In the latest episode of Philanthropy Roundtable’s interview series “Doers to Donors,” Roundtable President and CEO Elise Westhoff interviewed entrepreneur, investor and philanthropist Ray Dalio. Dalio is the founder, co-chief investment officer and board member of one of the world’s largest hedge funds, Bridgewater Associates.
During the interview, Dalio discussed launching Bridgewater Associates from his modest two-bedroom apartment, the principles that drive his business and how his son, Matt, inspired his family’s philanthropy. Dalio Philanthropies currently supports a variety of causes, including education, medical research, mental health, entrepreneurship and ocean exploration, among others.
Playing “the Game”
By his own account, Ray Dalio was not much of a student growing up.
“I didn’t like school, all the memorization,” he said.
However, the golf course was another matter altogether.
When Dalio was 12 years old, he took a job caddying at the Links Golf Club, within walking distance of his Manhasset, Long Island home. He says the decision to take the job “determined the course” of his life, providing an introduction to Wall Street professionals who taught him about the business of trading stocks. Dalio bought his first stock for $5 per share and tripled his money.
“I said, ‘I like this game. This game is an easy game,’” recalled Dalio. “Of course, it’s not an easy game, but that began my journey.”
After graduating from Long Island University, then C.W. Post, and earning his MBA from Harvard Business School, Dalio joined a brokerage house as director of commodities, then left to start his own company.
During their conversation, Westhoff asked Dalio why he chose to leave an established brokerage firm to strike out on his own.
“I got fired,” Dalio replied. “And that was one of the best things that happened to me … because I could then be on my own and do the things I loved and make my own path.”
Principles of Leadership
Dalio founded Bridgewater Associates in 1975 and enjoyed early success. However, in the early 1980s, he made a controversial market calculation that resulted in huge losses for his clients and himself. In fact, Dalio was so broke he had to borrow $4,000 from his father to pay his expenses. However, he learned a valuable lesson from this mistake.
“That was very, very painful … but it gave me the humility I needed to balance with my audacity,” Dalio said. “In other words, I started to think, ‘How do I know I’m right?’”
Dalio realized he had to learn how to better manage risk when making investment decisions.
“I had to solve that puzzle,” he said. “And it changed my approach. So, for example, it made me radically open-minded. … I wanted to find the smartest people I could who would disagree with me to understand their thinking.”
One of Dalio’s signature principles, his creation of an “idea meritocracy,” a “system that brings together smart, independent thinkers and has them productively disagree to come up with the best possible collective thinking,” permeates every aspect of his business. He even created a tool, the Dot Collector, to allow for “radical honesty” during meetings. Through radical honesty, Dalio believes the best ideas will inevitably emerge.
Dalio soon discovered every mistake he made and every puzzle he solved offered the opportunity for a “reward,” a principle he could then apply.
After all, he likes to say, “Pain plus reflection equals progress.”
Dalio ultimately aggregated his collection of principles – 150 in total – into a New York Times best-selling book, “Principles.” The book details how Dalio went from being broke to achieving business success and becoming one of the wealthiest people in the world.
Dalio Philanthropies: A Family Affair
Another principle Dalio says he learned along the way is the importance of community in contributing to joy and happiness. Thanks to his son, Matt Dalio, he and his family have found this sense of community through their philanthropy.
It all started when Dalio and his wife, Barbara Dalio, sent Matt to study abroad in China at 11 years old. After returning home, Matt learned his neighbors were trying to adopt a child from China and offered to help. Through the adoption process, Matt discovered the majority of Chinese orphans have special needs, many of them abandoned by parents who could not afford medical care.
Matt decided to start a foundation, China Care, “to offer orphaned children with special needs a brighter future.” He focused on providing lifesaving surgeries and medical care. Later, he built a network of 50 China Care clubs nationwide to raise money to help Chinese orphanages improve their care.
”That began our journey,” Dalio said simply.
Find Your Pull
Together, Dalio, his wife and their children launched a foundation, Dalio Philanthropies, to support their philanthropic priorities. Family members are encouraged to find causes that personally appeal to them. According to Dalio, this has led to a wide-ranging mix of causes and organizations that have won the family’s support.
“For me, some of the most important [causes I support involve] justice in terms of equal opportunity, because I got to live the American Dream … but it’s not the case for so many people,” Dalio said.
One way the Dalio family aspires to create equal opportunity is through their work for students.
“My wife particularly, but I really love to tag along, has her path for helping the most disadvantaged students in high school, [helping] them get through high schools and into jobs,” said Dalio.
One Dalio Philanthropies beneficiary, Connecticut Rise, has increased on-time graduation rates by 20%.
Meanwhile, to help expand access to health care in communities suffering from poor health, Dalio Philanthropies created the Dalio Center for Health Justice at New York-Presbyterian Hospital. Dalio Philanthropies is also a founding member and supporter of Grameen America, an organization that just surpassed a historic milestone of investing $2 billion in microloans to over 137,000 women entrepreneurs since 2008.
“[Grameen America] untaps great opportunity. Some of these [microloan recipients] have become fabulous entrepreneurs,” Dalio said.
Another major area of Dalio Philanthropies’ giving is ocean exploration, a passion Dalio developed at an early age when he used to go scuba diving and watch episodes of “The Undersea World of Jacques Cousteau.” Now, through his OceanX initiative, Dalio supports modern-day Cousteaus who explore “unreachable” parts of the ocean aboard “the most advanced exploration vessel ever built.”
To educate others about ocean exploration, Dalio is currently developing a television series with renowned filmmaker James Cameron that showcases “the most unreachable parts of the ocean aboard the most advanced exploration and media vessel ever built.”
Principles of Giving
When asked his advice for new philanthropists, Dalio offered a simple success principle, the same one that drives his family’s philanthropic work.
“It’s a journey. Make your work and your passion the same thing,” he said, “Make your philanthropy something you’re passionate about. Have the pull.”