The vital lesson Magic Johnson taught Starbucks CEO Howard Schultz

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When Magic Johnson wanted to move from basketball to business, he picked up the phone and started cold-calling 20 people he wanted to meet.

The famous NBA Lakers player did have an advantage: the names on his list were all Lakers courtside season ticket holders.

Those are people who would pick up the phone if the NBA legend extended a lunch invitation.

For Johnson, though, it was the first step in transforming himself from an NBA player suddenly retired in 1994 to a businessman.

Seeing the opportunities others ignore

If there's one theme to Johnson's business career, it's to see the opportunity that others have ignored, particularly in urban communities. This is the lesson that Johnson wanted to convey to the crowd of venture capitalists and tech entrepreneurs at the Upfront Summit as the tech industry grapples with its lack of diversity.

His first lesson came from Michael Ovitz, one of the biggest talent agents in Hollywood, and one of his 20 cold calls.

Ovitz had one major piece of advice: only surround yourself with the best.

"That's when I fired everybody. I got the best money manager, best accountant, best lawyer," Johnson told the crowd at the Upfront Summit in Los Angeles.

He started his business career with a couple of Pepsi bottling plants, then built from there into shopping centers and movie theaters in urban areas. His focus was on underserved urban markets, and it was often a tough sell — the folks in charge of investments for the CalPERS pension fund rejected him five times before finally agreeing the sixth.

See Magic Johnson through his career:

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The vital lesson Magic Johnson taught Starbucks CEO Howard Schultz
PHILADELPHIA, PA - May 16: Earvin Magic Johnson #32 of the Los Angeles Lakers celebrates with team owner Jerry Buss after they defeated the Philadelphia 76ers in the 1980 NBA finals 4 games to 2 on May 16, 1980 at the Spectrum in Philadelphia, Pennsylvania. Johnson played for the Lakers from 1979 - 91, 96. (Photo by Focus on Sport/Getty Images)
SAN ANTONIO, TX - CIRCA 1983: Earvin Magic Johnson #32 of the Los Angeles Lakers goes in for a lay-up against the San Antonio Spurs during an NBA basketball game circa 1983 at HemisFair Arena in San Antonio, Texas. Johnson played for the Lakers from 1979 - 91, 96. (Photo by Focus on Sport/Getty Images)
INGLEWOOD, CA - 1986: Earvin 'Magic' Johnson #32 of the Los Angeles Lakers holds up the NBA Most Valuable Player Award in 1986 in Inglewood, California. NOTE TO USER: User expressly acknowledges and agrees that, by downloading and or using this photograph, User is consenting to the terms and conditions of the Getty Images License Agreement. Mandatory copyright notice: Copyright NBAE 2003 (Photo by Andrew D. Bernstein/NBAE via Getty Images)
BOSTON - 1987: Magic Johnson #32 of the Los Angeles Lakers dribbles against Danny Ainge #44 of the Boston Celtics during the 1987 NBA Finals circa 1987 at the Boston Garden in Boston, Massachussetts. NOTE TO USER: User expressly acknowledges and agrees that, by downloading and or using this photograph, User is consenting to the terms and conditions of the Getty Images License Agreement. Mandatory Copyright Notice: Copyright 1987 NBAE (Photo by Andrew D. Bernstein/NBAE via Getty Images)
1988: Magic Johnson #32 of the Los Angeles Lakers dribbles down the court during an NBA game circa 1988. (Photo by B Bennett/Getty Images)
Guard Earvin (Magic) Johnson of the Los Angeles Lakers looks on during a game against the San Antonio Spurs at the Great Western Forum in Inglewood, California.
CHICAGO, IL - 1988: Kareem Abdul Jabbar #33 and Magic Johnson #32 of the Western Conference All Stars sit on the bench during the 1988 NBA All-Star Game on February 7, 1988 at the Chicago Stadium, Chicago, Illinois. NOTE TO USER: User expressly acknowledges and agrees that, by downloading and or using this photograph, User is consenting to the terms and conditions of the Getty Images License Agreement. Mandatory Copyright Notice: Copyright 1988 NBAE (Photo by Andrew D. Bernstein/NBAE via Getty Images)
THE TONIGHT SHOW STARRING JOHNNY CARSON -- Air Date 06/23/1988 -- Pictured: (l-r) NBA Basketball player Earvin 'Magic' Johnson during an interview with host Johnny Carson on June 23, 1988 (Photo by Chris Haston/NBC/NBCU Photo Bank via Getty Images)
Guard Earvin (Magic) Johnson of the Los Angeles Lakers takes a shot during a game.
PORTLAND, OR - CIRCA 1990: Magic Johnson #32 of the Los Angeles Lakers looks on against the Portland Trailblazers circa 1990 at the Veterans Memorial Coliseum in Portland, Oregon. NOTE TO USER: User expressly acknowledges and agrees that, by downloading and or using this photograph, User is consenting to the terms and conditions of the Getty Images License Agreement. Mandatory Copyright Notice: Copyright 1990 NBAE (Photo by Brian Drake/NBAE via Getty Images)
SEATTLE, WA - 1988: Magic Johnson #32 of the Los Angeles Lakers rebounds against the Seattle Supersonics at the Seattle Coliseum in Seattle, Washington circa 1988. NOTE TO USER: User expressly acknowledges and agrees that, by downloading and or using this photograph, User is consenting to the terms and conditions of the Getty Images License Agreement. Mandatory Copyright Notice: Copyright 1988NBAE (Photo by Brian Drake/NBAE via Getty Images)
ORLANDO, FL - FEBRUARY 9: Magic Johnson #32 smiles and talks to reporters after the 1992 NBA All-Star Game at Orlando Arena on February 9, 1992 in Orlando, Florida. NOTE TO USER: User expressly acknowledges and agrees that, by downloading and or using this photograph, User is consenting to the terms and conditions of the Getty Images License Agreement. Mandatory Copyright Notice: Copyright 1992 NBAE (Photo by Jon Soohoo/NBAE via Getty Images)

 Earvin 'MAGIC' Johnson December 10, 1993.

(Photo by Marcus Brandt/Bongarts/Getty Images)

INGLEWODD, CA - MARCH 27: Los Angeles Lakers head coach Magic Johnson looks on against the Milwaukee Bucks on March 27, 1994 at the Great Western Forum in Inglewood, California. (Photo by Jon Soohoo/NBAE via Getty Images)
LOS ANGELES, CA - JULY 10: Former Los Angeles Lakers player Earvin 'Magic' Johnson stands in front of the 12-screen movie theatre that he built and financed during the theatre's grand opening 10 July. 'Magic Theatres,' which is located in the Crenshaw area of Los Angeles, is 60,000 square feet and seats some 3,700 people. AFP PHOTO (Photo credit should read DAN GROSHONG/AFP/Getty Images)
LOS ANGELES - 1996: Magic Johnson #32 of the Los Angeles Lakers poses for a portrait in Los Angeles, California. NOTE TO USER: User expressly acknowledges and agrees that, by downloading and/or using this Photograph, User is consenting to the terms and conditions of the Getty Images License Agreement. Mandatory Copyright Notice: Copyright 1996 NBAE (Photo by Andrew D. Bernstein/NBAE via Getty Images)
LOS ANGELES - 1996: Magic Johnson #32 of the Los Angeles Lakers goes for a layup against the Miami Heat during the NBA game at the Forum in Los Angeles, California. NOTE TO USER: User expressly acknowledges and agrees that, by downloading and/or using this Photograph, user is consenting to the terms and conditions of the Getty Images License Agreement. Mandatory Copyright Notice: Copyright 1996 NBAE (Photo by Andrew D. Bernstein/NBAE via Getty Images)
PHOENIX - 1997: Magic Johnson #32 of the Los Angeles Lakers and Charles Barkley of the Phoenix Suns meet at center court during the NBA game in Phoenix, Arizona NOTE TO USER: User expressly acknowledges and agrees that, by downloading and/or using this Photograph, User is consenting to the terms and conditions of the Getty Images License Agreement. Mandatory Copyright Notice: Copyright 1997 NBAE (Photo by NBA Photo Library/NBAE via Getty Images)
348127 06: Former NBA star Earvin 'Magic' Johnson laughs at a press conference March 23, 1999 in New York City. Announcing plans to open a Magic Johson Theater in Brooklyn, NY, Johnson continues on his quest to improve the quality of inner-city life through his chain of state-of-the-art movie theaters. (Photo by Porter Gifford/Liaison)
Magic Johnson & Samuel L. Jackson during 'S.W.A.T.' Premiere at Mann Village Theatre in Westwood, California, United States. (Photo by SGranitz/WireImage)
THE TONIGHT SHOW WITH JAY LENO -- Episode 4539 -- Pictured: Former NBA Basketball player Earvin 'Magic' Johnson onstage September 30, 2013 -- (Photo by: Paul Drinkwater/NBC/NBCU Photo Bank via Getty Images)
Los Angeles Dodgers owner Magic Johnson (right) shakes the hand of new Dodger pitcher Zack Greinke (middle) at a press conference announcing Greinke's signing at Dodger Stadium in Los Angeles on December 11, 2012. At left is Dodger General Manager Ned Colletti. The right-handed, former Cy Young Award winner agreed to a six-year contract. Greinke, 29, will enter his 10th Major League season in 2013 after pitching for the Royals (2004-10), Brewers (2011-12) and Angels (2012) during the course of his careeer. (Photo by Gary Friedman/Los Angeles Times via Getty Images)
NEW YORK, NY - DECEMBER 09: (L-R) Tom Verducci, Madison Bumgarner, Magic Johnson and Boomer Esiason attend the Sportsman Of The Year 2014 Ceremony on December 9, 2014 in New York City. (Photo by Michael Loccisano/Getty Images for Sports Illustrated)
CHARLOTTE, NC - MARCH 20: Former Michigan State Spartans basketball player and NBA All Star, Magic Johnson (C), reacts against the Georgia Bulldogs during the second round of the 2015 NCAA Men's Basketball Tournament at Time Warner Cable Arena on March 20, 2015 in Charlotte, North Carolina. Michigan State won 70-63. (Photo by Lance King/Getty Images)
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But Johnson's business acumen really shone forth in a meeting with Starbucks CEO Howard Schultz.

"I said 'Look Howard, Latinos and black folks. We like coffee too,'" Johnson said.

He showed him how the theaters were performing, and it convinced Schultz to go 50-50 with Johnson to develop a chain of urban Starbucks locations in underserved locations. But he needed to make a few changes first.

"I had to take the scones out of my Starbucks and put in things like sweet potato pie and sockittome cake," Johnson said. They also changed the music, like playing more Michael Jackson instead of typical Starbucks fare like Hootie and the Blowfish.

howard schultz starbucksStephen Dunn/Getty Images

Johnson ended up building 105 locations, and his numbers were good enough that in 2010, after a 12-year partnership, Starbucks acquired the other half of the business from Magic Johnson Enterprises. At almost exactly the same time, he also sold his 4.5 percent stake in the Lakers. The deals reportedly netted him around $100 million.

"That really put the stamp on me as a legitimate businessman," Johnson said.

Changing demographics means changing business

Today, Johnson has turned his attention to tech and infrastructure. He's raised $1 billion on a fund solely focused on infrastructure improvements.

Yet, at the Upfront Summit, Johnson and his other panelists warned Silicon Valley that they must keep up with the changing demographics of the nation, or they too will miss out on the opportunities that Johnson had been seeing over the past 20 years.

"You have to look like America looks, and right now the tech space doesn't look like America," Johnson said.

It's not just about finding businesses that target minorities or under-served communities, but realizing that the demographic shift also means a shift in power. It's changed from when minorities used to only play on the fields, Johnson said. Now they can own the teams and write the big checks too.

"We can invest side by side by you, but we also bring the expertise to become successful too," Johnson said. "Look what Howard Schultz did. We changed the dessert. We changed the music."

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