How to build a company where the best ideas win:

 Great ideas can help investors finding asymmetrical risk opportunities. To make a high-returning investment, you have to bet against the consensus and also be right. It is easy to spot something contrarian. Most current stock prices reflect the consensus opinion about a company. Therefore, you will need to look for companies that are still not correctly valued or understood by the market. It is challenging to be right about the future. To achieve this, you have to be more emotionally resilient and back-test your investment thesis.

The best starting point is looking at the counterarguments. This will stress test your perspective. During this exercise, it’s vital to overcome personal biases and get an in-depth understanding of the counterarguments. The largest problem is that everyone seeks validation instead of the truth. This validation trap needs to be overcome.

According to Ray Dalio, his company Bridgewater Associates uses radical transparency and algorithmic decision-making to create an idea meritocracy where people can speak up and say what they really think. The system works on an iPad app called “Dot Collector”. Employees are expected to bring their iPads to every meeting, to give and receive constant feedback in the form of “dots”. Every dot you give and receive is public. Your credibility/believability is ranked on how thoughtful you have ranked the ideas over time and weighted when a decision is made. This helps the best idea to win and enables an idea meritocracy.


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