12 ‘Magic’ Strategies To Go From Basketball Star To Billionaire Businessman

Former National Basketball Association (NBA) player Earvin “Magic” Johnson Jr. is known for his strong work ethic.

When he was a kid growing up in Lansing, Michigan, he would shovel the snow off the basketball court just so he could play basketball every day. “Everybody in the neighborhood thought I was crazy,” Magic said.

But the two-time Hall of Famer, five-time NBA Champion, three-time NBA MVP, Olympic gold medalist, and founder and CEO of Magic Johnson Enterprises wasn’t born with a strong work ethic.

Magic watched his father, Earvin Johnson Sr., work two jobs his whole life to feed his 10 kids. One job was on the assembly line for General Motors, and the second job was picking up trash. Magic and his siblings went along to help pick up people’s trash on the weekends and when they weren’t in school.

“It was a cold Saturday,” Magic recalled. “My job was to break the ice, get the trash out of the ice, then throw it on the truck. It was maybe 7 below in Michigan and just freezing. I went and got half the trash out of the ice and jumped in the cabin of the truck and shut the door. By the time I shut the door, my father had opened the door back up. He grabbed me by the neck and dragged me all the way back to the trash that was still stuck in the ice and said, ‘Son, if you do this job halfway, you’re going to practice basketball halfway. Everything you do in life, you’ll do halfway. You have to do things right.’ At that moment in time, I became a perfectionist, not just in basketball but also in life and in business. I’m so happy my father taught me that lesson early because it’s helped me not just to achieve my goals and dreams in basketball but also my goals and dreams in business, as well.”

Here are 12 strategies Magic used to build his business empire that will help you achieve your goals and dreams in your MSP.

1. Believe And Achieve.

As a young man, Magic didn’t just dream of playing in the NBA; he dreamed about being a businessman. “I didn’t know people of color could own buildings and car dealerships,” Magic said. “There were two gentlemen back in Lansing, Greg Eaton and Joe Ferguson, who were African American and owned businesses. I got a chance to meet them, and they showed me their businesses. So, my dreams changed. Now I was saying, ‘I want to be a basketball player playing in the NBA, but I also want to be a businessman one day.’” They gave Magic his first job, cleaning all seven floors of their building. A big believer of “If you dream it, you can become it,” Magic vividly envisions what he wants. When cleaning the CEO’s office on the seventh floor, Magic would kick his feet up on the CEO’s desk, hit the intercom button, and pretend he was the CEO asking his assistant to bring him donuts, coffee, and the paper. “I was sitting there dreaming I was CEO at 16 years old, and now here I am 60, and I’m the CEO and own my own business. I think those moments helped shape who I am today.”

2. Seek Out Mentorship.

When Magic started in the NBA, there was an unwritten rule that “players just played, and owners owned.” Unfamiliar with this rule, Magic started a conversation with the owner, Dr. Jerry Buss, which led to a lifelong mentorship. “I had never been away from my family my entire life,” Magic said. “Dr. Jerry Buss picked me up, and we instantly hit it off. He knew I was out in Los Angeles by myself, so he used to pick me up every weekend, and we used to sit and just talk and talk.”

When Dr. Buss asked Magic what his dreams were after basketball, Magic told him he wanted to be a businessman. “He didn’t say anything, but a week later, he brought me all these books he wanted me to read,” Magic said. “And then he said, ‘I’m going to help you accomplish your goal. I’m going to open up the Laker books to you to teach you business,’ and he did. I learned so much, and he became my first mentor.”

After five years of mentoring, Magic asked Dr. Buss if he would give him the names and phone numbers of all the season ticket holders. Magic wanted to cold call all the CEOs and presidents that were season ticket holders to invite them to lunch so he could pick their brains. “I wanted to find out how they became successful and what I should look out for,” Magic said. He called all 50 names, and all of them said yes. One of those 50 turned out to be Peter Guber, who was running Sony at the time and later became one of Magic’s business partners.

Many of Magic’s mentors and business partners came out of those lunches and are still his mentors today. “If I were to tell anybody anything, it’s that mentors are very important, especially when you have goals and dreams but don’t know how to get there. They can tell you their journey, and you can grab from that and incorporate it into your own goals and dreams. I have mentors today, and I became a mentor to a lot of people, as well.”

3. Refuse To Lose.

When Magic left basketball and started in business, people thought he had it easy, but he struggled, made mistakes, and even failed. There was a lot of pain and frustration. People wanted his autograph, so they’d take a meeting but didn’t take him seriously. “I could get the meetings,” Magic said. “Magic Johnson got me that part, but Magic Johnson also played a role against me getting deals too … I used my own money in the beginning, but then I wanted growth and sustainability. I wanted to go for bigger deals, and I needed other people’s money to accomplish that, but they all turned me down.”

It took him three years before he was finally able to get a loan. He made wise investments with that money, which took him to a whole other level in business that he is at today. And all those banks that turned him down? They all want to do business with him now, and he is the one turning them down.

“It’s not about name recognition,” Magic said. “It’s not about anything other than you having a solid business strategy. Show them how they’re going to get a return on their investment and also how you’re going to drive ROI.”

4. Play Outside The Lines And Develop A Solid Business Plan.

At the time Magic was trying to get a loan, investing in urban development was not an obvious choice. Magic’s forward-thinking plan and unwavering belief that growth was in urban America is what drove him to keep trying despite being turned down over and over. “I didn’t think; I KNEW my business plan and my business strategy was sound,” Magic said.

Magic illustrated that minorities would spend money with the African American $1.5 trillion spending power and another $1.5 trillion spending power from Latinos. Magic told potential bank investors, “Nobody is going after their disposable income” and “I’ve got a plan that can make you guys a lot of money.” His plan was to build businesses in urban America. He emphasized this was a good plan by also talking about how everyone was going after the money in suburban America, which made it a much more competitive market.

Once he demonstrated to the bank that there was incredible spending power in targeting minorities, that there was much less competition for their money, and how he could get a return on their investment, he got a “yes.” This loan is what kicked off The Magic Johnson Theaters and Starbucks.

5. Get Your Audience To Buy In.

Magic went to the urban communities he wanted to develop first. He talked to the people living there and told them what he wanted to do. He told them about the quality retailers he wanted to bring to their community and that he would hire people of color to work inside those businesses and give them training to do their jobs. He also got buy-in from the business community. “This was thinking outside the box, so I had to have a CEO who had the ability to think outside the box,” Magic explained.

Magic asked Mike Norris, the CEO of Loews Cineplex (later AMC Theatres), to look at the data. “The data shows that if African Americans like a movie, they go see it three times,” Magic said. “They don’t go just one time. And we were the No. 1 group of people at that time going to the movies because we were priced out of professional sports … so we go to one of the most affordable things, which is going to the movies.”

Next, Magic bet him that the concession stand sales would be among the highest-grossing theaters in the country, showing Mike the data to back up his claim. “When I showed him that information, he said, ‘I get it. Let’s start building Magic Johnson Theaters,’” Magic said.

6. Do Your Homework First.

The first Magic Johnson Theater was built in Los Angeles, and as predicted, the concession sales landed it in the top 10 highest grossing theaters in the nation.

Magic knew his audience’s likes and dislikes and catered to them. He removed everything from the concession stands that minorities didn’t like and replaced it with the items they did like, whether it was sodas or candies, and so on. He understood their buying behaviors. For example, he knew that minorities don’t go to dinner and a show — they eat dinner at the show. The number of hot dogs he sold in one night took suburban theaters an entire month to sell. “Understanding your customer, knowing your customer, overdelivering to your customer, brought me back the returns that I was looking for and that Loews Theaters was looking for,” Magic said.

When the first theater came in the top 10 highest-grossing theaters in the nation, it was easy for Magic to get others to buy in and build more theaters after that. (Magic and his partner Ken Lombard sold Magic Johnson Theaters to Loews Cineplex Entertainment in 2004.)

He repeated the same strategies when he started building Starbucks. After replacing scones with desserts minorities enjoyed and playing music that minorities liked, revenue skyrocketed. He built 125 Starbucks before selling his share in the company.

7. Let Your Playing Do The Talking.

Magic Johnson brought Howard Schultz to urban America to get the deal with Starbucks.

Howard showed up on the day that Whitney Houston’s movie “Waiting To Exhale” came out. People were lined up around the block. The lobby was loud, not quiet and reserved. Every show was sold out, and 5,000 women were waiting to see the show. “Twenty minutes into the movie, every woman in there thought they were Whitney Houston personally,” Magic said. “They’re talking to the screen, ‘Girl, why are you still with him?’”

Howard nudged Magic and asked him to step outside and said, “I’ve never had a movie-going experience quite like this. You know what, Earvin, you got the deal. I’ve seen everything I need to see. I see they embrace your business, they support your business, and they spend money in your business, and I can see the same thing happening at Starbucks.”

8. Champions Learn From Failure.

There were business failures too. A TV show called “The Magic Hour” was canceled after only two months due to low ratings. When he opened Magic 32 Retail Chain, he sold nothing for 3–4 months and lost $200,000 because he tried to be the buyer and pick out the merchandise to sell himself. Although he didn’t get the results he was looking for, it inspired him to be successful.

Plus, he learned lessons that he says made him a better CEO. For example, he learned “to stick to what you know and what you can do best,” “to hire the best people,” and that he was “too much of a control freak and trying to make all the decisions.” He also reflected on what went wrong, asking himself, “Why did I fail?” and figured out what he could do better the next time. “I looked myself in the mirror,” Magic said. “Self-evaluation is hard … but I’m going to stay motivated and move that motivation, passion, and love into another area where I will hopefully excel because I didn’t excel at late-night hosting.”

9. Rivals Make You Better.

Magic Johnson and Larry Bird’s heated rivalry is famous and well documented and added fuel to the long-standing feud between the Celtics and the Lakers. “I disliked the Celtics and Larry because you have to in order to beat them,” Magic said. “But your competitor can make you better. I knew Larry Bird was taking 1,000 shots a day, so I had to make 1,000 shots a day. I knew he was working on a new move, so I had to work on a new move. I knew he was going to come back better, so I knew I had to come back better. So, I owe Larry Bird a lot because he made me better. And it’s the same in business. Your competitor can make you better. You’re going to work harder. They’ll keep you up at night sometimes because you wonder what he is going to do next.”

Later, the two became great friends after shooting a Converse TV commercial together at Larry Bird’s house in Indiana. “Larry’s mom made lunch, and he invited me up to the house for lunch,” Magic said. “She brings out all the food, and they aren’t talking, and Larry’s mom says, ‘Did you tell him yet?’ to which Larry says, ‘No, you tell him, Mom.’ And Larry Bird’s mom says, ‘Magic, you are my favorite basketball player.’ That broke the ice, and we found out we had so much in common.”

10. Elevate Your Game.

“It takes the same amount of time to do a million-dollar deal as a billion-dollar deal,” Magic said.

His point is that you must have guidelines on what deal fits within your brand, within your system, and within your company. “I’ve given everybody the guidelines on what I’m looking for in a deal, Magic said. “And if you can check only five of the 10 boxes, then we shouldn’t be doing a deal.”

For Magic, when the brands are aligned, the core values are aligned, and the revenue that they both want is aligned, along with a component to give back, that is an indication that a deal will work out. 

11. Don’t Let Good Enough Be Enough.

Whenever he starts a business or buys one, he does a SWOT analysis right away. (A SWOT Analysis is a framework for identifying your Strengths, Weaknesses, Opportunities, and Threats.) This helps him improve and grow. When he bought a health care business in Florida, he did a SWOT and discovered it had growth potential, but the management team was weak. From this, he knew he needed to move in a new management team to grow the business. He bought the company with 17,000 members for $20 million, grew it to 300,000 members, and sold for $900 million two years later.

Not only does he do a SWOT on his executive team to see if his companies are headed in the right direction, but he also does a SWOT on himself. “I run a personal SWOT on myself because I want to be a better man, a better husband, a better father, a better grandfather, and a better CEO,” Magic said.

As he looks to the post-pandemic future, he says the question he is asking is, “Can this team take me where I want to go tomorrow?” “I’m asking myself that because I want to make sure when we get back to normal, I can get where I want to go,” Magic said.

12. Have An Exit Plan In Mind When You Start.

No matter the business, Magic always builds in an exit strategy from the beginning. “You don’t have to use it,” Magic said. “But it puts you in the position to sell it if you ever want to.”

He reevaluates the business to see if he likes the business well enough to keep it or why he is going to keep it. For example, he has businesses he is keeping for his kids because they are interested in them. It doesn’t take athletic ability or name recognition to hustle. Using these strategies, you can follow in Earvin “Magic” Johnson’s entrepreneurial footsteps and be a true champion in your industry. Remember, don’t do things halfway. Keep your head up, have a positive attitude, and always strive to do better, and you’ll come out ahead