Ray Dalio Responds to Attack Piece: WSJ Lied About Bridgewater
This post originally appeared on LinkedIn.
While I just recently read The Wall Street Journal‘s article about Bridgewater and was surprised by its intentional distortions, I have been reflecting for quite a while on the destructive effects that fake and distorted media have on our wellbeing as a society.
To me, fake news and distorted media are essentially the same problem. My own experience, which I will share later in this piece, is just one small case within a larger epidemic. While Bridgewater will survive this—and even if we didn’t, the world would be fine—it is questionable what will happen if the fake news and distorted media epidemic is not arrested. As Martin Baron, Washington Post‘s Executive Editor, said in reflecting on the problem, “If you have a society where people can’t agree on the basic facts, how do you have a functioning democracy?”
Distortions lead to bad decisions. In my opinion, if we don’t correct such inaccuracies and don’t fight the problem, continued distortions in the media will prevent the public’s accurate understanding of what is happening. We in the financial community now openly talk about fake news or distorted media being used to manipulate market prices to the harm of many. Similar conversations are taking place in most other industries.
But this is not just a fringe media problem; it is a mainstream media problem. And while it is widely recognized, there is no discussion underway about how to rectify it. The Associated Press reports that only 6 percent of Americans surveyed have “a lot of trust” in the media. A recent Gallup study showed that Americans’ trust in the media has dropped to an all-time low, with only 32 percent of those surveyed saying they have either a “fair” or “great deal” of trust in the media. That compares with 55 percent having such confidence in 1999 and 72 percent in 1976.
The dramatically decreased trustworthiness even plagues icons of journalistic trust like The Wall Street Journal and The New York Times, as sensationalism and commercialism have superseded accuracy and integrity as primary objectives. Many, if not most, “journalists” are working backwards, trying to fit the facts into the story that they want to write—rather than accumulating facts to accurately report what is true. To be clear, I am not saying that this is the case for all news media, as there are a number of true journalists who do seek to convey accurate information; I’m just saying they are a rapidly-shrinking percentage of the total and the poll numbers reflect that.
Their representations regarding our ‘secret project’ to systemize our criteria for management decision making were both sensationalistic and misleading.
Failure to rectify this problem is due to an absence of systemic checks on the news media’s quality. The news media is unique in that it is the only industry to operate without quality controls or checks on its power—where even the most powerful people and companies are afraid to speak out against it for fear of recrimination. In fact, I presume I will be widely attacked in the media for what I am writing here. Nonetheless I am compelled to say what many express privately, which is that 1) the quality of news media is declining in general, 2) those in the news media have an enormous amount of power, 3) the news industry is unique in not having its standards of behavior specified and overseen, and 4) this confluence of realities is dangerous.
While we all treasure our free press—the reason this industry is not regulated—the accelerating loss of faith in the media appears to be coming to a head and will probably lead to a backlash. I worry that if the industry doesn’t fix its problems, the pendulum will swing in the opposite direction, leading to a loss of some of the most cherished press freedoms. That, too, could undermine the public’s ability to know what is true.
There is no getting around the fact that we need a responsible news media, and the powers that be need to start thinking about how to make that happen. Personally, I hope prominent media organizations will explore ways of self-regulating the quality of what they are producing, or at least establish a ratings system similar to that of the Motion Picture Association of America. In any case, it’s not my place to determine how this problem be resolved, as much as to speak up about the issue and encourage discussion of it.
A Case in Point
I have mixed feelings about describing our most recent experience with The Wall Street Journal because many people might misconstrue my doing so as simply complaining about an article that I didn’t like. While I certainly don’t want to let the inaccuracies about Bridgewater stand, my more pressing motivation is to give you a window into how news is often made because I believe that those who haven’t seen it from the inside will find the process eye-opening. It will probably be a bit like watching sausage being made for the first time.
About six weeks before The Wall Street Journal story by Rob Copeland and Bradley Hope was published, we were contacted by Copeland, who was “fact-checking” and seeking information about Bridgewater. Many of the things he asked about were downright wrong, so we were presented with the choice of either cooperating with him or allowing the incorrect information to go live. Because Copeland and Hope have a history of writing misleading stories about Bridgewater, even when we cooperated with them, we were not inclined to engage. We expected that they might again distort whatever we said.
Copeland, however, insisted they wanted to “reset the relationship” to present an accurate portrayal of the firm. He offered to enter into an agreement in which we would provide him with information that he didn’t already have in order to give him a fuller picture—but only on the condition that he would not use that information unless we mutually agreed that his presentation of it in the article was accurate. We understand that the culture behind our exceptional success over the last 40 years is both unusual and commonly misunderstood, so we decided to enter into that agreement. As explained below, he broke the agreement by distorting what we told him even after he asked us to “fact check” his assertions and we replied in writing that they were inaccurate.
Copeland and Hope allege that Bridgewater is an oppressive environment. They base this on only a handful of conversations—as they put it, interviews with “more than a dozen past and present Bridgewater employees and others close to the firm.” We have about 1,500 people working at Bridgewater, most of whom love it rather than feel oppressed, so the picture Copeland and Hope gleaned from their dozen interviews was clearly not representative.
Bridgewater could not have been as successful without a culture that values its employees and fosters excellence—but Copeland wasn’t seeking to understand or report that. As we explained to Copeland in writing, he was “painting a one-sided negative picture of the work environment. The problem is that people who are happy with their experience and respecting our rules are not allowed to speak with the media so you end up hearing disproportionately from disgruntled people. It becomes a gross exaggeration and none of the joy of the Bridgewater experience gets represented.” We offered to provide Copeland an extensive list of current and former employees who could freely speak with him. He did not take us up on that offer.
We also offered to put Copeland in contact with three prominent organizational psychologists and researchers who, inspired by their own curiosity, have studied our culture in depth and conveyed their highly-regarded analyses in three different books. These researchers were on site at Bridgewater and had access to anyone they wanted to speak with when they did their studies. Copeland and Hope chose not to speak with these experts. For anyone interested in reading a few much more informed assessments of Bridgewater, we suggest An Everyone Culture by Robert Kegan and Lisa Lahey, Originals by Adam Grant, or Learn or Die by Edward Hess. You can find excerpts from these books here.
Copeland asked about our culture of radical transparency, so we explained the logic behind it, and directed him to Principles, which describes it in depth. We agree that Bridgewater is a challenging place to work, that the characterization of the firm being like “an intellectual Navy Seals” is apt, and that it isn’t for everyone.
Nobody disputes that Bridgewater’s unique culture has worked remarkably well for 40 years. No company could produce the results we have achieved without fostering deep and meaningful relationships among the people who work there. We tried to explain to Copeland how our company culture works and how it has produced our unique results, and we tried to provide him with facts that substantiated this assertion. For example, in our most recent anonymous annual survey, 89 percent of employees agreed that “running Bridgewater according to the culture and principles is key to Bridgewater’s success” and 94 percent agreed that “the culture helps my personal evolution.” Similarly, 89 percent of our clients said they were satisfied or very satisfied with Bridgewater, 95 percent said “Bridgewater’s investment insights are uniquely valuable,” and 95 percent said “Bridgewater’s personnel are honest and direct with me, even when we disagree.”
We explained the logic behind radical transparency—both in conversation and in the following written statement:
“If you agree that a real idea-meritocracy is an extremely powerful thing, it should not be a great leap for you to see that giving people the right to see things for themselves is better than forcing them to rely on information that is processed for them by others. Radical transparency forces issues to the surface—most importantly (and most uncomfortably) the problems that people are dealing with and how they’re dealing with them—and it allows the organization to draw on the talents and insights of all of its members to solve them. Eventually, for people who get used to it, living in a culture of radical transparency is more comfortable than living in the fog of not knowing what’s going on. And it is incredibly effective. But, to be clear, like most great things it also has drawbacks. Its biggest drawback is that it is initially very difficult for most people to deal with uncomfortable realities.”
Copeland and Hope chose to not use any of that. Instead of making any attempt to understand how our company culture and radical transparency work—or referring to such facts in their article—they chose to push the story they wanted to write.
We discussed turnover rates at Bridgewater, and shared statistics that make clear that in the first year or two turnover is unusually high and in subsequent years it is unusually low. This pattern is a result of Bridgewater’s tough and unique standards. The company is not for everyone but for those who it is for, there is nothing like it. The numbers substantiate this: 21 percent leave in the first year and another 10 percent leave in the second year, but the turnover rates of those in years three, four, and five are exceptionally low, at only 6 percent, 4 percent, and 3 percent respectively. Copeland and Hope chose to focus only on the relatively high early turnover, saying “Bridgewater says about one-fifth of new hires leave. The pressure is such that those who stay are seen crying in bathrooms.” They omitted the longer-term high retention rates and the satisfaction levels behind them.
When Copeland asked how radical transparency works, he suggested we were disingenuous because we didn’t pursue it totally. We explained our approach:
“Don’t get me wrong: radical transparency isn’t the same as total transparency. It just means much more transparency than is typical. We do keep some things confidential, such as illnesses or deeply personal problems, sensitive details about intellectual property or security issues, the timing of a major trade, and at least for the short term, matters that are likely to be distorted, sensationalized, and harmfully misunderstood if leaked to the press.”
And we pointed Copeland to the relevant principles, which he and Hope chose to ignore. “He decided to let only 10 percent have the full measure of what he calls radical transparency,” they wrote.
We responded: “It is incorrect that only 10 percent get radical transparency. Here’s the fact. Everyone can see most everything, but only the top 150 or so people get to see the most sensitive type of stuff which, in most companies would be limited to only the top 5 or 10 people.” The authors chose to go with their mischaracterizations, even though doing so was misleading.
Their representations regarding our “secret project” to systemize our criteria for management decision making were both sensationalistic and misleading.
As we explained, what we are doing in systemizing management decision making is the same thing we have done for 30 years—which is to collectively agree on good principles for making decisions and to express them in computer code. This allows us to input the relevant data and for the computer to process according to our mutually agreed-upon criteria. We do this because we have learned that this principled and systemized decision-making process allows us to get above our emotional attachments to our own conclusions, and instead focus on deciding what our decision-making criteria should be. This ultimately leads to better decisions because computers can process these criteria more efficiently than humans.
For example, by collecting data on people, we can learn what they are like, what jobs they are best suited for, and how they would most effectively work together. People also learn a lot about themselves, which helps them in their personal development. We are collecting and building these criteria collectively, yet Copeland and Hope chose to characterize all this as being “like trying to make Ray’s brain into a computer” because that fit better with their desired narrative. Their goal was to paint Bridgewater as an oppressive company run by a Dr. Frankenstein-type character—even though hard evidence shows it to be an idea-meritocracy which has, for decades, succeeded in producing meaningful work, meaningful relationships, and unparalleled results through its radical truthfulness and radical transparency.
Copeland and Hope mischaracterized several other things (e.g., my thinking on Jim Comey, a man I admire). In each case, I explained to them that they were mischaracterizing and they chose not to convey anything that didn’t fit with the story they wanted to write. I won’t delve into more examples because we are past the point of diminishing returns.
So there you are. Now you know how news is made, and you’re left facing the dilemma I described in the first part of this piece. There is no established party to assess the accuracies of what is being said, and you are left to wrestle with questions of what is true based on the scant evidence you have in front of you. I suggest that rather than worry about what’s true about Bridgewater—which probably won’t have an effect on your life—you worry instead about the systemic risks arising from fake and distorted media.
Ray Dalio is the founder, Chairman and co-Chief Investment Officer of Bridgewater Associates, the largest hedge fund in the world with $155 billion under management. The firm was recently named the most successful hedge fund in the industry by LCH Investments, having made more money than any other manager for investors since its inception in 1975.