Episode 1 The Call to Adventure

Before we begin, let me just establish the fact that I don’t know much relative to what I need to know. Whatever success I’ve had in life has more to do with my knowing how to deal with my not knowing than anything I know.

That I should be telling other people what to do sounds kind of presumptuous to me. But I’m going to do it because I believe that the principles that have made me successful could help others achieve their own goals.

I’m now at a stage in my own life in which it is much more important to me to pass along what I’ve learned about how to be successful than to seek more success for myself.

What you choose to do with these principles is up to you. You have to be an independent thinker because only you can develop your own principles based on your own values. This brings me to my first and most fundamental principle which is that you need to think for yourself about what is true. So let’s get started!

Early on I discovered I need principles. Principles are smart ways for handling things that happen over and over again in similar situations. There are principles for everything from skiing to parenting, to cooking and so on. I’m going to share some of my most important overarching life principles that influence how we approach everything that we do.

I didn’t start out with principles. I acquired them over lifetime of experiences mostly from making mistakes and reflecting on them. My life principles are simple, but they are not complete. I still struggle to make the best decisions and I still make mistakes and learn new principles all the time. This is the reality.?

At the beginning, I needed to escape the conventions that surrounded me which meant that I need to think for myself. Unless you want to have a life that is directed by others, you need to decide for yourself what to do and you need to have the courage to do it. But I didn’t know that at first. I only learned that from going on my adventure.

Looking back on my own journey, I now see that time is like a river that carries us forward into encounters with reality that require us to make decisions. We can’t stop our movement down this river and we can’t avoid the encounters. We can only approach them in the best possible way.?

In your lifetime, you will face millions of decisions. The quality of your decisions will determine the quality of your life. Over the course of my lifetime, the most valuable things I’ve learned were the result of mistakes I reflected on to form principles so I wouldn’t make the same mistakes again.?

These principles took me from being a very ordinary middle-class kid from Long Island to becoming very successful as judged by conventional measures. They also gave me the meaningful work and meaningful relationships that I value even more than these conventional successes.?

People often ask me how I did it. I can assure you it wasn’t because of my uniqueness as person. It was a result of a unique approach to life I believe almost anybody can adopt. It starts with embracing reality and dealing with it. In Episode 2, I’ll explain what that means.

Episode 2 Embrace reality and deal with it

The path you take in life is your most important decision. In my case, I wanted my life to be great and I feared boredom and mediocrity more than I feared failure.

Since I didn’t start out with money and I didn’t need much more than a bed to sleep in and food to eat. I could skew my decisions to pursue my adventures. So ever since I was a kid, I ran after the things I wanted. Crashed, got up and ran again and crashed again. And each time I crashed, I learned something, got better and crashed less.?

By doing that over and over again, I learned to love this process even the crashing part of it. Through it, I encountered reality and I learned how to deal with it, which inspired another one of my most fundamental principles, which is that truth is the essential foundation for producing good outcomes.

By truth, I don’t mean anything more than the way the world works. I believe that we were given that laws of reality by nature. Humans didn’t create them. But we can use them to foster our own evolution and achieve our goals.

Realizing that made me a hyperrealist, by which I mean I became someone who has discovered the great rewards of deeply understanding, accepting, and working with reality as it is, and not as I wish it would be.

When I say I’m a hyperrealist, people sometimes think I’m saying that dreams can’t come true. That’s absolutely not true. Without pursuing dreams, life is mundane. What I mean is that to me, hyperrealism is the best way to choose one’s dreams and then achieve them.

Having big dreams, plus embracing reality, plus having lots of determination will bring you a successful life. I believe this formula is true for everyone.

But what does a successful life look like? We each have to decide for ourselves what success is. I don’t care whether you want to be a master of the university, or to live under a palm tree, or anything else. I really don’t.

Each of us chooses goals based on your values and decides on the best path to achieve them. But we all need approaches to making decisions that work well, especially when facing problems, mistakes, and weaknesses that stand in our way.

To succeed, we must embrace all our realities, especially the harsh realities that we wish weren’t true. At first, looking at these harsh realities caused me a lot of pain. But I learned that this pain was just psychological and my seeing things differently made all the difference.

I came to view problems like puzzles that would reward me if I could solve them. They could help me deal with the problem at hand and they would give me principles for dealing with similar problems in the future. I learned to treat pain as a cue that a great learning opportunity is at hand which led me to realize that pain plus reflection equals progress.

Meditation has been invaluable in helping me see things that way. I found that when I calmed myself down and embraced my realities and dealt with them, the rewards brought me pleasure and the pain faded.?

Each of us has the unique capability to think logically to reflect on ourselves and on our circumstances and to direct our own personal evolution. Doing this well is just a matter of following a simple five-step process. In episode 3, we’ll explore what that process is and how to use it.

Episode 3 The five-step process

We’ve discussed how important it is to reflect carefully after experiencing pain. When I did this, I was usually able to discover principles that would prevent me from repeating the same mistakes in the future. And I could see that being successful simply consisted of five steps.

Step1 is to know your goals and run after them. What is best for you depends on your nature so you need to really understand yourself and know what you want to achieve in life.

Step 2 is to encounter the problems that stand in the way of getting to your goals. These problems are typically painful. If handled badly, some of them could lead to your ruin. But to evolve, you need to identify those problems and not tolerate them.

Step 3 is to diagnose these problems to get their own causes. Don’t jump too quickly to solutions. Take a step back and reflect in order to really distinguish the symptoms from the disease.

Step 4 is to design a plan to eliminate the problems. This is where you would determine what you need to do to get around them.?

And Step 5 is to execute hose designs. Pushing yourselves to do what you need to progress toward your goal.

A successful life essentially consists of doing these five steps over and over again. This is your personal evolution and you see this process everywhere. It’s just a law of nature. Think of any product, any organization or any person you know, and you will see that this is true for them.

Evolution is simply a process of either adapting or dying. Conceptually, it looks just like the five-step process I described. As you push through this off-then-painful process, you’ll naturally ascend to higher and higher levels of success. I found that when I did it better, my struggling never became easier because the more capable I became, the greater the challenges are we take on.

Because different people are strong and weak at different things, most people can do all five steps well. Not facing these reality means you can stretch further than you should. And as the?

Sometimes, terrible things happen to all of us in life. They can ruin us, or they can profoundly improve us, depending on how we handle them. Something like this happened in 1982. In episode 4, I’ll show you what happened and the lessons I learned.

Episode 4 The abyss

We progress forward until we encounter setbacks. Whether or not we get out of them and continue forward or spiral downward depends on whether or not we’re willing to face the failure objectively and make the right decisions to turn the loop upward again.

Something terrible happened to me in 1982 when I bet everything on a depression that never came. The period between 1972 and 1982 was one of extreme turbulence for the global economy and markets and for me. And I believe that the US economy with the world economy tied to it was headed toward a catastrophe. This view was extremely controversial. I wanted the great upside and very publicly took a big risk and was wrong, dead wrong. After a delay, the stock market began a big bull market that lasted 18 years. And the US economy enjoyed the greatest growth period in its history.

This experience was like a blow to my head with a baseball bat. I had to cut my losses so that my company Bridgewater was left with one employee—me. I was so broke. I had to borrow $4000 from my dad to pay my bills. But even worse was having to let go the people I cared so much about.

I wondered whether I should give up my dream of working for myself and play it safe by working for someone else in a job that would require me to put on a tie and commute every day. Though I knew that for me, taking less risk would mean having a less great life.

Though I knew that for me, taking less risk would mean having a less great life. Being so wrong and especially being so publicly wrong was painfully humbling. I am still shocked and embarrassed by how arrogant I was in being totally confident in a totally incorrect view.

Though I’d been right much more than I’d been wrong, I had let one bad bet erase all my good ones. I thought very hard about the relationship between risk and reward and how to manage them. But I couldn’t see a path forward that would give me the rewards I wanted without unacceptable risk.

This kind of experience happens to everyone. It will happen to you. You will lose something or someone you think you can’t live without, or you will suffer a terrible illness or injury or your career will fall apart before your eyes. You might think that your life is ruined and that there is no way to go forward. But it will pass. I assure you that there is always a best path forward and you probably just don’t see it yet. You just have to reflect well to find it. You have to embrace your reality. In Episode 5, I’ll show you how this realization drove me to wonder, how reality works and how to best deal with it.

Episode 5 Everything is a machine

Sometimes, things happen that are hard to understand. Life often feels so difficult and complicated. It’s too much to take in all at once. My deep pain led me to reflect deeply on my circumstances. It also led me to reflect on nature because it provides a guide for what’s true. So I thought a lot about how things work which helped to put me and my own circumstances in perspective.

I saw that at Big Bang, all the laws and forces of the universe were created and propelled forward, interacting with each other as a perpetual motion machine, in which all the bits and pieces coalesce into machines that work for a while, fall apart and then coalesce into new machines. This goes on into eternity.

I saw that everything is a machine. The structure and evolution of galaxies, the formation of our own solar system, the makeup of the Earth’s geography and ecosystems, our economies and markets and each of us. We individually are machines made up of different machines. Our circulatory system, our nervous system that produces our thoughts, our dreams, our emotions and all the other aspects of our distinct characters. All of these different machines evolve together through time to produce the realities we encounter every day.

And I realized that I was just one tiny bit I was just one tiny bit in one nanosecond deciding what I should do. While that perspective might sound very philosophical. I found that it was very practical because it showed me how I could deal with my own realities in a better way.

For example, I observed that most everything happens over and over again in slightly different ways. Some in obvious short-term cycles that are easy to recognize so we know how to deal with them. Like the 24-hour day. Some so infrequently that they haven’t occurred in our lifetimes and we were shocked when they do. Like the once in a hundred year storm.

And some we know exist but are encountering at the first time like the birth of our first child. Most people mistakenly treat these situations as being unique and dealing with them without having proper perspective or principles to help them get through them. I found that instead of dealing with these events as one-offs, I could see each as just another one of those and approach them in the same way a biologist might approach an animal—first identifying its species, then drawing on principles for dealing with it appropriately.

Because I could see these events transpire in pretty much the same ways over and over, I could more clearly see the cause-effect relationships that govern their behaviors, which allowed me to develop better principles that I could both express in words and algorithms.

I learned that while most everyone expects the future to be a slightly modified version of the present. It is typically very different. That’s because people are biased by recent history and overlooked events that haven’t happened in a long time. Perhaps not even in their lifetime, but they will happen again.

With that perspective, I realized that what I missed when I mistakenly called for a Great Depression was hidden in the patterns of history and I could use my newfound knowledge of these patterns to make better decisions in the future.

And when I thought about my challenge, balancing risk and reward, I realized that risk and reward naturally go together. I could see that to get the most out of life, one has to take more risk and that knowing how to appropriately balance risk and reward, is essential to having the best life possible.

Imagine you are faced with the choice of having a safe boring life if you stay where you are or having a fabulous one if you take the risk of successfully crossing a dangerous jungle. That is essential the choice we all face. For me, the choice was clear. But that doesn’t mean the path forward was without challenges. I still needed to face two big barriers that we all must face. In Episode 6, I’ll show you some invaluable techniques I learned about how to best do that.

Episode 6 Your two biggest barriers

I can’t tell you which path in life is best for you because I don’t know how important it is for you to achieve big goals relative to how important it is for you to avoid the pains required to get them. This is the courage I spoke of earlier and we each feel these things out for ourselves.

After my big mistakes in calling for a depression, I had come to one of life’s forks in road as we all do. If we made the choice to take a normal job and play it safe, I would end up with a very different life than the one I had. But as long as I can pay the rent put food on the table and educate my kids, the only choice for me was to risk crossing the jungle in pursuit of the best life possible.

My big mistake inventing on a depression gave me a healthy fear of being wrong. In other words, it gave me deep humility which was exactly what I needed. At the same time, it didn’t stop me from aggressively going after the things I wanted.

To succeed, I needed to see more than I alone could see. But standing in my way of doing that were the two biggest barriers everyone faces——our ego and blind spot barriers. These barriers exist because of how our brains work.

First, let’s just explore the ego barrier. When I refer to your ego barrier, I’m talking about the part of your brain that prevents you from acknowledging your weakness objectively so that you can figure out how to deal with them.

Your deepest seeded needs and fears reside in areas of your brain that control your emotions and are not accessible to your high-level conscious awareness. And because our need to be right can be more important than our need to find out what’s true, we like to believe our own opinions without properly stress- testing them.

We especially don’t like to look at our mistakes and weaknesses. We are instinctively prone to react to explorations of them as thought their attacks. We get angry, even though it would be more logical for us to be open to feedback from others. This leads to our making inferior decisions, learning less and falling short of our potentials.

The second is the blind spot barrier. Everyone has blind spots. The blind spot barriers when a person believes he or she can see everything. But it’s a simple fact that no one alone can see a complete picture of reality.

Naturally, people can’t appreciate what they can’t see just as we all have different ranges for singing, hearing pitch and seeing colors. We have different ranges for seeing and understanding things. For example, some people are better at seeing the big picture, others excel at details. Some are linear thinkers, and others are more lateral while some are creative but not reliable, others are reliable but not creative and so on. Because of our brains are wired differently, everyone perceives the world around them differently.

By doing what comes naturally to us, we fail to account for our weaknesses and we crash either we keep doing that or we change. Aristotle defined tragedy as a terrible outcome arising from a person’s fatal flaw, a flaw that had it been fixed would have instead led to a wonderful outcome. In my opinion, these two barriers of the main impediments that get in the way of good decision-making. My dear of getting wrong gave me the radical open-mindedness I needed and that changed everything.

Episode 7 Be radically open-minded

Taking risks and occasionally being ruined wasn’t acceptable, and neither was not taking risks and not having exceptional results. I needed an approach that would give me the exceptional upside without also giving me the exceptional downside.

When I discovered it, it turned out to be my Holy Grail. To get it ?I needed to replace the joy of being proven right with the joy of learning what’s true. This need prompted me to seek the most thoughtful people I could find to disagree with me.

I didn’t care about their conclusions. I just wanted to see things through their eyes and to have them see things through my eyes so together we could hash things out to discover what’s true. In other words, what I wanted most from them was thoughtful disagreement.

Going from seeing things through just my eyes to seeing things through the eyes of these thoughtful people was like going from seeing things in black and white to seeing them in color, the world lit up. That’s what I realized the best way to go through the jungle of life is with insightful people who see things differently from me.

Think about the five steps process I described earlier as I said because we are wired so differently not everyone can do all the five steps well. But you don’t have to do them all alone, you can get help from others who are good at what you’re not, who are wired to perceive things you can’t. All you need to do is let go of your attachment to having the right answers yourself and use your fear of being wrong to become open-minded to these other views. In this way, you can point out the risks and opportunities that you will individually miss.

I found that taking this radically open-minded approach and believability weighting people’s thinking significantly increased my probabilities of making the best decision possible. This enabled me to ascend to greater heights and greater challenges.

In the past, I would always want to do what I, myself, thought was best but now I sort out the strongest independent thinkers I could find. I still do, there is nothing better to be on a shared mission with extraordinary people who can be radically truthful and radically transparent with each other.

This approach led me to create a company with the unique idea meritocracy operating in a unique way that produced unique successes. In an idea meritocracy, you get the best of everybody, everyone thinks independently then we work through our disagreement to get what’s best.

However not every opinion is equally valuable and we have to learn to distinguish between good ideas and bad ones to get the best decisions, in other words, we needed to believability way to people’s thinking but that’s another story I will explain in my work principles.

Right now, there are many wonderful opportunities and dangerous risks surrounding you that you don’t see. If you saw them free of the distortions produced by your ego or your blind spots, you would be able to deal with them more effectively. If you could acquire this ability and with practice you can, you will radically improve your life.

In episode 8, I will conclude our short journey together with a few practical thoughts, so you can begin your own journey toward whatever you want.

Episode 8 Embrace reality and deal with it

So far I described how I learned to confront my own realities, my problems, my mistakes and weaknesses, and how I surrounded myself with others who could do things better than I could.

This is the most effective way I discovered from making decisions. This is not the normal way of being. But through this approach, I became very successful. And being successful enable me to meet extraordinarily successful people and see how they think.

I’ve discovered that their journeys were similar to mine. You might not know it, but they all struggle and they all have weaknesses that they all get around ?by working with people who see risks and opportunities that they would miss.

Over time, I learned that by nature most people’s greatest strengths are also connected to their most significant weaknesses. And striving hard for big things is bound to lead you to painful Falls. It’s just part of the process. Such setbacks will test you. They sort people.

Some think hard about what caused their setbacks, learn lessons and continue progressing toward their goals. While others decide that this game is not for them and get off the field.

I’ve come to realize that success is not a matter of attaining one’s goals. I found that when I reach each higher level of success, I really remain satisfied. The things we are striving for are just the bait. Struggling to get them forces us to evolve. And it is this struggle toward personal evolution with others that is reward.

I no longer wanted to get across the jungle, but instead wanted to find greater and greater challenges to go after. Surrounded by great people, working together on a shared journey, eventually the success of the mission, and the well-being of people alongside me came more important than my own success.

I also started to see beyond myself and wanted others to be successful when I’m no longer here. I realized that if I fail to do that, I will be a failure. I struggle with that now.

We all struggle at different things at different times until we either choose to give up or until we die and become part of the larger evolutionary story. This is how all machines work and are recycled through time. When a machine breaks down, its parts go back into the system to become parts of the new machines that also evolves through time.

Sometimes it makes us sad because we’ve become very attached to our machines. But if you look at it from the higher level, it’s really beautiful to observe how the machine of evolution works.

Now you must decide for yourself how you will evolve. Forget about where these principles came from. Just access whether or not they are useful to you and evolve them to suit your own needs. As with all of life’s decisions, what you do with them is ultimately up to you. My only hope for you is that you have the courage to struggle and evolve well, to make your life as great as it can be. Thank you and goodbye!