Contact-With-the-Enemy Pivot
Use real-world failure to dismantle the weak plan and redeploy what survives
- Difficulty
- Advanced
- Time to result
- ~months to results
- Steps
- 6
- Confidence
- 98%
Scaramucci's original SkyBridge model was to seed early-stage hedge-fund managers and share in their growth, but limited capital meant the firm backed only ten managers just before the financial crisis. Redemptions mounted and the firm dismantled the seeding business. Scaramucci calls it a successful failure because it kept the company alive while the team searched for another path. The SALT conference filled a market void and expanded the firm's network; through that network, Scaramucci learned Citi needed to dispose of non-core assets. He approached Citi about a narrow seeding operation but accepted the chance to buy the entire fund-of-funds business. The framework treats a pivot as evidence-led asset redeployment: acknowledge the failed premise, preserve what remains useful, explore opportunities exposed by continued action, and commit resources to a larger viable model.
Origin
Extracted from Masters in Business through Scaramucci's account of turning SkyBridge's failed seeding model into a conference and fund-of-funds business.
Core principles
- 01A plan must change when reality invalidates its assumptions.
- 02A failing operation can preserve the team, network, or access needed for the next model.
- 03Dismantling a weak business is different from abandoning every asset it created.
- 04Opportunities discovered through action may be larger than the original request.
- 05A pivot is judged by survival and renewed traction, not by whether the original idea endured.
How to run it
- 1
Confront the failed premise
Compare what the plan predicted with what customers, capital, and operating results now show. State plainly which core assumption no longer holds.
Pro tip Use cash loss, redemptions, or adoption evidence instead of optimism as the trigger.
Watch out Renaming failure as a pivot without changing the underlying model preserves the problem.
- 2
Dismantle the bleeding component
Stop committing resources to the part of the business that has become a liability. Protect the rest of the organization from an open-ended drain.
Pro tip Separate contractual exits from the inventory of capabilities worth retaining.
Watch out Do not keep a broken unit solely to defend the original plan.
- 3
Inventory what survived
Record the relationships, team, credibility, data, and market access created during the failed attempt. These assets form the bridge to another model.
Pro tip Ask which assets would be expensive for a new entrant to reproduce.
Watch out Failure of the model does not make every asset worthless.
- 4
Create adjacent contact
Take a bounded action that keeps the firm engaged with its market, as SkyBridge did with the SALT conference. Use the action to discover unmet needs and motivated counterparties.
Pro tip Choose an action that creates conversations even if its relationship to the old model is imperfect.
Watch out Do not demand a perfect strategic narrative before testing a visible opportunity.
- 5
Expand the opportunity frame
When a counterparty offers a larger viable deal than the one requested, assess the whole opportunity rather than reflexively shrinking it. Determine what resources and risks the broader move requires.
Pro tip Keep composure in the conversation, then validate financing and downside privately.
Watch out Thinking bigger is not permission to ignore survival risk.
- 6
Redeploy and verify
Commit retained resources to the new model and track whether it restores durable growth. Keep revising if the new evidence contradicts the replacement plan.
Pro tip Measure both operating stability and customer adoption after the pivot.
Watch out One successful transaction does not by itself prove a repeatable business.
In the wild
SkyBridge's seeding business suffered redemptions and appeared close to collapse during the financial crisis. The firm dismantled that model, launched the SALT conference into a conference-market void, and used the resulting network to discover that Citi was selling non-core assets. A request to buy Citi's seeding business expanded into the purchase of its entire fund-of-funds operation.
→ Discretionary assets grew from about $1 billion to $9.3 billion over five years, while the conference also became established.
Common mistakes
Defending the original plan
Continuing to fund a model after its core assumptions fail converts pride into an operating liability.
Discarding every failed-model asset
The relationships and access created by the first attempt may contain the path to the replacement model.
Thinking only as big as the request
Scaramucci approached Citi for one unit and had to widen his frame when offered the whole fund-of-funds business.
Is it for you?
Best for
It is best for founders whose current model is failing but has created useful relationships, capabilities, or market access.
Not ideal for
It is not ideal for businesses that have not gathered enough market evidence to distinguish a failed premise from temporary execution noise.
From the transcript
“you start with a plan and then you have contact with the enemy and you have to switch your plan.”
“the tech folks h call that a pivot.”
“It was a successful failure in the sense that the seating business was the lunar module that we lived in as we tried to figure…”
From the episode
SkyBridge Anthony Scaramucci: Masters in Business (Audio)
Anthony Scaramucci