Washington: Flashing his megawatt smile, Earvin "Magic" Johnson recently entered the cavernous exhibit hall in the newly refurbished Washington Hilton hotel to lead a pep rally of sorts.
A majority owner of the luxury hotel, the former all-star for the Los Angeles Lakers, and now a team co-owner, stood before several dozen housekeepers, bellmen and security guards and encouraged them to perform their best to win their customers' repeat business.
"When I played sports, I only wanted to play with the best," Johnson said, sounding like an NBA coach rousing his players to victory. "When I invest money, I only want to invest with the best. Guess what? All these faces — I'm playing with the best.
"If we over-deliver to our customers, we get retention, retention, retention. They will always come back," Johnson said. "They'll say the Washington Hilton is my home away from home."
Johnson has been a cheerleader-in-chief for an array of enterprises that has earned him a $500 million fortune and put him on Forbes' list of the five richest African-Americans.
Right fund
In 1990, Johnson, 50, made his foray into the Washington area business scene when Black Enterprise Publisher Earl Graves recruited him as a partner in the purchase of a $90 million Pepsi-Cola distribution operation in Forestville, Md. (Graves later bought out Johnson and sold the facility.)
Since then, Johnson has built his empire largely by catering to the black community. He has opened multi-screen movie complexes, TGI Friday's locations, Burger Kings and retail outlets in underserved urban communities across the country.
The Washington region has been especially important to Johnson. Besides the Hilton and an upcoming high-rise residential development on that site, he has opened home loan centers, seven Starbucks and the AMC Magic Johnson Capital Center 12 theaters in Largo, Md. He also has a partnership with Gaithersburg, Md.-based Sodexo to co-brand cafeterias it operates at hospital, college and corporate campuses around the country.
Now he's ready to fire up businesspeople of a different sort. Johnson aims to mentor small, minority-owned professional business service firms here and elsewhere, providing them with advice and contracts with Fortune 500 companies. And in a separate effort, he is establishing a fund called TCW CapitalAssist Management that will offer some of those firms financing.
He discussed his ideas while strolling around the hotel, stopping repeatedly to sign autographs and pose for pictures. He talked with and made time for anyone who approached him.
Similarly, he plans to make himself available to the small-business owners, giving them access to his expertise and contacts.
"I've been around the country talking to small-business owners asking them what's missing, and the number-one thing is capital. How can they get capital to go to the next level?" he said.
"Small businesses can't get loans. A lot of people who were playing in that space are not any longer playing in that space of loaning medium-sized to small businesses money.
"So I'm raising a fund right now to give those businesses loans. ... We already have a couple hundred million now committed to us and we're going to raise about $750 million to $1 billion. That's going to be important because now when we help those small businesses, we can also give them money, too."
While basketball was his first love, Johnson said, he started envisioning himself as a businessman during his teen years. He said he admired several black entrepreneurs in his hometown of Lansing, who drove Mercedes-Benzes and other fancy cars.
He snagged a job cleaning their offices. When no one was watching, he said, he'd sit behind their massive desks and fantasize about being like them. "For two-and-a-half hours, I was the CEO, right? I'd hit the intercom button like I had an assistant out front," he said. "I mean, I playacted the whole thing. But I'm a big believer that if you don't dream it, you can't become it. Here I am today. I'm able to say, "I am the CEO'."
A year after going into partnership with Graves on the Pepsi operation, Johnson dropped a bombshell: He announced he was HIV positive. Some players shunned him, and he soon retired from basketball.
Still, the California Public Employees' Retirement System (Calpers) took a chance on him, given his health and his risky idea of bringing name-brand franchises into depressed communities.
The pension fund invested $50 million in the mid-1990s, allowing him to open his first TGI Friday's and Starbucks in a long-neglected shopping centre in the Los Angeles area. When it determined the project was succeeding, Calpers invested $100 million more.
