like 475 I think I'd
like yeah I get anything under like four
and 4.6 here like might as well not be
driving if we run out of things it's
talk about this ends up with you and me
checking our Uber ratings together but
and I and I I better be higher than you
Alex I want to live there's no no
there's no I'm not the kind of guy who
gets a high Uber rating I'm the kind of
guy who says uh who says take the bridge
not the tunnel um that's a New York joke
for uh for our West Coast listeners the
um the problem is if I can walk into a
meeting and I can already see that you
Alex have a lot of
red dots have a lot of bad feedback you
can finish me off I and I should finish
you off by the way because there is very
little incentive for me to go against
the curve because if I stand up for you
now I'm putting myself out there
publicly and you know yeah go ahead well
I I spoke to someone um I spoke to a lot
of people with this experience but I
spoke to someone who was there for only
about 3 months and she had a a pretty
rough transition at Bridgewater but she
wanted wanted to stay she wanted to
learn to use the principles to learn
more about herself but she said it was
just a negative feedback loop she was if
you if you mess up in your first week
you are marked as the weak prey and then
it just gets piled and piled onto you
and you can't stay now I want to say
something really important here which is
everything that I've just said to you if
I if Ray Delio were here right now he
would tell me that I was only talking to
disaffected employees and that to many
people that many people love it but I
can tell you that for this book I I went
and I got the internal HR emails I got
their own memos their own memos people
telling Ry this is a self defeating Loop
that people are scared that at any
moment they may be fired and the real
scary thing for me about Ray dalar and
Bridgewater is that he
knew he did know he does know and he
will continue to know that this is the
real impact of the principles and he
apparently does not care well he's he's
also there are um plenty of enablers
right I mean if you looked at he did
that 60 Minutes interview or it was
either them or Ted or maybe both where
he's talking about the dot collector and
the reporters like in the room being
like wow they're like really raing based
off of the system and he's like showing
it off and I just think that like in the
popular imagination there's like no
feeling that like what is ha or no like
statement that what is happening is
pretty messed
up absolutely look and we've seen this
you see this in in Tech all the time
these these these Tech Heroes who are
here to save us I was blown away in
researching this book you know Adam
Grant very very famous organizational
psychologist Wharton Professor writes
bestselling books he goes in and he sees
Ray Delio and he Witnesses this and he
writes that it's Bas in it he devotes a
whole chapter of his book to it and he
writes that it's basically one of the
greatest things he's ever seen later Ray
Delio hires Adam Grant to a paid job as
a consultant this is a okay talk about a
feedback loop I mean you can you can
decide that for for yourself but yes 60
Minutes um CBS This CBS This Morning so
many
interviewers they they just sat heard
Ray Doo's version of things and said
well this is fantastic you know gwenneth
palro interviewed him she said Ray you
should run for president mhm listen I
like you a lot Alex I don't think you
should run for president I don't like I
it's just like he got put on this other
level and no one just stopped and said
hold on a second how about we just
switch the angle of it switch the
aperture why don't we ask the people who
work for him what it's really like and
that's really that has really been my
reporting journey I don't know how this
went to me running for president I'm
just a humble podcast host Rob but um
did did other well you're a podcast host
but we can argue on the humble well
anyway did um did other companies try to
uh embody this like did the other
companies try to build the same software
so this was ry's great dream and he
talked about it endlessly inside
Bridgewater and he they spent more than
$100 million on this technology his
great dream is that the principles and
the dock collector would be a adopted by
other companies and he went to other to
some of the most famous men in business
you know he told people inside
Bridgewater he was talking to Elon Musk
about doing this at Tesla he visited
Jack dorsy when Jack dorsy was running
Twitter you know Bill Gates endorsed the
principles um the wild thing is that all
of these quite famous and successful
people they sat and they listened and
they never said anything publicly
against Ray but most of them did not
actually
ADT these ratings tools which should
tell you quite something right so he had
these like what would you call them
outwardly
constructive relationships with Silicon
Valley royalty but when he tried to sell
them on the actual product that he bet
his whole life on it was a no well and
he did he was successful uh with one
company sort of so he was successful
with coinbase I don't know exactly how
but he got coinbase to do a program
where they brought the dot collector to
to coinbase and uh spoiler alert the
reaction among coinbase employees was
quite poor and when uh reporters asked
coinbase about this coinbase's defense
was it was not that um that this was
their defense it was this product was so
unpopular that not enough employees used
it to make it worth continuing so they
didn't neither defended nor insulted it
they just said nobody wanted it and I
know that that was very devastating for
Ray right and I guess like thinking
about the culture inside Bridgewater I
mean Bridgewater knew that they were
perceived as like cult-like and somewhat
negative on the
outside and you know being in New York
at the like height of Ray Delio's career
um and having people getting offers
there like I had friends or even before
the height like I had friends who were
very cleare eyed telling me that I got
this offer from Bridgewater and I don't
know about it it seems like the culture
there sucks and it's very harsh so I
want to ask you a question because
you've been speaking to the people that
decided to take those job offers and
work there why would people subject
themselves to such an
environment and I by the way I want to
add something people I I talk to people
who still work there I I didn't speak to
just disaffected people I spoke to a lot
of people with very complicated feelings
about about Ray and about Bridgewater
remember this goes back to the
principles and the principles say if you
follow these rules you will achieve a
higher level version of yourself it's a
challenge and it's it is a
way it it's it's one of the best pitches
I've I've ever heard more than money is
he's pitching you a chance to achieve a
a better version of yourself so a lot of
people even people who otherwise are
clear eyes said well if I put myself
through this Gauntlet and at at the end
of a year 2 years 10 years setting aside
the money I may literally figure out
what I'm good at this could change my
life and that's still what Bridgewater
pitches to this day uh they're still
going out and saying we we operate on on
principles and we're a place where you
can challenge yourself it reminds me of
I don't know if you've seen these Tik
toks of these like you know fake
military camps for men who want to
toughen themselves up and they pay like
thousands of dollars to be yelled at by
you know former Marines like going up
muddy Hills and becoming quote unquote
men after that so I haven't seen those
Tik toks because my Tik toks are all
shirtless men giving me um advice on
weightlifting I don't know why the
algorithm thinks that but um the uh I
will tell you that Ray
actually Compares Bridgewater to the
intellectual Navy Seals right these are
these are his words so he absolutely
would agree with that that comparison
and those people remember your in your
Tik Tok which apparently you have a
little bit of a satom masochist thing
which I think we should explore on a on
a future episode of this we'll back
progam sure um we'll have me back just
for that I'll interview you but the uh
remember you're paying them this is even
better Bridgewater pays you so you know
maybe you're having a terrible time and
for many of the people who are in the
book you you as you follow their their
way you you can see how difficult this
is for them but they are getting paid a
lot of money so I'll skip to your next
question which is a lot of people ask
you know is it a
cult I would say I can't answer that
question for you because Bridgewater has
threatened me with many many lawsuits
and I'd like to um you know keep my
one-bedroom apartment but I will say if
it's a cult it's a cult where you get
paid a lot of money to stay so that's
just another way to that that's another
reason to stay money notwithstanding do
you think people actually get that
benefit out of the experience that
they're looking for I mean do you think
Bridgewater you know iron sharpens iron
so to speak do you think Bridgewater can
turn people into like the essential form
of themselves by dealing by by living
within these systems so for this book I
spoke to hundreds of people people still
at Bridgewater people whove left
Bridgewater and I truly try to find
those True Believers and I will just
tell you that even people who Ry
considers his closest
acolytes uh don't necessarily fully buy
into the principles but everybody who
leaves say it's not says it's not worth
it not everybody says it's not worth it
but everyone says it's nothing like what
he says it is that the principles and
this dot collector are are are
weaponized tools to be wielded princip
by Rey and those in his favor against
anyone who is uh who's out of favor I
mean there's a lot of crying yeah
there's a lot of crying in your book
obviously
um I wonder what it is about our work
culture today that makes people I mean
yes I understand that people want to
become this distilled version of
themselves and want to go through this
but just it's it's work you know it's
crazy to me it's just your job
what do you think it is about the fire
War culture that makes people say yeah
that sounds okay well I'd like to talk
about the crying for 10 seconds because
probably my favorite thing I ever heard
back from Bridgewater from you know I
fact checked this book I offered them a
chance to comment we spent years going
back and forth with Ry and his lawyers
and Bridgewater's lawyers one of my
favorite things I've ever heard from a
Bridgewater PR person is we have no
record of people crying regularly at the
office because there there's there's a
scene isn't the opening scene of your
book book somebody it's not even regular
crying it's the display of crying for
learning purposes that struck me there's
the opening scene of your book is
someone just absolutely breaking down
that being recorded and put in the
transparency library and then Ry
encouraging people to watch it ABS
absolutely I I this is where I'd like to
pause just to say the book is actually a
lot of fun um I didn't want to write a
downer of a book there is this book is a
ride it was a ride for me to write it
and report it but yes there is a real
darkness here and people it's not just
crying they're being broken down in
front of the cameras for everyone for
what many people would say pleasure but
I I do want to get back to your question
because I I I really love this idea that
our job has to be our identity and that
is Central to Bridgewater's pitch is
that the principles are for life and
work now look Google what Google pay for
the laundry for their employees all
these all these uh all these tech
companies encourage you to stay more and
more at at the office Bridgewater does
did even more than that they made sure
their headquarters was so far away from
New York that many of their employees
lived with each other during the week
this became their whole life and it it
really does become a closed Society off
of the grid
and with with I think some really
upsetting results um I'm going to keep
talking about this because I I love it
because I I so I work for the New York
Times this my it's my day job um it's my
real job this this book is my passion
and people ask me all the time you know
they'll they'll point to Something in
the times that they didn't agree with or
a reporter's tweet they didn't like and
they'll they'll not just ask me about it
but they'll basically say it's my fault
and I always try to say to people you
know I don't walk around with a New York
Times tote bag this is my job this is
not my identity I love my job I'm very
lucky to work here I'm proud of this
news organization but I'm not going to
reflexively defend everything the New
York Times does at at Bridgewater you
have to be fully in you are 100% believe
that the principles where you have to
say you believe in the principles but it
is something that it's like it's not
surp it's maybe shocking but not
surprising in our work culture like I'm
glad you have this disassociation in
some ways or your between your identity
and your job but our work culture does
have this sort of like you know
willingness to put ourselves through
hell for
employers absolutely and your employer
now it feels like they they almost don't
want an employee who treats it as a job
they're hiring you for a job but they
want you to say no I would do anything
exactly one of the the you know you know
I used to live in San Francisco for a
few years um this is one here's another
story I helped you move a dresser out of
your apartment so it wasn't just that uh
wasn't just that Alaska Lounge but go
ahead well let's well but let's let's
really be honest you actually helped me
move that dresser out for a third friend
you were such a good friend that you it
wasn't even it was a CB2 dresser um I'm
this SP this episode is now sponsored by
Craton Barrel um but the uh I will say
this whole Silicon Valley mentality
which is now taken over the workplace
like RIT large just act like an owner
you know everyone should act like the
owner of the company you should treat
the company's money like it is your own
um that's all well and good if if you're
the owner right but I don't think we
should all act like the owner of our
workplace because um our workplace can
disappoint us you know
definitely did this stuff work I mean I
actually like we've been talking about
this all throughout about the dot
collect
about how brutal it could be and the one
thing that would almost excuse it well
not even excuse it but rationalize it
shall we say is if the people who were
rated highest on they were super
believable and you know they were given
widely way to make
investments and they made those
Investments and it worked so what they
mean obviously it's got to be a closed
loop system and and a successful one to
say okay this this thing is real and
effective what actually
happened okay so this is really the the
Fateful piece of logic that links
Bridgewater and the principles together
which is that Ray Ry would
say that he built this whole investment
system he became so rich off of these
rules and these rules led to the
principles so that just got me thinking
what is this investment system when he
talks about it it is so absurdly he'll
say I could be long or short anything in
the world you know that basically means
at any point I could I could hold or any
asset it's it's you know just mumbo
jumbo and I watched many interviews with
him talking about the investment system
where he just never said anything
concrete my my career as a business
reporter is talking to really successful
really smart people or at least people
who think they're really smart and they
they don't usually have trouble it's
expressing like oh yeah we think that
the Euro zone is in trouble so we're
going to short the Euro that's their job
good on them it's it's my job to uh to
to tell people about their perspective
so for years I tried to crack the secret
of Bridgewater's investment system what
are these rules these Timeless and
Universal rules that Ry talks about and
as I kept investigating this remarkable
thing happened is that Bridgewaters made
fund it just kept doing poorly for years
upon years since uh from the end of 2010
almost uninterrupted for a decade and
more it was just falling so far behind
the markets and when I started talking
to investment staffers they said you
know you know what Ry thinks is a rule
isn't what you or I think is a rule a
rule to me is if x happens over here y
happens over here to Ray if if Ry thinks
of it it's a rule if it's ry's opinion
it's a rule and that just got me then I
I just it all clicked for me that there
is no investment secret there is no
secret sauce it's just
Ray here is where my lawyers would like
me to tell you that lawyers for
Bridgewater Associates say there is an
investment system they just won't tell
you about it full stop so is your belief
that all this data collected in the dot
collector was it used for investment
purposes so
there
what I believe the dot collector is my
research would tell me is just a giant
distraction that it all had to do with
nothing to do with Investments but it
was a metaphor it is a metaphor for how
Bridgewater deals with Investments that
Ray and Bridgewater would like to say
that we have a similarly datadriven
approach for our investments what I can
tell you is I've spoken to people
intimately involved with those
Investments people still intimately
involved with those Investments and not
a single person has ever been able to
identify an actual quantitative what I
would consider to be a 2023 level
quantitative Rule and to the contrary
people have given me many many many
examples of when what Ry wanted Ray got
you know what struck me um in in an
excerpt you published in the times you
know talk about a whole firm that rates
itself this way and then you would
imagine if everybody's rating each other
this way that everybody would be able to
make investments but you say that at
Bridgewater's Peak which was 2,000
employees fewer than 10 20% were
assigned to Investments or related
research and something like 10% were in
an inner circle that was actually making
these Investments
fewer fewer so this whole notion that
this was being this these rankings were
being used to wait people's ability to
invest just on its face seems ridiculous
there was something is something called
the circle of trust at Bridgewater it's
about 10 people they signed lifetime
contracts and Ray allegedly lets them in
to see the real secrets of Bridgewater
they have to swear not to work anywhere
else everyone else at Bridgewater has
functionally no specific idea of what
the firm is doing with its
money yep sounds like
Scientology I'm really glad that those
words came out of your mouth Alex not
mine okay um well that's just my
perspective I don't know anyway uh so
you tried you tried to work at
Bridgewater that's what Ray alio was
saying in a tweet storm directed at you
a few years ago so talk a little bit
about your history with him it's great
fun okay so in uh I graduated college in
2009 right after Ray Delio you know made
a fortune predicting the financial
crisis couldn't get a job anywhere I was
moved back home with my parents and I
applied to so many jobs in
200920 um one of them was a hedge fund
called Bridgewater Associates and I I
was living in a three-bedroom apartment
with four people it was I was actually
having a lot of fun to be honest um I
was an absolute wreck back then
and I applied had no idea anything to do
with them I think I had one or two
interviews they didn't take me I never
thought about it for I didn't think
about it again for a few years and then
a few years later actually they reached
out to me and they tried to hire me for
a job uh editing their economic research
I had another few interviews I turned
them down none of this was too
extraordinary to me I've I have
unsuccessfully applied Alex to many jobs
in my lifetime I don't know if you had
to but I don't I don't bat a thousand on
this and once I started writing about
Bridgewater in around
2015 uh it became very clear to me that
Bridgewater had no idea that I had
applied there they had no idea that I
had any history there and so I I mean I
didn't know anyone there I I had
interviewed what on the phone or in
person once or twice and then eventually
Rey figured out that I had interviewed
there and he just he just went apeshit
um he started attacking me calling my
bosses saying I was a disaffected person
who couldn't who couldn't make the cut
there you know one of my this is the
book that I wrote is not a book about
how journalists are heroes I am not a
character in this book I don't figure
out some great thing and swoop in and
save the day but I will say there is at
the very end of the book there is a
chapter about my history with Ry that
was enormously fun to write um because
it it's been enormously fun to be honest
tussling with this uh super charismatic
I'll put it billionaire for the last
better part of a decade yep Le let's end
here so we've spoken through this entire
conversation about a way of working and
a way of investing and we've talked
about how it's framed in high-minded
terms and it's we talked about people
trying to achieve their uh essential or
their their greatest possible condition
by working at a place like this using
the principles and how Delia was trying
not to just be a businessman but in some
way a guy who guides people's lives um
after s bankman Freed's whole situation
and the movement where they were trying
to be effective altruists and make all
this money so they can improve the world
I'm starting to get a little wary of
business people who talk about anything
else than I mean of course it's okay if
your product solves a problem but if
you're talking about how you're trying
to improve the world through your
company that's when I start to get a
little bit concerned do you think we're
going to start to look at this stuff
differently or are we going to continue
allow people to use this language to
cloak what's going on behind the
scenes I think For Better or Worse we're
all looking for a hero and for the last
decade or so maybe longer business
people have stepped into that void for a
lot of reasons that that could be the
subject of probably another whole
podcast and I hope that our experience
with not just Rallo but you know Adam
Newman and Travis kalanick and Sam
bankman freed and all of these people
who said they were going to quote
unquote disrupt for the better Our Lives
I hope we realize that the hero does not
is not always the guy with the biggest
checkbook the book is the fund Ray Delio
Bridgewater Associates and the
unraveling of a Wall Street Legend the
author is Rob Copeland Al also a
reporter for the New York Times I
enjoyed reading it I enjoyed speaking
with you rob thanks so much for coming
on I'll be back all right thanks
everybody for listening thank you Nick
guatney for handling our audio and
Linkedin for having me as part of your
podcast Network always great to come to
you here today uh here every Wednesday
so thank you for listening we be back on
Friday breaking down the news with Ron
joh Roy thanks again for listening and
we'll see you next time on big Tech
techology
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