Inside The Life of Silicon Valley's First Athlete Investor | Magic Johnson

There's only four billionaire people in sports. You have LeBron, you have Jordan, you have Tiger, and then we got Introducing the towering point guard from the Midwest. Number 32, Magic Johnson. How you did it was not just sports, but majority from business.

I don't just want to win in sports, which I have 18 championship rings. I also want to win in business. I'm going to do everything I can to make sure that deal or that partnership wins.

When we bought the Dodgers for 2.2 billion, everybody said we overpaid. Now it's 8 billion. The Commanders is 2 years old now, 6 billion. And now that the new stadium that's going to go even up higher.

We pour so much money into sports, and nobody's ever going to stop watching sports in America. Right now you got companies looking to buy teams. It's always been an asset class, but now people really see the long-term reality.

Most of the rich people before us took the knowledge with them. They didn't share it. This show right here today, we covered everything. There's nobody else on TV that can cover all the things you and I just covered.

Magic. Hey, Chris. Good to see you, man. Good to see you. It's a pleasure. I'm glad you're able to come through today, man.

Well, thank you, man. It's all the great things that you and I have been doing for these years, and now we get a chance to sit down. I think this is important for a lot of people and a lot of different reasons, too. Absolutely.

Look, I think that, you know, like you said, this is a culmination, I think almost 10 years of from investments to conversations to, you know, having you come up to San Francisco talking about venture, expanding the portfolio.

We wanted really just to take the time today because, you know, you are one of the ultimate deal makers, businessmen, entrepreneurs, and that's also the same ecosystem that we have here at A16Z. And I felt like there was no better way to have a conversation that bridged both worlds than to have you come on today. So, I appreciate you.

Again, thank you because you brought me in though. I think a lot of times, somebody has to pull your coattail or somebody has to make sure that you can see deals or you can see opportunities. And I want to thank you for 10 years making sure that I've had a chance to see these great opportunities that I've been have a chance to invest in.

So again, you being in there, being an executive, being a dealmaker yourself and then bringing in so many different artists and athletes who now can say they're businessmen or business women because of you.

Well, it's not I might have played a big part on the investment side in terms of getting people into Silicon Valley and getting them and understanding, you know, the benefits of equity versus endorsements, but you know, you were the one that actually pioneered getting into business itself.

A funny story that I've always thought that actually inspired me and I think that we have one tiein from the very beginning. That's actually one of my first mentors when I first got into Silicon Valley, and that was actually Michael Oitz.

And so I I don't know if you know that, but the firm was actually built off of CA's model and Oitz was on the board of Market Ben's company. And so that's where they originally got the idea for A16Z and having a service-based model.

When I first got the job and started working at the firm, I got a chance to meet Mike and my position was actually it was a code word. It was called mini oit. Ben was like we can't call you mini obit. So we got to figure out a very specific strategy.

The funny story is that he told me he was like look Chris the first sitting down and I came from the entertainment industry as well too and so I needed a gap in order to understand how to think about things and he was like you need to first order of business I need you to have a breakfast, lunch and dinner meeting every single day for a year and then come back to me and let me know what you learned.

I was like this is the craziest idea that I've ever like why are you telling me this? But then after going through that journey and understanding how to build a network and understanding how he thought about things was really important.

He also first talked to you when you were thinking about getting into the game and sitting down having that same conversation. So, I I don't know if you could just just go flashback.

I told Dr. Jerry Bust, the owner of the Lakers, that I wanted to become a businessman. He became my first mentor. But then he told me, "Listen, you need to meet a guy named Michael Owens." The King Deal maker in Los Angeles and in the country, right?

So I said, "Okay." So I reached out to Michael Oitz and I said, "Hey, I would like to take a meeting with you because I want to become a businessman after my playing career is over." And he said, "All right, come on in."

I get there and I think the meeting was around 2 o'clock. I'm early for everything. So I got there about 1 and I'm sitting in the lobby. It's 3:00. It's 4:00. And now finally it's 5. So the assistant come out and get me and I go into his office and he shakes my hand.

The first thing he says, you know, I don't know about representing you. Athletes, they spend more money than they make. I don't know if you're serious. I don't know if you have what it takes to become a businessman. I represent everybody in Hollywood. I got all the producers, the directors, the actors, actresses, the writers. He said, "Nice meeting you." And he threw me out.

You're like, "Whoa, whoa, whoa, whoa, whoa." Like, wait a minute. What? I came here for something done. I had a pen in my pocket.

A couple weeks later, he calls back and he says, "I checked you out. Dr. Bus told me that you were serious. Okay, come back." So, I came back and he had a stack of magazines and he said, "Here, you read these. I'm gonna give you a test. If you pass the test after reading all these magazines, then I'll think about representing you."

So, I went back and read that same day. I read them all. Whenever he called me a couple weeks later, I went back. He did the test. I passed the test and he said, "I see you're serious about becoming a businessman."

He took me all around town meeting everybody. We met for lunch a lot. He loved meeting at his favorite restaurant. He taught me so much not just about business about just the art of deal making and also making sure you have a long and big rolodex.

You might not need the people today but you may need them tomorrow. We go to his favorite restaurant. That's when Morton was the place to be. He had the table the table in the middle. He says, "Watch what happens when I sit down."

He sits down, we sit down and after two minutes, everybody came and kissed the ring. They came over to him. Hey, Michael. As he was talking to him, he would always introduce me to him. Everybody that came over, he would always also make the introduction to me.

About 6 months later I'm meeting all these CEOs of companies through Michael and so then here comes the Pepsi deal. When I became a franchisee of Pepsi, he put Earl Graves and I together and man that took off. Here comes Starbucks, all these things because he was right in the middle of everything.

The last thing he did, he reworked my contract to make me one of the highest paid in the NBA. I said, "Well, how much I owe you?" He said, "I don't want nothing from you." That's who Michael Oates is.

I wouldn't be where I am today without Michael Oitz about everything that he did for me, making me smarter, make me understand business, make me understand deal making. Also, make sure that you go in and you ask questions and you really get the knowledge.

He was big on making sure you had the knowledge, being an expert at not only deal making but also understanding the deal, also understanding the sector, whatever you're getting involved in.

Even on our business there's three different sides. First you have to be able to see the deal and then okay the deal that comes in then after that the next stage is saying okay I actually want to make that investment. But the third stage is actually the most important stage which is winning the deal.

You know in terms of being able to identify those right opportunities and then being able to then you know execute and do a right deal on top of execution. Execution and more execution.

When you look at doing deals and thinking about opportunities, a lot of it really does come down to relationships. How do you think about your network and how that's cultivated into your the relationships and the deals that you have been because often times, in venture, it's a very long-term game.

You're not just thinking about just doing the deal immediately. There's a lot of steps and process that come into it and you have to give first in order to have these things happen. So how has relationships and the EQ of the business really became it seems like that's a superpower for you that allows you to have these opportunities come your way?

You're right because I built a fabulous relationship when you think about with Ron Burkel and you Kyper and we did the equity deal, the private equity deal we had. We bought some amazing companies and but I knew Ron for 10 years before we actually did a deal together.

When you think about customer service, that's what really it taught me everything I needed to know about customer service. Having a great partner and going into Starbucks and really understanding the business side of it and you know, a cup only cost less than 10 cents or 15 cents at that time. And then the sugar, the beans, and then you and it all start to line up.

Your margins were incredible when it came to that. I've been blessed to create not only great partnerships, but also having these people as friends as well. I just carried that on to all the other things. Mark Walters today, Peter Gruber, all these guys who I'm in business with.

Dr. Jerry Bus treated me like I was his son. When I think about our relationship and him opening up the door for all these other people, for me to meet them and them to become my partners. So I really look at it like when you come into business with these people, you have to play your role and do your part as I tell them, what role do you want me to play in this partnership?

I'mma overd deliver to you and to the company and to this partnership. So it's like a team. Instead of me being a point guard and a leader like I'm normally, tell me what you need. Now I'm playing a role player in business with these men and it's okay.

I am happy about that and these partnerships have been huge and lucrative and but I learned so much from each individual. They taught me so much and I was like a sponge. I wanted to get up under them and learn a lot.

One of the things that you can be a sponge of is not just one specific industry but multiple different verticals. So you said from food and beverage to hospitality to now the insurance business and and now you know sports, media, entertainment, there's so many different variables but all kind of having that one consistent vehicle or mindset in terms of service and and really overd delivering is important.

Sometimes people want to be in one industry and I think for me that was never my mindset and then there was nothing sexy about anything that I invested in.

Boring businesses keep that's that's a secret. Everybody wants to find the hottest company and sometimes that might be it might go up and then next thing you know it could be a trend. You're absolutely right. It's more those that fail or like go start up and then go down.

The ones that are boring and people don't know about or care about, those are the ones who are on a consistent making money or going up, you have growth. That's where I want to be.

You've done a great job of teaching these entertainers and athletes long-term investing. It doesn't come immediate. You invest into the fund. They're like, call you back 18 months later. Hey, I need this back. I got to go out this weekend. It doesn't happen like that.

But thank you for that because they've learned a lot from you and the deal making expertise that you have. Thank you for that. I appreciate No, no, it's building your network is building like we talked about your rolodex and then it's going to lunches and breakfastes and dinners that you probably don't want to go to but you should be there and because those were those places are where the dealmakers are.

Those places are where the billionaires are, the multi multi-millionaires are. I learned that early on and so when I got invited I went and then I went early. over said, "Go early because all the richest people Cuz they know about their time, right?" They not trying to hang out. They come early and they want to leave early.

You'll get that quality time with them if you go early. See, that's a gem right there. See, early is to be on time. Absolutely. Not CP time. No.

Even how we it's a lot of the soft skills that really lead into the these real investment opportunities and being in the room and having the right time. When we first met, we met in Silicon Valley when we were doing the Skyo deal. I think it was the series A at the time.

What was that interest in because you were that was almost 10 years ago. What was the interest when you were thinking about expanding your business portfolio to to get into startups and to think about why Silicon Valley was an interesting opportunity to explore when nobody else was really you were literally one of the first people that we that we did a co-investment with that that gave me the idea to realize, oh my goodness, like this is a huge opportunity not just for our portfolio companies to have access to someone like you and your networking and and and the relationships that you have, but also for the portfolio companies to learn from you and you know, I called it like share genius where you have the best of both worlds really just coming together and and and having and you getting a chance to talk to the CEO and and and how that's kind of conspired. But what was your original uh interest in terms of like thinking that this was actually something that that we you should be exploring?

When you go back, I did the movie theaters with Peter Gruber and Mattis Johnson theaters. Howard Schultz and I did Starbucks, 125 stores and 40 different markets. I just told you how he taught me so much about customer service. I was looking for what's what's the next growth opportunity for me and my company, right?

We want to continue to evolve, grow, and think outside the box. I said, "Wow, all the money is going towards Silicon Valley. How do I get into that world?" Then here you come. This little old smart young man see. I just needed that foot in the door and you provided that foot in the door for me and also Ben as well knowing him.

Here comes this opportunity with Scottio and the drones to be able to be a early investor. The product wasn't even it was still in prototype. That really excited me and I think it took me and my company to a whole another level because that brought me into Silicon Valley.

I didn't have that in Silicon Valley. Now I had it everywhere else, a great track record of success, but I didn't have it there. That deal provided me with a track record in Silicon Valley and then opened up the doors for me to see other opportunities that I didn't get a chance to see.

Again I want to thank you thank Ben for the opportunity that I had. You two also my friends. Sometimes it's about timing. Some people forget about that part of it. It's about sometimes it it's just not your time to do that deal or that or have that opportunity.

It just lined up perfect with the right people being you being Ben and the timing was right when Scottio was just coming out with their product and so and it was a consumer product at the time. Then you know with you just now making a couple of the investments into the sports teams and seeing how an autonomous drone could potentially be the future for sports and in entertainment and and then when we're outside the Four Seasons.

To that point you just made, who would ever thought now they use drones for everything. I mean, so we were way ahead of the curve. That's what we do. That That's what people don't understand. We were way ahead of the curve. And now you think about every sports league, every fire department, every police department, on and on and on.

Defense contracts are now going very crazy off of it. They all use it around the world.

For us, one of our investment strategies is a simple one, but it's a tough one, which is like good ideas that look like bad ideas. Sometimes you have to think outside the box and see around the corner when you're making these investments and often times a good idea looks like a good idea. That means everybody can really do it.

Kind of intersection where there's like Adam for example like he grew up just you know doing RC racing and and he eated and breathed this and used to work at at Tesla and so knew the the opportunity around autonomy and and really kind of creating that opportunity and so you know that's what we look for when we're looking at founders like what what do you see cuz now Now we opened up the box. Everybody's, you know, hitting you and your team trying to get you to invest into the next series A, the next series B. Like when what do you look for in founders or or or the next entrepreneur that's trying to have you become their an investor?

First of all, you're right. It's is it something that is not in the marketplace? Can we really look at this 10 years from now that it's going to still be here? It's going to still it has growth potential hopefully year year in and year out.

Do we have a chance to exit or sell down the line. And then the partners, I want them to make sure that these founders and these great people, they have skin in the game. They also are great and they're experts at what they do.

We then also look at it. Can we bring added value, being Magic Johnson, all the things that we have in our toolbox, can we can we bring added value to the deal or to that founder and make that company grow or take off and fly?

One of the things that I always tell founders because they always, you know, whenever we might either get you into a co-investment or present the opportunity and they have the opportunity to to sit in front of you and your team, initially they always think, okay, well, we need to get magic and have him be the face of this or tweet this and you know, and I think that people are now finally starting to understand that, you know, the the the iceberg, tip of the iceberg is magic and Irvin the the the the face, but the enterprise and the networks and the and the introductions that you can make to whether it's the sports teams, whether it's to, you know, the insurance companies, whether it's, you know, strategic businesses. Now, I think that people are really starting to understand the true value of talent and when they're thinking about having somebody on their cap tables.

We see we're in we're politically strong. We're we're CEO strong and we our rolodex is huge and long and powerful and so we know how to grow businesses. We've been doing it for a long I've been in business over 30 30 years and I tell them all the time utilize us utilize our network our expertise.

Once they get into partnership with us, then they say, "Oh, you didn't know." Like, "What you what did you think?" It's called Maggie Johnson Enterprise. That's what we talk about when we say the added value.

You want my check, but also too, you should want everything else that we bring to the table because I'm used to winning. I'm used to winning. I mean, you just you just got another another little chip check. I still got a little got a little little championship on my shoulder, bro.

To that point, I don't just want to win in sports, which I have 18 championship rings. I also want to win in business. So I have a mindset of winning. I'mma do everything I can to make sure that deal or that partnership wins.

That's why you'll get my whole team and everything that we have to to hopefully support what you're doing. The next generation of talent, the next generation of whether it's athletes, entertainers that are interested in business, that are looking to invest into Silicon Valley, they often like what how should they think about structuring a team in in today's time?

You just said it. What they fail to realize is structuring a team. Just what you just said because that's so important. You're great at what you do. Basketball player, football player, singing, being an entertainer, but you're not great at business.

You have to get a team that is great at business that you control that is a part of your entire enterprise that can help you achieve your goals in business. Michael always pointed that out to me. Get people who are smarter than yourself. Get the right people and always pay them and then let them do their thing. He was absolutely right.

I'm telling all of them out there, you got to get a team of people who can help you. While you're on the stage singing, they're conducting business somewhere. They're making deals for you. Remember, these are not people you going to hang out with. Then nor do you need them in there.

If they're in the club, then who's signing that check? They spending your check. So, to your that point, I've always looked for for when we're in the infrastructure, okay, let's get some experts in infrastructure, on and on and on. So, that's what you got to do. So, I would tell them that that's be the first thing I tell them.

Make sure you get a great team around you. Also, those can tell you no. See, they're not used to somebody telling them no. They don't even know that that that words don't even that's not even the vocabulary. They'd be like, "No, no, no, no, you can't do that." Or, "No, you can't write that check." Or, "Your friends are bringing you deals that make no sense."

That's you know, and so, that's important as well. When you think about deals, especially when it comes to venture capital, no one bats a thousand. We have that it's called the Babe Ruth effect where I have the highest number of strikeouts, but you also have the highest number of home runs, right?

You got to swing for the fences for every deal, but there's some deals that that you might miss. Within any venture capital firm, you you've missed a deal and and that's just the nature of the beast in the industry. Do you have one in in your that you can remember where you like either looked at the opportunity wrong or you missed the deal or like that that one just either got away like you know just just cuz you got 30 30 32 years plus in the business you know if you were striking a thousand then then you know I'm just curious kind of if you can and what did you learn from that?

There's always deals that you know you wish that you had wrote the check and you didn't or deals that you know you heard about too late between the Ubers and all the deals like that that you say, "Wow, you know, you had an opportunity but you just didn't pull the plug. I mean, you didn't pull the the the string to write the check, right?"

Then you have a deal like Nike when I was young and they wanted to sign me but give me stock. Why did I meet you? Why did I meet you about 40 something years ago? Hey, well, you got to call my mom and call my and I would have loved to negotiate that with Phil Knight said, "I don't have the money they have, but I got stock."

They just ran the analytics. If I had a deal did that deal in 1979, it'd be over a billion dollars. So that's the one that you talking about one that got away, man. I'm sure that's the one. Michael owes you aund billion papers.

There's deals that you always will think back and say, "Man, I wish I had did that deal." At the same time, I'm not a guy who goes backwards a lot. I move forward. I'm always constantly moving forward. What I have is what I'm supposed to have.

The great thing is being 66 now, I'm not the same young guy I was then. So I can see deals different today and better. I have a team of people who vet those situations where I didn't before. So things have improved. I've gotten better. What you don't have, you don't have. But you learn. You learn. And you won't make that mistake again.

One of the things that I mean but you learned this extremely quickly was the the power of equity versus just you know writing a check and getting endorsements. Have you seen that continue to to change in terms of just more people outside of the industry that are now starting to look at equity based deals versus, you know, instead of just trying to get traditional endorsements?

I think you're seeing it now across the board and you're seeing it. Look at it from actors. All these actors now are doing equity deals instead of taking the money, right? You see that creating their own brands. Creating their own brand and making a lot of money.

You see the same thing happening with the athletes and just everyday people too. It's changed a lot where before you you you were brought up and you were coming up and you supposed to say get the most money, get the check, get the check. Things have changed now.

There's a lot of people who were able to help people understand that's not the way to go and so now you're seeing some of the most high pro high-profile people, celebrities now owning, like you said, their own brands, their own companies.

We see it on our end when people are wanting are are wanting to invest into the next big companies and understanding now that, you know, it's not, hey, I'd love to work with you. You should write me a check. It's like, I'd love to work with you. here's, you know, some some money so I could get on the captain. And I think that's what's really changed.

Before athletes said, "No, I'm not gonna write no check." You know, I know give give me give me give me and you were like and they, you know, they was like, "No, but also the founder doesn't happen like that. That it's two totally different worlds. We're in Silicon Valley. People, you know, they don't we it's a series C or a series A company. They don't even have a marketing budget like that."

It's like, well, we do have stock, right? You know, and then wonder how that could play out over. Everybody changed, right? So, so let's try to make it happen. But hey celebrity, hey athlete, hey, you got to be driven by the equity now. And sometimes the equity and you got to write a check to be a part of that as well.

They're willing now. They're more educated, I think, today, but because of people like yourself who are their age and can help them understand and teach them how the game is played today versus yesterday when I came around.

One of the reasons and you kind of talked about it when around creating that halo effect is that we can when we make these investments now and I think that you know before used to just be on one or you know Wall Street Journal or Techrunch. Now when someone makes an investment or the new companies are being built in in Silicon Valley, they go across mainstream media from Complex to Essence Magazine to you know all on social media like Boardroom you know there there's whole entities now that are being created that are really expressing the business of of investing and I think that it's and now people are it's in their conscious mind and they're thinking about the next generation of those companies.

That's what's so cool about 2025 now. I look at Steph Curry, you look at LeBron, the companies that they have built off the court, Snoop, Dr. Dre, on and on and on. Kevin Durant. I mean, these guys are just doing they owning teams now while they still playing. Crazy, crazy.

It's just it's just beautiful. You see Tom Brady and the on and on and on, the Manning brothers. So, you see all these former athletes and current athletes and again there's so many others who are just taking advantage of their brand and star power, but turning it into a successful company.

You were the literally the first one. You said people were saying why are you even interested in business and now you fast forward 25 years like that the cool thing to do is have you know a company that that you can actually go and invest into and you can build your own brands. I think that with even like when we think about the world of crypto and AI you can we one of our thesis is that at one point one person will be able to build a billion dollar business with the tools that are that are available right now you know being able to use prompt engineering to to actually create a business plan or think about different strategies and all those things.

Where do you see kind of the evolution of with these next generation of product of of of technologies coming? I mean everyone talks about what's going on with AI. I mean we're very big believers in the future of blockchain technologies. How are you seeing those worlds kind of develop and what you have going on and what what if you have a specific thesis?

Technology it just keeps going and growing. I mean, man, you and I way back investing in technology and still investing today in technology. Like you said, AI now is it's is it's is it's going to blow people's mind. It's already blowing our mind where where we are today with it, but it's only going to get better.

I think everybody's now have have changed and said okay I'm moving money from over here exactly invested in this to invest in AI and I I I say to everybody and you got to get in early.

So to a lot of today's young successful people, look who else is investing when you look when you look at a deal and that's going to tell you everything you need to know, right? I mean, I can't tell you the amount of times someone's reached out to me, been like, "Oh, hey, you should I do this? Should I?" And I'm like, "Well, who's leading the deal?" And then they're like, "They don't have a lead yet." And I'm like, "Well, then you're the lead. Duh. And they're like, "Oh, that's a good point." And you don't want to be that.

For me, I always look at who is the lead, also who else is in investing, and then I'd say, "Okay, they got a track record of success. They've already vetted this this deal frontwards and backwards. If they wrote a check, I'm writing my check. 100%."

Also, the industry is super important and I think you know you you've recently had an opportunity to to join the cap table on alchemy health and also with function health which actually just announced their series B today. You're developing an amazing portfolio in the intersections of AI bio and and and where the future of innovation is going from there. How how do you think about that in terms of just that specific sectors especially with and now people are the next big companies are all coming and saying okay well I see magic has invested in these businesses like I I think that this is the next big one yeah cuz you take alchemy and buildingarmacies and places that they don't havearmacies and we were just at a conference in DC and we made multiple deals just in DC they opening.

So, you know, um and they're doing amazing. They're doing an amazing job. Heavy demand fories. A lot of them are all the big boys are closing a lot of theirarmacies and drugstores and now but they're still in need especially in in specific areas that don't aren't in the mainstream e. Well, that's that's the key. Right. Rural America. Right. The inner cities.

There's plenty of opportunities for Alcoy to take advantage and they are. These cities are courting them. They need it. That's how I look at it. If the sector, if there's demand and heavy demand, just like you look at AI, it's heavy demand for it across every industry, it's going to help everybody, right?

Lower your your your your cost. You're going to be more efficient. You're going to be faster. You got you literally have the world's information just right there on your fingertips, ready to help, you know, build you the next product. Code the next company faster, quicker