After stints at Avenue Capital and Goldman Sachs, and managing Patriots Quarterback Tom Brady’s career, Will McDonough is joining a growing group of Wall Street alumni on the blockchain tech frontier.
The 38-year old is CEO of a start-up called iCash, which focuses on “smart contracts” and is raising money though a controversial method known as an initial coin offering.
“He’s acutely aware of where he is, that he’s out on a frontier and he’s aware that this could be a huge success,” his former boss, ex-Goldman president Gary Cohn, says.
The private table in the back of Nobu was a tabloid photographer’s dream.
It was January 2005, and Tom Brady, Michael Jordan, Alex Rodriguez, Bill Clinton, Gary Cohn and Marc Lasry were among the group dining at the Japanese eatery after 18 holes at Jordan’s celebrity golf tournament in the Bahamas. For most 25-year-olds, having a seat at this table would have been nothing short of a miracle — or at least, a once in a lifetime opportunity.
For an up-and-comer named Will McDonough, who now calls some of those men “brothers,” it helped get him hired as a rookie with a lackluster finance resume at some of the most respected firms on Wall Street.
Will McDonough (Ozy)
“It’s still not lost on me how pretty damn cool that is,” McDonough said in a recent interview.
Now 38 years old, McDonough is taking center stage, leading his startup, iCash, through an initial coin offering that launched in mid-July. Already, iCash has attracted investments from the 1Confirmation Fund backed by Peter Thiel, Marc Andresssen and Mark Cuban. It’s also backed by Goldman Sachs alum Matthew Goetz’s crypto hedge fund BlockTower.
He joins a growing list of Wall Street alumni who have left the perceived safety of places like Goldman for the new frontier of technology known as the blockchain.
McDonough is not used to talking about himself. In past interviews, the questions were often about his former bosses, the New England Patriots’ star quarterback Tom Brady or former Goldman Sachs president Gary Cohn. That may all change if his gamble with iCash pays off.
“He’s acutely aware of where he is, that he’s out on a frontier and he’s aware that this could be a huge success,” Cohn told CNBC. “But with opportunity for success comes risk of failure. He’s not naively involved. He’s very much in the world of reality, what could or couldn’t be the outcomes.”
McDonough’s path hasn’t been typical for Wall Street. He never had a finance internship. He didn’t go to an Ivy League school, study economics, or pivot to an MBA. He started out as New England Patriots quarterback Tom Brady’s manager.
New England Patriots (Wikimedia Commons)
McDonough, who looks and sounds like a distant Kennedy relative, was a sports buff as a boy. As a sophomore at Westwood High School in suburban Boston he landed a gig at local sports radio station WEEI. At 16 years old, he showed up on his first day and was asked to drive the company van down Boylston Street to Fenway Park and hand out flyers.
“I didn’t want to tell them I didn’t have my license,” he said. “I just figured it out.”
He made it to Fenway that day, and ended up working at the radio station on its promotions team, eventually setting up microphones and running wires for a famous Boston Globe sports reporter, who also happened to be named Will McDonough. As a freshman at Boston College, the younger McDonough started working for the Patriots, and after graduation joined the organization full-time.
There, the 2002 graduate found himself working in the team’s corporate affairs group at the same time a lanky, sixth-round draft pick named Tom Brady was ascending to the top of the NFL. McDonough won over Brady’s trust, something a former teammate and the current coach of the Tennessee Titans said was hard to do.
“We’d see Will around Foxborough, he’d say, ‘Hey, you need help with anything? Do you want to get into this bar, or this club?’ – you just start to trust him over the course of time as a guy who was really looking to help,” said former All-Pro Patriots linebacker Mike Vrabel.
As Brady became a household name in New England, McDonough transitioned from the team’s public affairs group to the quarterback’s first full-time manager. In the early days, the job centered around making sure Brady could focus on football after being “thrust into a whole new world of stardom,” McDonough said.
“I would only approach him on non-football things one day a week,” he said. “It matured into me negotiating sponsorship deals for him from my own network.”
Brady makes $8 million a year in sponsorships, according to Forbes’ latest estimates. Among those is an Under Armour deal, which McDonough says he helped broker by introducing Brady to the apparel-maker’s founder and CEO, Kevin Plank.
McDonough’s ability to network was tested as he traveled the world “on Brady’s hip” in 2005, which brought him to the dinner at Nobu that fateful evening. He recalled joking with billionaire and Avenue Capital founder Marc Lasry about the absurdity of the Nobu guest list and how “guys like us” were the glue that got groups like that at the same table. That conversation made an impression on Lasry, who recruited McDonough to his own firm in 2008.
“Will was deciding to change careers and leave the Patriots, I convinced him to come join us,” Lasry told CNBC.
With no economics degree (he was marketing and pre-law-at Boston College), McDonough took an entry level job at the global investment firm Avenue Capital, which had $9.4 billion of assets under management as of February.
“We ended up putting him in business development, and it turned out to be a great decision on our end,” Lasry said. “For a kid who had not been in finance he’s done really well.”
Goldman Sachs (Wikipedia)
While at Avenue, McDonough came into contact with then-Goldman president and chief operating officer Gary Cohn when he was pitching a deal the investment firm had previously done with Morgan Stanley.
As Cohn recalled, the two had originally met years earlier when McDonough accompanied Tom Brady to a lunch near Goldman’s office in downtown Manhattan. And once while in a private box at a Patriot’s game, Cohn was able to observe McDonough’s ability to fit into multiple crowds – he was able to bounce from conversations with CEOs, to running backs, to wait staff, Cohn said.
“This is a unique skill set I see in only the best sales people I have ever had work for me,” Cohn said. “Will was the most unbelievable people-management person — I could see he could fit in well in any crowd.”
The Cohn connection led McDonough to one of Wall Street’s coveted jobs: Vice President at Goldman. Joining the bank in 2010, he was put in a group that handled private investments for Goldman partners, a role that straddled divisions and allowed McDonough to closely observe the firm’s high profile deals, including Facebook’s IPO.
Investing in Africa
At Goldman, McDonough was partly tasked with diversifying partners’ financial exposure into things other than company stock. One area that piqued his interest was Africa.
He was approached by a World Bank executive with an idea to buy banks in Africa through what’s known as a SPAC, or a special purpose acquisition company. In a SPAC, an investment company is formed through an initial public offering, or IPO, and those proceeds are used to buy one or more existing companies.
Goldman didn’t want to participate, McDonough said, so he left the bank in 2013 to pursue the opportunity full-time. He teamed up with former Barclays CEO Bob Diamond, who at the time was looking for his next gig, and former EcoBank Africa CEO Arnold Ekpe. The group launched Atlas Mara, which went public a year later on the London Stock Exchange.
Because of the way SPACs work, McDonough’s affiliation with Atlas Mara ended after the IPO, which he says is one of his biggest regrets.
“That’s been the biggest lesson learned — you need to be control of a project you pitch, you can’t leave that subject to outside things you can’t control,” McDonough said. “All you have is your word.”
Ekpe went on to work with McDonough in Nigeria while consulting for Uber. The ride-sharing giant was looking expand its presence in Africa by finding a way to help drivers finance cars, and co-founder Travis Kalanick tapped McDonough for the job. According to Ekpe, McDonough had the same effect on his African colleagues as he seemingly did on Goldman’s Cohn.
“He has an ability to connect with people, to put things in very simple and convincing terms,” he said. “My team was quite taken with him.”
Betting on blockchain
Another regret, McDonough said, was dismissing bitcoin to a friend who sought his advice about it 2013, well before the cryptocurrency gained almost household name status. It had been gaining attention in online communities like Reddit at the time.
“I felt bad I shouldn’t have just written it off — people tend to listen to me, and I gave him a perspective hadn’t done much research on,” McDonough said. “I called my friend back two weeks later and said I was wrong.”
But he saw more value in bitcoin’s underlying technology, known as blockchain, and was especially taken with what are known as “smart contracts.” He dove into learning about the technology, taking notes. On the right column of each piece of note paper, he wrote down reasons big institutions and folks like Gary Cohn wouldn’t invest.
Gary Cohn (Wikimedia Commons)
In a smart contract, a deal can automatically settle or be verified without a third party. Two people agree on terms, or the inputs, ahead of time and the contract gets settled automatically. These transactions, like most on blockchain, are irreversible and can’t be tampered with, which is a bonus in some cases. But in others, if there’s an error by somebody on the input side, it can be disastrous.
McDonough uses the example of the equation A+B=C. The math can be right but the input “A” or “B” can still be wrong.
“There’s no layer that allows for assurance that the inputs are accurate,” McDonough said. His company iCash is looking to solve that issue, and is an additional “layer” of code embedded on top of the blockchain. It’s what he describes as the added “are you sure?” button.
The company is raising money through an initial coin offering, a fundraising technique that has brought in more than $12 billion globally this year, according to data firm Autonomous Next.
Blockchain’s potential has been compared to the internet but so has its hype. Even McDonough said it’s a “sexy” term used by companies that might not truly involved, those that might not have taken social media seriously, or are “self conscious” from missing out on the web 2.0. In some well-publicized cases, even adding the word “blockchain” to a public company’s name can send the stock skyrocketing.
Multiple venture capitalists and investors, including Apple co-founder Steve Wozniak have pointed out similarities to the early 2000 internet mania. Union Square Ventures, a firm with numerous investments in cryptocurrency projects, is wary of that. While investors are “rationally” pouring money into the sector, and the winning blockchain could be worth trillions, one managing partner at Union Square Ventures predicts that many more will fail.
“Either you develop one of those winning protocols or you don’t, in which case your value will probably be zero,” said Albert Wenger, managing partner at the venture capital firm. “In this particular field, the stuff that actually works will float to the top, it might take a while.”
McDonough says he’s equally aware and is betting his career, and hard-earned trust of investors that iCash will be among those that floats to the top.
“I’ve measured three times over, I’ve gone deep and put the time in to really understand the underlying technology,” he said. “Trust is the most important thing you have to return — people know that if I’m putting something in front of them, it’s something I’ve vetted.”