Earvin “Magic” Johnson aims to win in the face of adversity. At age 15, he was nicknamed “Magic” when he scored his first triple-double to help his high school team beat all odds and win the state championship. Later, he went on to help the Lakers win 5 NBA championships. After retiring from basketball, his resilience and tenacity were further demonstrated with his successful business career that challenged convention and positively impacted underserved communities.
Johnson’s tenacity parallels that of the real estate industry which faced the challenge of a refinance boom and hot residential purchase market in the midst of a global pandemic. At the Future of Real Estate Summit, Johnson shared his life and business lessons with Matt Kaufman, VP of Marketing at Qualia. After nearly a year of social distancing, fast-changing regulations, and overall uncertainty, there’s still much to learn about taking chances and innovating from Johnson who has been driving forward change and embracing uncertainty for decades.
Know your customer in order to effectively innovate
One of Johnson’s early enterprises was Magic Johnson Theaters. He decided from the start to commit to developing businesses in urban areas because he knew these communities well and could provide the products and services they wanted. “[Magic Johnson Theaters] was the top ten highest-grossing theater in the nation,” Johnson said. The success of the theater was largely due to his ability to provide the movie-going experience the community wanted.
In the late 1990s, Johnson pitched Howard Schultz, the CEO of Starbucks, his idea to open Starbucks locations in urban neighborhoods. He knew that the urban community loved the Starbucks brand, but didn’t want to drive several miles for a cup of coffee. Schultz was skeptical; however, he agreed to visit Magic Johnson Theaters to see Johnson’s winning formula for himself. On the day Schultz visited the theater, hundreds of people were wrapped around the building to get tickets for the latest movie release. Schultz was convinced. In 1998, Johnson opened the first-ever Starbucks franchise in the company’s history.
“The first day we opened in LA, the headline was ‘there’s no way minorities will pay three dollars for a cup of coffee.’ But the reality is we will pay for it,” Johnson said. Instead of serving up scones; however, he served up sweet potato pies and other items that the urban consumer wanted. The results were a resounding success. “I’m still outpacing suburban stores with my urban stores,” Johnson said.
Johnson’s vision opened up a whole new and wildly successful market for Starbucks. “If you over-deliver to your customer, you’ll get the retention you’re looking for,” Johnson said. “And all of those people will become your brand ambassadors too.”
Be an active mentee to succeed
Johnson’s success is in large part due to his ability to form connections and seek advice from his peers and mentors. His early business mentor was Jerry Buss, the then-owner of the Lakers. “He opened up the books and taught me the Lakers business,” Johnson said. “What the sponsorships meant to the bottom line, what the radio contract meant to the bottom line… [when I later went into business] I was very prepared because of that mentorship.”
At one point, Johnson asked Buss if he could have the contact information of all of the CEOs and presidents of companies who were Lakers season ticket holders. “I wanted to take them to lunch and pick their brain,” he said. “Six of those people became my mentors and two of them I’m in business with today.”
Johnson stressed that if he hadn’t picked up the phone to do that simple exercise, he wouldn’t be where he is today.
Diversity and inclusion makes your business stronger
In addition to building strong external business partnerships, Johnson also underscored the value of fostering an internal culture that values diversity and inclusion. “You want minorities working at your firm. It makes your company better. You want minorities on your board. It makes your board stronger. You want minority suppliers and vendors because it only makes your business better,” he said.
His advice for leaders is to let employees be themselves. Instead of focusing on creating a homogenous business where everyone dresses a specific way or presents themselves in a certain way, Johnson encouraged leaders to focus on the work their employees are producing. “You want every employee to come happy to work and know that they have the respect of their colleagues. That’s what it’s all about.”
To watch a recording of the fireside chat with Johnson and Kaufman, click below.