Notes on a book by Ray Dalio

Ray Dalio is the founder of Bridgewater Associates, one of the world’s largest hedge funds. He attributes Bridgewater’s success to the fact that it runs on principles, and this book explains what they are.

The book is divided into three parts. The first, Where I’m Coming From tells Mr. Dalio’s story and how he arrived at identifying principles as the core of his life’s work. This part combines biography and philosophy to offer a compelling understanding of the subject and why it matters.

The second, Life Principles lays out a set of concepts that have guided Mr. Dalio’s decisions and actions throughout his life. These include his approaches to goal-setting, dealing with other people, and fostering open-mindedness.

The third part, Work Principles is an outline of the principles that inform the management of Bridgewater — and how they’ve evolved — using concrete examples from the firm’s history. Think of it as an explanation of the company’s operating system: how it hires people, how it deals with clients, how it consciously shapes its culture, etc. Central to this OS is a belief in radical truth and transparency which informs most of the company’s processes and structures.

Underlying the whole is an understanding that organizations are systems — the image in the book is of the company as a “machine” — and need to be designed as such. Mr. Dalio takes a pragmatic approach to trying new approaches in the design of this machine, trying new things, seeing what works and what doesn’t, tweaking, always in the direction of creating a more transparent environment that allows actors in the system to get closer to the truth.

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Download a free PDF from Bridgewater that outlines the book’s principles.