From 1975 to 2011, Ray Dalio built the most successful hedge fund in the world. Bridgewater Associates never lost more than 4% during any calendar year from 1991 to 2020 (and only did so for 3 calendar years). On the first day of 2011, at the age of 60, Dalio announced that he would step down as CEO after more than 35 years at the helm of Bridgewater Associates.
He and his management team put together a transition plan, and expected the replacement to last a few years at most. Since the team had hardly ever changed and they had been working together for so long, they were confident that there would be no major problems. Turns out they couldn’t be more wrong.
Over the next 18 months, chaos descended on Bridgewater. There were so many things to take care of, the people in charge were overwhelmed, and even though they had worked with Ray for so long, they didn’t really understand how he was “doing it.”
So Dalio came back, and they approached the management issue the way Bridgewater approaches many of its investment decisions: in a very systemic, process-oriented way. They looked at Ray’s attributes in relation to others to see what was missing, and identified what they called the “Ray gap.”
They discovered that the most important component to incorporate to cover most of Ray’s gap was something called “shaping.” As Dalio expresses it in his book Beginning:
“A shaper is someone who conceives unique and valuable visions and builds them beautifully, usually above the doubts and opposition of others.”
Shortly after identifying the gap, Dalio began researching trainers and what they had in common, with the intention of developing “an archetype of the typical trainer.” Thanks to his success and reputation, he was able to connect with shapers he already knew: Bill Gates, Elon Musk, Jack Dorsey (Twitter), Reed Hastings (Netflix)…
Dalio even asked them to undergo personality assessments to discover their values, skills, and approaches, and many of them agreed.
Needless to say, most of us can’t reach out to Dorsey, Musk, or Gates and expect them to spend 1 hour of their time filling out a personality test. Therefore, the knowledge and learnings from Dalio’s project are absolutely invaluable.
Dalio is one of the few people who has the ability to not only evaluate some of the most brilliant people of our time, but also share the results with the world. In this article, we will review the 4 most important traits that emerge from her studies, and what we can learn from them.
On October 5, 2011, a few months after Dalio became interested in shapers, Steve Jobs died, and Walter Isaacson published his biography shortly after. Reading it, Dalio noticed several similarities between him and Jobs.
Steve Jobs created his company from his garage, Dalio from his two-bedroom apartment. Steve Jobs revolutionized computing, music and communications with highly designed products. Dalio revolutionized investing with a systemic, process-oriented approach that relies heavily on decisions made by machines rather than humans, because computers are not swayed by feelings.
Jobs and Dalio were also rebels. Dalio was fired from one of his jobs for punching his boss in the face and founded Bridgewater shortly after. Jobs dropped out of college, took a job as a video game designer, and saved enough money for a pilgrimage to India to experience Buddhism.
The shapers They are independent thinkers because they don’t let anything or anyone get in the way of achieving their audacious goals. They are also characterized by having ideas that are very ahead of their time.
For example, Dalio always wanted his computers to be more powerful because then he could get more accurate results and predictions from them. He already thought that machines could make better decisions than humans on many levels because they are not biased by feelings. But the technology wasn’t there yet.
Steve Jobs was known for always pushing his engineers to deliver beyond what they thought was possible. When he introduced the world’s thinnest laptop (the Macbook Air in 2008), many couldn’t believe that he had managed to make his vision a reality.
Ray Dalio also spoke with Jack Dorsey, who was then “double CEO” of 2 huge companies: Twitter and Square.
Dorsey has all the traits mentioned in this article. In fact, he was so ahead of his time (an independent thinker) that he first outlined the idea that would become Twitter in 2000, when some still thought the Internet was a fad. Twitter would not see the light until 6 years later. But, without a doubt, Jack Dorsey’s most notable trait is his resilience.
Dorsey was ranked as one of America’s worst CEOs 2 years in a row, in 2016 and 2017. He has been criticized countless times for being the CEO of 2 huge companies at the same time, instead of focusing his time and energy on just one. .
Investors have complained about his numerous vacations, his silent retirements and his time-consuming hobbies.
Dorsey has never been your typical CEO, and he has had to endure criticism his entire life for it. However, over the past 10 years, he has helped create two of Silicon Valley’s most successful companies.
Trainers are extremely resilient because, as Ray Dalio points out, “their need to achieve what they imagine is stronger than the pain they experience while struggling to achieve it.” This is a very powerful concept, and something that only a few can achieve.
Beyond resilience, some are even capable of becoming antifragile, a term created by Nassim Nicholas Taleb in his book Antifragile: Things That Gain from Disorder:
“Antifragility describes a category of things that not only gain from chaos, but may need it to survive and thrive.”
We use the word fragile to describe people, things, and organizations that weaken when they are damaged, and the words robust and resilient for things that can withstand damage without weakening. Taleb created the word antifragile because he thought we didn’t have a word for things that get stronger when hurt.
Ray Dalio is a great example of an antifragile person.
In the late 1970s, he lost $100,000 in a bad stock bet, which was most of his wealth at the time.
Throughout his career, he wrote down, studied and analyzed every mistake he made to increase his knowledge. As a result, he went through many financial crises and almost always emerged from them richer than before, profiting from the chaos in the process.
When Ray Dalio asked Elon Musk how he came to found his company SpaceX, this is what the businessman responded:
«For a long time I have thought that it is inevitable that something bad will happen on a planetary scale – a plague, a meteorite – that forces humanity to start over somewhere else, like Mars. One day I went to the NASA website to see what progress they were making on their Mars program, and I realized that they were not even thinking about going there in the short term (…) I had raised $180 million when my partners and “I sold PayPal, and it occurred to me that if I spent $90 million and used it to acquire some ICBMs from the former USSR and send one to Mars, I could inspire Mars exploration.”
Sending a rocket to Mars requires a lot of knowledge, experience, and probably, in most cases, some type of college degree. You don’t wake up one day and send something to Mars. However, when Dalio asked Musk what his experience in rocketry was, he responded that he didn’t have any. Zero. “I just started reading books.”said.
Not only are shapers able to see a broader view than average, but they also recognize that there are things they can’t see, and they have no problem with any of them:
- Hire people who are better than them at specific tasks, or
- Assume large amounts of information to learn much faster than average.
They either rely on their broad vision or get it from others who can see what they can’t (by hiring people or reading other people’s books). Thanks to this approach, almost all trainers are able to see both the big pictures and the small details, the levels in between, and the conclusions and perspectives that can be drawn from each of those levels.
Most people only see one level and don’t even bother to become experts at it.
Trainers see all levels and can become excellent at many of them.
Make no mistake. The number one reason why Gates, Musk, Dorsey or Dalio are able to continue being the best at what they do is because they are passionate about it. No one can maintain that level of excellence for that long without being passionate. If you don’t love it you won’t stick with it, and this is the biggest lesson to learn from trainers.
It takes some people a long time to find their passion in life, and people who are lucky enough to find their passion at a young age are the ones most likely to get ahead. But that doesn’t mean you should sit back and wait for your passion to “hit” you like a mystical revelation.
The best way to find what you like to do in life is to experiment and always try new things until you find something that you can see yourself doing for a long time.
99% of famous entrepreneurs, business executives and other CEOs are shapers. But it is important to remember that not all trainers are famous. As Dalio points out in his book, the trainers are of diverse types:
«You probably know some of them personally. They may be the leaders of your local business, nonprofit organization, or community, the people who drive change and build lasting organizations.”
It is also worth noting that you do not have to become a trainer to excel at something.
If you are willing to put in the work and do it for a long time, chances are you will be successful in life. Once again, the number one reason trainers drive change is not because they have all the qualities mentioned above combined, but because they are passionate.
Warren Buffet, another of the greatest investors of all time, spends up to 6 hours a day reading books and newspapers on his favorite topics. Bill Gates reads an average of 50 books a year. Elon Musk read 10 hours a day when he was a child. He started SpaceX by reading about rockets, simply because they interested him. Most people read fewer than 12 books a year.
Yes, all these people are trainers, but what moves them most is passion, the rest is like the icing on the cake. So if you haven’t yet found something that makes you get out of bed every morning, the best way to find it is to experiment and always try new things.
If you come across something you can try for longer, stick with it. Read about it, learn about it, keep beating your craft. You may have found your passion.
Have fun and enjoy the trip.