Photo: Papa John’s

Shaq’s biggest investment regret is a lesson for everyone, including you

Investing doesn’t require a pro sports contract, bags of cash, or an Ivy league education.

Shaq’s carry

Shaquille O’Neal is undoubtedly one of the most famous basketball players on the planet, and he’s since pivoted to a wildly successful investment career. His portfolio includes hamburgers, car washes, nightclubs, pizza and much more. However, until recently, there’s been one glaring omission: coffee. In fact, when Starbucks’ Howard Schultz approached Shaq about investing in the caffeine juggernaut, Shaq turned it down. The reason he stated was, “growing up in my household, I had never seen a black person drink coffee. So it was my thought process that black people didn’t drink coffee…In my house, it was always sweet tea or hot chocolate.” Magic Johnson ended up taking the investment deal and the rest is history. But, don’t feel too bad for Shaq, he has since added FORTO coffee to his portfolio.

Investment influencers

Professional athletes of modern times seem to have become more financially savvy than their counterparts from yesteryear. In fact, the latest addition to an entourage is a private equity expert; a fiscally responsible shift from food holders, battery changers and umbrella holders. This bodes very well for the next generation of pro athletes who have financial literacy woven into their crew.

With the rise of social media, pro athletes like Shaq have taken on the shape of an investment influencer; a position more traditionally reserved for ‘professionals’ like Warren Buffett. In fact, Shaq’s investment style is definitely something everyone can emulate: “If I don’t believe in your product, I will never partner up with you.” Shaq’s straightforward perspective is an excellent litmus test for novice investors entering the crowdfunding market. A core belief in a product along with shared values is paramount to a successful and fruitful investing career, no matter the size of one’s portfolio. Being genuinely invested (ha!) in your investments is crucial.

Apply the full court press to investing

Just as ordinary people can carve out successful investment paths for themselves, today’s pro athletes are forging ahead to diversify their interests through entrepreneurship and becoming investors. Professional athletes like Shaq are used to continuously improving their performance, studying the game and strategizing ways to win. These skills can also be applied to investing. Shaq and other athlete investors demonstrate that mindset is of equal importance when it comes to investment strategy. As much as Shaq famously regrets passing on Starbucks, he made an investment decision based on the information available to him. In his world, selling coffee to Black people seemed implausible.

Get into the game

Shaq’s investment logic regarding Starbucks is a gut punch with the benefit of hindsight. Unfortunately, he allowed a limiting belief to guide his ability to see an opportunity. Interestingly though, the practical strategy he applied to his successful decision making going forward stems from the very same one that caused his ‘penalty’ on Starbucks. However, there is an important difference that every investor can learn from.

Before Starbucks, Shaq made a decision based on an assumption, derived from a limited experience and belief. It would appear that he didn’t seek out black peers or friends to ask if anyone they knew drank coffee. In my family, all of the adults drank coffee. By asking around, Shaq would likely have discovered that his family was the anomaly who didn’t drink coffee. Now this doesn’t mean that he’d change his mind and make the investment, but the unfounded assumption that led to him passing on the deal would have been corrected. This would have allowed him to take the same approach he uses now, to believe in the actual product; but belief in your product is much different than assuming there isn’t a market for it.

Take his investment in Ring for example. Here, Shaq used the product at home and loved it so much he sought out the creator to begin exploratory talks about a possible investment. In these talks, Shaq would have discovered information that was outside of his personal experience of using Ring, allowing him to make a more educated decision about investing. And while it didn’t hurt that he loved and believed in the product, that wouldn’t make any difference as an investment if there was no market for the product.

Shaq has made more money today as an investor than when he was playing professional basketball. This is likely because while he continued to lean on personal experiences and remain within his comfort zone when it came to determining his belief in a product, he no longer made assumptions based on the limitations of his own personal experience. He broadened his knowledge and expanded his perspective.

Even you can make a layup

Making a decision whether or not to invest in what you know makes perfect sense. This may be why restaurants, beverages and consumer goods are seeing particularly serious traction in the crowdfunding ecosystem. However, assuming that you know something because of a limiting belief will almost never lead to a winning investment. Now go ‘take it to the hole!’

Business Management & Financial Services Consultant Focused on Development Stage Companies & Microcap Markets

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