His basketball days behind him, superstar Magic Johnson is now busy scoring points in the world of business. Here's what he thinks, what he wants...and how he's going to get it.
It's all in the moves. Under pressure, Earvin "Magic" Johnson is known for seeing the open shot and taking it, risking big to win big. He thinks like a champion.
But now he's in a whole new league. The former Los Angeles Lakers star wants to be more than a former Los Angeles Lakers star . . . he wants to be America's most valuable entrepreneur. A big man with huge ambitions, Johnson wants, in his words, "to build, to build, to build."
Although Johnson was the first active NBA player to become a league licensee and one of the original athlete entrepreneurs with his own T-shirt licensing business, the man who learned balance sheet analysis from former Walt Disney Co. president Michael Ovitz wasn't content with the typical sports-business connection for long. Johnson's first major move came via Magic Johnson Theatres, which he started in 1995 in partnership with Sony Retail Entertainment. His goal was to create a top-of-the-line entertainment experience for Baldwin Hills/Crenshaw, California, moviegoers; his vision was to revitalize the underserved community; his result was a theater complex that's one of the highest-grossing in the nation.
Meanwhile, Johnson is taking no time out. He continues to open theaters, entertainment complexes, restaurants and retail centers in underserved communities nationwide. (He has also opened theaters in Atlanta, Detroit and Houston, and has plans for new ones in Chicago, Cleveland, New Orleans, New York City, San Diego and Washington, DC.) His latest forays include a joint venture with Starbucks CEO Howard Schultz to develop Starbucks in inner-city and urban locations throughout the United States; the purchase of a majority stake in Los Angeles-based Founders National Bank with Janet Jackson and record industry executive Jheryl Busby; and a stab at television with "The Magic Hour," the late-night talk show that, as of press time, he was scheduled to begin hosting in June.
How has Johnson mastered his crossover success from sports figure to entrepreneurial whiz to entertainment mogul? Actually, there aren't too many surprises up Johnson's well-cuffed business sleeves--he relies on research, connections, instinct and customer service. Like any entrepreneur, Johnson prepares, strategizes and acts. But once in a while, he'll take a breathtaking shot that comes directly from some magical, instinctual place in his core. And he'll make it.
Entrepreneur: Because you're Magic Johnson, obviously you don'thave to run these businesses. Why do you?
Earvin Johnson: If you look at most of my businesses, they're in the inner cities, and that's where they need to be. People in those communities deserve to have them, and they supply jobs for the people who live there. And it makes good business sense. So when you have this combination of things, then it's just the right thing to do.
Entrepreneur: You have said: "It's important to help the community, but the number-one goal here is to make money. This is not charity." How have you managed not to sacrifice your profits for the sake of giving back to the community and vice versa?
Johnson: Business is business--you have to understand that and have that attitude. If it were just about charity, the business side wouldn't last long. But if you understand you're building this Starbucks or these theaters because of business and you can also give back to the community, then I think it becomes a win-win situation for everybody.
Entrepreneur: When you first started, did you have any problems with people in the corporate world not taking you seriously as an entrepreneur?
Johnson: Well, yes, of course, because it's that tag that's been put on athletes for a long time--that we're not serious about business. So in the beginning, people didn't take me seriously, but they found out I was a persistent guy and that I really believed in my dreams. I believed I could make them money as well--it could be a viable business deal for both of us and be good for the community. So once Sony saw that, they said "OK, if you believe in it so much, then put your money where your mouth is" (laughs).
Entrepreneur: You mentioned persistence. Is that something that's not only helped you in your basketball career, but has translated into your success in business as well?
Johnson: Oh, yeah, without a doubt. You have to be persistent in business, especially for me because, like I said, doors didn't just open right away. I almost had to kick them down. I had to keep coming back, coming back, because many corporations weren't going into the inner cities like they are now. The theaters were like a test model, and that's why I now have the other deals, because we've proved it can happen and it can work.
Entrepreneur: What did you say to these large corporations to convince them to go into these areas?
Johnson: They knew they were missing a market. African-Americans make up more than 30 percent of all the movie-going business. So it wasn't like African-Americans weren't going to the movies; they always have. It's just that there were no theaters in our neighborhoods, and Sony recognized that. It's the same thing with Starbucks. We'd drive anywhere to get a cup of Starbucks, but now we have it in our own communities, and that's why our [company's] numbers have been so high. [Corporations] just didn't know how to go about [breaking into the market].
Entrepreneur: What do you look for in advisors?
Johnson: People who don't need my money (laughs). People who have done well themselves. That's why I went to someone like Michael Ovitz, who's a mover and shaker, a guy who's smart and who knew how to connect me with the right people. The best thing he ever said to me was to pay the best people, because you can either pay them now, or you can pay them later. If you're the best, you have to go with the best. And that always stuck with me--if you want to hire a lawyer, an accountant, hire the best.
Entrepreneur: One of the pieces of advice [former Warner Bros. Records president] Joe Smith gave you was to be careful whom you trust. Do you follow that advice?
Johnson: Oh, yes, I follow that advice. I don't trust too many people.
Entrepreneur: So that advice has served you well?
Johnson: Yeah. Very well.
Entrepreneur: It sounds as though it's not just you, Earvin Johnson, who makes up Magic Johnson, but an entire team behind you.
Johnson: Well, Magic Johnson makes up Magic Johnson. I've got a team of people who work for me and advise me. But I call my own shots. That's one thing about me. I'm my own businessman. I'm my own person. The team I built taught me how to get into business, how to run a business. They gave me the knowledge I needed to have. But now I'm on my own. If you ask Howard Schultz, if you ask the Sony people, they'll tell you I make my own deals. Everybody knows they have to deal with me.
Entrepreneur: If someone new to business came to you today, what advice would you offer?
Johnson: Research your idea. See if there's a demand. A lot of people have great ideas, but they don't know if there's a need for it. You also have to research your competition.
Entrepreneur: You have said the Magic Johnson Theatres work because you do your homework. What do you mean by this?
Johnson: First of all, I had to know that the number of moviegoers was high among African-Americans. I had to do the demographic work and know how many people living in the area could support that theater. Also, I have to keep track of how many people come in daily and know what our customers like to eat. It's all a process, you know. And I stay on top of it.
Entrepreneur: Even though you said you don't trust too many people, you decided to trust this community that few others trusted.
Johnson: But that was easy.
Entrepreneur: What did you see that others didn't?
Johnson: Well, I'm from there. You know, when you grow up with these people and see them every day and then you look at the numbers . . . it was easy; it was a no-brainer. And when Sony took a look, it was a no-brainer to them, too.
Entrepreneur: You've said you built the theaters to answer one of the pressing needs in urban areas. It seems the traditional method of answering pressing needs is to start a social program, but you decided to offer a medium of entertainment. What was the reasoning behind your decision?
Johnson: There are a lot of social programs, but they usually only identify with a few people. This helps everybody, not just one particular group. Everybody wants to laugh; everybody wants to cry; everybody wants to come in and have a good time. They work hard, five or six days a week; some of them have two jobs, and they need to get away from that. A theater helps them do that.
Social programs don't [always] supply jobs. We need jobs in our communities, and that's what the theaters provide. They also give our young people hope that they can dream about being a businessperson, that it can actually happen, because they see me being a businessperson, being from the neighborhood just like them, having had the same problems growing up that they do.
Entrepreneur: Like you, your theaters have become so much a part of people's lives that they've already earned a nickname--I hear they're called The Magic. What's your secret for creating that kind of connection?
Johnson: In everything I do, I want to make sure people see it like it's theirs. That's what has happened--they've embraced the theaters, they've embraced Starbucks, everything. It's there, they have a piece of it, and they feel good about that. See, when you go to my theaters, it's not like going to any other theater. The energy is high; everything is moving fast--in the lobbies, people are talking, laughing, high-fiving. It's a lot of fun.
Entrepreneur: A Los Angeles economist has called you a pioneer in that the Baldwin Hills/Crenshaw theater has opened the door for economic potential in the surrounding areas. Was that your intent from the beginning--to spark a revitalization of the community itself?
Johnson: No question about it. I knew that once everybody saw it could work, it would spark other companies to move in there. And that's exactly what has happened. We've already added three more screens, which takes us up to 15. They've embraced the Starbucks coffee--you can't even get in the door from 6 a.m. to 10 a.m.; there are lines all day long. I'm really happy, because it's about more than just business.
Entrepreneur: So it's revolutionary not just on the business realm but on the social realm?
Johnson: Yeah, for sure. That's what I was telling you, that some social programs just identify with certain people, but this identifies with all people. Whatever your getaway is--you want to cry, you want to laugh, you want to see some shoot-'em-up movie--you can do that at the theaters. That's [often] why people go to movies: They want to get away from reality.
Entrepreneur: You think so?
Johnson: Yeah, 'cause I do, too (laughs heartily).
Entrepreneur: With your theaters, you've created roughly 100 permanent jobs and, in building them, offered approximately 850 construction jobs in each city where you've opened a theater. But your venture has not been without criticism. Sales in some of the stores in the Baldwin Hills/Crenshaw Plaza have fallen, and three stores have closed since your theaters opened. And now some of the small-business owners say your theater draws a younger crowd that doesn't spend a lot of money and tends to scare off older, more affluent shoppers. One entrepreneur who recently closed his restaurant there spent three weeks crafting an angry letter to you. Another entrepreneur said, "Magic has never had to deal with the kinds of situations that smaller [African-American-owned businesses] have had to deal with." How do you respond to that?
Johnson: It's not my job to market their stores for them. They're supposed to do that themselves. There are [close to] 1.5 million people going through our doors every year. Now, what they do with 1.5 million people is up to them. People have to get out and [ask themselves] "If I put this store here, will it be viable? Will it be the right thing for the community?" Obviously, the community said these weren't the right stores. You can't blame that on Magic Johnson.
Business is business. [Those businesses] were doing badly before I got there. Before I got there, [the mall] was 49 percent occupied. Now it's running about 80 percent to 85 percent. So that theater has helped, no question about it.
I can't help [those small-business owners]. I'd like to, but I can't. There's nothing I can do. I can't make those 1.5 million people go into the mall. What the community is saying is, the mall has to bring in the stores they like. If I had built a second-rate theater, those people wouldn't be there. So you have to give African-Americans some credit, because they're going to spend their money just like you're going to spend yours. And they have the right to do that. So it's not all about me.
Entrepreneur: So you directly ask the people in the community what they want?
Johnson: I already know because I go to church down there, and I get my hair cut there, so I hear everybody talking.
Entrepreneur: How does your new talk show fit into your strategy?
Johnson: It's the same thing: bringing quality entertainment to people at home and making them feel good before they go to sleep.
Entrepreneur: You mentioned making them feel good. Is that a common thread among all these businesses?
Johnson: I'm in the "feel good" business (laughs). If I can't [make people feel good with a business], most of the time I don't do it. And that's why I'm happy about the talk show, because it will make people happy. It's something I've always wanted to do.
Entrepreneur: In your first season with the Lakers, the team clinched the NBA title, and you were named MVP of that series. But in the second season, you were injured and missed 45 games, some of your teammates started questioning your fast-break style, and in the final seconds of Game Three, you shot an air ball, taking your team out of the first round in the playoffs. With that sort of experience and what it does to you emotionally, are you ever afraid of a sudden slump in your business?
Johnson: No. Even that situation helped me to grow, to be a better player. So I don't worry about that. If you do what you're supposed to do, people will come . . . you hope. And we do everything possible to keep our customers happy and keep them coming through the doors. It's the same thing [with my TV show]; if I'm funny and if the show has the right guests and I do what I'm supposed to do as the host, [viewers] will stay tuned. If not, they'll turn it off.
With businesses, you go to the same places because you like the service, you like the people and they take care of you. They greet you with a smile. That's how people want to be treated, with respect. That's what I tell my employees--customer service is very important.
Entrepreneur: The mural in your Crenshaw theater traces your career from your days at Michigan State to the Lakers, and now as an entrepreneur. When did you first want to be an entrepreneur?
Johnson: Ever since I was in high school.
Entrepreneur: So do you believe business comes naturally to you?
Johnson: It comes naturally because I'm a workaholic.
Entrepreneur: Was the transition from basketball to business easy?
Johnson: It was easier for me, because I've always studied business. Even when I was a ball player, I'd read business journals and the business sections of newspapers. Or I'd study what people like, as well as my own [preferences]--why do I like this restaurant; what makes it the highest-grossing restaurant? And then I talked to entrepreneurs who were already doing very well. That's why it came naturally. I'm a natural talker, and I love to ask a lot of questions--because I'm nosy (laughs).
Entrepreneur: So do you think entrepreneurship is tougher in some ways than basketball was?
Johnson: Oh, yes. I've been playing basketball since I was 7 or 8 years old. I can still just get out there and play, like I did this morning. But business--you have to get into the numbers, research and asking people what their needs and wants are, picking the right locations. There's a lot that goes into business. It's not just "OK, I want to be a businessman. Boom--go with something," and hope they come in. It doesn't work like that.
Entrepreneur: What are the talents you had as a basketball player that work for you as an entrepreneur?
Johnson: My work ethic, for sure. And my preparation. See, I prepared for games; I prepare for business.
Entrepreneur: How about fulfillment? Is entrepreneurship fulfilling in any of the same ways as basketball, or in different ways?
Johnson: You get gratified even more so with business because you're touching so many people's lives. I love doing that.
Entrepreneur: Because success seems to be associated with your very name, more is expected of you in all that you do. How do you react to that type of pressure?
Johnson: I love it. I wouldn't want it any other way. It keeps me on my toes; it keeps me sharp.
Entrepreneur: Is there a different type of pressure to running a business than playing a basketball game?
Johnson: Yes, but again, it comes naturally. [In basketball,] under pressure, I wanted to take the big shot. And I think that pressure helps me with this pressure in business.
Entrepreneur: To take the big shot?
Johnson: Yeah, I'm used to pressure, and that's why I've done well in business. When I'm under the gun and I've got pressure on me, I don't panic. I look for the right solution, and then I go for it. Of course, I'm not in it for the quick hit; I'm in it for [the long haul].
Entrepreneur: By your own confession, you're a workaholic. How do you balance the needs of your business, your commitment to nonprofit ventures, your celebrity appearances, your talk show and your family?
Johnson: I take my son to tee-ball; I just took him on Saturday. We go to early movies; I read them bedtime stories. You know, I'm still a dad. And I still have to be a husband, too; I take my wife out to the late movie (laughs). But that's what the balance is. I understand when to give my time to the public, when to give my time just to family, and when to give my time to business. I cut a lot of things out and gave a lot of responsibilities to a lot of other people once I signed to do my show, because I want to try to be the best I can be at hosting it.
Entrepreneur: A quote from your advisors says yours is an all-out bid to become America's most important African-American entrepreneur. Why is this so important to you?
Johnson: Those kids who come to my theaters have to know they have someone they can look up to in the business community, so that's why I want to be the best and the biggest. I also have to show athletes they can be more than just a basketball player, football player and so on. And I have to do it for myself, because that's the challenge for me: to be the best TV talk show host I can be, to be the best businessman I can be.
Entrepreneur: It looks to me, as a casual observer, as though you're building an empire. Is that your ultimate vision?
Johnson: Heeey. You better write that I said that.
Entrepreneur: So that's your vision, to build an empire?
Entrepreneur: And what's next in this empire?
Johnson: Well, we have a few things cooking, so you'll just have to wait. But really what's next is my TV show. That's my next empire.
Entrepreneur: You've spent most of your adult life in the spotlight. How do you maintain your hunger for success?
Johnson: If you're a competitive person, that stays with you. You don't stop. You always look over your shoulder, and I don't have to look far to see [David] Letterman and all of them sitting there (laughs).
Entrepreneur: If you had to talk about your long-term dream, how would you characterize it?
Johnson: To be on the air for 10 years--that's about enough. Then I could continue to build, to build, to build--until you'll be calling me the next time, saying "OK, I guess you've done it." You were the first to say "the empire." And in five years, you can say it's come true--it went from dream to reality. That's my goal. I hope I can say that to you in five years.
Entrepreneur: Do you think it's tougher to go from success to failure, or from failure to success?
Johnson: You'll have to ask somebody else that. I haven't failed at too many things, so I don't know.