Release year: 2017

Author: Ray Dalio

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Review

Ray Dalio, one of the richest and most successful individuals on this planet, heads Bridgewater, the world’s largest hedge fund, consistently touted as one of the most successful globally. Remarkably, his entire success is attributed to a set of principles he developed and refined over time, guiding his relationships and decision-making. In his book “Principles,” he shares the recipe for his success.

How’s that for a sales pitch?

“Principles” is a substantial book. I must admit that towards the end, I was feeling fatigued. It’s understandable, though; the book spans roughly 550 pages, equivalent to trying to drink from a fire hose. After the approximately 100-page autobiographical section, the author succinctly lays out his life and work principles. The text serves merely to put them in context. His writing is rapid, akin to a machine gun: nugget after nugget after nugget, a barrage of wisdom accumulated over decades of leading the world’s largest hedge fund. I doubt this book was meant to be read at the pace I was reading it, just like all my book reviews aren’t meant to be read in one sitting. This book is meant to be slowly digested or used as a reference. There is so much to talk about in here.

As you can see below, I managed to accumulate 52 star quotes from this read, which is certainly above average for me. A lot of it is common sense, which, as I’m beginning to learn, is a misleading way of saying “experience.” Ray Dalio’s teachings extend in all directions, simply because his own experience is so vast.

From reading Dalio’s biography, it seems obvious to me that he never expected to become as successful as he was. What he consciously did was invest in the idea of principled decision-making, also known as the idea meritocracy, and simply got curious about how far he could push it. The rest took care of itself. To that effect, this book is the logical conclusion of a lifetime of synthesizing one’s train of thought for others to grasp onto. A wannabe author like myself can’t help thinking, “You’re a long way from writing a book as good as Ray Dalio’s ‘Principles.’” While this is as bleak and envious a thought a would-be author can have, the sole existence of this book also gives me hope. Being diligent and curious is the foundation of the work that allowed Dalio to write this book. In that sense, I very humbly feel that by writing book reviews such as this one, I’m proving to myself that I also have these traits. My ego is still too big for my own head, but I feel that time and life are both on my side on that front.

Above all else, this book made me contemplate the core idea of having principles. While reading a thought leader’s list of principles is certainly enlightening, it did make me ponder my own principles. What measuring sticks do I use when making decisions to determine if I shall go left or go right? If I were to capture such principles in written form every time I make a decision, what would the end result look like? How much better can a relationship be when both parties know they share the same principles?

I’m looking forward to finding out.

Félix rating:
👍

⭐ Star quotes

  • (p. xiv) Shift from having a perspective of “I know I’m right” to having one of “How do I know I’m right?”
  • (p. 38) Go slowly when faced with the choice between two things that you need that are seemingly at odds. That way you can figure out how to have as much of both as possible. There is almost always a good path that you just haven’t discovered yet, so look for it until you find it rather than settle for the choice that is then apparent to you.
  • (p. 71) ✅ While one gets better at things over time, it doesn’t become any easier if one is also progressing to higher levels – the Olympic athlete finds his sport to be every bit as challenging as the novice does.
  • (p. 79) The greatest success you can have as the person in charge is to orchestrate others to do things well without you. A step below that is doing things well yourself, and worst of all is doing things poorly yourself.
  • (p. 91) Life consists of three phases:
    1. First, we are dependent on others and we learn
    2. Then, others depend on us and we work
    3. Finally, others no longer depend on us and we no longer have to work. We are free to savor life.
  • (p. 123) Having the basics – a good bed to sleep in, good relationships, good food, good sex – is most important and those things don’t get much better when you have a lot of money or much worse when you have less. And the people one meets at the top aren’t necessarily more special than one meets at the bottom or in between.
  • (p. 145) Perfection doesn’t exist; it is a goal that fuels a never-ending process of adaptation. If nature, or anything, were perfect it wouldn’t be evolving.
  • (p. 152) If you can develop a reflexive reaction to psychic pain that causes you to reflect on it rather than avoid it, it will lead to your rapid learning/evolving.
  • (p. 172) Don’t confuse goals with desires. A proper goal is something that you really need to achieve. Desires are things that you want that can prevent you from reaching your goals. Typically, desires are first-order consequences.
  • (p. 174) Acknowledging your mistakes is not the same as surrendering to them. It’s the first step toward overcoming them.
  • (p. 176) Proximate causes are typically the actions (or lack of actions) that lead to problems, so they are described with verbs (“I missed the train because I didn’t check the schedule”). Root causes run much deeper and they are typically described with adjectives (“I didn’t check the train schedule because I am forgetful”).
  • (p. 189) You can’t put out (convey thinking and be productive) without taking in (learn).
  • (p. 192) Holding wrong opinions in one’s head and making bad decisions based on them instead of having thoughtful disagreements is one of the greatest tragedies of mankind.
  • (p. 197) If your statement starts with “I could be wrong” or “I’m not believable”, you should probably follow it with a question and not an assertion.
  • (p. 199) Consult others when you find yourself about to make a decision in an area that is your blind spot, where in the past you’ve constantly made bad decisions.
  • (p. 199) If a number if different believable people say you are doing something wrong and you are the only one who doesn’t see it that way, assume that you are probably biased.
  • (p. 228) The five types of the Team Dimensions Profile:
    • Creators generate new ideas and original concepts
    • Advancers communicate these new ideas and carry them forward. They relish feelings and relationships and manage the human factors. They are excellent at generating enthusiasm for work.
    • Refiners challenge ideas. They analyze projects for flaws, then refine them with a focus on objectivity and analysis. They love facts and theories and working with a systematic approach.
    • Executors can also be thought of as Implementers. They ensure that important activities are carried out and goals accomplished; they are focused on details and the bottom line.
    • Flexors are a combination of all four types. They can adapt their styles to fit certain needs and are able to look at a problem from a variety of perspectives.
  • (p. 254) All of your “must-dos” must be above the bar before you do your “like-to-dos”.
  • (p. 255) Any damn fool can make it complex. It takes a genius to make it simple.
  • (p. 299) An organization is a machine consisting of two major parts: culture and people. The people who make up an organization determine the kind of culture it has, and the culture of the organization determines the kinds of people who fit in.
  • (p. 321) To have an idea meritocracy,
    • Put your honest thoughts on the table
    • Have a thoughtful disagreement
    • Abide by agreed-upon ways of getting past disagreements
  • (p. 327) Never say anything about someone that you wouldn’t say to them directly. There is never a good reason to bad-mouth people behind their backs.
  • (p. 328) Managers should not talk about people who work for them if they are not in the room.
  • (p. 328) In some companies, employees hide their employer’s mistakes, and employers do the same in return. This is unhealthy and stands in the way of improvement.
  • (p. 329) Create an environment in which everyone has the right to understand what makes sense and no one has the right to hold a critical opinion without speaking up.
  • (p. 342) To have a good relationship, you must be clear with each other about what the quid pro quo is:
    • What is generous
    • What is fair
    • What is just plain taking advantage
  • (p. 348) Create a culture in which it is okay to make mistakes and unacceptable not to learn from them.
  • (p. 350) It is important to know the difference between 1) capable people who made mistakes and are self-reflective and open to learning from them and 2) incapable people, or capable people who aren’t able to embrace their mistakes and learn from them.
  • (p. 351) If you don’t have a willingness to fail, you’re going to have to be very careful not to invent.
  • (p. 351) People who are just succeeding must not be pushing their limits.
  • (p. 354) Pain + Reflection = Progress.
  • (p. 364) “I often hear people complaining about the style or tone of a criticism in order to deflect from its substance. If you think someone’s style is an issue, box it as a separate issue to get in sync on.”
  • (p. 386) If you don’t think the principles provide the right way to resolve a problem or disagreement, you need to fight to change the principles, not just do what you want to do.
  • (p. 399) People often make the mistake of focusing on what should be done while neglecting the more important question of who should be given the responsibility for determining what should be done
  • (p. 414) The person with good character and poor abilities, while likeable, won’t get the job done and is painfully difficult to fire because doing so feels like shooting the loyal dog you can’t afford to keep anymore – but they must go.
  • (p. 417) There’s not enough money in the world to get you to part with a valued relationship.
  • (p. 422) ✅ Changing someone’s values is something you should never count on.
  • (p. 426) In the end, accuracy and kindness are the same thing. What might seem kind but isn’t accurate is harmful to the person.
  • (p. 428) The most powerful transformations come from experiencing the pain from mistakes that a person never wants to have again – aka “hitting bottom”.
  • (p. 453) When a problem occurs, conduct the discussion at two levels:
    • The machine level (why the outcome was produced)
    • The case-at-hand level (what to do about it)
  • (p. 455) Managing people who report to you should feel like skiing together.
  • (p. 461) All your little problems are small pieces of trash you’re stepping over to get to the other side of a room.
  • (p. 464) It is more important to have good challengers than good followers.
  • (p. 465) The kind of leader who looks and acts like a skilled ninja will beat the kind of leader who looks and acts like a muscular action hero every time.
  • (p. 466) The greatest influence you can have over intelligent people – and the greatest influence they will have on you – comes from constantly getting in sync about what is true and what is best so that you all want the same things.
  • (p. 473) Problems are like coal thrown into a locomotive engine because burning them up – inventing and implementing solutions for them – propels us forward.
  • (p. 475) Acknowledging a weakness isn’t the same thing as accepting it. It’s a necessary first step toward overcoming it.
  • (p. 478) Think of yourself as a chef and taste the soup before it goes out to customers. Is it too salty or too bland?
  • (p. 480) Problems ranked from worst to best:
    1. Unidentified problems
    2. Identified problems without a planned solution (it hurts morale)
    3. Identified problems with a good planned solution
    4. Solved problems
  • (p. 489) A root cause is not an action, but a reason.
  • (p. 501) A good machine takes into account the fact that people are imperfect and make mistakes.
  • (p. 509) Don’t just pay attention to your job; pay attention to how your job will be done if you are no longer around.
  • (p. 522) Success consists of going from failure to failure without loss of enthusiasm.