She was one of Ray Dalio’s favorites. And now she had collapsed into tears — not with ordinary crying but in a full-on meltdown, complete with chest heaving, gasping for breath, and animalistic sobbing.

Katina Stefanova, until that day, was known as the Ice Queen at Bridgewater Associates, the world’s largest hedge fund. Thirty-something, with shoulder-length blonde hair, she wasn’t afraid of conflict, particularly if it came with a fat check.

She was Dalio’s mentee and friend, and as she rose through the ranks in the firm, he took to telling others, “Katina is one of my people,” which nearly made her blush with happiness. Some at Bridgewater even began to whisper that she could someday be a candidate to succeed Dalio.
It was the cusp of early fall 2009, on one of the days when the weather couldn’t quite decide if summer was over yet, the Bridgewater founder Dalio’s mood, too, waxed and waned. At 60 years old, the billionaire was beginning to say he might need to hand off some of his operational responsibilities in areas like recruiting to underlings such as Stefanova. But she couldn’t keep up the pace at bringing in new staff.

Dalio told Stefanova he wanted to get to the bottom of the problem — and he wanted to do it in front of a crowd.

Stefanova entered a conference room at Bridgewater’s Westport, Conn., headquarters, and watched as the seats around her filled with Bridgewater’s top brass. Dalio sat across from her and began ranting, as by now she knew he was wont to do.

Dalio announced to the room that he would first “probe” and then deliver what he called a “diagnosis.” In the probe he asked her to confirm that she had fallen short in his assignment.

The diagnosis was that she was an idiot, a point he made over and over.

“You’re a dumb shit!” Dalio spat. “You don’t even know what you don’t know.”

No one else made a peep.

“I was working really hard,” Stefanova eked out. “I was doing my best. What would you have done?”

If he had approved the pace of the hiring, he responded, then it was her fault for not telling him he was wrong. He repeated his diagnosis, calling her dumb, grabbing the table for emphasis. People in the room remember him screaming, waiting for her lip to quiver, then screaming at her again for failing to control her emotions while he screamed at her.

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