Duff McKagan, Guns N’ Capital
Former Guns N’ Roses bassist Duff McKagan moonlights as an investment guru
Business majors can party. They can get wasted, wake up the next morning, hit 18 holes, and still make afternoon classes. But few have the expertise of Duff McKagan, bassist for Guns N’ Roses and Velvet Revolver, and student at the Albers School of Business and Economics at Seattle University. In his autobiography, It’s So Easy: And Other Lies, McKagan, 47, explains how he stopped his gallon-of-vodka-a-day habit by switching to 10 bottles of wine. How he drank his own vomit, because it had alcohol in it. How he used cocaine just so he could drink more. How he drank so much beer at one point that Guns N’ Roses lead singer Axl Rose introduced him as “The King of Beers” and a producer from The Simpsons called to ask if he could name the show’s beer, Duff, after him, which they did. How his pancreas basically exploded, causing third-degree burns on his other internal
After his emergency room hospitalization for acute pancreatitis at age 30, McKagan quit drinking, started mountain biking, trained in a martial art called ukidokan, lost 50 pounds, and learned to read his Guns N’ Roses profit-and-loss statements. Soon he figured out that despite listed expenses such as yachts and private jets, he wasn’t in bad financial shape. That’s because the profit side of the ledger showed that Guns N’ Roses released the most successful debut album ever.
All the founding members owned an equal share, and McKagan, unlike many musicians, wasn’t cheated by his accountants. Mostly because they were honest, but maybe also because when he hired them he got their home addresses. “Because I came from a big family, I didn’t do the knuckleheaded things,” he says over sushi near his second home in Sherman Oaks, Calif., where he lives when he’s not in Seattle. “When I bought a Corvette-which in 1989 was a $28,000 car-my brother Jon said,’This is what you’re going to do? Blow all your money?'”
McKagan, who is 6’3″ and has long blond hair, a lot of silver jewelry, and many tattoos, trimmed
his locks while in college. He enrolled soon after he got his girlfriend, Susan Holmes McKagan (model, swimsuit designer, and co-star of E!’s rock-star-wives reality show, Married to Rock), pregnant with their first daughter. She’s his third wife. “I don’t even think of her as my third wife,” he says. “She’s my only sober wife.”Searching the restaurant for low-sodium soy sauce, McKagan has that calm friendliness that a lot of people who grew up in Seattle have. So even though he was 10 years older than his fellow students at Seattle University, he fit in. His first $100,000 in stock investments in 1994 turned out pretty well, largely because he was in Seattle: He bought Starbucks, Microsoft, and Amazon. com. When he formed Velvet Revolver in 2002 with ex-Guns N’ Roses bandmate Slash, McKagan helped negotiate the band’s record deal. “It was really refreshing to know what I was talking about,” he says.
The college courses have also helped him manage his two bands, Velvet Revolver and Duff McKagan’s Loaded, which takes more business savvy than it did when he was in Guns N’ Roses. “We were playing shows then where shows were a loss leader to sell albums. Now it’s completely the opposite,” he says. “You make the most off your ticket receipts and T-shirts. Now the sexy thing is’How many T-shirts did you sell,’ not records. No one talks about records.” He knows that in the middle of the U. S., people like big shirts that hang loose and are made of thicker material than the thin, tight style on the coasts: “It’s like you’re a garmento, too.”
Bands now seek tour sponsors and sell VIP packages tied to credit cards. Not long ago, McKagan was backstage at a Queens of the Stone Age concert, hanging out with the band whose albums include Lullabies to Paralyze. “I ended up in the corner talking average fuel costs for the year for tour buses,” he says. “‘Make sure you fill up in Alabama. Don’t wait until you get to Louisiana.'”
Even before he headed to Seattle for school-he was taking a class at a community college-his friends in other bands brought up his studies. But not to make fun of him. “I was only taking math classes. And I was getting calls from peers wanting help investing their dough,” he says. So for the last four years he sought a partner to start a wealth management firm for musicians, which he did, with Andy Bottomley, a co-founder of Imprimatur Capital, a British venture capitalist firm. They just opened Meridian Rock Capital Management, named after the Cormac McCarthy novel both love, Blood Meridian.
McKagan’s own investment strategy is pretty conventional: He’s got 65 percent of his money in stocks, the rest in bonds and real estate trusts (plus a big house in Seattle, three investment properties, and a cabin). He doesn’t seek out hot stocks, but just prunes ones that take on too much debt: “I’m the anti-Jim Cramer. I don’t want to pimp or unpimp any company.”
Although he’s always given investment advice to musician friends, he hasn’t helped any of his former Guns N’ Roses members. Looking at their investments would be way too personal. These are guys, remember, that he’s seen naked and smoked crack with. “It’s a very private thing, even though we all made the same amount of money,” he says. “It’s private because, who knows? What’s your old lady spending?” McKagan, in fact, was embarrassed to show Bottomley his portfolio when they first started talking about working together: “It’s intellectually personal. How smart is this guy? What does he know?” If that seemed too revealing, wait until Bottomley reads his book.
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