For Bridgewater, finishing the lawmaking project—the company’s charter—is one of the last steps before Dalio can pass on his boon and just manage money in the woods. This rule of law, rather than rule by whoever is in charge, is “closer to the U.S. legal system” than any guidelines or policies a typical company might have, Dalio says. The effort led by senior managers and board members involves building out and expanding in extraordinary detail a governance structure based on the Principles, he says. The charter will outline how people’s votes are weighted and what benchmarks are used to measure investments, among other details. It will even clarify which disputes get escalated to the management committee. The group in charge is also creating a system for how the Principles can be amended, added, or deleted and what happens to employees who don’t follow them. Dalio expects this phase of the charter’s development to take another year to complete.
Codifying the Principles makes sense for a company that’s already codified everything else. Just as Bridgewater automated its money management, it’s been capturing data on its employees to feed its people-management algos. Sure, plenty of companies scour emails, telephone logs, and calendar entries to measure productivity and boost efficiency or buy people-analytics software that uses behavioral science to help streamline decision-making. Real-time assessments aren’t out of the ordinary in an age where social media and technology invite immediate reactions for everything from car services to restaurants. Recently, Goldman Sachs Group Inc. and JPMorgan Chase & Co. have gone as far as introducing software that enables employees to exchange instant scorings of one another. Yet Bridgewater’s use of employee ratings is on steroids, more akin to the Black Mirror episode in which people’s feedback of each other has a dramatic impact on their daily life.
In Westport, workers carry iPads to grade their colleagues on attributes such as Assertive & Open-Minded or Dealing With Ambiguity. They are required to “actively” log these assessments, known as Dots. The Dot Collector then rates employees’ strengths and weaknesses weighted by the rankers’ believability—how much their views can be trusted. The company has collected about 3 million Dots to date, or about 2,000 per employee. Each employee has a Baseball Card, with ratings on 75 or so attributes, and anyone can see anyone else’s card.
Dalio says anyone can and should be able to weigh in on an idea or criticize anyone, including him. In his TED Talk, for example, he shows an email from an underling giving him a D-minus for his preparedness—and makes clear that he relishes the employee’s openness. Not everyone’s opinion is equal, however, and the company runs on what Dalio calls believability-weighted decision-making. Dalio’s Baseball Card shows him to be among the most believable in the company, so his opinion carries more weight than most. His rating, though, isn’t so high that other believable employees can’t overrule it, according to the company. Former employees who left within a few years put it more bluntly: Everyone has to bend to Ray’s way.
One investor, who declined to be identified, says that while culture has been a key to success, it’s hard to tell if it’s gone too far—or if there remains a broad buy-in across Bridgewater. He’s also critical that the company didn’t do a great job of communicating the news that Dalio was temporarily stepping back into the co-CEO role that Jensen previously held, with most of the information coming from the press rather than directly from the company.
Much of the technology powering these Bridgewater initiatives comes from David Ferrucci, 55, who joined in 2012 after leading the International Business Machines Corp. group that developed Watson, the human-trouncing computer Jeopardy! helped make famous. His AI efforts have guided Bridgewater’s internal apps. The software includes the Dot Collector; the Combinator, which helps choose the right people for jobs based on their Dots; the Dispute Resolver, which assists two parties in resolving issues according to the Principles; the Coach, which guides people in making decisions based on the Principles; and finally the Pain Button, which helps each person understand why they’re feeling embarrassment or confusion. “It’s like a psychologist,” Dalio says. Ferrucci’s current AI challenge is to build systems that can grasp the meaning of language and provide explanations of how they came up with answers, according to the website for Elemental Cognition, the company he founded in January 2015 in partnership with Bridgewater.
Dalio has high hopes for AI. “I imagine when the day is done that the algorithm will have all information that’s going on everywhere. It will have all the criteria, it will be a lot smarter and knowledgeable than any person and give much more superior guidance to anybody,” he says.
One person no longer offering guidance at Bridgewater is Rubinstein. He may have helped Steve Jobs create the iPod at Apple, yet he crashed and burned after less than a year under Dalio—and it wasn’t as if he didn’t know what he was walking into. Even before joining, Rubinstein, 61, attended and watched hours of meetings and shadowed senior executives. Within four months, however, it was already clear he was struggling to adapt, according to people at the company. Rubinstein declined to comment.
McCormick, 51, a West Point graduate who worked in the Treasury Department under President George W. Bush, says Bridgewater is making more of an effort to show job candidates “the hard conversations and tapes that expose what it really is.” Sharing this tougher side of the culture helps prepare prospects for the reality of what’s ahead. “It’s like watching the Navy SEAL TV ads—the uniforms, the fast roping from the helicopter into the water. It’s very appealing,” says the co-CEO. “But when it’s 3 a.m. and you’re treading water in the middle of the freezing ocean, well, that’s SEAL School.”
Another way the company assists senior hires is providing “ski partners” who help them co-lead their teams and coach them on the culture. To train the next generation of leaders, the company is developing “succession pyramids.” It’s also attempting to cultivate a Bridgewater alumni network that might help spread the word about the advantages of working there.