Clients interviewed for this story added that the returns aren’t correlated to the stock market or most other hedge funds, echoing key points Bridgewater executives make about their performance. Bridgewater says that, in its annual client survey, 94 percent of respondents gave the “highest ratings” for overall satisfaction over the last five years; 93 percent gave “positive ratings” for performance.
To most investors, Bridgewater’s mantra of radical truth and radical transparency is the reason for its success. “The culture is key,” says James Grossman, CIO of Pennsylvania Public School Employees’ Retirement System. “It drives them to do things better. Their secret sauce is that they are constantly looking for the truth about how markets work and behave.”
The quest for truth, an idea that drives much of Dalio’s Principles, makes life inside Bridgewater especially intense.
“What really distinguishes Bridgewater is truth at all costs,” says co-CEO Murray, 59. “And it is not for everyone.” When Murray arrived eight years ago, she says, she remembered thinking, “I don’t allow anyone to talk to me this way except for my sister”—which is saying something coming from someone who spent decades working for Wall Street alpha males, including former Morgan Stanley CEO John Mack.
In interviews with Bloomberg Markets, Murray and other employees spoke about the feeling of family at Bridgewater—one fostered by all the employees working on the same campus. The headquarters, located in a bedroom community about 60 miles northeast of New York City, is the company’s sole office, despite trading in global markets and serving international investors. This also guarantees that control remains centralized.
Employees live to work there. Campus encounters can be so intense, the pine trees might as well be porcupines. One video of a meeting included in a 2012 Harvard Business School case study shows Dalio and Jensen admonishing a younger colleague in an investment meeting for being defensive. Jensen points out the younger man’s habit of using the words “as we have said” and then adding a point to his argument that logically doesn’t fit, rather than saying “as we missed.” One former employee, who left after less than two years and would speak only on the condition of anonymity, recounted a Maoist-like struggle session where a young male employee was berated by a group of peers and superiors for not being good enough. Instead of helping him improve or getting rid of him, they needed to “get in sync” about the employee’s perceived inadequacies, he says. The encounter ended, he adds, with the man firing himself. (Bridgewater says it isn’t familiar with this episode and that in its most recent quarterly employee survey, 99.4 percent of respondents said communication is open and honest and their manager cares for them in a way that’s meaningful and genuine.)
Twenty-one percent of employees leave within the first year of experiencing the company’s “radical transparency.” An additional 10 percent quit in the second. After that, attrition falls off to the low single digits, according to the company. Adapting to the culture usually takes 18 months and requires a leap of faith. One employee, who asked not to be named, advises new recruits not to question whether they’re enjoying or hating their experience but to keep an open mind. She now finds the constant feedback, which was at first overwhelming, empowering. As a self-described “people pleaser,” she’s learned to be more assertive even outside work. Another employee says the feedback on weaknesses helped her progress more quickly in her career.
Once they make it through the gantlet, many staffers are there to stay. To keep those bonds strong, Murray created “affinity groups,” 100 or so clubs where people play softball or rescue pets together. Prince, who once invented a golf putter, helped establish Grace Community Church in New Canaan, which some Bridgewater employees attend. Younger staffers live together in dorms during the week. Murray has even lodged colleagues in her home.
Culture is a nebulous concept. At companies, it runs the gamut from having informal values and mission statements to explicit guidelines. It can foster workforce cohesion and align staff closer to company goals but can also risk deteriorating if it doesn’t evolve or is too stifling, Yale’s Sonnenfeld says. “Cultures need to adapt or else they become like rigid religions,” he says. “That may lead to employees becoming too risk-averse and second-guessing what their founder would do in any given situation.”
Robert Kegan spent time at Bridgewater and listened to more than 100 hours of meetings for a 2016 book he co-authored, An Everyone Culture: Becoming a Deliberately Developmental Organization. He describes Dalio as a “messenger from the future” because of the self-analysis he champions. “But if you choose to commit to the Principles, you have to realize it’s hard,” he says. “It’s like constitutional democracy. It’s good in theory, but the reality can be different.”