"Dear Entrepreneur:  Think Cash, Not Ideas"
Magic Johnson and Starbucks

This is a blog that I ran across while researching a paper for another class, the title obviously caught my eye.  Written by Anthony Tjan, the CEO, Managing Partner and Founder of the venture capital firm "Cue Ball", he wrote this piece for the Harvard Business Review.  In his writing he identifies the joint venture of Magic Johnson and Starbucks.  Twelve years ago, Johnson collaborated with Starbucks to form Urban Coffee Opportunities with which the goal was to "reinvigorate under-served neighborhoods with jobs" -- together they opened more than 100 franchise locations across the country in cities such as Harlem, Chicago, Detroit, Atlanta, New York and Washington D.C.  They created numerous jobs and sparked local economies.  Last week, Johnson sold his franchises back to Starbucks for an estimated $75 million.

Tjan comments that the success of this venture "is an important endorsement of the power behind small businesses with real cash flow models...and a counter-intuitive lesson to leaders about how good businesses and good partnerships can work in under-served areas."  He points out though, that these ideas are "less sexy" to venture capitalists than start up tech and pharma firms, even though they represent a more secure investment and can be good for society.

He points out that in Johnson's 10 seasons with the Lakers, he earned approximately$20 to $25 million..."over roughly the same number of years after his NBA career, Johnson's Starbucks venture earned him more than three times that amount.  Not bad for the kind of investment many venture capitalists would dismiss before even finishing their cocktail..."

Source:
Tjan, A.  "Dear Entrepreneur:  Think Cash, Not Ideas"  Harvard Business Review.  October 29, 2010.