Self-Made Billionaire: There Are Three Levels Of Reality, And Most People Are Stuck In Level One, But They Have No Idea
Author’s Note: This article was written over 60 hours with love and care using the blockbuster mental model.
The brutal truth is that most people aren’t even aware of Level 2 or 3
One commonality of great thinkers, CEOs, and entrepreneurs throughout history is that they see reality on a deeper level. This helps them figuratively play chess while everyone else plays checkers.
This realization slowly came to me as I spent thousands of hours over the last few years reading, watching, and listening to everything from many of history’s wisest business leaders, from Charlie Munger, Elon Musk, Steve Jobs, Warren Buffett, and Jeff Bezos to Thomas Edison and Benjamin Franklin (all of whom I have written about).
Over and over, I thought I understood their words, and then later, when I revisited them, I realized there was a whole other layer I had missed. The experience was like looking at this image below, seeing only one thing, and then realizing it is both a picture of a duck and a bunny.
See it?
This all brings me to self-made billionaire, entrepreneur, investor, and polymath Ray Dalio. Dalio is the founder of Bridgewater Associates, the largest hedge fund in the world, and his approach to and results from uncovering and using deep principles and mental models is unparalleled. Over the last 40 years, Dalio has meticulously identified and stress-tested a set of universal, success principles, and then created detailed step-by-step systems that his 1,500-person team uses to make management and investment decisions. This year, he effectively open-sourced everything with the release of his book, Principles: Life and Work.
This chart below from Dalio’s book is like the duck/bunny image. On one level, it’s a simple chart like any other chart. On another level, it’s profound and speaks to the three levels of reality that Dalio sees.
Understanding these three levels of reality is critical because the better you build a map of how reality works, and the more you’re open to improving that map, the more successful you’ll be.
Let’s dive into Dalio’s three levels of reality…
Reality Level 1: Getting Stuff Done
Most people operate in this realm. The output of a good sales call is a closed sale. The outcome of a good meeting is the resolution of a specific problem. Conversely, a bad sales call is one that doesn’t result in a new customer. A bad meeting is one that decides nothing.
This level of reality is essentially about getting stuff done: creating a to-do list from most important to least important and then kicking butt right on down the list. Dalio calls this layer of reality the blizzard because lots of things are constantly coming at you from different directions, and it’s hard to get clarity on what really matters.
Dalio’s book is not written on this level. Most books are.
Reality Level 2: Principles
To people like Dalio, the value of an activity isn’t just its immediate result, but also the underlying principles at play. The principles you learn in any situation are often more valuable than the immediate result because you can apply them for the rest of your life across all areas to make better decisions.
For example, let’s say you’re a salesperson. At Level 2, each sales call is an opportunity to learn about related principles on multiple levels:
As you move down toward fundamental mental models of what selling is and how it works, you get closer to principles that are more timeless and universal.