Shaquille O’Neal explains why he missed the boat on investing in Starbucks

Shaquille O'Neal and Yahoo Finance Senior Correspondent JP Mangalindan.
Shaquille O'Neal and Yahoo Finance Senior Correspondent JP Mangalindan.

Shaquille O’Neal has been called many names over the years on and off the court — Shaq, Superman and Diesel, among other nicknames — but “investor” isn’t often one of them.

Yet after retiring in 2011 following 19 seasons, four rings and 28,596 career points, the 7-foot, 1-inch O’Neal managed the unlikeliest of transformations from athlete to investor.

With a personal net worth approaching $350 million according to some third-party estimates, O’Neal amassed a vast portfolio of investments that began with pre-IPO shares in Google (GOOG), as well as Apple (AAPL) and General Electric (GE), and now includes ownership of 150 car washes, 20 Krispy Kreme locations, a handful of Las Vegas clubs, as well as Uber and Lyft pre-IPO stock. Indeed, O’Neal also told Yahoo Finance at one time he owned more than 155 Five Guys restaurants and 40 24 Hour Fitness gyms before eventually selling them off.

Yahoo Finance caught up with O’Neal, 44, following his keynote last week at Intuit’s QuickBooks Connect 2016 Conference in San Jose, Calif., to discuss his latest incarnation: Shaq, the businessman. Below is an edited and abridged version of the interview.

Yahoo Finance: Shaq, I think a lot of people will be surprised to know that you were actually an early investor in Google, Apple and GE. How did you get involved in something like Google?

O’Neal: I want to say it was after I got to LA in 1996, when I was nice to this guy’s kid at a game. The guy’s father calls my office soon after, and we met at the Beverly Hills Hotel. He pulls it out [a Google demo] and tells me what it is. I remember the quote, “If it was going to change somebody’s life, it would probably work…” It [Google] would probably work. Well, that was a nice hit.

Yep, no doubt. And you were also an early investor in Apple, right?

O’Neal: Yeah, all the stuff that Warren Buffett talks about? I’m in.

That’s quite a lot, Shaq.

Trust me. I’m reading what he’s doing every day. I’m in. Of course, these other companies that have been around 50 or 60 years, you got to go with them. General Electric, Apple, Pepsi, Coke, plus Lyft, Uber, all of that stuff.

You’ve invested in Lyft and Uber?

I bought stock, but I didn’t invest no.

Car washes. Krispy Kremes. Uber. Lyft. Your investments are so diverse. What’s your investment philosophy?

First of all, I listen to everybody’s pitch. I like to look in your eyes. I like to listen to the passion in your voice. I try to understand what it is. You have to demonstrate that it works. I know I’m getting all the credit, and it’s cool. But you can never win championships without your team. And the greatest of leaders are the ones smart enough to hire people smarter than them.

I’ve got a lot of unknown un-famous superstars in my squad. Guys that went to Harvard. Guys that went to Law School. Georgetown. We make a decision on whether we’re going to invest or not, but it’s about having a great team. I’ve been lucky. I’ve been super lucky.

You’ve obviously had a lot of success with investments, but is there ‘the one that got away’? One investment you passed on that you regret?

Oh a lot of them. Starbucks got away big time.

And why did you pass on that one?

Because growing up, I never saw a black person drink coffee. Not only that. Growing up I never saw a coffee spot in the ‘hood. So when I met with Howard Schultz, he said, ‘We want to put Starbucks in African American neighborhoods.’ I said to myself, ‘Did that come from not doing the research?’

But I stayed true to my heart and true to my beliefs. Nobody in my family drank coffee. We drank hot chocolate. We drank tea. Earl Grey. So if Earl Grey would’ve said, ‘I want to open up [a tea spot], I would’ve said ‘Yeah, that’ll work.’ But Starbucks? That one got away. And then he did the deal with Magic [Johnson], and it just blew up. So I always kick myself when I see a Starbucks.

Looking ahead Shaq, what are you sort of excited about investment-wise?

We are just going to continue to invest in things that are going to help people. Again, they’re not allowed to come in my office and say something like, ‘Hey, we’re investing in Sprite now. We get to a certain level, and we could probably sell it for $50 billion.’

We don’t have those conversations. We never have those conversations. It’s not about flipping it, wham-bam-bam. Every deal that I’ve done like that? I’ve failed. Big time. I’ve got a lot of failures just like I’ve got a lot of success stories.

On the entrepreneurial side, what’s a failure for you?

Failure for me is rushing to make a decision. Not doing the correct due diligence. Not paying attention. And of course if everything goes belly up.

Is there an example?

There were a lot of examples, but I don’t want to embarrass people.

That’s fair. What then was the most interesting, creative elevator pitch you’ve gotten from an entrepreneur? Maybe it’s the person? Maybe it’s the way they delivered it?

A guy wanted me to run on a treadmill for two hours to collect portions of my sweat and make a cologne.

A Shaq sweat-derived cologne?

Yeah. I quickly turned that one down. Not going to do that. This guy was serious. He was a chemist. He was a brilliant guy. Real brilliant. And the crazy thing is he’s already in the cologne business. He designed 20 different colognes, so he’s very successful. The guy knew what he was doing. If he was just a chemist that said, ‘I want to design a cologne,’ I probably would have bid, but he was adamant that we needed it to be from sweat.

How would that even have worked? How do you scale that?

I have no idea. I guess he would’ve taken portions of my sweat, then went to a lab and recreated it. I don’t know.

Like an IV?

The crazy thing is I was on the treadmill, and he was going, ‘Oh, my god. You smell so awesome.’

That’s creepy.

Buddy, you’re telling me.

JP Mangalindan is a senior correspondent for Yahoo Finance covering the intersection of tech and business. Follow him on Twitter or Facebook.

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