| Applying Ray Dalio’s
Principles to my Life |
Learning to be comfortable with failure is a prerequisite, and necessary nonetheless. The ROI of failure seems to have more exponential return than that of early Success. Not that winning early in life is bad, but the compounding overall effect of ”fail” is one of tremendous Growth and dramatic Self revelation. An essential step to having a great idea is to have a “failed” idea first.
“Failure is Feedback.” Only during failed and tumultuous times can one calibrate the limit of boundaries and tolerance. Only when one becomes conscious of risk can one contemplate self awareness.
“Circumstance does not make a man, it reveals the man to himself.” – James Allen
This applies to all fragments of life, but mostly importantly to the innovators and risk takers among us. There is a set of values, principles and beliefs in which exposure to failure, defeat, embarrassment and human shortcoming reveals either a bruised EGO or an Unfettered DRIVE. Failure breeds Uncertainty- which causes discomfort and is a catalyst for CHANGE.
“It is far more common for people to allow ego to stand in the way of learning.”
― Ray Dalio,
The Goal is to FAIL FAST, so that one can CALIBRATE, PIVOT and make a CORRECTION.
Every single one of my present projects were a product of a failed startup. Real in depth decision making is necessary to examine the direction of your trajectory. The only path to Self Mastery is CONSISTENCY and REPETITION. Consistency of fails will eventually lead to success, it is a “numbers” game after all. Success is a product of failure, therefore without failure, there will be no such thing as SUCCESS.♣
“Pain + Reflection = Progress”
― Ray Dalio,
This all brings me to self-made billionaire, entrepreneur, investor, and polymath Ray Dalio and his Principles…
“Principles are fundamental truths that serve as the foundations for behavior that gets you what you want out of life. They can be applied again and again in similar situations to help you achieve your goals.”
― Ray Dalio
Dalio brings in his 3 levels of Reality:
Level 1: Getting Stuff Done
We as humans are doers, but for plenty of us it takes a lot of momentum to beat ‘resistance‘ of getting stuff done. This level of reality is essentially about setting goals and doing them: creating a to-do list from most to least important and then trying to beat ‘procrastination’ and essentially get
Dalio calls this layer of reality the blizzard because lots of things are constantly coming at you from different directions, and it’s hard to get clarity on what really matters.
Level 2: Principles
Dalio believes that in every action, reaction and results, there are underlying principles at play. The principles you learn in any situation are often more valuable than the immediate result, because you can apply them for the rest of your life across all areas to make better decisions.
As you move down toward fundamental mental models of how your business/startup works, you gets closer to principles that are more timeless and universal.
Once you reach the “timeless and universal” level, you can apply a principle or mental model to exponentially more situations.
Once you have a good understanding of the mode, you then have a tool that can be applied in future situations to help you be more efficient, make better decisions and eventually be successful.
Applying this to my life personally would be:
Level 1: Idea Curation | Coding | SEO | Content Creation| Marketing | Phone Calls
- Pain threshold.
Level 2: | Fail & Successes | Interactions | Concepts
- Underlying Principles
- Providing Value
- Calibrating “Fails”
- Applying “Sytems”
- Always Learning.
To Dalio, at Level 2, it would be a learning opportunity because of his following core principle:
“Pain + Reflection = Progress.”
As he explains:
“There’s so much more that you can learn from mistakes because they give you a loud signal. Rewards keep you doing the same things, and so you don’t grow from successes… Mistakes, if you can deal with them the right way, with reflection is where the growth comes from.”
Dalio has built systems, tools, and habits that help him move toward pain, react logically and objectively, and engage in thoughtful disagreement rather than arguments. Dalio believes that you will be able to see connections more naturally over time.
When I was faced with types of situations I had encountered before, I drew on the principles I had learned for dealing with them. But when I ran into ones I hadn’t seen before, I would be painfully surprised. Studying all those painful first-time encounters, I learned that even if they hadn’t happened to me, most of them had happened to other people in other times and places, which gave me a healthy respect for history, a hunger to have a universal understanding of how reality works, and the desire to build timeless and universal principles for dealing with it.”
Dalio’s approach gives him a tremendous advantage as an investor because financial cycles in the market happen more too often, and with Dalio’s wider lens, he can see those patterns. He is also extremely deliberate with learning from his experience so he can be more “consciously” reactive to “situations.”
And he does this by building “ALGORITHMS”
If Principles and Algorithms are the Steak and Potatoes… Algorithms is probably the Steak in my opinion.
Level 3: Algorithms
Level 3: Algorithms ℘ ℜ φ
My own personal Algorithms:
Is there a NEED for my product/service ? ⇒ √ Yes or No ? If Yes ⇓
Am I creating enough VALUE that people are willing to PAY ? ⇒ √ Yes or No ? If Yes ⇓
How can I leverage this VALUE to do GOOD for the World/Others ♥ ⇒ that they are willing to PAY.
If NO ? ⇒⇒⇒ PIVOT ⇒⇒⇒ RE-CALIBRATE ⇒⇒⇒ NEW IDEA ♣
Is there OTHERS that OFFER that SAME Exact product/service ? ⇒ Yes or No ? If Yes ⇓
Am I creating MORE VALUE than them ? ⇒ Yes or No ? If Yes ⇓
How can I leverage my POSITION to CREATE more VALUE ♥ than OTHERS ⇒ that customers are willing to PAY.
If NO ? ⇒⇒⇒ Is there a CHANCE for me to COMPETE ? ⇒ Yes or No ? If Yes ⇓
⇒⇒⇒ Do i have enough RESOURCES ? ⇒⇒⇒ What is the ROI ? ≈ Full AnalySIS
Dalio’s 5 Step Process
The 5 Step Process
1. Have Clear goals
2. Identify Problems/Barriers
3. Diagnose this Problem/Barriers
4. Design Plans for Solution
5. Implement Design
Make decisions based on Value Calculations:
– think of every decision as a bet with probability of reward and penalties.
This means it is important to check your target market, and if there is a space for your product or service.
Adaptation through rapid trial and error is invaluable – Ray Dalio
This means FAIL FAST.
Failure just means adjustment and improvement.
– conscious learning
– self awareness
⇐⇐ A quick Case Study base on one of my businesses ⇒⇒
♠ Business: Senior Hug
What we do: PROVIDE SEO SERVICE TO NURSING HOMES IN NEW YORK CITY THROUGH A HEALTHCARE DIRECTORY.
Customer Base/ Acquisition: Nursing Homes ( Nurse Manager, Nursing Home CEO )
Monetary/Revenue Model: 6 or 12 month Contract with Nursing Homes.
Possible Push-backs from Clients: Use this as Feedback
- Pricing ?
- Value ?
- Confused of Value ?
- Bad Pitch
Ψ Re-evaluate Feedback.
- Is the PRICE to high ?
- Is the VALUE justified ?
- Does the Client fully UNDERSTAND ?
- Is the PITCH too Aggressive ?
Ψ Analyze the Metrics.
- Cost per Client Acquisition
- MRR (Monthly Recurring Revenue)
- Expenses ≅ Revenue
- Growth ≅ Scale
Ψ Calibrate base on Results.
- Client Relationship
- Churn Rate
- Net Revenue
Dalio has systematically taken his principles and turned them into algorithms in computers that he uses to make better investing decisions.
For Dalio’s company, Bridgewater, has developed several apps that employees use to make better decisions. These apps collect input data that can be placed in databases. Starting in the 1970s, Dalio created investment algorithms and turned them into code. Over time, he improved the code and his team used all these historical data to stress-test using algorithms.
With the results from stress-testing, he and his team refined the principles and algorithms in order to be successful.
“Visualizing complex systems as machines, figuring out the cause-effect relationships within them, writing down the principles for dealing with them, and feeding them into a computer so the computer could ‘make decisions’ for me all became standard practices.”
Throughout his career Ray Dalio has focused on constant and deliberate learning. Dalio’s approach means he gets less done in a day, but gets drastically more done in his life. This happens because the value of operating on Levels 2 & 3 compound over time.
I Support ♥ Creative Homeless
- My Pets: 🐱 Senior HUG, ElectGuide, MyRockland, AllnursingNotes, Creative Homeless, NYC Spots, Pinoy Logic, NY WORDPRESS, Youtube NCLEX, SuperNerdo, Aurelio, Music, Bacarro Post, NJ Edgewater. 🐱
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