One on One with Earvin "Magic" Johnson
Tuesday, November 18, 2008
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SUSIE GHARIB: Legendary basketball star Earvin "Magic" Johnson is captain of a new team, a $700 million business empire. For more than 20 years, he has partnered with major corporations to open upscale franchises in urban and diverse communities. The former LA Lakers star owns more than a hundred Starbucks coffee shops, AMC movie theatres, TGI Fridays and 24-hour fitness centers. Now he's telling the secret of his success in a new book called "32 Ways to Be a Champion in Business." Earlier today I met with Johnson at a Best Buy store, where he has a marketing relationship and asked him what's the key to being a champ in business.
EARVIN "MAGIC" JOHNSON, CHAIRMAN & CEO, MAGIC JOHNSON ENTERPRISES: Your customer service. That's the one thing. Because you can have the best business in the world, but if you don't have great customer service, it's going to fail.
GHARIB: Magic, when you decided to start your businesses, you were already a celebrity, but in your book you say that it was still very hard to partner up with companies and to get financing. What advice would you give to people starting a business that has less star power than you?
JOHNSON: I would say, understand what you're going after, understand the marketplace so that you can now gauge how you're going to be successful, not just a first year, but in three to five years.
GHARIB: You're very open about the mistakes that you've made in business. What's the most important lesson you've learned?
JOHNSON: One of my first ventures were a sports paraphernalia store. Not only was I the owner, I was going to be the buyer, too, so I flew to Atlanta to the super show and I bought a hundred jackets, a thousand hats, jerseys, different things. I got back, put it in the store and nobody bought anything. Because I bought everything I liked and nothing that the customers liked. So from that lesson, from that day on I said, I'm going to always make my business about the customers and what they like and not necessarily what I like.
GHARIB: You say in your book that you used to dream about being the CEO of General Motors, a company where your father worked for his whole career. If you were the CEO of GM today, what would you do to turn around that company?
JOHNSON: America is about now being smaller now. We used to be bigger cars, bigger trucks, the bigger the better. It's not like that any more. And so we must focus in on smaller, more efficient cars that's going to help people save money and put more money back in their pockets. So if I was GM, that's what I would focus in on, making sure we've got beautiful small cars.
GHARIB: Magic, here we are at Best Buy, which depends a lot on consumer spending. How is the recession and the financial crisis impacting all of your businesses?
JOHNSON: The consumer is spending less. We got less foot traffic going in to our Starbucks and some of our retail outlets. And the consumer now is really focused in on need versus want, do they need it or do they want it. And if they don't need it, they're not spending their disposable income, so it has affected by business somewhat.
GHARIB: With Barack Obama going to the White House, do you think that this is going to make it easier for minorities to start their own businesses?
JOHNSON: I would hope so. But, you know, it's going to be tough still at the same time, but I think that at least some doors were opened. Now from the African American side of the business owner, once we get that access, we have to make sure that we have a successful business, because also it can hurt us, too, if one or two fail, then everybody else gets blamed for that. But if one or two make it, then we all benefit from it.
GHARIB: What do you think is the biggest mistake first time business people make?
JOHNSON: The biggest mistake is always probably overstaffing, too many employees, so too much money going out, not enough coming in.
GHARIB: So what's next for you? What's your next business venture?
JOHNSON: I just really want to grow the businesses that I have. My focus in '09 is (INAUDIBLE) Magic, which is my food company, I want to grow that. Magic Workforce, I want to grow that and put people back to work, my staffing company and put minorities to work. So my whole growth strategy in '09 is to just grow the businesses that we have, not focus in on trying to get new business, but grow the existing business that we have already.
GHARIB: Thank you so much. So much fun talking to you today.
JOHNSON: Thank you for having me, too, it was great.
