Ray Dalio is among the top100 wealthiest individuals in the world. He achieved this starting from zero through founding and leading Bridgewaters, the most successful hedge fund of its time. In Principles, he shares his rulebook both for living and working.
I had not read something that smart since Sapiens by Yuval Harari. And it is the third time I read a book having the feeling I wrote it myself and agreeing with each single line. First time was The Genealogy of Morals by Friedrich Nietzsche when I was twenty-year-old. Second time was The 4- Hour Week by Tim Ferriss when I was thirty. I hope I find a fourth one before I hit fifty.
Principles is a 550-page long synthesis with hundreds of punchlines. Making it shorter while keeping the substance is impossible. Below are a few concepts I chose to retain for myself. Each sentence comes directly from the book.
Enjoy the curation!
Aim at a successful life – “Dreams + Reality + Determination = a successful life. It should allow you to savor life and make an impact at the same time as both are mutually reinforcing. Have clear prioritized goals: while you can have virtually anything you want, you can’t have everything you want”
Understand that people are wired very differently – “If you’re like most people, you have no clue how other people see things and aren’t good at seeking to understand what they are thinking, because you’re too preoccupied with telling them what you yourself think is correct.”
Create your own mental map of people archetypes– “If you think about it, you can probably come up with a handful of archetypal people you meet over and over again in life: the spacey, impractical Artist; the tidy Perfectionist; the Crusher, who runs through brick walls to get things done; the Visionary who pulls amazing big ideas seemingly out of the air. Over time I came up with a list of others including Shaper, Chirper, Tweaker, and Open-Minded Learner, as well as Advancer, Creator, Cat-Herder, Gossiper, Loyal Doer, Wise Judge, and others. Individual people will always be more complex than the archetypes that describe them.””
Accept being a shaper – “Shapers are independent thinkers who do not let anything or anyone stand in the way of achieving their audacious goals. They have very strong mental maps of how things should be done, and at the same time a willingness to test those mental maps in the world of reality and change the ways they do things to make them work better. When faced with a choice between achieving their goal or pleasing (or not disappointing) others, they would choose achieving their goal every time.”
Embrace reality and deal with it well – “Embrace reality as it is, not as you think it should be. Don’t confuse what you wish were true with what is really true. The biggest mistake most people make is to not see themselves and others objectively. Don’t worry whether you like your situation or not. Life doesn’t give a damn about what you like. Realize that you have nothing to fear from knowing the truth.”
Compensate for weaknesses – “Acknowledging your weaknesses is not the same as surrendering to them. It’s the first step toward overcoming them. The fastest path to success starts with knowing what your weaknesses are and staring hard at them. Once you identify a problem, don’t tolerate it. If you’re bad at accounting, hire an accountant.”
Welcome challenge – “When someone disagrees with you and ask you to explain your thinking, you get angry, even though it would be more logical for you to be interested in the other person’s perspective, especially if they are intelligent. This is because you are programmed to view such challenges as attacks. To be effective, you must not let your need to be right be more important than your need to find out what’s true. If you are too proud of what you know or of how good you are at something you will learn less, make inferior decisions, and fall short of your potential.”
Identify when you are wrong — “When two people believe opposite things, chances are that one of them is wrong. It pays to find out if that someone is you. Radically open-minded people know that coming up with the right questions and asking other smart people what they think is as important as having all answers. Triangulate your view with believable people who are willing to disagree. Believable people are those who have repeatedly and successfully accomplished the thing in question – who have a strong track record with at least three successes – and have great explanations of their approach when probed. Spend your time exploring ideas with the most believable people you have access to. Even experts can make mistakes; it pays to be radically open-minded and triangulate with smart people.”
Choose who you listen to and how – “Remember that everyone has opinion and they are often bad. Choose your believable people wisely. Keep track records in mind. Don’t have anything to do with closed-minded people. Don’t pay as much attention to people’s conclusions as to the reasoning that led them to their conclusions. Think about whether you are playing the role of a teacher, a student or a peer and whether you should be teaching, asking questions or debating. Though anybody can debate, the best protocol is for the student to be open-minded first.”
Make good decisions — “Knowing when not to bet is as important as knowing what bets are probably worth making. You can significantly improve your track record if you only make bets that you are confident will pay off. The best choices are the ones that have more pros than cons, no those that don’t have any cons at all.”
Cultivate meaningful relationships – While there is nobody in the world who will share your point of view on everything, there are people who will share your most important values and the ways in which you choose to live them out. Make sure you end up with those people. Treasure honorable people who are capable and will treat you well even when you’re not looking. They are rare. Such relationships take time to build and can only be built if you treat such people well.”
Get in sync with people – Don’t give orders and try to be followed; try to be understood and to understand others by getting in sync. Recognize that there are many ways to skin a cat. Your assessment of how Responsible Parties are doing their jobs should not be based on whether they’re doing it your way but whether they’re doing in a good way. Surface areas of possible out-of-syncness. Recognize that getting in sync is a two-way responsibility. Start by assuming you’re either not communicating or listening well instead of blaming the other party. Spend lavishly on the time and energy you devote to getting in sync, because it’s the best investment you can make. Don’t leave important conflicts unresolved.”
Think like an owner – Think like an owner, and expect the people you with to do the same. Remember who has what responsibilities. Watch out for people who confuse goals and tasks, because if they can’t make that distinction, you can’t trust them with responsibilities. Probe so you know whether problems are likely to occur before they actually do.