The legendary L.A. Laker's secret behind a successful sports-to-business transition.
Don Yaeger July 2, 2010
Magic Johnson was in the seventh year of his Hall of Fame career when thoughts of his basketball afterlife led him to the office of uber-executive Michael Ovitz, co-founder of Creative Artists Agency, Hollywood's most powerful agency. Johnson had watched many former athletes attempt entry into the world of business only to fail, and he was hoping for advice that would allow him to chart a different course.
“Michael dropped the newspaper in front of me,” Johnson tells SUCCESS. “He asked, ‘When the paper arrives, what do you read first?’ I told him I opened the sports section.
He looked at me and said, ‘Wrong answer. From here on, if you want to be involved in business, you have to read business.’ I walked in his office 6-foot-9 and proud. I left feeling 5-foot-tall and stunned.”
And thus began the business career of a man who, just 22 years later, in 2009, was hailed by Ebony magazine as one of the most influential black business leaders in America. Built over the past 23 years, Beverly Hills, Calif.-based Magic Johnson Enterprises now owns or operates gyms, movie theaters and other businesses in 89 cities across 21 states.
“I learned a couple of great lessons there with Michael Ovitz,” Johnson says. “The first is that if you want to be successful, you have to be willing to use every connection you’ve got. It is a funny story how that meeting came about. During a Lakers game the season before, I was standing on the sidelines getting ready to pass the ball inbounds. There were two businessmen I respect—[studio executive] Peter Guber and [recording industry executive] Joe Smith—who were sitting there courtside and were huge fans. I looked over and asked, ‘How do I get into business?’ It probably wasn’t the best place to ask, but they could tell I was honestly looking for help, so later they arranged for me to meet Michael Ovitz.
‘Be Ready to Listen’
“The second thing I learned is that if you want someone to be your mentor, you better be ready to listen and be humbled,” Johnson says. “Michael wasn’t sure about working with me because so many athletes think they can move right into business and never take anyone’s advice. I had to prove to him I was serious and that I would listen.”
That meant changing his reading habits, Johnson says, and he immediately started grabbing business magazines, newspapers and books to take with him on the road.
But reading was just the beginning of Magic’s business education. His next big lesson was “listening.” Johnson says his first foray into the world of business taught him what happens to entrepreneurs who aren’t listening to their customers. In 1990, he decided to begin a chain of retail sporting goods stores called Magic 32 that he intended to take nationwide.
To get the business off the ground, he decided to attend a major sporting goods convention and negotiate for products he’d sell at the stores.
“I didn’t ask a single customer what they’d be interested in,” Johnson says. “I went there looking for products I’d be interested in buying. I had to learn that I was not my customer. Actually, I was taught that lesson by what happened after we opened.”
Among the line of products Johnson chose to carry was a series of $1,500 leather jackets. They fit Johnson’s taste, but not the taste of his customers, as evidenced by the fact they were still hanging on the racks when the initial store closed just a year later.
“I’m sure I’ve made bigger business mistakes,” Johnson says, breaking into his trademark grin, “but I can’t think of one.”
Early Lessons
Johnson’s earliest entrepreneurial influences came from his parents in his hometown of Lansing, Mich. “I grew up in the kind of black family that people today worry is disappearing. Even though there were nine of us, we had what we needed— two great parents, food on the table and time for the whole family to be together,” he writes in his 1993 memoir, My Life.
Both parents worked hard; his dad on the night shift at a GM factory as well as second jobs that included pumping gas and running his own trash-hauling business, and his mother in janitorial and cafeteria work. “My parents believed in work—not only for themselves, but for their children, too,” Johnson writes. The kids had assigned chores around the house and had to earn their spending money. “By the time I was 10, I had my own little neighborhood business. I raked leaves, cleaned yards and shoveled snow. With the money I earned, I could go to the movies and buy an occasional record.”
Johnson’s dad, Earvin Johnson Sr., provided other life lessons, too. Through one-on-one basketball games, his father played tough and not always fair. “But that was the point. Dad was teaching me that I wouldn’t always get the calls, that I had to play above the contact,” Johnson writes. “He taught me to win against the odds, and never to quit.”
Johnson’s basketball career included a national championship at Michigan State, five NBA championships with the Los Angeles Lakers and a gold medal with the “Dream Team” at the 1992 Olympics. He played alongside and against some of the NBA’s best players, including Michael Jordan, Larry Bird, Kareem Abdul-Jabbar and John Stockton.
His new teammates are business partners who include Sodexo, T.G.I. Friday’s, Aetna, AMC Theatres, 24 Hour Fitness and Starbucks. He has carved out a niche, becoming the go-to player for companies hoping to expand into the urban marketplace, using the power of his brand in that space to increase the credibility of businesses desiring a part of the pie in what Johnson calls “underserved and ethnically diverse urban communities.”
