Lessons from a Billionaire Investor: Part II

More from Ray Dalio’s Principles

What's up, everyone. This is Alex Lieberman, co-founder and Executive Chairman of Morning Brew. Welcome back to Founder’s Journal, my personal audio diary, where I give you, the business builder, the tools you need to think better in order to build better, whether that's building a business, a team, or a new product. It is time for part two of the lessons from the book Principles, an amazing read by Ray Dalio, the founder of Bridgewater Associates. On this episode, we're going to focus on work-specific principles from Dalio. Let's hop into it. 

Hiring is broken

From Ray Dalio’s point of view, and my point of view, too, hiring is broken. We are typically very bad at assessing ourselves and assessing others. And if you believe that to be true, you should also believe that the traditional interviewing process is very bad at hiring the right people since traditionally hiring is all based on inaccurate assessment. And that is why Bridgewater relies on psychometric assessments, which is basically just fancy words for standardized tests, to choose people. So one test they do is the famous Myers-Briggs Type Indicator, which basically just judges every candidate on four spectrums: introverted or extroverted, intuitive or someone who senses, thinking versus feeling, planning versus perceiving. Another test they do is the team dimensions profile, which breaks people into five types: creators, refiners, advancers, executors, and flexors. Me personally, I identify as a creator and an advancer and my co-founder is a refiner and an executor, which is why I think we work so well together. So that's how Dalio thinks about bringing the right people into the door. 

A company is like an orchestra

Then it's about making sure the right people are in the right seats, doing the right things at your company, and the way that Ray Dalio visualizes, this is by comparing a company to an orchestra. Managing others is no different than conducting an orchestra. The conductor, AKA the person in charge, isn't the doer, though it helps if they have done the things before, but rather they are the person who visualizes the outcome and sees what each member must do to achieve the collective goal. The conductor makes sure each member of the orchestra knows what they are good at, what they're not good at, and what their responsibilities are. One of the hardest jobs of the conductor is getting rid of instrumentalists that don't play well individually or with others. And on top of that, the conductor needs to translate this very specific vision of the score that they have in mind to the orchestra actually executing properly, making sure each player, each group of instruments is adding their specific value to make the vision come to fruition. And so what a conductor may say is, you know, the bass players bring out the structure, the trumpets bring out the depth, the concert master, and the first chairs are like my senior leaders who look over part of the orchestra for me, the conductor. The conductor, can't settle on making this vision in their head, come to life in any way that is different from what they imagined. 

Principles for your day-to-day work

So now we've discussed principles for assessing people, decisions, and a company. Now let's finish up with principles that can guide you specifically as an individual in your day-to-day actions. The first is that everything looks bigger up close. If you put your finger super close to your eyes, you have an inability to see your finger clearly. Every experience in life follows the same rule. What's happening today seems like a way bigger deal than it will appear in retrospect, many years from now. When I decided to move from CEO to executive chairman at Morning Brew, it seemed like a way bigger deal than how I feel about it today. Time is the best formula for understanding what matters and how much it matters, which is why it helps to step back, get perspective from others who aren't as up close as you to the action, and sometimes defer decision until time passes and emotions have subsided. The next thing is that you need to learn to be an imperfectionist. And this lines up really well with the recent Founder's Journal episode on Pareto Principle, or the 80/20 rule, which I'll link to in the show notes. You need to realize that you get 80% of the value out of 20% of the information or effort. And you're likely to spend 80% of your effort to get to that final 20% of the value. And that is why imperfection is actually key. Perfectionists spend too much time on the minutiae at the margins, rather than focusing on other important things. What you should really do is get things 80% of the way there, and always ask yourself if that remaining 20% is worth the 80% of effort that will probably be required. The answer is usually no. 

Tough love

And finally, with the last principle to specifically guide your individual actions, it's about tough love. Tough love is the most important love for you to give others. Tough love means having uncompromising standards and enforcing those standards, especially when not easy. Again, this sounds very logical, very much like the idea of meritocracy, yet most people don't do it. Most people compromise on their standards because they're afraid of confrontation. And when I say most people, I'm also referring to myself. For the longest time, I wasn't capable of having hard conversations. We're afraid of what others think or hurting the feelings of others. So instead of embracing discomfort, we put comfort ahead of success, which ironically is worse for everyone, not just you, since the person that you could have given tough love to now, doesn't have the opportunity to know how they could get better. And the ironic part of this is that people assume if you're tough, or having tough conversations, you don't care about the person you're critiquing, but it's actually the opposite. The more you care deeply and the more you connect with your people, the more that you both have the permission to give tough love, and you can create value from giving tough love. Ray Dalio talks about this in his career. It's the centerpiece of radical candor, a framework by Kim Scott, and Ray Dalio shows admiration for Vince Lombardi, who is one of the greatest NFL coaches of all time for showing tough love and caring deeply. Here's what Dalio said about Lombardi: “With limited resources. He led his team to five NFL championships. He won two NFL Coach of the Year awards and many still call him the best coach of all time. Lombardi loved his players and he pushed them to be great. I admire and still admire how uncompromising his standards were.”

Share this episode

 And those are just a few of my favorite principles from Ray Dalio's book. If you enjoyed hearing about them and you think there are people, whether it's your friends, your family, or co-workers, that would also enjoy it, copy the link to this episode and share it either in your iPhone group chat or your work Slack channel. 

As always, thank you so much for listening to the show. And before we go, I want to give a huge shout out to the team that makes this podcast possible. Our show is produced and engineered by Dan Bouza. Our associate producer is Bella Hutchins. Brian Henry is our executive producer.

Alan Haburchak is Morning Brew is director of audio. Holly Van Leuven is our fact checker. Noah Friedman is our video producer and editor. And I'm your host, Alex Lieberman. Thanks so much again. And I'll catch you next episode.