Earvin “Magic” Johnson’s life has been about defying the odds.
The son of a trash hauler, the Lansing, Michigan-born Johnson rose to athletic prominence as a Hall of Fame basketball player, one who transformed the game with his unique blend of size and skill. After retiring from basketball in 1991 following his HIV-positive diagnosis, the odds of Johnson seeing the 21st century seemed unlikely. But Johnson transferred his gregarious personality, leadership traits, and competitive drive from the hardwood to the entrepreneurial world, determined to live and craft an even brighter future.
And Magic has done just that. Over the last two decades, Johnson has become one of the globe’s most powerful African-American businessmen, a devoted philanthropist, and a champion for urban America as the head of Magic Johnson Enterprises, a diverse conglomerate that touches a variety of industries, including sports, entertainment, retail, and foodservice.
“I've been defying the odds for a long time,” Johnson told a capacity crowd during his keynote address at the 95th Annual National Restaurant Association Restaurant, Hotel-Motel Show in Chicago on May 18. In the first deal of his post-basketball career, Johnson acquired a Pepsi distributorship in metro Washington, D.C. In order to learn the business, Johnson said, he needed to relinquish his ego. For three days, he traveled with truck drivers and made deliveries, an experience that allowed him to understand how the business worked at the ground level and provided keen customer insights.
“Always know your customer and speak to your customer each and every day,” Johnson said, reminding that today’s consumers have abundant choices.
The Pepsi distributorship deal only intensified Johnson’s entrepreneurial drive. He struck a deal with Sony-Loews to open a chain of movie theaters, and later pitched Starbucks chief Howard Schultz on the idea of placing Starbucks locations in minority-dominated urban neighborhoods. As Johnson touted the growth prospects, Schultz agreed to explore the idea, but only after seeing how Johnson managed his movie theaters. At a packed screening of the film “Waiting to Exhale,” Schultz saw the dedication of Johnson’s team to customer service and facility upkeep.
The duo teamed to create Urban Coffee Opportunities, and Schultz agreed to open three Starbucks units. If Magic’s team over-delivered, Johnson said, Schultz pledged to open as many as 125 locations.
“I told him we’d be number one,” Johnson said.
To accommodate the minority audience, Johnson traded Starbucks’ traditional scones for sweet potato pie and swapped the café’s customary jazz music for Lionel Richie and Smokey Robinson tunes. Johnson’s stores quickly emerged as a gathering spot for locals, and Schultz held true to his promise of opening 125 units. After a fellow churchgoer told Johnson she couldn’t get a salad in her community, Johnson dove further in the foodservice world, notching a deal with TGI Friday’s to open units of the casual dining chain in urban areas. Though customers flooded his first Friday’s restaurant, Johnson said, wayward food costs challenged the shop’s profitability. Identifying the flaw, Johnson installed a new manager and made a determined push to reconstruct the store’s purchasing habits.
“That was a learning curve for me, and we took off from there,” Johnson said.
Like Game Six of the 1980 NBA Finals—a historic contest in which a rookie Magic filled in at center for the injured Kareem Abdul-Jabbar and led the Lakers to the title—Johnson said operators in today’s restaurant environment must embrace a winning mindset. “The No. 1 thing I wanted to be was the best at what I was doing,” Johnson said, asking attendees, “What are you going to do for your restaurant?” In particular, Johnson stressed the importance of investing in people and the business.
Though blessed with a comfortable financial cushion, Johnson said, he did not extract any money from his businesses, nor change his lifestyle as his entrepreneurial success accelerated. Rather, he turned profits from his earliest restaurants to fund additional units and invested heavily in technological advances that delivered efficiencies and propelled performance.
Johnson also championed the value of leading by example. The NBA legend shared the story of mopping a customer’s spilled coffee at one of his Starbucks locations, a quick act that Johnson said showed his staff the commitment they needed to their tasks and their customers. “I'm not above any job, and they follow my lead,” Johnson said. “You need to make sure you continue to do the work.”
In a brief Q&A session following his 40-minute keynote, Johnson urged a Chicago-based chocolatier to grow within her means. “We all want growth and sustainability, but don’t grow too fast or take on contracts you cannot deliver,” Johnson said. “If you take on too much and you fail to deliver, word will get around.”
By Daniel P. Smith