Bridgewater’s bosses are fighting over something
ONE video shows Mr. Dalio standing at a dry-erase board and demonstrating how the marker ink won't fully rub out with an eraser, according to people familiar with the video. Mr. Dalio prods Bridgewater employees at length about why they bought the dry-erase board, why it doesn't work and how the bad decision could have been avoided, those people say. The animating conflict of the story is that there's "an unprecedented showdown" at Bridgewater, a power struggle between founder/guru Ray Dalio and co-Chief Executive Officer Greg Jensen. They are locked in a mortal battle over ... umm ... something?
"The question here about Greg is whether he said things about me on tape in our meetings that he did not discuss with me before," Mr. Dalio said in a written statement to The Wall Street Journal. And the consequences could be ... nothing? Dalio and Jensen "have called for votes on each other's conduct." But "the potential impact of the votes isn't clear." It's just ... a vote? "The vote results and each person's individual votes will be made available to the rest of Bridgewater."
I joked on Twitter that I never understood how Bridgewater gets any investing done, but of course there's a computer that does the investing. ("After honing ideas through debate and discussion, Bridgewater employees write trading algorithms that buy and sell invest- ments automatically, with some oversight.") One stylized model for thinking about Bridgewater is that it is run by the computer with absolute logic and efficiency; in this model, the computer's main problem is keeping the 1,500 human employees busy so that they don't interfere with its perfect rationality. This model might predict that the computer would create a series of distractions for the humans; the distractions would keep the humans busy, but if you examined them closely, there would be telltale signs that the intelligence that designed them was not completely human. "In an iPad app called 'Dot Collector,' employees weigh in on the direction of conversations while they are happening." "Any meeting of at least three people is expected to hold at least one poll." "One former Bridgewater employee recalls debating with other employees for as long as an hour whether a misused apostrophe in one of Mr. Dalio's research reports was intentional or not." Good ones, computer!
The showdown at the top feels a bit like that too. The way power struggles at investing firms usually work is, there's some non-transparent process by which someone wins and someone loses, and then the loser is either kicked out or subjected to some sort of symbolic loss of status. The symbolic loss of status that I often think about is this one, from power struggle at Pimco:
After the forum, Gross devised a seating plan for a meeting of portfolio managers, relegating Balls, Ivascyn and Mather to the rows of the conference room instead of at the main table. The arrangement was perceived as a snub, according to a person familiar with the matter.
Balls, Ivascyn and Mather got their revenge, and Gross was gone a few weeks later. But imagine contesting power at a trillion-dollar investing firm that way, with seating arrangements. Actually, I bet you can imagine it pretty easily. "Next to comp, seating is the most important issue on the Street." Human beings care deeply about their status, and there are lots of indicators of status -- like seating arrangements -- that are both instantly legible to humans and weirdly difficult to parse logically.
These fuzzy, irrational, human status markers are of course a complete mystery to the computer that is, in my fanciful model, running Bridgewater, as are the vague processes by which winners and losers are typically decided. But the computer can create its own processes, and its own symbolic status adjustments. Like that vote. People vote, and if you lose the vote you lose one unitless unit of status. The symbolism is pure: You are adjudged to have lost the showdown, and you know it, and the winner knows it, and everyone else knows it, but that's it. You should change your behavior, I guess, but you don't have to leave. You don't even have to sit somewhere else.