Dave Kline, Ex COO of Bridgewater Associates shares his expertise in team management & recruitment
On this episode of Founder Story, we’re pleased to present you Dave Kline, the brilliant coach and leadership trainer, ex alumni of Bridgewater Associates and Moody’s Analytics and owner of SkillScouter.com
Dave brings together his invaluable experiences of working for Bridgewater Associates in varying capacities to lead teams through management and recruitment to help educate and coach leaders on the best strategies to build effective teams.
“ I think the trade-offs for being remote-first outweigh being in the office… like 3 hours a day, you’re on a train or you’re in a car. And I love podcasts as much as the next person, but as a company, I’d rather let them have 2 hours of their life back and get an extra hour of productive work because they can just do it at home”
Take a listen to the full podcast to hear first-hand accounts of the phenomenal employee evaluation systems created by Ray Dalio at Bridgewater Associates incorporating Baseball Cards and the Dot Collector to strategically analyse each employee’s strengths and weaknesses in a transparent manner.
Dave’s Book Recommendations:
Where to Find Dave Kline:
Follow him on Twitter: dklineii
Find him on LinkedIn: Dave Kline
Dave’s startup: SkillScouter
In today’s episode, we have Dave, the man behind SkillScouter.com. Dave, welcome to the show.
Thanks so much for having me. So thrilled to be here.
So Dave, maybe I can give you a quick intro about Dave for those who don’t know. So he’s the owner of SkillScouter. Also, he runs this management accelerator course on Maven.com, go check him out. And maybe the most impressive bit will be his previous experience at Bridgewater Associates.
He had a stint of almost a decade, worked as COO or maybe at the very end, head of recruitment. That was, I think, his last title. Also, for those who don’t know about Bridgewater Associates, let me give you a quick intro on that as well.
It’s one of the biggest hedge funds on earth. Probably the third based on AEM, has about 154,000,000,000, probably the most popular as well because of the legendary founder Ray Dalio. It’s known for its strong culture, and there’s a lot we can learn about any company can.
So you can dive deep into that to get started Dave could you tell us how did you get into Bridgewater? Quick introduction, please. How did you end up there?
Absolutely. Yeah. So I’d love to say that it was part of a brilliantly masterminded strategy for me to get into the company, but the reality of the situation, it was a brilliantly masterminded coup by someone on my team when I was at Moody’s.
So basically a recruiter reached out to one of my direct reports, suggested that there was this great opportunity up in Westport, Connecticut. And he said, you know, I’m not that interested. I live in New Jersey, but my boss lives in Connecticut.
Maybe you talk to him. And so one thing led to another. And that call came in and a week when the trains in New York City broke down three days in a row and my hour commute turned into two and a half-hour commute.
So one thing led to another. We had a few conversations. I was completely intrigued by what they were building, which seemed as much an asset manager, but also a different way to manage, like turning management into a craft onto its own, doing it in a systematic way, generating data about people. I’m sure you’ve heard about the baseball cards or the dot collectors and things like that.
So did you ever think of joining them before you got the opportunity? Is there something you had in your back of mind or anything like that or. No. It was like a total surprise.
I hadn’t even heard of them, really, in the fact that they were one of my clients. But we had hundreds of clients at Moody’s, and so it’s just another name on the list.
It was only when I really started interviewing that I got a taste of how things would be different. For example, all of my interviews were recorded. Right. Which is pretty uncommon for interviews. And then to learn that that’s not just the interviews, but every single meeting is recorded.
So they had that culture even Back then, like a decade ago, they had the recording culture?
Yeah very much. Ray wanted to start the process of transitioning from day to day management and focusing only on investments. He started previewing that, I think, 15 years ago and said it would take him at least a decade to do it.
And so writing down the principles, building some of these systems, like recording the meetings, et cetera, were all part of that transition.
Got it. And the baseball card system, was it there as he joined or they’re just developing that system?
It was there as I joined. There was a little bit more kludgey when I joined. It was kind of the tail end of being Excel spreadsheet in the beginning of kind of the tools that he’s now made more publicly available.
Could you tell us a bit more about the baseball card system? For those who don’t know, there’s more like the cards you get for baseball players with their size, cost and everything.
So they implement that into their employee management. Everybody. So everybody has a scorecard. So based on their skills and everything. But I would like to hear from you exactly how does that work? How does a card look like?
Yeah. So I think the problem that we were trying to solve is sort of the typical performance management problem where people do work for 52 weeks, and then you sit down with your manager and they sort of remember the last ten days and then give you a grade for the year and your bonuses based on that, et cetera. And instead, it was much more like, how could you help people use data to be more consistently self-aware?
And so across something like 60 attributes, from creativity to detail, orientation to conceptual thinking, et cetera, you would receive observations all the time. So I’d be in a meeting and I might say something very clever, and seven or eight people could record into a tool called the Dot Collector. That was a creative idea.
And then I might say something really narrow and dumb ten minutes later, and they might say that was negative in a particular dimension. And those little observations would add up to then a baseball card that would say, like, wow, consistently Dave is creative.
Consistently Dave is also linear, something like that. And that would be based on thousands and thousands of observations from dozens or hundreds of people that you interact with instead of just your manager remembering what happened last week. At the end of the year,
The criteria are they different from managers and different employees. Or is it the same for everybody. Like everybody’s measured on creativity, everybody’s measured on the same criteria or based on their role, is it different?
Well, I can say this the baseball card, the system would record the same criteria for everybody. I think the thing you’re alluding to is then saying which criteria matter for a job. Right.
If you put it into a sports analogy, you might say if I were using baseball as the example, I could record pitching statistics for the person who plays right field. I could see that they throw 90 miles an hour, but it’s not that relevant.
So we have one system, and then you would say as a manager, I could use that system to kind of stare at different people’s profiles and match to the types of things I needed for my type of job.
So as you mentioned coming in, I was the COO of a couple of departments. Right. So that tended to be more like operational, organized, consistent. I’d be looking for people with that type of profile.
When I was then working in recruiting one of the jobs we had sources. These are the people who had to creatively think about where in the world is the best talent hiding for us to go find it. So I had a very different profile that I would want out of that person.
And this tool would just give you more data to kind of work from the experiences they have had instead of just like a CV.
Got it. You think a system like that can be applied to all organizations, or you think there’s a limitation on scale, it will only work on really huge organizations or a certain sector? Or do you think it’s something that everybody can adapt at some point?
How do you see that based on the scale, maybe a startup, maybe ten people working, can we apply this or no? How do you see that?
That’s a great question. I think the answer is predominantly no. I would say, but let me separate the way we implemented it from things I think you could do if you sort of hear me describing it, it sounds like a Twitter feed for feedback, which is what it was. Right.
Like I said, I had almost 10,000 observations on me and the speed of those observations were publicly available. So literally you could go in and see all the positive and negative feedback I had gotten at any point in time. And that was for everybody.
I just don’t think most organizations will have the interest, the desire and the consistency to do that at that scale.
What I do think you could do if you go to the baseball card side of it, though, of having a couple of things. One, a description of the types of capabilities, values, et cetera, that is important in your organization for different roles.
Having that picture and that shared language, I think, is something that doesn’t have to be very complicated. You basically write it down share it with people and get them to start using it and then having more regular observations than once a year.
When I’m coaching people, I’ll encourage them to say, yeah, you should have expectations with people. You should remind them what about their strengths and weaknesses are going to help either help them or hurt them against pursuing those expectations.
And then you should have conversations probably monthly, but at least quarterly about how it’s going. Where are they doing well and exceeding your expectations? Where are they coming up short and matching it to that picture of what they’re like is often very helpful for them in terms of getting better.
I think the next bit, maybe around the popular bit things from their culture is idea meritocracy. Could you tell us a bit more about that, how did it work?
Even if I tried to define the concept, it’s this idea that the best ideas should rise to the top. But I think people hear that and they think of like a free for all of ideas coming from every direction.
And I would say it’s not typically the case. There are usually two ways that an idea would win out. So one way would be it’s coming from a person with a track record in that particular domain.
So if we go back to the recruiting example, a great idea from a recruiter who has a ten or 15 or 20 year history of recruiting is probably weighed more heavily than someone who just showed up. And it’s their first day in the recruiting department. So there’s a little bit of this concept of believability that said, that could easily turn into an echo chamber.
So you sort of need to see the other side of the idea of meritocracy, which is like the best matching of data and logic. Right. So you don’t want to just fall back on people’s reputation and their track record or you’ll miss out on the new ideas.
And so for the new ideas, it was much more does this make sense? And does the data support that point of view? And so those are sort of the two factors that were often coming in together to kind of fuel the idea of meritocracy.
So it wasn’t necessarily a Democratic way, but it gets a single vote, but it’s mostly based on their skill level or expertise in the industry. They get rated bigger for that idea they come up with.
So that’s how it works, right. So it’s not necessarily a single vote for each person. You might not be an expert in that domain. So you don’t get the same vote as somebody who’s an expert on the same domain. Right.
I would say one thing is I wouldn’t confuse meritocracy with democracy. So there was never really a vote. Right. Like part of what was expected of us in really any leadership role or what we would call a responsible party.
But anyone who is responsible for something. What came with that responsibility is you were the one who was required to make the decisions. So the idea of meritocracy was giving you lots of ideas and lots of data and giving you alternative points of view that you might not have sourced on your own. But as the person responsible, you still had to decide.
Right, that makes sense. So that person took the decision at the end. Excellent. All right.
Of course, I was a bit taken back with democracy. If you look at Democratic ways, they can be quite slow. Not as efficient as somebody, a single person taking the decision on top. Right. So that’s always that fine balance. But now it makes a lot more sense. All right. Excellent.
And to be fair, there were points in time it was slow. Because there was also this and again, this is part of the beauty of the system was there were these different principles that were competing and creating intentional tension. So one of the tensions was this idea of fighting to get in sync or fighting for truth. And so you are encouraging people to debate.
And if you think about running an investment manager, that could make a lot of sense. Right. You want the best ideas, fighting for their point of view, because you’re generating Alpha. And Alpha is effectively a zero-sum game. So if Bridgewater doesn’t go get the Alpha, somebody else does. If they don’t get the excess market returns.
And this is where I would say even running my own business now, I don’t know that I would try to replicate that system in full because I’m not an asset manager. I don’t necessarily want every decision debated. I want the input, I want the data. Right. But I don’t have a vehicle that will convert debate into Alpha in the same way.
And there’s some controversy. If you look at the articles written, like from current affairs magazine pointing out that some employees were really struggling with the system where it has negative psychological impact on them. They say they even have this case study of a former COO Hope Woodhouse.
I’m not sure that you read this article, how she was shaded in front of the whole management committee, and she also came to the point of crying. So you think that’s a bit too much, or what do you think about those criticisms of the system?
That is a good question. I don’t think Bridgewater has a monopoly on people crying at work. But if you look at the stats right now, where something like 70% of people are open to leaving their jobs, I don’t know that Bridgewater is particularly unique in that way.
One of the things that we tried to do and I experienced it on my way into Bridgewater. And then as someone who did a lot of recruiting and ultimately led a recruiting Department, we tried to do more of this, which is to be very transparent with what you could expect. We tried to build into the recruiting process. The tape of the article that you’re describing was part of the recruiting process. People actually watched it. Right.
And said, because we are going to be able to have these types of transparent conversations about good performance and about bad performance, et cetera. This happens. It can be very raw and it can be when we would solve problems down to the level of not just what broke in a process, but who designed the process.
And what about that person led to that design flaw? That’s a very different level of emotional connection that you’re going to make. And it can come with really strong bonds for people who want that type of environment. Right. It’s sort of mimicking the same environment like elite athletes go through. Right.
You think about the New Zealand All Blacks, or you think about the Blue Angels and their ability to debrief after things in a very transparent like, this was bad, this was good. We’re not going to sugarcoat it. That’s what I think we were trying to replicate.
But not everybody makes, not everyone wants that type of environment, and not everyone
thrives in that type of environment. And I think if you get that mismatch, like, it is going to be as hard as probably described in some of these articles.
I think something you just brought up with the current situation, what we call a great resignation or great reshuffle. A lot of people are searching jobs. What is that you think is the reason for that? How do you see that?
It’s interesting. I don’t know if you saw this. I put a poll on Twitter because I was super skeptical. I was like, there’s no way that all these people want to leave their jobs. This is just sensational headlines, et cetera.
And so I kind of dared Twitter to show me I was wrong. And much like Twitter does, they showed me I was wrong. And it was an amazing set of stats where 20% of people had left their job in the last year. Another 30% were actively looking, and another 25% said, I could be convinced.
And so with my I do a lot of coaching and training of managers. And I said to my last cohort of the managers, well, it’s a good news, bad news story. The bad news is two-thirds of your team is willing to leave right now. And so if you’re not really leaning into making sure that they’re engaged, doing good work, they’re growing, et cetera, you’re running a real risk that half your team’s gone in a year.
The good news is that talent you probably never really had a shot at getting right even before the pandemic is now on the table. And so you can go be more Proactive and clever and try to entice people away from their jobs, especially if you have some of the things that I think people are valuing right now with flexibility, different locations, et cetera.
And so you sort of have to kind of protect what you have. But then there’s a real chance to go upgrade your team if you want to take advantage of it.
I think it has more to do with your organization culture right now, whether it’s an organization where people want to work or if it’s not, those are the kind of organizations who’d be in trouble. Right?
Yeah. And maybe one more thing related to that would be remote work. How do you see that affecting current work culture, especially, let’s say, with teams. Do you think remote working is efficient, as in a team can do productive work remotely, or do you still prefer people to be in a single room? How do you see that?
The efficiency of remote work
I might be on the minority of this point of view. I think the trade-offs for being remote-first outweigh being in the office. So what I mean by that is when you are just tip, I just go back to being a Bridgewater.
Even with that name and that brand and that credibility and the resources we had, you still had to go entice people. We were very much a local-only like there was no remote work for a long time. And so you had to be in Connecticut.
Because it was also our primary office. And so my ability to go get talent was really constrained by people who were qualified to do the job and willing to come to Connecticut.
They have to physically move them not to work for you. Right. Exactly. And then I put that in contrast to a company that’s remote first and saying if you can build that way and operate that way, you have three to 5 billion people available in the workforce globally.
You can set that up to work around the clock. You can source employees from different geographies that you’re in, et cetera. And then I think you can still bring them together almost. Instead of how we used to do off sites where we take people and go somewhere else, you can also do on-site, which is once a quarter.
Even if you brought the whole company together for two weeks every quarter, the money you save by not having a physical real estate and all the other pieces would be so dramatic.
It’s still better. And because they were coming together and focused in that way, I think the quality of the interaction you get in the two weeks is probably higher than what you were getting in the kitchens occasionally during the quarter. You know
I don’t know exactly where you live. Like all my friends who are out in the Tristate area, it could be 90 minutes commute into New York City. And so you’re like 3 hours a day, you’re on a train or you’re in a car and I love podcasts as much as the next person, but as a company would I rather let them have 2 hours of their life back and get an extra hour of productive work because they can just do it at home anyway.
So I kind of added up to being, I think the things that I think we’ll look back in ten years and the companies that embrace this fastest will be the furthest ahead.
Got it? Yes. The talent attraction is going to be much easier 100%. But what about the efficiency specially let’s say brainstorming sessions? Do you think it can be as effective as you are in physically in a room where you’re debating each other? Do you think that it’s still possible to do that in remote?
I think so. Probably one of the it’s hard to say. This is a silver lining of the pandemic. Tragic two years. But one of the silver linings is we sort of all went through the transition at once, right.
I remember doing Zoom meetings before the pandemic, and it was this weird hybrid that was terrible where you’d have a room full of 20 people on one screen and then three poor people who’d be like, in some other location on their own little boxes, and they just always got excluded.
They weren’t in the meeting. It was kind of a joke to pretend they were. Versus now it’s like exactly like this session here’s, the three of us, and we all have a box and the collaboration tools are so much higher.
I’ve stopped sending emails and start sending looms to people to give feedback. And they’re like, oh my god, it’s like we’re together, And so I just think with a little bit of creativity and the speed with which the technology is catching us up, the delta between being in person or being like, this isn’t very high anymore.
Got it. So you’re 100% pro remote. That’s excellent.
It might just be because I don’t want to go back to an office.
But personally, you prefer this working remote. How about you see that personally, you think you have a better work-life balance working remote? You get to spend time with family to your workouts and everything. How do you feel that?
I honestly don’t know whether it’s correlated or causated. Right. I work for my own business, so there’s a part of, like, I have sovereignty and I get to choose how I spend my time. And then there’s the fact that it is remote because all of the people I work with are freelancers for the most part and they’re in different locations, et cetera.
I don’t know which one is which, but I am much happier being able to kind of like choose and assemble each and every day the way that is optimal for me.
Got it. So to speak tiny bit about SkillsScouter. Could you tell us what is SkillScouter? What is that you’re planning to do with it? We’d love to hear about that?
Yeah, I’d love to. I left Bridgewater about 15 months ago and the goal was to buy a business.
And so we looked at all kinds of different businesses. At one point was doing due diligence on an oil change franchise. But I was sort of drawn to the digital world and I wanted to be a space that I was passionate about. And so as you can sort of hear this idea of remote opportunities and in this particular case, education is one I am pretty passionate about.
So we found a website to buy and I bought from a person in Australia. It reviews online education opportunities across a number of different topics. Right. So if you want to learn Python or if you want to learn piano, that is, you now have the ability to find the best instructors in the world and have them come to your house. Right.
And so we review that. Part of what I was hoping to build with that is there’s these ideas of cohort-based courses where a group of 2030, 5100 people will come together for a small period of time on a particular topic.
And so by kind of happenstance, I took a course with Sahil Bloom on audience building with Twitter. I did that six months ago. I had 40 followers. I met this amazing community of other people who were trying to create communities around their own specific needs and interests. But I was seeing this trend of these cohort-based courses. And so part of the idea with this business is that we should be able to extend and start to review those courses as well, draw more people into that world and then finally either buy or create our own courses. Right.
And so that sort of was what followed behind that, where I created the management accelerator, kind of taking the 20 years of management experience and all the mistakes I
made and the systems I had built and then teaching sort of managers in their first what I thought would be their first couple of years. But it turned out to be really the first ten years.
Some of the people who got the most out of the course so far are people with five to ten years of experience at big companies. We had Amazon, we had Spotify, we had Microsoft, we had Facebook. It was kind of crazy just to see, but to kind of come together with 40 or 50 other people, take the time to rethink how you manage, borrow some of the systems we were even talking about earlier in this show. It’s been great.
So I went from buying a site to kind of growing a site to cover more of the online education market to now being an instructor myself in that market. So it’s been a fun serendipitous journey.
For somebody, let’s say in their 20s, just starting out, maybe in finance, tech, they don’t do a real professional job. What would you advise them? Any advice you can give to them generally?
What is that they should do, especially with this new culture, remote culture and everything you think they should be going specifically for, let’s say an industry or they should spend time doing different things, then let’s say 20s, try things out, then choose a specific industry and settle down later on. How would you do it if you had to go back?
It’s funny. I wrote about this morning. So we just connected to that, which is one of the things we do at the end of the course is I’ll talk to people about building their professional brand. You brought up the remote piece.
I think it’s more important than ever that you think about what is the brand I’m trying to build and it can evolve over time. But is your professional brand going to be I had a student who like his professional brand was he was a firefighter when something broke in the company, they dropped him in and he fixed it.
I have another one who is like the creative, the creative problem solver. So when other groups got stuck, they bring this person into unlock them with new, clever ideas. And so whatever your professional brand is, first kind of know what it is and then start to collect experiences and build relationships with people that enhance that.
Right. And so for me, instead of saying go be in finance or go be in a particular industry, I would say build the experiences that enhance the brand. And especially early on, like, if you’re in your 20s, learn the ones that are going to be broadly extensible.
Right. So you might want to learn how to tell great stories. That might not seem like a skill that’s obvious. But almost no matter what business you’re going to be in, you’re always going to have to tell the story of yourself, tell the story of your product, tell the story of your work, and learn and tell great stories so people pay attention.
Another one could be we have a couple of young girls, kind of ten and twelve. And so I think if you are not learning to at least be reasonably digitally savvy, you are going to be behind in the world.
So whether that’s light coding or at least knowing how to use no-code tools, et cetera, the ability to put together a landing page, put together a marketing campaign, put together some sort of clean graphic, et cetera, all of those just feel like extensible skills that whether you’re in finance or tech or something else you can take with you.
And so I would be making sure that I’m collecting some of those extensible skills while I am building that brand. Those are probably the two pieces I put together.
So even for somebody who’s not going to necessarily start a company just to be an employee, maybe he’s going to be an analyst on a hedge fund still, his personal brand is going to be a big help for him right when it’s getting into the field, getting more people, all of that.
So that’s one of the primary things I get. Excellent. You were saying? I didn’t get that. Could you say that again?
I was just going to say, if you wanted to use that example, then I would say maybe you’re swapping out graphic design, and instead you should be learning to become very savvy in Excel in Python and the typical skills associated with data analytics and those types of things.
100%. This is a question we have. Everybody. Your favourite. Three books, nonfiction. What would those be? Three books. Non-fiction books.
Got it. I’m like glancing over at my bookstack. One that I’ve been recommending a lot lately is a book by Julie Zhou, which is called The Making of a Manager.
It’s just a very accessible recounting of going from being an individual contributor at Facebook to being a senior manager there. She kind of like, takes you on the journey and through all the mistakes she makes. So that’s kind of been high on my recommendation list.
I’m like halfway into this, halfway into Resilience right now by Eric Greitensfirst hand accounts
. Multiple people recommended it to me on Twitter and just said it’s one of the most beautifully written nonfiction books that they had read.
And I have to say I am as interested in the content as I am in the writing. Exceptionally. It’s pretty moving. It’s all based on letters that he wrote to a fellow Navy Seal who was struggling in life. And so he went through the series of writing letters to kind of help him work through that. And so that’s extremely compelling.
And then if I was recommending two right now, I’m recommending those two. The third one starts to become a tie between, like, 20 books.
I’m not sure which place to go.
Even a fiction book is fine. Maybe something you read when you’re young.
Maybe I’ll just give you an author like Seth Godin is someone I’ve read for two decades, and you sort of think, like, how many different topics is he going to cover in a way that’s really compelling.
But each one I find 10-15 insights from. And he’s good. He’s good in the sense that a lot of writers will blow up a book to be 350 pages long when it was really an 80-page idea. And if he’s got an 80-page idea, he’ll write an 80-page book. So whether it’s the Dip or Tribes, there’s lots of good options for Seth.
I think his most prominent bit will be The Purple Cow. That’s probably the biggest one. Excellent. Thank you,
Dave. Thank you for being here. And for sharing with us your journey. And that is a wrap.
Thanks for having me.