Summary List Placement
Kanye West failed to impress Divesh Makan.
It was an unusual pairing: Makan, a disarming, strong-willed investor with a world-class Rolodex and a commitment to absolute discretion. West, a maximally bombastic and unrestrained rapper whose life has played out almost entirely in the public eye.
The two were brought together as a result of Makan’s constant drive to expand his network of clients, a list that includes Mark Zuckerberg and Tom Hanks. At stake for West was admission to Silicon Valley’s most exclusive club: Iconiq Capital.
Makan’s standards are exacting, however, and Yeezy didn’t make the cut. An initial meeting between the two went nowhere, and in subsequent conversations with his employees, the Iconiq founder was dismissive of West, whose frequent tabloid appearances and brushes with controversy had the potential for a public-relations risk. (A spokesperson for West declined to comment.)
Other celebrities have had far more success.
Over the past decade, Makan has quietly built an unrivalled network of billionaire and celebrity clients through his high-end wealth-management firm, Iconiq Capital. By leveraging an early connection to Facebook’s founding team, the South African-born businessman transformed himself from a rising star wealth manager at Morgan Stanley into a free-wheeling counselor to billionaires, responsible for $40 billion in funds under management.
As Iconiq Capital has ballooned, its ambitions have too. In its short life, Iconiq has expanded from the basics of family-office activities to a dizzying array of investment arenas, from venture capital to real estate, that now verge on overshadowing its original business.
At the center of it all is the remarkable network of money and power, carefully curated by Makan. Membership in this super-exclusive club means access to a world of private deals, business connections, and VIP privileges made possible because of the stature of Iconiq’s client roster — a feedback loop that strengthens the value of the Iconiq network and provides the fuel for Makan to grow the firm.
“He wants to be the most influential person in the world,” one former colleague said of Makan. “If you think ‘The Wizard of Oz,’ he wants to be the guy behind the curtain that nobody sees … the person controlling the pieces.”
Insider talked to more than a dozen Iconiq insiders, obtained confidential fund documents, reviewed public filings, and spoke with others in the industry to learn the story of Makan and Iconiq’s rapid rise to Silicon Valley preeminence. The interviews and information offer the most comprehensive look yet at how the secretive firm has won and lost big-name clients, why it’s branched out from the family office business, and which growing pains have accompanied a firm that invests in and supports other “rocketship” enterprises.
Insider is also mapping dozens of clients key to Iconiq’s success and publishing extensive nonpublic data from its signature tech investment funds, showing exactly how and where Iconiq made its billions.
Iconiq Capital declined to comment on the record.
Are you an Icon or an IQ?
At Iconiq, multi-millionaires come in two flavors.
Divesh Makan’s top-tier network of the rich, famous, and impeccably connected has its roots in Silicon Valley. A few longtime names of Iconiq Capital’s client list are public knowledge: Facebook CEO Mark Zuckerberg and COO Sheryl Sandberg chief among them.
But the majority of that elite roster remains as secretive as the rest of Iconiq’s operation and is viewed internally as two sometimes overlapping groups from which the firm’s name is derived: “Icon” and “IQ.” Icons are “titans of industry,” the “visionaries” at the top of their field, possibly billionaires. IQs are the operators, often (but not always) one step below — senior executives at major tech companies, smaller startup founders, well-connected insiders, and upstarts with potential (Eddy Cue, Apple’s senior vice president of internet software and services, is viewed as one well-connected IQ).
A source familiar with the matter said Iconiq did not formally categorize its clients or give them differing levels of service based on the Icon/IQ concept. Yet according to one former employee, internal documents sometimes referred to clients with a specific classification.
Early Facebook alumni figure prominently on Iconiq’s client roster: Facebook cofounder and Asana CEO Dustin Moskovitz is one of the firm’s biggest clients, and Facebooker turned investor Chamath Palihapitiya is another notable name. Other clients include former Uber CEO Ryan Graves, Nextdoor CEO Sarah Friar, and LinkedIn executive chairman Jeff Weiner.
“I’ve been with Divesh since he knocked on our door at Facebook in 2006 and convinced Zuck, Dustin, myself and a few others to do some estate planning, pay our taxes on a timely basis, and have fun along the way,” Palihapitiya said. “It’s been great advice. He’s the best. His organization is top-notch, and I trust them implicitly.”
In recent years, Iconiq has deliberately spread far beyond tech industry royalty to target Hollywood A-listers and celebrities, a previously unreported move, as Makan strategically expands his connections. Movie stars might have smaller portfolios than tech wunderkinds, one former employee said, but “they can tell interesting stories around the roundtable and make for an interesting dinner guest.”
Hollywood power couple Tom Hanks and Rita Wilson patronize Iconiq, sources said, as do Ryan Reynolds and Blake Lively. Pop sensation and actor Justin Timberlake also has a relationship with the firm, along with Will Smith, director J.J. Abrams, and Ashton Kutcher.
In the broader business community, Iconiq’s clients include Joshua Kushner, a major New York entrepreneur and brother of Donald Trump’s son-in-law Jared Kusher, and media scion James Murdoch. It has about 225 high-net-worth clients in total, according to financial disclosures, along with 26 charitable organizations whose investments Iconiq manages.
All these figures have varying degrees of relationship with Iconiq. Some entrust the firm with almost their entire estates and finances as family office clients, while others are much more limited, giving Iconiq access to just a small slice of their portfolios or other family office duties.
Iconiq hasn’t retained every titan Makan ever wooed. Twitter CEO Jack Dorsey — often cited as one of Iconiq’s most high-profile clients — discreetly ended most of his ties with the firm a few years ago. The Instagram cofounder Mike Krieger is a former client, along with the Dropbox cofounder Arash Ferdowsi. And some prospective clients, like West, simply fail to make the cut. Iconiq was in preliminary talks to bring on the Tinder cofounder Sean Rad, but amid sexual-harassment allegations in 2014, the firm told him he would need to look elsewhere.
Together, the varied Icons and IQs comprise one of the world’s most exclusive networks, connecting the most rarefied circles in the technology business to Hollywood legends, entrepreneurs, pop stars, and top-tier investors — with Divesh Makan firmly at the center.
The South African billionaire whisperer
Divesh Kanthylal Makan’s stamina sets the pace for his company.
Before the coronavirus grounded planes, he was known to spend 12-hour flights to Asia working the entire time. On arrival, he’d throw on a change of clothes to see Iconiq clients, sometimes not even pausing to shower, and then hop to his next flight. He is, one former colleague said, like a professional athlete in his commitment and in his ability to perform consistently at a high level.
The 47-year-old, of average height and physically fit, cuts an elegant but approachable figure, with short, neatly coiffed hair, an ever-present bead bracelet on one wrist, and a wide, affable smile. Sources describe him as warm, personable, and engaging, but more professional than chummy. “He doesn’t actively try to make jokes and be funny,” one person said. “When he’s talking to you, he’s fully engaged in whatever you’re talking about. He’s really thoughtful, he chooses his words carefully,” another said.
Makan got his MBA at the Wharton Business School in the US after earning an undergraduate degree at South Africa’s University of Natal. He worked at the consulting firm Accenture, and later joined Goldman Sachs in 2001, where he met Zuckerberg. Makan quickly managed to win favor with the Facebook founder (he was later instrumental in devising Facebook’s unusual dual-stock structure that allows Zuckerberg to retain absolute control of the company, according to a former Iconiq executive) and hitched his fortunes to the future fifth-richest man.
In 2011, after a three-year stint at Morgan Stanley, Makan struck out on his own and established Iconiq Capital, alongside his cofounders Will Griffith, Chad Boeding, and Michael Anders. Makan took clients like Zuckerberg with him — leveraging those early relationships to build an exclusive brand and win further business.
Managing wealthy families’ affairs demands discretion, and Makan fits the bill. “As a guy,” one former colleague said of Makan, “it’s just not a very interesting story.”
There are no ostentatious hobbies or lavish partying, people say. Typically clad in the de rigueur West Coast financial services uniform of slacks or jeans and a button-down, the man overseeing the fortunes of Silicon Valley’s nobility doesn’t even have a Wikipedia page. When Forbes profiled Makan in 2014, Iconiq’s spokesperson tempted the reporter to ditch the story with a promise that the founder “would be a lot more valuable as an asset you could call all the time.” After a lawsuit involving Zuckerberg’s neighbor surfaced emails from Iconiq, he instructed employees not to put important or sensitive matters in emails. In his almost two decades’ experience as an investment advisor, his file includes only one disclosure of a customer dispute in 2008 (no action was taken).
The wealth manager isn’t flamboyant, but he is charming and charismatic — and intensely driven. “You never tell him no,” another ex-colleague said, “and he never tells a client no.” Highly efficient, up to four people help schedule his meetings, and his assistants are taught to mimic his tone carefully so that they can send emails in his name.
Almost his entire life appears to revolve around the relationship-building game that powers Iconiq Capital. Now living in San Francisco, Makan will take prospective clients out for dinners on weekends, and he’s made Iconiq a family business. His wife, Diksha Makan, heads up engineering efforts for the firm. Outside of work, the father of three girls sits on the board of SFJazz, a music-and-arts center in San Francisco, and was previously a trustee at a science museum. His net worth is unclear, but substantial.
‘If you have all the money in the world, you have someone to wipe your ass’
Iconiq Capital helps its clients manage all the tiring and confusing work of being extremely rich.
At the most basic level, it’s a multifamily office. Its 260 employees handle clients’ money, run their households, hire staff, buy property, plan taxes, sort estates, offer interesting investment opportunities, direct philanthropic efforts, provide advisory services, and more.
The San Francisco-headquartered firm distinguishes itself from rivals in two ways. The first is its reputation for willingness to cater to clients’ every need. Private bankers often highlight such “white glove” services, but Iconiq became so well known for residential real-estate prowess that employees joked its former longtime general counsel was the largest home buyer in the Bay Area, given the number of his signatures on LLCs established to hide clients’ identities.
“You can have your entire life run through Iconiq if you want,” one former employee said. Another was blunter: “If you have all the money in the world, you have someone to wipe your ass.”
The second is that all-important network. It’s the implicit promise that by joining Iconiq’s ranks, you’re accessing deals alongside the likes of Zuckerberg; that you’ll be meeting other brilliant minds working in relevant fields; that you’ll see the most exclusive investment opportunities money and prestige can buy; that you’re part of tech’s ultimate brain trust, the elite of the elite.
The network has been used for both professional and personal purposes, from enticing startup founders with an introduction to Apple’s App Store boss Eddy Cue to engineering a meeting between a client’s child and the cast of “Star Wars.”
Meanwhile, investment opportunities include real estate, various funds, and a tech-focused venture-capital arm, Iconiq Growth — and some more esoteric options that benefit Iconiq’s own clients.
This is Iconiq Capital’s modus operandi: A powerful, expanding, self-reinforcing network of affluent and influential individuals scratching one another’s backs, a flywheel that helps them get ever wealthier together.
It’s a captivating pitch to both clients and investors. In March 2020, according to its most recent public filings, Iconiq had about $22 billion in assets under management on a discretionary basis and another $17.5 billion nondiscretionary. (About $12 billion of that comes from non-US clients.) Makan’s “strong Rolodex” is what really draws clients to Iconiq, a former staffer said.
The founder has relentlessly cultivated this network, throwing private “fireside chats” featuring clients and glitzy retreats where his stable of VIPs can hobnob in the vein of the prestigious Milken Institute’s famous conferences. The comedian Hasan Minhaj performed a set for clients’ entertainment at a private “Iconiq Ideas” event in California’s wine country in 2019, where Tom Hanks, a client, also gave a presentation.
“There’s no doubt that they have massive conflicts of interest”
In May 2018, Divesh Makan lost a top lieutenant.
Chad Boeding, part of the team Makan had led from Morgan Stanley to establish Iconiq, parted ways to launch rival firm Epiq Capital Group with roughly a dozen poached Iconiq employees. Unsurprisingly for the low-profile industry, the transition was largely cordial and professional, sources said, but Boeding took some veiled shots at his former employer’s conflicts of interest in a public statement on his way out the door.
Iconiq’s conflicts of interest are no secret, and mirror those at some private banks that advise the ultrawealthy. It freely discloses them in corporate filings, indicating how the organization has sprawled out into an assortment of services over the years. It buys and sells securities it also recommends to clients, for example, while its fee structure “creates an incentive for us to invest your assets into funds managed by us or our affiliates.”
“There’s no doubt that they have massive conflicts of interest,” one rival said. “But there’s also no doubt that those conflicts of interests haven’t kept them from growing or kept them from making their clients a lot of money.”
As Iconiq has grown, the firm has faced cultural and organizational growing pains. Some former employees complained of a sharp-elbowed and political corporate culture that left them frustrated; that some teams were expected to stay in the office until late at night; and that relatively few women and other underrepresented groups occupied and stayed in leadership roles — not uncommon problems in the intense world of corporate finance. (A person familiar with the matter said 36% of Iconiq’s senior leaders were women, higher than the industry average.) Sources also said employee turnover on some teams seemed high.
Occasionally, issues at Iconiq have bubbled into the public eye. The company fired its real-estate chief, John Sauter, over a decades-old sexual-assault charge in 2018 as the #MeToo movement developed, Bloomberg reported at the time. And Zuckerberg’s Iconiq-managed family office has been shaken by allegations of misconduct against several aides, first reported by Insider, including legal claims that his then security chief Liam Booth sexually harassed staffers and made racist remarks about Zuckerberg’s wife, Priscilla Chan. (Zuckerberg’s team has denied wrongdoing, and his spokesperson declined to comment for this story.)
Frank Ghali, a former colleague of Makan from his days at Goldman Sachs, is also nipping at his heels. In 2017, Ghali left Goldman after more than 16 years to launch his own Silicon Valley-focused multifamily office firm, Jordan Park Group. Though still early days for Jordan Park, it has hired nearly a dozen Iconiq alumni.
If the competition represents a threat to Iconiq, Makan hasn’t shown it. An Iconiq cofounder, Boeding took dozens of clients with him on his way out, including Travis VanderZanden, the founder of scooter startup Bird. But the majority were smaller than Iconiq’s typical clientele and not in its interests to fight for, sources said.
Iconiq’s slam dunk in venture capital
Over the past few years, Iconiq has built out a venture-capital investment arm, tying its fortunes ever more tightly to the technology industry that built its business. It’s going very well.
By the end of 2020, VC unit Iconiq Growth had invested more than $5.4 billion across dozens of startups, investments that were by then worth more than $23 billion on paper, according to internal documents from the firm’s five Iconiq Strategic Partners funds shared with Insider by a source.
Additional documentation, from June 30, 2020, showed that the firm had invested in 75 companies, including Tencent and Zoom, across its first four funds by the middle of last year and has already seen some smash hits. Snowflake’s September 2020 initial public offering, which valued the data-warehousing company at $33 billion, was then the biggest US software IPO, and Iconiq owned 14% of the company as it went public.
As with any VC fund series, ISP’s final results won’t crystallize for years. For now, the leaked documents offer a map of Iconiq Growth’s strategy and an early peek at some of its winners that could propel the portfolio.
Since the June 2020 fund results, Iconiq has bet on more companies and shored up existing investments, joining Robinhood’s emergency fundraiser in January after the fintech startup sought more cash to cover day-trade-mania-sparked liquidity issues. Its Fund V is now almost halfway invested, and the team plans to start fundraising talks for Fund VI in spring 2021, according to a confidential investor letter.
Initially just an offshoot of the core family-office business, Iconiq Growth has developed into a semiautonomous organization within an organization, sharing little more than technology infrastructure with Iconiq Capital itself. It has established a strong track record and a prestige brand of its own, both by focusing on software as a service (SaaS) investments and by linking founders to Iconiq’s network.
Adriel Lares, the CFO of the cloud-computing company Fastly, said that Iconiq’s investment helped him understand various metrics as the company grew, and its Growth partners brokered introductions to prospective customers. And after Fastly’s 2019 IPO, Iconiq tapped Lares to counsel other CFOs in its network about going public. “I’m always willing to share because I’ve been able to benefit,” he said.
As Iconiq Growth has grown, the composition of its funds has shifted. While most of the cash for its first fund, ISP I, was drawn from the coffers of Iconiq’s family-office client base, the majority of the unit’s capital now comes from outside funders, including top-tier institutional investors like the Canadian Pension Plan Investment Board. Fund fees make Iconiq Growth a higher-margin business than its family office, particularly as more external investors sign up.
Will Griffith, one of Iconiq’s founding partners, leads the team. He’s well liked internally and highly respected for his success in building Growth. Some wonder whether he might one day be tempted to strike out on his own.
From Premier League football to a Boston hotel — inside Iconiq’s investment menu
While venture capital is a business where Iconiq’s Silicon Valley roots and connections give it a natural edge, the firm’s ambitions and operations stretch across a vast field of disparate businesses.
The Iconiq investment menu varies, including both standard family-office fare — public equities, investments in top-tier hedge funds like Tiger Global — and juicy in-house opportunities benefiting its own clients and leveraging its relationships. Clients can invest in individual commercial real-estate deals, vetted by Iconiq analysts and sourced from Cadre, a real-estate startup cofounded by Iconiq client Josh Kushner. And through an Iconiq fund, internal and external investors can put their money into data centers that house reams of corporate code from some of the firm’s clients.
Real estate is one of Iconiq’s more recent bets in which it now oversees $3 billion in assets. Property is typically the asset class most resistant to technological change, but Iconiq touts its tech prowess, with offerings including its data-center fund, one-off investments like an upscale Boston hotel, and an apartment portfolio geared toward Airbnb stays.
Under the guidance of chief investment officer Nugi Jakobishvili — a brusque BlackRock veteran — Iconiq has added an outsourced chief investment officer (OCIO) function to manage portfolios for small institutional investors, an increasingly important source of business for rivals like Goldman Sachs.
Iconiq’s other strategies include more out-of-the-box investments that don’t mimic stock-market returns, like trade finance and third-party funds that invest in music royalties and digital billboards. Through Iconiq’s unique sourcing for minority deals and full acquisitions, clients can invest in assets as varied as a Premier League team or an Australian dormitory complex.
Not everything on the investment side has been a win. An initiative to expand into private-equity buyouts — previewed in the Wall Street Journal in November 2017 — was quietly shuttered because of high investment prices, and the effort’s leader, Arvindh Kumar, ultimately left for investment firm EQT Group in January 2020. A credit team also closed down a few years ago after failing to gain traction.
While Iconiq’s venture-capital efforts are blossoming, the core family-office business isn’t so straightforward to scale. Estate management is personnel-intensive work, requiring constant hiring to support new clients, part of why Iconiq has long evaluated return on investment with clients and politely parted ways with those who don’t make the cut. As clients mature — evolving from spendthrift 20-something founders to doting parents with multiple properties and mounting needs — the stakes for successful household management creep higher, threatening margins. But the prestige and power that the family-office client network confers means it’s unlikely to go away — even if it’s not the moneymaker that venture capital is proving to be.
“The test” will come when markets turn
As COVID-19 devastated the American economy last year, Iconiq Capital sprang into action.
In early 2020, it spun up a roughly billion-dollar “tactical opportunities” investment vehicle to hunt down funding opportunities and “dislocations” sparked by the pandemic — from senior loans and structured equity to rescue financing.
It’s emblematic of how Iconiq is continuing to seek growth and financial opportunities from disparate sources around the globe.
Its New York office — a hub for celebrity clients — has been steadily expanding under the watchful eye of founding partner Michael Anders, adding staffers to cater to clients and manage VC investments. An office in Singapore, headed by ex-Goldman Sachs director Rajeev Natarajan, focuses on capturing Chinese investors’ capital, investing locally, and assisting customers on the other side of the globe. And it’s eyeing Europe as another growth area, filing paperwork to incorporate in the UK and searching for a local investment partner to fund European startups, Insider recently reported.
Iconiq took on a round of external investment in late 2020, with Dyal Capital Partners buying up a 6% stake in the firm. The firms are further linked through Dyal’s pending merger and public offering via special purpose acquisition vehicle — Iconiq is part of an investor group putting $1.5 billion into the deal, an unusual arrangement for a Dyal portfolio company.
Over the past year, Iconiq has also begun to shed some of its secrecy, which sources attribute at least partly to the venture-capital arm’s increasing importance. It launched a new website, published blog posts about investments and personnel moves, and issued a statement in support of Black Lives Matter. An outward-facing investment firm has very different promotional needs to a secretive family-office business, and to generate buzz Iconiq now needs to make public statements that would have been anathema to it even a few years ago.
The rising public profile helps Iconiq pitch itself to clients as a world-changer, using invested capital to benefit humanity — along with its bottom line. “It’s very inspiring. I think that position helps in the circles they move in,” said Carolyn Armitage, a managing director at investment bank Echelon Partners. “And with the billions they have to invest, they can move those mountains.”
As Iconiq celebrates its 10th birthday and expands into more businesses, its success story exposes another distinguishing trait: The firm has never been tested in a bruising economic downturn.
To Wally Okby, of financial services consultancy Aite Group, that kind of experience matters, especially for a firm making the jump from wealth management to other types of investing. “It may appear to be easy, because of the performance of the markets over the last decade, but it’s really not,” he said. “The test of that will come when markets turn or when they vacillate a little. You need a certain skill set.”
For now, Makan’s ambitions and cachet continue to open opportunities and to grow Iconiq’s returns — even as the firm relies less on its original crown jewel, Mark Zuckerberg.
The 36-year-old billionaire still uses Iconiq’s family-office services for managing his household affairs. But while the marquee client once managed the vast majority of his assets through Iconiq, as he’s dived more deeply into philanthropy with his Chan Zuckerberg Initiative, he’s also moved the bulk of his capital away and hired a dedicated chief investment officer for CZI, David Lee.
Iconiq’s brand might be linked inextricably to Zuckerberg, but Divesh Makan’s empire now reaches far beyond him.
Contact reporter Rob Price via encrypted messaging app Signal (+1 650-636-6268), encrypted email (firstname.lastname@example.org), standard email (email@example.com), Telegram/Wickr/WeChat (robaeprice), or Twitter DM (@robaeprice). Use a non-work device to reach out.