Book Brief: The Fund: Ray Dalio, Bridgewater Associates, and the Unraveling of a Wall Street Legend

One of the most compelling books I read this summer was The Fund. It offers an insightful look into a workplace driven by a culture of control, making it one of the best explorations of this kind of organizational environment.

To give some context, in my book Connection Culture: The Competitive Advantage of Shared Identity, Empathy, and Understanding at Work, I identify three types of relational cultures that exist within organizations:

• A “culture of control” is one where those with power, control, and influence rule or dominate the rest.
• A “culture of indifference” arises when individuals are so focused on tasks related to money, power, and status that they neglect to foster supportive relationships.
• A “culture of connection” is one where people experience positive bonds with their supervisors, colleagues, senior leaders, the organization's mission and values, and the people they serve.?

A connection culture is life-giving; cultures of control and indifference deplete people's energy and lead to burnout. In a connection culture, individuals can thrive, and thus the collective group thrives, and positive results are sustainable; in cultures of disconnection, people begin to disengage or just go through the motions, and while results may be impressive for a period, they are not sustainable.

The draining effect of a culture of control is vividly portrayed in The Fund through the depiction of Bridgewater Associates. Anxiety, depression, burnout, and even suicidal thoughts are recurrent themes in the book.

Bridgewater Associates is a hedge fund founded in 1975 by Ray Dalio. At one time, it was the world’s largest hedge fund in terms of assets under management. Dalio developed a set of “Principles” that shaped Bridgewater’s culture. He described it as an “idea meritocracy that strives to achieve meaningful work and meaningful relationships through radical transparency.”??

In parsing that phrase, it starts out promising. “Idea meritocracy” implies that colleagues throughout an organization can contribute and there may be a robust marketplace of ideas. Having a voice and feeling valued in this way is connecting. Pursuing “meaningful work” and “meaningful relationships” is also connecting. “Through radical transparency” is about the “how” and it’s the stumbling block, particularly the way Bridgewater went about it under Dalio’s leadership until he retired in 2023.

One of the methods employed to enforce the culture was a system of constant employee evaluations via internal apps. Throughout each day, and available to them 24/7, employees used a Dot system to rate each other on a 1-10 scale based on criteria including humility, assertiveness, and open-mindedness. Individual ratings were aggregated into reports called “baseball cards.” Poor ratings lead to reduced compensation and eventual dismissal—what Bridgewater calls being “sorted” (fired).?

The way the evaluation system was built is skewed to give those with greater power and influence more weight in the ratings process. Dalio’s own ratings of others, for instance, carry the most influence. Consequently, those in power are incentivized to deal out negative assessments to protect themselves and their own jobs, which creates a toxic “kiss-up, kick-down” environment where the least powerful are often targeted.?

Author Rob Copeland writes that people learned to game the system:

“There was little incentive to stick out, and every incentive to pile on. It took only a few days for newcomers to figure out that the best way to earn high ratings was to agree with others already ranked highly. This inevitably meant hewing closely to the views of the hedge fund’s top brass.”???

Another striking aspect of Bridgewater’s culture was its pervasive surveillance, with almost every work space video-recorded and audio-recorded. It feels eerily reminiscent of the surveillance tactics employed by regimes like China’s Communist Party, which tracks and rates citizens. It’s perhaps not surprising that Dalio admires autocratic leaders including Vladimir Putin.

While The Fund reads like a dystopian novel, its accuracy is believable for two reasons. First, a friend of mine who worked at Bridgewater while battling cancer felt compelled to hide the?life-threatening illness from colleagues for fear it would be viewed as a weakness. Additionally, executive recruiters I know confirm that Bridgewater suffers from high employee turnover. Many employees join for the financial rewards but leave as quickly as possible.

Copeland, a finance reporter for The New York Times, deserves credit for his thorough research and captivating storytelling. By the end, I felt profound sadness for Bridgewater’s employees, who endure immense hardship under this oppressive system. But I also felt sympathy for Ray Dalio.

I respect Dalio for his brilliance as an investor—his macro-investing prowess produced attractive results between 1991-2006 and through the 2008 global market meltdown. Although Bridgewater has underperformed over recent years, it appears to be finding its way back under the leadership of Bridgewater’s new CEO, Nir Bar Dea.?

In his personal life, I appreciate Dalio’s charitable endeavors through Dalio Philanthropies and his role in starting and supporting the annual town party in Greenwich, Connecticut, where we both reside. I empathize with the personal loss he endured following the tragic death of his son Devon, a moment my wife and I unknowingly witnessed when we happened to be driving by the site of the accident that led to his death in December 2020 as first responders were beginning to arrive. As a father, I can’t imagine a greater pain than losing a child.?

My hope for Dalio, one of the wealthiest individuals in the world, is that he will shift his focus away from promoting his “Principles” and instead use his wealth and considerable intellect to contribute more directly to the greater good of society through philanthropy. If he does, Ray Dalio could leave behind a truly admirable legacy.