scorecardRay Dalio once interrogated his pregnant protégé in front of his top execs until she cried
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Ray Dalio once interrogated his pregnant protégé in front of his top execs until she cried

Rob Copeland   

Ray Dalio once interrogated his pregnant protégé in front of his top execs until she cried
Finance7 min read

She was one of Ray Dalio's favorites. And now she had collapsed into tears — not with ordinary crying but in a full-on meltdown, complete with chest heaving, gasping for breath, and animalistic sobbing.

Katina Stefanova, until that day, was known as the Ice Queen at Bridgewater Associates, the world's largest hedge fund. Thirty-something, with shoulder-length blonde hair, she wasn't afraid of conflict, particularly if it came with a fat check.

She was Dalio's mentee and friend, and as she rose through the ranks in the firm, he took to telling others, "Katina is one of my people," which nearly made her blush with happiness. Some at Bridgewater even began to whisper that she could someday be a candidate to succeed Dalio.

It was the cusp of early fall 2009, on one of the days when the weather couldn't quite decide if summer was over yet, the Bridgewater founder Dalio's mood, too, waxed and waned. At 60 years old, the billionaire was beginning to say he might need to hand off some of his operational responsibilities in areas like recruiting to underlings such as Stefanova. But she couldn't keep up the pace at bringing in new staff.

Dalio told Stefanova he wanted to get to the bottom of the problem — and he wanted to do it in front of a crowd.

Stefanova entered a conference room at Bridgewater's Westport, Conn., headquarters, and watched as the seats around her filled with Bridgewater's top brass. Dalio sat across from her and began ranting, as by now she knew he was wont to do.

Dalio announced to the room that he would first "probe" and then deliver what he called a "diagnosis." In the probe he asked her to confirm that she had fallen short in his assignment. The diagnosis was that she was an idiot, a point he made over and over.

"You're a dumb shit!" Dalio spat. "You don't even know what you don't know."

No one else made a peep.

"I was working really hard," Stefanova eked out. "I was doing my best. What would you have done?"

If he had approved the pace of the hiring, he responded, then it was her fault for not telling him he was wrong. He repeated his diagnosis, calling her dumb, grabbing the table for emphasis. People in the room remember him screaming, waiting for her lip to quiver, then screaming at her again for failing to control her emotions while he screamed at her.

Several others in the room forced themselves to look away, fearful that they, too, would crack.

Mascara, mixed with hot tears, streamed down her face. Several others in the room forced themselves to look away, fearful that they, too, would crack.

Stefanova pushed her chair back from the table and, still crying, ran from the room.

Dalio, who would later proclaim himself an expert on human behavior, was apparently unmoved by extenuating circumstances surrounding Stefanova's meltdown. She herself had told him about it before that awful day.

She wasn't only losing her composure because her billionaire boss was inches from her face. She wasn't just fearful for her job.

She was pregnant.

Dalio must have known he'd crushed one of the firm's alpha dogs, one he'd helped build up. Now, he would make sure no one could forget it.

This was easier than it might have seemed.

In the center of the table that day sat a chunky black box, roughly the size of a VCR. A recording device, it captured every groan, grunt, and whimper as Dalio roared, and Stefanova crumbled. A handful of Dalio's lackeys would later listen to it over and over, marking up their favorite parts.

Dalio made clear that he wanted all to hear it. The tape was loaded into one of his most prized creations, Bridgewater's Transparency Library, an electronic repository of tens of thousands of hours of internal meetings, eventually encompassing both audio and video, ranging from raging debates among the management committee to dull economic chats between junior wonks.

There were so many tapes that some were never replayed, but Dalio made playing this one a requirement. He ordered his team of editors to create a short version of the episode. In it he was cast as the hero. In his version of events, which focused largely on Stefanova's howling distress, Dalio was portrayed as a kind but firm questioner. The probe was cut down to just a few minutes, making Stefanova's reaction seem extreme and inappropriate.

He was seemingly constantly agitated, and perhaps most unforgiving about the lowest-level tasks of the firm.

Never one for subtlety, Dalio also wrote the title, "Pain + Reflection = Progress." After having it sent out to all thousand or so Bridgewater employees, he ordered that a version of the tape be played for job candidates, making it one of their first impressions of the firm.


Stefanova's interrogation reflected an increasing pattern of Dalio's. He was seemingly constantly agitated, and perhaps most unforgiving about the lowest-level tasks of the firm. He exhibited a short fuse when he became aware of what seemed like rudimentary problems that could easily be fixed through the careful application of The Principles.

Thus the blue-collar men and women in charge of custodial, secretarial, and other such tasks at the hedge fund were in a danger zone. They had inarguably the most limited prospects for a lucrative future outside of the hedge fund; their day-to-day responsibilities were not obviously different from those at any other business, there being only so many ways to stack paper next to the printers, or to patrol a parking lot. But Bridgewater paid lavishly — more than $200,000 a year for secretaries, one recalled.

In exchange, they were expected to hew to — and be graded under — The Principles like everyone else.

Their professional lives were consumed with tumult. The bus drivers were often under investigation for keeping their vehicles too hot or too cold (sometimes both at the same time, per competing complaints). Then there was what became known as the whiteboard case.

During a meeting, Dalio rose from his seat and picked up a dry-erase marker to draw on the room's whiteboard. Midway through sketching a flow chart, he went to write over some of the work, grabbing an eraser attached to the board. For a few seconds he rubbed the eraser on the board, then froze. He turned to the group, gesturing behind him.

The eraser hadn't fully eliminated the marking; instead it had smeared, almost imperceptibly; light ink remnants across the board.

This is badness, Dalio announced. Who was responsible?

Whoever it was, wasn't in the room. One of Dalio's leveragers rushed out to find the responsible party, but there was no record of who had chosen the whiteboards.

No responsible party meant the whole facilities department was responsible. For roughly the next six weeks, Dalio devoted himself with fervor to a drill down of the team. With cameras rolling, he called them in for a demonstration at the whiteboard. He kept drawing on the board and erasing it, over and over. How could he have been the first to notice?

The facilities staff reacted as if their jobs were at risk, which was true. First they brought in giant pieces of cardboard as mock-ups and asked Dalio to show them exactly how and where he planned to use the equipment. Then, said one person involved, "We ordered every single whiteboard on the market." As each board came in, the staff paraded it past Dalio and took notes on his requests. They even tried electronic whiteboards, which didn't have to be manually erased. Those were quickly thrown out because, according to a little-known state disability rule, such boards had to be set relatively low to the ground for wheelchair access and Dalio didn't like the height. And he didn't like that the problem was taking so many man-hours to be solved.

"You're all bumping into one another!" he said.

The whiteboard case created two lasting legacies (three, if one counts that the whiteboards were eventually replaced). The videos of the investigation were edited together under a particularly memorable title: "How many facilities people does it take to put up a whiteboard?" This offended many members of the department, who felt that they were being mocked for following the boss's orders.

The second effect was that a new phrase entered Bridgewater's vocabulary. For years to come, whenever Bridgewater's professional staff were frustrated with the services of the firm's facilities staff, someone could be counted on to jump in with the quick diagnosis: You're all bumping into one another.

The intense focus with which Dalio attacked even the most mundane problems earned him a nickname among some of the rank and file. He was Ray-man, after Dustin Hoffman's Oscar-winning portrayal of an autistic man.


Excerpted from THE FUND: Ray Dalio, Bridgewater Associates, and the Unraveling of a Wall Street Legend by Rob Copeland. Copyright © 2023 by the author and reprinted by permission of St. Martin's Publishing Group.

A spokesperson for Ray Dalio told Insider, "This book is just another one of those classic tabloid books, authored by someone who applied for a job at Bridgewater and was rejected more than a decade ago. He then became an investigative reporter at a prominent newspaper and made a career of writing distorted stories about Bridgewater and Ray Dalio, at first in articles and now in this book. He did this by speaking with former employees who had been dismissed, seeking out negative rumors, and making up the stories he wanted to fit his narrative because he wasn't there for the events he describes. In fact, the author states in the preface that the book is filled with made-up dialogue and the book's footnotes are full of statements from people directly contradicting what is written about them. The picture the book paints is obviously implausible given Bridgewater's long track record of investment performance and its high percentage of long-tenured employees. Mr. Dalio doesn't want to divert his attention from more important things to discuss this trivial gossipy book."

Rob Copeland is a finance reporter for the New York Times. He was previously the longtime hedge-fund beat reporter at the Wall Street Journal, and has also covered Silicon Valley and the hidden worlds of the wealthy and powerful.




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