Harry CampbellIn the revolving door between Washington and Wall Street, President Obama’s planned F.B.I. nominee, James B. Comey, will be just the latest to spin through. And it’s not unusual that the financial institution where Mr. Comey, a former deputy attorney general, had worked was a hedge fund — you may recall that Lawrence H. Summers, the former Treasury secretary, had a short spell at D. E. Shaw, making millions.
What may raise some eyebrows is the hedge fund itself: Bridgewater Associates, the largest hedge fund in the world, with some $120 billion in assets under management.
The first thing that’s remarkable is Bridgewater’s success. Since its founding by Ray Dalio in 1975, it has reaped huge returns. Mr. Dalio was the second-highest-paid hedge fund manager last year, making $1.7 billion despite his fund’s so-so performance, and Forbes estimates his net worth at $12.5 billion. Mr. Dalio, however, is known as much for the work culture he creates as the money he mints. He has written a 123-page manifesto titled “Principles” that is at the center of the distinct philosophy being “lived out” at the fund.
It’s easy to poke fun at the 210 principles as a latter-day model of EST or another 1970s personal discovery group. Take for example the notation in Principle 18 of “pain + reflection = progress,” the Christian-like maxim in Principle 122 to “teach your people to fish rather than give them fish” and the last principle, which lets you know something your mother told you: “Don’t try to please everyone.”
It is phrases like these that led a writer for New York magazine to describe the principles as “written in a digressive, self-serious style that reads as if Ayn Rand and Deepak Chopra had collaborated on a line of fortune cookies.”
It’s not all about personal attitude. Some of the principles express the harsh type of Darwinian capitalism that financiers tend to love. Principle 131 states that “when people are ‘without a box,’ consider whether there is an open box at Bridgewater that would be a better fit. If not, fire them.”
I’m not really sure what the box is, but I think the principle is saying if you don’t fit inside it, you’re gone.
And of course, because the principles are about being a better person, there is some type of system intended to make you not just improve your life but make you a better employee of Bridgewater. Principle 166, “design your machine to achieve your goals,” sets up a number of objectives for running your life to produce maximum outcomes.
All of this would be sort of comedic except that they are lived out at Bridgewater. And all of the principles are subsumed to a fundamental “truth.” Bridgewater employees are supposed to live in a world of “radical honesty,” a concept that has raised controversy and something that most of us don’t even live out in our homes let alone in the workplace. Employees are encouraged to express their opinions and ideas without bar, criticize what they see as employee failings and search for ultimate truth. Meetings and phone conversations are recorded even at the highest level to make sure that there is a record and no dispute of what is said. And no one is allowed to talk behind the back of another. For those who want a taste, videos are made by young, bright-faced, mostly white employees about how Bridgewater changed their lives.
In an article about the hedge fund, Institutional Investor’s Alpha magazine stated that according to former employees at Bridgewater, “the focus is on an individual’s flaws and mistakes rather than a balance between positives and negatives” and that constant criticism can hurt. Alpha wrote that one employee said that “what [Dalio] doesn’t understand is that if you kick a dog enough … [the dog] curls up and just whimpers. And he kicks pretty hard.”
Because of all of this, The Daily Beast has called it the weirdest hedge fund out there, detailing how Harvard grads were running over themselves to work there, participating in the mock debates that Bridgewater uses to interview prospective employees. Because this is Bridgewater, these debates don’t cover finance but rather topics like abortion.
When I asked Bridgewater to comment on its culture and Mr. Comey’s tenure at the firm, I was referred to those videos online. Mr. Dalio also commented that “President Obama could not have picked a man with greater integrity or a stronger moral beacon than Jim Comey.”
So, what was a prominent Justice Department lawyer and potential top G-man doing in a place like this?
First, for whatever reason, Mr. Dalio’s philosophy works. Bridgewater makes real money, regularly making macroeconomic bets that beat the stock market for its clients, including many of the nation’s pension funds. And this system is intended to solidify and keep together 1,300 people at Bridgewater headquarters in Westport, Conn.
On Wall Street, people don’t mock money. They worship it. So, Mr. Dalio is often hailed as a genius. The New Yorker, in a glowing profile, doubted whether Bridgewater was a cult, saying no one was there against their will. So, maybe the rest of us are living a world of nonsense and Mr. Dalio is right.
The probable next director of the Federal Bureau of Investigation was part of this mind-set for about three years, from 2010 to 2013. Before that, Mr. Comey was general counsel at Lockheed Martin. There, he got decently rich, making $6.1 million in 2009 alone.
He left to become Bridgewater’s general counsel in charge of the legal, compliance and security departments. Presumably, it was for the money — when Mr. Comey discloses his Bridgewater earnings, it will almost certainly be a sum greater, perhaps far greater, than $6 million a year.
But did he buy into the Bridgewater culture? Or was it all about the money?
If it is all about the money and Mr. Comey didn’t believe in the firm or the culture, then this is perhaps a sad commentary on what people are willing to do not just to be rich, but to be superrich. Mr. Comey could have been quite comfortable in his previous job, yet he wanted more.
Or maybe not. Maybe the Bridgewater way is the way of the future and Mr. Comey bought into this belief when he was there. In the New Yorker profile, Mr. Comey was quoted as saying, “The mind control is working. I’ve come to believe that all the probing actually reduces inefficiencies over the long run, because it prevents bad decisions from being made.” Perhaps the F.B.I. is about to experience what “radical honesty” means for government, as well as what it means to fire people who don’t fit in.
Mr. Comey’s reasons for going to Bridgewater and what he thought of the culture there are only speculation at this point. If he is nominated, though, Mr. Comey may want to go before the Senate and let the public know what he thinks of the hedge fund and why he worked there.