For this first post of 2105, I am channeling my nascent inner Ray Dalio. If you’ve never heard of Ray, he runs a hedge fund, Bridgewater Associates, which he started from his apartment in 1975. He has risen into rarefied air among investors – Bridgewater is, and has been for quite sometime, the largest hedge fund in the world managing in excess of $160 billion. I believe Dalio is to hedge funds what Warren Buffett is to the public markets. And for those of us who look to these titans to learn, we sometimes think “Wouldn’t it be great if you could climb inside their head and understand more about how they think?”
Well with Ray, amazingly, you can. In 2011, Dalio took the bold step of publishing on the Bridgewater website a 123 page document entitled “Principles”. No, there are no investing tips, but rather the content delves into how he thinks, what he values, and how he has evolved himself and his firm to rise to the top in a very competitive field. For me, as a student of anything that can enable one firm to compete and succeed over the long-haul, this peek into Ray’s world, and mind, is simply fascinating. To some, Dalio has evolved to a sort of “cult-like” status, with all the good and bad that entails depending on who you read or listen to. Having never met Ray (yet!), I don’t really want to wade into any of those tidal pools, but would like to draw a few intersections with what we try to do at Kestrel Capital Group. The title of this post summarizes one of Ray’s perspectives, and yes, he’s a realist. In fact, he desires Bridgewater to be a place striving for “hyper-realism”. With that perspective, if you step back and look objectively at a life, over time, more often than not, one gets what one deserves. Life doesn’t care what you want, but rather, it more or less delivers you what you deserve.
At KCG, we hold a similar view for companies. If you sit pat, make no effort to grow, learn, evolve, contemplate your business and its journey – more often than not, your market will give you what you deserve. And thus we strive to engage with our management team partners to think long and hard about where their business has come from, where it is going, where it could go, what could get in the way and what they could be doing today to carve a new path. How do they solve problems? Tackle challenges? Recruit, train and retain their human capital? These questions take time, and require thoughtful input from people inside and outside the organisation. Importantly, in fact in most cases critically, the customers (old, current, new, lost, etc.) can provide the best feedback and barometer to the waters that lie ahead, and how one can compete effectively and win over the long-term. I don’t think this will be my last post about Ray, and I encourage you to dig a bit into his journey – there is much to learn for organisations who desire to compete and win over the long term.