World’s Largest Hedge Fund Is Building an Algorithmic Model from Employees’ Brains

by Vins
Published: Updated:

The world’s largest hedge fund, Bridgewater Associates, is developing software to automate the day-to-day management of the firm, including hiring, firing, and other decision-making. The firm manages $160 billion in global investments for what it calls “sophisticated institutional clients.” Bridgewater has created a team of programmers specializing in analytics and artificial intelligence (AI) to develop apps including “Baseball Cards,” which shows employees’ strengths and weaknesses, and “The Contract,” which will get staff to set goals then track how effectively they follow through. According to billionaire founder Ray Dalio, “[t]he role of any remaining humans at the firm wouldn’t be to make individual choices but to design the criteria by which the system makes decisions, intervening when something isn’t working.”

These AI tools are early applications of PriOS, the management software that Dalio wants to make three-quarters of all management decisions with in the next five years, like ranking opposing perspectives from multiple team members when there’s a disagreement, and finding the right staff for job openings. “A lot of management is basically information work, the sort of thing that software can get very good at.” At least for now, humans will still be designing the software and setting overall objectives.

This story first ran in the Wall Street Journal on December 22, 2016. An hour later the Guardian carried its own version, citing the WSJ article. Dalio responded on January 3, 2017 with a 2,700-word post on LinkedIn titled, “The Fake and Distorted News Epidemic and Bridgewater’s Recent Experience With the Wall Street Journal. In his rebuttal, Dalio alleges that the WSJ intentionally distorted facts in the story. “I have mixed feelings about describing our most recent experience with The Wall Street Journal because many people might misconstrue my doing this as me simply complaining about an article that I didn’t like.”

Sources:

Olivia Solon, “World’s Largest Hedge Fund to Replace Managers with Artificial Intelligence,” Guardian, December 22, 2016, https://www.theguardian.com/technology/2016/dec/22/bridgewater-associates-ai-artificial-intelligence-management?CMP=fb_us

Ray Dalio, “The Fake and Distorted News Epidemic and Bridgewater’s Recent Experience with the Wall Street Journal,” January 3, 2017, https://www.linkedin.com/pulse/fake-distorted-news-epidemic-bridgewaters-recent-experience-ray-dalio

Student Researcher: Rachel Maslow (San Francisco State University)

Faculty Evaluator: Kenn Burrows (San Francisco State University)