It's up to you now to think, okay, what is going to be your 43? Is it going to be this, that, now, and okay, so now go for it.
Take your time. Take your time. One of the things that's fun about the game is it's got all these possibilities that are happening, right? You can move any piece, any time, and so on. You have to go through those calculations at a fast pace. One of the things I love about the game is you move fast, it happens, and the thing starts to pick up. And as you get the pace going, that's exciting.
It's appropriate that you're teaching me how to do this because you've just come out with a book and teaching a larger community beyond the firm you founded at Bridgewater about the principles that Bridgewater is run under is important to you. So today we want to discuss a few of the things in the book and discuss a few of the parts of the culture that you explain here. So, I want to start with a part that you phrase in the book as an abyss.
I started Bridgewater in 1975 and so now that we're taking it to '82 and I was building this company, it's a small group of people.
How many people at this point?
Um, I would say it was probably eight or ten people, something like that, just a small team. And I'm betting on the markets and I went through the calculations of countries, other countries paying their debts back.
I calculated that they would not be able to pay their debts back and that there was going to be a financial crisis and I bet on it. I received a lot of attention on Wall Street, got testifying to Congress, and I expected that the world would have an economic collapse. This is '82. This is the bottom, the absolute bottom of the stock market of the greatest bull market that we had in our time. Right? And so I was dead wrong. I lost my clients, a lot of my clients. I had to let people go. I was down to me. It was just me. I was so broke that I had to borrow $4,000 from my dad to help pay my family bills. It was a terrible experience. But it turned out to be the best experience that ever happened to me, at least one of my best, because it changed my whole attitude about decision-making. I went from thinking, you know, I'm right, to asking myself, how do I know if I'm right?
Well, that gave me an open-mindedness, a humility that I needed, and it led to us forming an idea of meritocracy.
Explain that because that is a central point of this book and a central point, I would argue, of your life, that this is something that is so deeply ingrained in everything you do.
First the problem, then the solution. The problem is, I think, one of the greatest problems of mankind is that they have wrong opinions in their heads. It's a tragedy because they could so easily stress-test those opinions and improve their probabilities of being right.
And so how do we do that? You have to have an idea meritocracy. You have to know that there is a high probability that you're wrong and that you certainly don't know all the things you need to know. There are three steps to this. First, put your honest thoughts on the table.
It's not easy to get people to even put their honest thoughts on the table.
Exactly. Put your honest thoughts on the table. Second, have thoughtful disagreement. Don't view a disagreement as a fight. View it as a curiosity, an exchange of thoughts, thinking, how do I know I might be wrong? How would I double-check that? But that open-mindedness to have that back and forth to improve the probabilities of making a better decision than you can make alone. And then the third is, if you can't agree on what the decision to do, how do you move beyond that to make a decision in an idea meritocratic way. So we have a process which we call believability-weighted decision-making,
in which we will literally take votes and weigh it according to people's believability. Anyway, the main thing is if you can have idea meritocratic decision-making and get the best ideas wherever they are and learn from them, that's the key to success.
So, I roll two dice again here.
Yep. Oh, 65. Okay, there's a classic 65. I won't have you figure it out, but the classic 65. We'll take our nickel here.
