Then Scaramucci gets serious, talking about how he shaped up after his father, a construction worker, paid for him to go to Tufts. He studied hard and worked his way into Harvard Law and, eventually, a job in investment banking at Goldman Sachs. He was fired a year later. “I was terrible at it,” he says. It was the first of several humbling moments that led to a revelation. “I’m not Steve Cohen, I’m not Julian Robertson, I’m not Dan Ochs,” he tells the class. “I’m actually Anthony Scaramucci. Here’s my skill set; let’s see if I can use it to be who I am.”
He was rehired at Goldman, this time in sales, then left to start a hedge fund, which he then sold to a firm called Neuberger Berman, which then sold itself to Lehman Brothers, which provided Scaramucci with enough capital to start SkyBridge. At first, the idea was for SkyBridge to be an incubator of hedge funds, but that flew out the window after the financial crisis. The down market, however, provided him with another opportunity. In 2010, he made a deal with Citigroup to purchase a funds-of-funds business worth $4 billion. “We were the canary that swallowed the elephant,” he tells the Columbia class. After the deal, employees from Citigroup approached him. “They were like, ‘We gotta tell you, we thought SkyBridge was huge,’ ” he says. “ ‘We saw the movie, we see you on television.’ ” He pauses to let the students take this in. “Because I projected something.
“Think big,” he commands. “Look at Starbucks. This is a guy selling crushed beans, and you pour some water on them, and you slap a mermaid on the front of the cup. It’s crazy. He’s charging a higher price because he’s offering an experience. You walk in, nice tunes, you got the mug, you get the French press. Look at me,” he adds, striking a pose. “I’m like, quasi Euro.” The class cracks up.
This is a common reaction. “Right from the minute you meet Scaramooch he charms you,” says Woody Johnson, the Jets owner and a fellow co-chair of Mitt Romney’s National Finance Committee. “He’s talking about Italian food and his mother and saying funny things. It’s disarming.” But not everyone finds him so lovable. Last year, Felix Salmon of Reuters assailed Scaramucci in a blog post for his “fake it till you make it” techniques, and called the concept of popularizing hedge-fund investing “sleazy” and “dangerous.”
Scaramucci didn’t mind the first charge. “F. Scott Fitzgerald said, ‘All Americans are self-invented,’ ” he tells me. But the other accusations rankled. Livid, he called Reuters, which suggested the pair do a video interview. “In five minutes, he was on his heels,” Scaramucci says after class at a Starbucks across the street from Columbia.
Salmon denies being bowled over. “To the extent that I was smiling,” he says, “I was smiling out of fear.” Not for himself, but for humanity. “He is putting people into hedge funds that really shouldn’t be invested in hedge funds,” says Salmon. “He has this extremely expensive smile and very good hair, and they trust him. And to the degree that he’s accomplishing it, he’s hurting America.”
The main arguments against hedge funds for small investors is that their bets are too risky for those with something to lose: They lock up your money for at least 90 days, and you may never see it again. Or, Scaramucci points out, you could see a lot more of it. “I’m not saying people should invest their life savings. But 5 percent?”
This year, SkyBridge clients haven’t lost money, but they haven’t seen the kinds of eye-popping returns they read about in the Journal, either. This is partly because of the onerous cost structure of funds-of-funds. For the privilege of investing with guys with recognizable stipple portraits, SkyBridge charges a 1.5 percent annual fee, and passes along a one-time broker placement fee of 3 percent. This is on top of the 2 percent annual fee and 20 percent profit commission charged by each hedge fund in the fund. As critics like Warren Buffett have pointed out, funds-of-funds rarely outperform the market. Over the past three years, SkyBridge’s Series G fund has consistently beat the HFRI fund-of-fund composite index but also fared 48 percent poorer than the S&P 500.
“All the risks are in there,” Scaramucci says at Starbucks. “It’s not like we’re selling it to people off the street. You have to have a million dollars.” He’s still steamed up about the whole Felix Salmon thing. “He was trying to say I’m a snake-oil salesman, that I’m sleazy,” he says. “That sucks. I don’t view myself that way. We’re creating an experience.” He takes a slurp of his iced coffee. “There were scathing articles about Steve Jobs throughout his career,” he remembers. “A lot of people didn’t like Amelia Earhart flying an airplane or Hillary Clinton running for president. I’m going to have a SALT conference and television show and a book and a movie, and a this and a that, and people are going to be like, ‘Hey I want to be an investor in SkyBridge, they’re going to put me in the know.’ ” He shakes his cup.
“Crushed beans. Hot water. Mermaid.”