 McDermott began busking in 1985, which he says equipped him with useful experience and the ability to cope with most situations when he later started performing in clubs. He joined a group called Gigantic Fly which performed at a new Canberra club called Cafe Boom Boom. It was here that he got to know Tim Ferguson and Richard Fidler of the musical comedy group the Doug Anthony All Stars (DAAS). McDermott was asked to join the group when the third member, Robert Piper, left due to other commitments. His primary reason for joining, he says, was monetary: "I 'd been stealing canvas from the bins around the art school." Initially busking and performing live in clubs, with McDermott writing the majority of their material and songs, DAAS achieved success at the 1986 Adelaide Fringe Festival and subsequently travelled to Britain for the Edinburgh Fringe festival, where they were nominated for the Perrier Award. They toured both nationally and internationally, appearing on British television and playing at the opening of the Barcelona Olympics. After initially struggling to gain success in Australia, in 1989 DAAS was picked up to perform on the ABC show The Big Gig, on which they became a popular feature. They appeared frequently on the show until 1991, when the group premiered their own series on the ABC, DAAS Kapital, which ran for two seasons. McDermott says that he liked performing with DAAS because it allowed him to bring together a range of his interests — he got to write, perform, sing, create costumes and paint backdrops.
