Because our communications often find their way into the media in distorted ways, we wanted to share publicly the below letter we sent to our clients this morning.
As you know, Bridgewater has a unique culture that works exceptionally well in our industry. Because consensus views are built into market prices, in order to beat the markets, we need independent thinkers. These independent thinkers need to have thoughtful disagreements and ways of resolving them. For this reason, our culture is a well-thought-out idea meritocracy. It requires people to be radically truthful and radically transparent with each other. This radical truthfulness and radical transparency includes looking at people’s mistakes, problems, and weaknesses as well as their strengths and talents. Doing this isn’t always easy, especially at first, but dealing with these mistakes, problems, and weaknesses is what fuels our improvements. Some people love this forthright way of operating and wouldn't want to work anywhere else, while others dislike it and leave. But nobody doubts that this unique culture is the force behind Bridgewater's unique success over the last 40 years.
Consistent with this idea-meritocratic way of operating, Bridgewater is run by a number of capable partners who can assess things independently and work together to come to the best decisions. This partnership model, rather than a single leader model, is why we have co-CEOs to run the business parts of Bridgewater, co-CIOs to run the investment parts, and co-chairmen to make sure the co-CEOs are doing a good job. We also have a team of others in key management roles who thrash things out, back each other up, and reduce key man risk. We are very fortunate to have such a broad and deep team, especially at this time of transition.
Changes Coming in April
Any organization run by a 60+ year old that says that it isn’t in transition is either naïve or disingenuous. For that reason, when I was about 60 (seven years ago), Bridgewater started its management and equity transition, with a goal of having others replace me. As explained at the time, we allowed for this transition to take up to ten years because we knew that getting things right would take some adjusting of the ways we did things and some trial and error. We have done what we have said we would do, and we have kept you informed. The purpose of this note is to continue doing that.
I am happy to report that my transition out of management will be complete as of April 15th.
As a reminder, ten months ago I temporarily stepped back into management as interim co-CEO for a one-year stint in order to help transition Greg Jensen’s co-CEO responsibilities. Handling both a co-CEO job and a co-CIO job is tough. For that reason, we decided that Greg would shift his full attention to the co-CIO role. I will be doing the same in April. As I love markets, I’m excited about this change and expect to remain a professional investor at Bridgewater until I die or until those running Bridgewater don’t want me anymore. So Bob Prince (who has been with Bridgewater for 31 years), Greg Jensen (who has been with Bridgewater 21 years), and I (who have been here 42 years) will remain focused on investing as co-CIOs. In addition, Osman Nalbantoglu (who has been at Bridgewater for nine years) continues to run our portfolio implementation and trading/execution areas, and eight of our key investment research associates will step up into senior researcher roles. These 12 people are supported by hundreds of researchers and technologists, giving Bridgewater the strongest investment team the firm has ever had and a deep bench of experienced investment professionals.
I can now permanently transition out of the interim co-CEO role because we now have confidence in the people and processes that will lead Bridgewater’s management without me. David McCormick will be stepping up to join Eileen Murray in the co-CEO role. As you know David, who is currently President, has been at Bridgewater for eight years and has been a critical part of our success. Over the last year, he, Eileen (who has been at Bridgewater for eight years and a co-CEO for four years), and I ran the business part of Bridgewater with Co-CEO Jon Rubinstein, who was new and focused mostly on technology. We worked together to build-up our governance, management support, and metrics systems in a way that has demonstrated that David and Eileen can run Bridgewater without me as a co-CEO. Most importantly David, Eileen, and the people who support them have a proven understanding of Bridgewater and its unique culture, and they treasure these things.
Jon Rubinstein will step out of the co-CEO role and will be leaving Bridgewater, though he will remain an advisor. While over the last ten months Jon has helped build a plan to re-design our core technology platform and has brought in a group of extremely talented executives to build out our technology leadership, we mutually agree that he is not a cultural fit for Bridgewater. As a result, we have put in place a plan for him to transition to an advisor role in April. I really do appreciate Jon’s hard work and contributions.
Carsten Stendevad, the former CEO of the large Danish pension fund ATP, is joining Bridgewater as part of our new “Bridgewater Senior Fellowship Program,” which will bring highly distinguished individuals into Bridgewater for a year to explore what our culture is like and lend their expertise and insights to our organization. We expect a limited number of such special people to join this program in the future.
And as previously announced, John Megrue joined me as a co-chairman on January 1st. John has been a leader in the private equity industry for over 30 years and is currently chairman of Apax Partners U.S. He brings with him a practical understanding of board governance. Bridgewater’s oversight board now consists of current executive management members and former senior executives, as well as outsiders, which we believe is the right balance for strong long-term governance.
As always, if you have any questions, please let us know.