24 Excerpts and Takeaways For Entrepreneurs From Principles Book

The Principles book was on my virtual bookshelf for a while and, I finally finished reading it. I wanted to share some notes that spoke to me and might speak to you as well.

This book has provided me with so many invaluable guidance and insights, and I highly recommend it to every entrepreneur and leader.

In this book, Ray Dalio, one of the world’s most successful investors and entrepreneurs, shares the unconventional principles that he’s developed, refined, and used over the past forty years to create unique results in both life and business — and which any person or organization can adopt to help achieve their goals.

In going through this book, I pulled out takeaways across all the chapters that I will re-read periodically. I give those to you now and highly recommend that you get the book. But if you’ve only 10 minutes, read this instead.

I learned my principles over a decade of making a lot of mistakes and spending a lot of time reflecting on them. I’ve been a curious, thinker who ran after audacious goals. In pursuing those goals, I have had some failures, learned principles that would prevent me from making the same sort of mistakes again. As an independent thinker, I incline to take high risks in search of high rewards. I fear boredom and mediocrity much more than I fear failure. — Ray Dalio


    1. Pain + Reflection = Progress. Don’t let pain stand in the way of progress — There is no avoiding pain, especially if you’re going after ambitious goals. Believe it or not, you are lucky to feel that kind of a pain if you approach it correctly because it is a signal that you need to find solutions so you can progress. Most people have a tough time reflecting when they are in pain. They pay attention to other things when the pain passes, so they miss out on the reflections that provide the lessons. If you reflect well while you’re in a pain, that’s great. But if you can remember to reflect after it passes, that’s valuable too.
    1. Own your Outcomes. Don’t blame bad outcomes on anyone but yourself — Whatever circumstances life brings you, you will be more likely to succeed and find happiness if you take responsibility for making your decisions instead of complaining about things beyond your control.
    1. Be Radically Open-Minded — The two biggest barriers to good decision making are your ego and your blind spots. Together, they make it difficult for you to objectively see what is true about you and your circumstances and to make the best possible decisions by getting most out of others.
    1. Understand your ego barrier — Your ego crave praise and respond to criticism as an attack. Even when the higher-level parts of the brain understand that constructive criticism is good for you, they make you defensive.
    1. Understand your blind spot barrier — Your blind spots prevent you from seeing things accurately. Just as we all have different ranges for hearing pitch and seeing colors, we have different ranges for seeing and understanding things. We see things in our own way. Some people naturally see big pictures and miss small details while others naturally see details and miss the big picture.
    1. Practice radical open-mindedness — If you can recognize that you have blind spots and open-mindedly consider the possibility that others might see something better than you — and the threats and opportunities they are trying to point out really exists — you are more likely to make good decisions. Sincerely believe that you might not know the best possible path and recognize that your ability to deal well with “not knowing” is more important than whatever it is you know.
    1. Appreciate the art of thoughtful disagreement — When two people believe opposite things, chances are that one of them is wrong. In thoughtful disagreement, the goal is not to convince the other party that you are right but to find out which view is true and decide what to do about it. To do this well, approach the conversation in a way that conveys that you’re just trying to understand. Use questions rather than make statements. Be calm, collegial, and respectful. Remember, you are not arguing; you’re openly exploring what’s true.
    1. See the world through other’s eyes and make better decisions together — Rather than thinking that you’re right, think about how do you know that you’re right. Recognize that to gain the perspective that comes from seeing things through another eye’s, you must suspend judgment for a time, only by empathizing you can properly evaluate another point of view. Remember that you’re looking for the best answer, not simply the best answer that you can come up with yourself.
    1. An organization is a machine consisting of two major parts: Culture and People — A great organization has both great people and culture. Great people have both great character and great capabilities. By character, it means that they are radically open-minded, transparent and deeply committed to the mission of the organization. Great cultures bring problems and disagreements to the surface and solve them well, and they love imagining and building great things that haven’t been built before.
    1. Build a company on meritocracy — not an autocracy in which the founders lead and others follows, and not a democracy in which everyone’s vote is equal. Building the company on the idea of meritocracy that encourages thoughtful disagreements and weighs people’s opinions in proportion to their merits. An idea meritocracy requires people to do two things: 1) Put their honest thoughts on the table for everyone to see, 2) Have thoughtful disagreements where there are quality back-and-forths in which people evolve their thinking to come up with the best collective answer possible.
    1. To do exceptionally well, you have to push your limits and that if you push your limits, you will crash and it will hurt a lot. When that happens, the most important thing you can do is to gather the lessons these failures provide and gain humility and radical open-mindedness in order to increase your chances of success in the future.
    1. If you work hard and creatively, you can have just about anything you want, but not everything you want.
    1. Leaders must be judged within the context the circumstances they encounter.
    1. Investing is anything but easy. To be an effective investor or successful entrepreneur, you have to bet against the consensus and be right.
    1. Dreams + Reality + Determination = A Successful Life
    1. When you have two choices (e.g. savor life or making an impact), the question isn’t just how much of each to go after, but how hard to work to get as much as possible of both.
    1. Don’t get hung up on your views of how things “should” be because you will miss out on learning how they really are. It’s important not to let our biases stand in the way of our objectivity. To get good results, we need to be analytical rather than emotional.
    1. Most people call something bad if it is bad for them or bad for those they empathize with, ignoring the greater good. Typically, people’s conflicting beliefs or conflicting interests make them unable to see things through another’s eyes.
    1. None of us is born knowing what is true; we either have to discover what’s true for ourselves or believe and follow others. Radical open-mindedness and radical transparency are invaluable for rapid learning and effective change.
    1. Recognize that decision making is a two-step process. First, take in all relevant information, then decide.
    1. Don’t worry about looking good; worry about achieving your goals.
    1. Be clear on whether you are arguing or seeking to understand and think about which is most appropriate based on your and others’ believability.
    1. Triangulate your view with believable people who are willing to disagree. Find the most believable people possible who disagree with you and try to understand their reasoning. It’s not just experienced people. Inexperience people can have great ideas too, sometimes far better ones than more experienced people. That’s because experienced thinkers can get stuck in their old ways.
  1. Plan for the worst-case scenario to make it as good as possible.