Even for superstar basketball players, getting started in the business world isn’t easy.
“I had to take my ego out of it and say to myself, ‘I don’t know business,’” recalls Earvin “Magic” Johnson. “I met different CEOs and people like [Johnson partner] Bobby [Turner] who talked to me about how to get started.”
For years, Johnson had wowed basketball fans—first at Michigan State and later
But, as Johnson remembers, it wasn’t easy. Early on, Johnson learned the importance of the joint venture. “The smartest move I made was to get into partnerships with people,” he says. “I have an expertise and they have an expertise.”
Johnson teamed up with companies like Starbucks and Loews Cinemas, working to establish the chains—co-branded with Johnson’s name—in cities throughout the US.
“Magic recognized this early on and captured the opportunity by providing a movie theater, by providing a coffeehouse,” says Turner. “He recognized that the urban consumer was no different from the suburban consumer, except that they didn’t have the options available.”
In 2001, the Canyon Johnson Urban Fund raised $300 million (€234 million) to pursue its strategy of urban investing in the US. The firm has since raised more than $600 million for a second vehicle, having invested in high-profile projects in Los Angeles, Miami, New York, Chicago and Baltimore.
Johnson and Turner point out that the fund pursues what they call a “double bottom line,” both making money for LPs and providing underserved neighborhoods with the sort of retail options and quality housing found in more affluent suburban neighborhoods.
“They don’t want less anymore,” Johnson says of people living in urban neighborhoods. “The problem had been people coming in and [offering] less. You can’t do that. We set the standard.”
The complete interview with Magic Johnson is available in the October issue of Private Equity Real Estate. To subscribe, click here.