Ray Dalio: What Would Happen If You Were 100% Honest With Your Colleagues?

Dec 2, 2017
Originally published on September 27, 2019 9:40 am

Part 2 of the TED Radio Hour episode Transparency.

About Ray Dalio's TED Talk

Entrepreneur Ray Dalio would want somebody to tell him if he's about to make a mistake. So in his company, even the most junior employees are expected to give him--the boss--critical, honest feedback.

About Ray Dalio

Ray Dalio is the founder of the world's biggest hedge fund, Bridgewater Associates, which manages $160 billion.

His book, Principles, describes his business philosophy of "radical transparency" which he believes is the key to Bridgewater's success.

Copyright 2019 NPR. To see more, visit


It's the TED Radio Hour from NPR. I'm Guy Raz. And on the show today - ideas about transparency. So just think about your bosses for a second.


GARY COLE: (As Bill Lumbergh) I'm going to need you to go ahead and come in tomorrow.

RAZ: Have you ever wanted to tell them exactly what you think...


COLE: (As Bill Lumbergh) I'm also going to need you to go ahead and come in on Sunday, too.

RAZ: ...To let them know all the ways they're doing it wrong...


RAZ: ...That they're being jerks...


RAZ: ...Or that they're just not very good at their jobs?

DALIO: It's great.

RAZ: This is Ray Dalio.

DALIO: I'm Ray Dalio. I'm the founder of Bridgewater Associates and now currently chairman and chief investment officer.

RAZ: So Ray's company is the largest hedge fund in the world. It manages more than $100 billion in assets. And Ray credits a big part of that financial success with creating a certain kind of culture at work, a culture he believes could help other companies succeed, too. And it's something Ray calls radical transparency.

DALIO: That we want an idea meritocracy - in other words, a place where the best ideas win out - the ability to see things for oneself, the ability of people to see that thing happening so that they can form their own opinions about it.

RAZ: So Ray believes that even the most junior-level employees, like people straight out of college, can tell him to his face that basically he sucks.

DALIO: Yeah.

RAZ: And not only is that encouraged, it's kind of mandatory.

DALIO: I want to make the best decisions possible. And I know that I don't have all the answers in my, you know, my head. And I also know that the relationships set up with - with the people I'm dealing with are really important.

I think one of the greatest tragedies of man is that people have opinions in their heads that they act on that are wrong. How do you know that wrong person isn't you? And so if we put it out there and then we have a thoughtful disagreement process, aren't we going to be better off?


RAZ: Here's Ray Dalio on the TED stage.


DALIO: Just to give you an example, this is an email from Jim Haskel, who - somebody who works with me. And this was available to everybody in the company. (Reading) Ray, you deserve a D-minus for your performance today in the meeting. You did not prepare at all well because there was no way you could have been that disorganized.

Isn't that great?


DALIO: That's great. It's great because, first of all, I needed feedback like that. I need feedback like that. And it's great because if I don't let Jim and people like Jim to express their points of view, our relationship wouldn't be the same. And if I didn't make that public for everybody to see, we wouldn't have an idea meritocracy.


RAZ: OK, so let's just go over a couple things that happen at Bridgewater. All meetings are videotaped, right?

DALIO: Some case video, some case audio, and it's virtually all. Nothing is 100 percent...

RAZ: But most.

DALIO: They might be proprietary (ph) but most things are recorded so that people could see things for themselves.

RAZ: OK, so most things are recorded. Basically every employee is subject to a 360-degree review, like, every day, right?

DALIO: Yeah, everybody is getting - the way it works is in order to have an idea meritocracy, you're also trying to understand the merit of each person's thinking. And different people have different strengths and weaknesses. And you also want to collect everybody's thinking. So if you imagine you're going into a meeting, what it is is what people are thinking about how people are doing different things and what's going on is downloaded, you know, in almost continuous fashion through meetings and interaction.

RAZ: Into an app. People are constantly...

DALIO: Into an app.

RAZ: ...Inputting data points into an app about ideas that other people raise.

DALIO: That's right.


DALIO: In order to give you a glimmer into what this looks like, I'd like to take you into a meeting and introduce you to a tool of ours called the Dot Collector that helps us do this. A week after the U.S. election, our research team held a meeting to discuss what a Trump presidency would mean for the U.S. economy. Naturally, people had different opinions on the matter and how we were approaching the discussion. The Dot Collector collects these views. It has a list of a few dozen attributes, so whenever somebody thinks something about another person's thinking, it's easy for them to convey their assessment. They simply note the attribute and provide a rating from 1 to 10.

For example, as the meeting began, a researcher named Jen rated me a three - in other words, badly - for not showing a good balance of open mindedness and assertiveness. Others in the room have different opinions. That's normal. This tool helps people both express their opinions and then separate themselves from their opinions to see things from a higher level. When Jen and others shift their attentions from inputting their own opinions to looking down on the whole screen, their perspective changes. They see their own opinions as just one of many and naturally start asking themselves, how do I know my opinion is right?


RAZ: So, OK, so this is very complicated for, as you know, for 99 percent of people to understand because it's a - it is a radical idea. So I want to just break it down a little bit. Essentially, all 1,500 employees at Bridgwater have access to see how any other employee has been evaluated at any given time by other employees.

DALIO: Yeah. And why wouldn't you do that?

RAZ: It sounds horrible, right? It sounds absolutely horrible.

DALIO: You know, when we examined - when we examined the difficulties people have, they break into two groups. Somewhere between I would say probably a third in the first 18 months, they say it's not for...

RAZ: And they leave.

DALIO: And they leave.

RAZ: And they leave. OK.

DALIO: And we agree that it's not for - but we find it takes about 18 months to get used to, and when people are doing it, they can't work anywhere else.

RAZ: OK. I'm going to be radically transparent with you because I love that you have this big idea and you put it out there. I'm not sold on it at all. Like, I am seeking to be convinced, and this interview is one of those seeking moments. But I am still not convinced. I want to be transparent with you about this.

DALIO: Oh, that's great. No, like even the fact that you feel like you have to be compelled to say that somehow almost implies like there's some problem that we have - we don't - we have a disagreement and we haven't worked it out. There's no problem. Don't apologize. You don't have to unveil that.

RAZ: Yeah, no, no, not an apology.

DALIO: It's great.

RAZ: OK. So, all right, so you have this radical transparency, but it seems like radical transparency can only work if people are given a lot of room to fail, that they work in an environment where they're not afraid of being fired because of the way they're being evaluated all the time.

DALIO: Well, I believe failure is an important step in the learning process.

RAZ: How much?

DALIO: Look, you know, I guess 80 percent of it if you're asking how much.

RAZ: No, but I mean how much can you fail, right?

DALIO: Well, what you can do is you can scratch the car, but you can't total the car. In other words, that experimentation of being able to do things and fail - failing produces most of the learning because, look, if you're not failing, then you're successful already. Learning's got to come from failing, to do something wrong, and then analyzing how you failed. I think it's - to know how to struggle and fail well is an important thing. And to do that openly rather than to be stuck within your head and you're saying that these mistakes - so I'm asking you - so let's go back to the problem.

RAZ: Yeah. Sure.

DALIO: What is the problem with this way of operating intellectually? Tell me the intellectual problem. I hear that emotionally it's challenging, but tell me what the intellectual problem is.

RAZ: But I don't think they're mutually exclusive, right? I think they're connected. I mean, humans aren't these bodies of meat. I mean, we intertwine the intellectual and the emotional all the time.

DALIO: I'm asking you give me an example of what is wrong with that problem. We all, as human beings, have to reconcile the emotional and the intellectual in order to make the decision. And how we make that decision is important. So I think emotions are very important - inspiration, love, all those things - and they're together. But the reconciliation so they line up so that we do things in our interest isn't important, and I'm saying we have better relationships as well as better outcomes by operating this.

RAZ: Do you acknowledge that your idea is pretty radical?

DALIO: Yeah. I acknowledge that and that's why - it's what's differentiated us.

RAZ: Yeah.

DALIO: It's not for everybody. It's like if you want to be in Navy SEALs, OK? The Navy SEALs - it's tough. And so the first thing you have to do is - it's kind of like an intellectual Navy SEALs. There's - they produce excellent results and they have an excellent community. Right. So I get it. Not everybody wants to be this way, but other people would say, wow, it's invaluable. So I'm saying everybody should consider it. Decide in what degree you want it. Don't make it a black-and-white thing. I'm not saying everybody should do everything that we're doing. Just find the degree for yourself and ask yourself conceptually is it going to be better off or not.


RAZ: Ray Dalio - he's the founder of the hedge fund Bridgewater Associates and author of the book "Principles: Life And Work." You can see his full talk at Transcript provided by NPR, Copyright NPR.