How Magic Johnson Built a Billion-Dollar Portfolio in 30 Years

29:39Hey, well, you got to call my mom and call my dad. I would have loved to negotiate that one Exactly Phil Knight said I don't have the money they have But I got stock Wow And 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? Oh man That's the one Michael owes you a hundred A billion favors Exactly Oh man So, again, you know, there's deals that you always will think back and say, man, I wish I had did that deal. But at the same time, I'm not a guy who goes backwards a lot. I move forward. I'm always constantly moving forward.

30:29What I have is what I'm supposed to have. Yep, yep, yep. And so I'm not. 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. And I have a team of people who vet those situations where I didn't before. So things have improved. I've gotten better. And so, again, what you don't have, you don't have. Yeah, but you learn. You learn, and you won't make that mistake again. That's right, that's right. I think one of the things that, I mean, but you learned this extremely quickly was the power of equity versus just, you know, writing a check and getting endorsements.

31:10And so have you seen that continue 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, well, look at it from actors. Yeah. You know, all these actors now are doing equity deals instead of taking their money. Creating their own brand. That's right. Creating their own brand and making a lot of money. And then you see the same thing happening with the athletes and just everyday people, too. Yeah.

31:54And so, yeah, it's changed a lot. Well, before, you were brought up and you were coming up and you're supposed to say, get the most money. Get the check. Get the check. And, well, things have changed now. And I think there's a lot of people who were able to help people understand that's not the way to go. Yeah. And so now you're seeing some of the most high-profile people, celebrities now, owning, like you said, their own brands, their own companies. I mean, we see it on our end when people 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.

32:42You should write me a check. It's like, I'd love to work with you. Here's, you know, some money so I can get on the cap. That's right. And I think that's what's really changed. Yeah. Before, after, he said, no, I'm not going to write no check, you know. I know. Give me, give me, give me. Yeah. And you were like, and they, you know, they was like. No. But also the founders. Doesn't happen like that. It's two totally different worlds. We're in Silicon Valley. People, you know, they don't, it's a Series C or a Series A company. They don't even have a marketing budget like that. So, but it's like, well, we do have stock.

33:15Right. You know, and then wonder how that could play out. That's right. No, everybody changed, right? 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. Absolutely. But 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. Yeah. Right. And I think one of the reasons, and you kind of talked about it around creating that halo effect, is that we can, when we make these investments now, and I think that, you know, before it used to just be on Wall Street Journal or TechCrunch.

34:09Now, when someone makes an investment or the new companies are being built 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's whole entities now that are being created that are really expressing the business 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. Yeah, and that's what's so cool about 2025. Yeah. Right? And so I look at Steph Curry. You look at LeBron. The companies that they have built off the court.

34:54Mm-hmm, mm-hmm, right. A Snoop, Dr. Dre, on and on and on. Kevin Durant. Yeah. I mean, these guys are just doing, they're owning teams now. Why are they still playing? Crazy. Crazy. So it's just beautiful. And you see Tom Brady and on and on and on, you know, 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. Absolutely. Yeah. Yeah. And I mean, you were literally the first one. I mean, like you said, is that, you know, people were saying, why are you even interested in business?

35:45And now you fast forward 25 years, like that the cool thing to do is have, you know, a company that you can actually go and invest into and you can build your own brands. And I think that with, you know, even like when we think about the world of crypto and AI, you know, one of our theses is that at one point, one person will be able to build a billion dollar business with the tools that are available right now. You know, being able to use prompt engineering to actually create a business plan or think about different strategies and all those things. And so I'm curious, where do you see kind of the evolution of what these next generation of technologies coming?

36:28I mean, everyone talks about what's going on with AI. I mean, we're very big believers in the future of blockchain technologies. Like, how are you seeing those worlds kind of develop and what you have going on? If you have a specific thesis. Well, technology, it just keeps going and growing. I mean, man, you and I way back investing in technology and still investing today in technology. And like you said, AI now is going to blow people's mind. It's already blowing our mind where we are today with it, but it's only going to get better. Yep, yep, yep. So I think everybody now have changed and said, okay, I'm moving money from over here, investing in this, to invest in AI.

37:18And I say to everybody, you got to get in early. So to a lot of today's young, successful people, look who else is investing 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 time someone's reached out to me, been like, oh, hey, should I do this? 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. You know, and so for me, I always look at who is the lead, also who else is investing.

38:08And then I'd say, okay, they got a track record of success. They've already vetted this deal frontwards and backwards. Yep. And if they wrote a check, I'm writing my check. 100%. Also, the industry is super important. And I think, you know, you've recently had an opportunity to join the cap table on alchemy health and also with function health. That's right. Which actually just announced their series B today. You know, you're developing an amazing portfolio in the intersections of AI, bio, and where the future of innovation is going from there. 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.

38:57Like, I think that this is the next big one. Yeah, because you take Alchemy and building pharmacies in places that they don't have pharmacies. And we were just at a conference in D.C. and we made multiple deals just in D.C. They told me. Yeah, yeah. They said thank you. Yeah, yeah, yeah, yeah. So, you know. And they're doing amazing. They're doing an amazing job and heavy demand for pharmacies. A lot of them are, all the big boys are closing a lot of their pharmacies and drugstores. And now. But they're still in need. That's right. Especially in specific areas that aren't in the mainstream ecosystem.

39:41Well, that's the key. Yeah. Right? Yeah. Rural America. Yep. Right, the inner cities. Yep. There's plenty of opportunities for Alkabee to take advantage, and they are. Yeah, yeah, yeah. And these cities are courting them, right? They need it. 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, there's heavy demand for it across every industry. It's going to help everybody, right? Lower your cost. You're going to be more efficient. You're going to be faster. Yep. Yep. And you literally have the world's information just right there on your fingertips.

40:21That's right. Ready to help, you know, build you the next product. Exactly. Code the next company. Faster, quicker. Yep. Less money. Yep. That sounds like a win to me. And you make more money. Exactly. So, again, you know, I want to make sure, you know, companies are on the cutting edge and are doing things we've never seen before. Or there's a huge demand, like Alchemy, there's a huge demand. And man, it's almost you can't miss. Well, you see, I mean, the funny thing is, is that you've seen it before. You think about the theaters, you think about Starbucks, all the things that we did, there was heavy demand for it in the inner cities.

41:06Exactly. But nobody was going in there building them. So it was supply and demand, right? So we met that, and man, everything just hit a home run. And then we just kept that business thesis going. And then here companies came in and said, oh, wow, that's a huge marketplace. Minorities do have a lot of spending power, right? And right now we're over a trillion, about$1.4 trillion spending power between African Americans and Latinos. those is a couple trillion. A hundred percent. Exactly. And so nobody was going after their disposable income. So that's why I built my business in those communities.

41:51And to your point. So I will continue to look there, but because now my company is more global and we're doing bigger, bigger deals. So that's sometimes a problem that you and I have our friends and people that we know who are great people, who are celebrities. You know, they bring you deals, and they're too small. They don't understand. I've outgrown those deals, you know. What did you say? You said, like, the same amount of time I'm going to work. That's right. Work on this small. That's right. For a small deal, I could be working on a big deal. Yep. And we got to put our efforts in those big deals.

42:32But there's nothing wrong. And so everybody has to start somewhere, and they have to understand that. But don't think that you have to start where I am or where LeBron is or Steph or whoever it is. It's okay to start small and grow your business and grow your company. But for me, you can't get mad at me because I say, hey, my deal's got to be here. Yeah. Because, again, that's where my company, my brand is. And that's the calls that I'm getting today. Yep, yep. where yesterday I was getting the other calls, but not today. All these big deals, they call me and say, hey, we want you to be a part of it.

43:12That's how I got into the sports team. Exactly. I remember when I went to your annual conference down in Laguna, you had your whole team around, and you were just pointing out, look at my portfolio. This is the portfolio. This is the value. Billions. That's right. And so you emphasized, like, we're going to keep growing this. We're going to need exponential value. And so you're going to have to, you know, swing for the fences and think bigger continuously. Yeah, because, Chris, we look, let's just break down. When we bought the Dodgers,$2.2 billion, where everybody said that was, we overpaid, right?

43:52And today, this is not from me. This is from Forbes and all the companies. Now it's$8 billion. Yep, yep. Right, right. And so, so. Billion. Dr. Buzz bought the Lakers for$65 million. They just sold for$10 billion. Lake show, baby. The Commanders, just two years old now. Going great, yeah. Six billion. Now they just said we're closer to eight billion. And now that the new stadium, that's going to go even up higher that we're building today. So sports, I know we always talk about it. Why do I invest? Well, it's easy because the valuations are so high and nobody's ever going to stop watching sports in America.

44:45That's where we get away. Exactly. That's our release. Exactly. That's our getaway from our everyday work life is to watch sports. And that's why it's always going to be these teams, the valuations of these teams will continue to skyrocket because of that. The sparks? Yeah. I mean, you did that deal super early before people, the WNBA wave even really took off. And we were losing money. Exactly. So why'd you decide to hold on that? Well, because, first of all, we thought that someday it would change. And we wasn't losing a lot of money, but we were losing money. But stuff that we could, okay. Yeah, yeah, yeah.

45:26It's okay. We're comfortable with the loss. Yep. and we didn't know it was going to turn around like this. Yeah. No, exactly. From now, the team is worth like$300 million and growing, right? Crazy. But we only paid a few million for the team. Yeah. And now it's where it is. But give a lot of the players a lot of credit. Give college basketball, women's college basketball, took off. Yep. And then that fan base came in to the WNBA and started watching that as well. So, no, we're still blown away about the growth of the WNBA and where it's going. Soccer in America, same thing. LAFC, we're valuation over a billion dollars, I think, with one, two.

46:22Man, it just keeps growing. and the NWSL, the Women's Soccer League, same thing. It's just skyrocketing. Now they all have great TV contracts. The WNB, that's the reason why. They have great TV contracts. 100%. And so it's just amazing. So that's why I invested in sports teams. And they're growing more. That's right. Growing and growing and growing. And then streaming came in. All those companies really allowed these leagues to grow because they all want sports content. So much, even like what happened with YouTube a couple weeks ago, YouTube TV, when they shut off ESPN for a couple weeks and Disney, and everybody was like, no, hold on a second.

47:06We got to get this deal right. Yes, yes, yes. Because that's how important it is. That's right. And young people get everything on their phones. Oh, yeah. You know how many times you'll be eating dinner, and then you just go out to eat, and you got the game on? They told me, a lot of people told me, they were watching the World Series when my Dodgers won back-to-back, and they said they'd be out to dinner. Absolutely. They wasn't listening to their wives or girlfriends. They were like, wait a minute. And one guy told me they were at a wedding. Yep. And said all the guys sort of went outside. Right.

47:45Y 'all good? Y 'all good? And we going outside and watching the game on our cell phones. Oh, man. But that's how they consume their content is on their phone. Well, even when you were talking about sports when we were upstairs, you said one of the secrets to why these teams are growing and obviously with the success of the Dodgers when you purchased them and the Sparks and, you know, continuing. And now, you know, with the Commanders and so many other teams is that you have to not be afraid to spend money. You got to spend money in order to make money. That's right. So break that down because, I mean, even from our portfolio companies and founders thinking about, you know, always just conserving the cash versus going out and really putting the money to work.

48:30Yeah, Chris, that's a great point. When we bought the Dodgers, we put a couple hundred million into the fan experience, into the stadium. We had to increase the fan experience. What is every league and every team talking about today? Yeah. how they'll increase the fan experience because then the money will come back to the owners. Right. And so because of that, now the Dodgers is just, we're making money that no major league baseball team has ever made revenues. It's been crazy. Yeah. Unbelievable. So it came back to us. And so I can tell you so many different situations that you have to invest in the team, in the stadium, because it will come back.

49:17And the players. Because that's the number one thing. You have to put a great product out on the field. Yep. That's where we're growing the commanders. That's the next step for us. How do we get better? Mm-hmm. You know, and so we're going to do that. We finally got our quarterback in Jaden Daniels, but we have to surround him with more weapons. We have to get better on the defensive end. So we're taking steps. But every team got to put money into the player development, players itself, and then last but not least, making sure that the fans are happy because you're asking them every year. To come back?

49:59Yeah, come back and ticket prices go up. Absolutely. Yeah, yeah. Yesterday's price was not today's price. Exactly, exactly. And so they're going to say to us, okay, if we're going to pay more money for our season tickets, and what are you going to do as the owners? Yep. And as an owner, I mean, it really boils down to, you know, it's not just the team itself. Like you're working with operations. You're working with so many different puzzles. And obviously when you were playing, you were the captain of the team. For the founders that are thinking about building and scaling their teams, like what is it that you think that they should keep in mind or what would be, you know, what's your methodology of thinking when it comes to keeping a team together as you're going towards these goals?

50:47Yeah, I think first, you know, making sure that you do invest in player development analytics. Yep, yep. When I play no analytics, today you got to have a whole staff. Yep. Because that's how you went in today, right? Right-hand pitcher versus left-hand pitcher. That's right. This percentage. That's right. In basketball, this guy shoots from the right side on threes and he makes them more than he does on the left side or force them left because he doesn't score well. I mean, on and on and on. So I've never seen analytics come into every sports now. NFL, football, basketball, baseball. Baseball actually started analytics really in sports.

51:41So invest in analytics and then marketing because you got to have a great marketing team to help you go out and tell your story and what you're about. That's right. Your way, what you're about. And so between that marketing PR team, you got to have a great one. And then I would tell them identity. See people Going to latch on To your identity What is your identity Why do I even Need to even be with you That's right Right What is your identity Who are you Players Also going to ask you that What's the identity Of the commander Of the Lakers Of the so on and so Yep And so And then Do you want to win Because a lot of Players And a lot of fans Going to be saying Hey Mr.

52:35Owner Do you really want to win Exactly You know Ben says you're either playing not to lose or you're playing to win. It's either one or the two. It's either one or the other. And he's right. Yeah. And every group I'm with, you know, they're playing to win. And that's why, you know, every team I have but the Sparks, and this year now the Commanders won't be in the playoff, but every team was in the playoff. Absolutely. And so we're playing to win. Yeah. And so the fans see that. Free agents see that. Yep. Yep, yep. Because they're like, hold on a second. I'm tired of going to Cabo. Exactly. And I want to be in the playoff.

53:20Why did old Tani leave the Angels to come to the Dodgers? Yep. He had never been in the playoff, and he wanted to be in the playoff. That's why he signed with the Dodgers, and he's back-to-back World Series champion. That was one of the best World Series. I was on the East Coast, man. You guys had me up until 3 o 'clock in the morning watching that game. That 18-inning game. Crazy. But I'm locked in. Yeah. And everybody says the same thing. I couldn't believe it. That series changed baseball in the MLB for the better. And I think that we brought in fans that normally didn't watch baseball. Absolutely.

54:02And so, again, that's what can happen sometimes. When superstars play like superstars, Ohtani performed well. Guerrero from their side performed well and on and on and on. They all played like superstars. That's what made it so entertaining. And the highs and the lows, that's what sports give you, right? One minute you're up 3-0, the next minute they tie you and they take the lead. Exactly. I mean, that series was going back and forth, so it's a beautiful thing. That's why, again, we love sports. And we pour so much money into sports. Right now, you got companies looking for opportunities in sports, individuals who didn't think about investing in sports.

54:47Now they're looking to buy teams. It's always been an asset class, but now people really see the long-term real value. And can I add to this? the WNBA got so many people willing to invest in own teams and bring them into markets they're not in. Exactly. The NWSL got so many more people wanted by a soccer team today that wouldn't have been interested in one two, three years ago. Exactly. I mean, I think Atlanta just got added recently. That's right. And because they know that behind everything there's real business that's associated with it. And a lot of revenue streams. Absolutely. Absolutely.

55:26And I think a lot of even our companies, when we're thinking about even like the next generation of AI video, right, and being able to be able to work with these companies and find unique ways to bridge technology and innovation. Because if you're building a business from the ground up in 2025, you're starting a brand new company, you're not going to do things the old way. Oh, you can't. And you think about with the tools that are available now, like that means just by default, you can say instead of us having a, you know, 100-person team or we can actually do this with 10 people. And now we can still operate at 10x a speed.

56:05That's right. Because of where, you know, whether it's the, you know, from AI to using blockchain and all these different resources is really helping push innovation forward on the business side. Mm-hmm. And that's in everything. Just think about my journey. You couldn't pay an athlete in high school, college, and now NIL. Now high school players are getting paid a couple hundred thousand. College players are getting paid millions of dollars, which I'm so happy. Because when I came to Michigan State and I was dating my girlfriend, who is now my wife, Cookie, I didn't have no money to take her to get something to eat.

56:47Right. And they couldn't pay me because that was illegal. But today, these young men and women, these college athletes, these high school athletes, student athletes, I should say, are getting paid a lot of money. So name and likeness is so amazing. And now you got companies. Yeah, yeah, building products specifically for that. That's right, that's right. So things have really changed. And this show right here today, this has been the best show because we've covered everything. There's nobody else on TV that can cover all the things you and I just covered. That's amazing. Well, I think one of the main reasons is because we both are passionate about this and we're both actually in it.

57:33That's right. Every single day. That's right. Like, we're not, you know, just on the outside reporting in. Right after this, you going back to your business call, I'm running back to go to the next meeting, and we're going to keep it going. And our phone going to be ringing because everybody going to say, how can I get down with you guys? Hey, well, listen, you got to start getting 10 years in the game in order to help make it happen. Yes, yes, exactly. But I think that, like, you know, your journey, and this is why we just wanted to make sure you were the first one that we shared this with because you did it, like you said, we talk about the NIL deals.

58:07You talk about all those things. Like, you know, the contracts were way different back then when you did it. And you see, you know, I think there's only four billionaire people in sports. I mean, you have LeBron, you have Jordan, you have Tiger. And then we got Mr. Magic in the building, you know, and Irving. But how you did it was not just on the sports, but all majority from business. That's right. And a number of deals that led you into going, taking one thing, taking your investment in Starbucks, flipping it into Dodgers, just continuing to build. And so I think that, you know, as much as we love you as the Hall of Fame athlete, you're a Hall of Fame entrepreneur.

58:53Thank you. Thank you, Chris. Are you a risk taker? Absolutely. You see, and I think a lot of times that's what they have to ask themselves. Are you willing to take the risk from the money that I did make from Howard Schultz and Starbucks? And again, thank you, Howard, because he made me legitimate. Yep. That Starbucks deal sealed the deal for me. But I was a risk taker. I put up my money. Yeah, exactly. I put up a lot of money. You got to pay to play. That's right. And Dr. Bush said, I love you. He said, I love you as a son, but you got to write a check. That's all I'm saying. Ain't nothing free.

59:32I said, yes, sir. And so. But that's real. Yeah, that's real. And think about this. And all these athletes and entertainers out there that we're talking to, and of course, other people. I was in a position. See, I saved my money. Mm-hmm. Mm-hmm. So every deal that came that I had to write a check, I was ready to do that. So that's what's important. Interesting. That's a gem right there. That's what's important. And so while you're blowing it on so many other things, remember when that deal comes and you have to put equities, you have to put skin in the game. You got to be ready for that. Stay ready soon.

1:00:10Got to get ready. That's right. That's right. So I wanted to throw that nugget out there. And that's so, so important. And man, my journey, you know, the best compliments I get is from all the current guys, the current hip hoppers, Rick Ross, all them comment. They all say, man, we couldn't do what we're doing today. Yeah. But we can do it because of you. Absolutely. You showed us the way. And I said, man, that's a great compliment. I remember a comment pulled me aside. He said, man, we don't respect a lot of people. But every time I get into any concert, we talk about money, we talk about owning something, they all say you.

1:00:50Absolutely. They point to you. And I say, well, thank you. And I'm just so happy that Michael and I can say, hey, now look at KD, look at Steph, look at LeBron. It's more than them. There's so many other, Draymond, Equidala. I mean, I can keep going. There's so many great businessmen out there and women because the WNBA, those young ladies are doing great things. 100%. And so I want to also shout them out. And it's been a blessing, man, to sit here with you so that we can educate and also help others who want to get into investing or Silicon Valley, owning their own company. It's not easy, but it's doable if you put the time in.

1:01:41You got to be willing to put the time in. Yeah, 100%. Because like you said, after this, you and I running, and I'm going to be on the phone in that car. Exactly. All the way back to the office doing deals. You and I was separately on phone doing deals before. You ready? You ready? Exactly. And that's what it takes. And then last but not least, I got to say this. Yeah. Don't be afraid to partner. See, that myth, we got to get rid of that myth that you got to be the only one. Yeah, yeah. It's abundance, man. That's right. You and I are partners. So, see, you didn't have to bring me in. You could have just said, oh, I'm good.

1:02:23Exactly. But you brought me in. And so I want all these young people to understand that it's okay. To collaborate. That's right. It's okay. Yeah. And then do multiple deals. Keep going. Because they, Chris, you're so needed in today's culture. I appreciate it. See, because I'm older. You're young. So they're looking at you saying, dang, I want to be like you. I want to partner with you. I want to teach me. See, sometimes we're afraid to say, hey, somebody say, teach me. Yeah, yeah, yeah. Right? And you know so much and you've helped so many. And that's been your blessing and your purpose. Of course, you're rich and going to be richer, but you're rich by a lot of different ways.

1:03:16You're rich by money, but you're rich also with your Rolodex and your knowledge and your willingness to spread that and give it to somebody else. The downfall of minorities has been most of the rich people before us took the knowledge with them. They shared it. Exactly. Okay, so I wanted people to know. This is the man right here. I appreciate it. Look, I wouldn't be here if we didn't have the opportunity to soak up your wisdom and just the foundation that you've created. And, you know, you've been my inspiration behind everything in terms of taking business and bridging these worlds together.

1:03:51And so I appreciate you taking the time to have this conversation. You know, you're a friend. You are always there whenever we need anything. and in return, we just want to keep on running it up. That's it. That's it. Keep on winning them reigns. Come on, 19, 19, 20. Thank you, man. I appreciate you, man. This is super needed. Yes. And, you know, I'm glad we were able to get this wisdom down. Thank you. You're the man. Thank you. I appreciate it. And so are you. Thank you, bro. Thanks, everybody. All right. Signing out. Signing out. But not signing off. No, no, no. Out. Exactly. That was amazing.

1:05:00it's great, man. content here is for informational purposes only, should not be taken as legal business, tax, or investment advice, or be used to evaluate any investment or security, and is not directed at any investors or potential investors in any A16Z fund. Please note that A16Z and its affiliates may also maintain investments in the companies discussed in this podcast. For more details, including a link to our investments, please see A16Z.com forward slash disclosures.

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