Shaquille O’Neal shares his formula for successful investing

Since retiring from the NBA in 2011, Shaquille O’Neal has had great success building a career as an investor and businessman. 

As an early investor in Google and Apple, O’Neal tells CNBC Make It that he started out slow with investing, “making maybe one investment per year,” but as time went along, he grew more confident in his ability to spot smart deals. He’s also incredibly careful with his money: He reportedly saves 75% of his earnings and lives off the other 25%.

While O’Neal, 47, says he isn’t totally comfortable giving advice, since he says he’s “not an expert,” he is also sure in his ability. “I know for a fact that my turnover ratio is way better than my loss ratio,” O’Neal says.

O’Neal’s confidence reflects the many years he’s spent growing his own brand. In addition to serving as the new face of FORTO coffee, he also owns 17 Auntie Anne’s, a Krispy Kreme franchise and several other service businesses.

In describing his strategy for investing, O’Neal follows a two-part approach.

1. Do your due diligence

O’Neal says one of the most important things you can do is to study what other successful business people are doing and follow their lead.

He knew the businessmen who approached him to sign on and invest in Google pre-IPO. “They were always in the [floor] seats at all of the Lakers games,” O’Neal says.

As the story goes, O’Neal first connected with these early Google investors after looking after their kids at a Four Seasons in Los Angeles.

“I’m actually babysitting the guy’s kids while he’s in a meeting,” O’Neal told Ellen DeGeneres. “After the meeting, he says, ‘You know what? You’re good with kids, I like you, I’m going to bring you in on this investment.’ And it was called Google. He said, ‘You know, in the future, you’re going to be able to type on your phone, search engine this, do this, boom, boom, boom, you should invest.’

At first, O’Neal says he wasn’t sure what Google even was or what it was going to end up being. But he took a meeting with these men who O’Neal says were able to “break it all down” for him before he signed on.

Even though O’Neal was new to investing, he says he knew that if it was working for these guys — who O’Neal says were “putting $50 million or $100 million into Google” — then it would likely work for him.

“My first big hit was done by accident,” O’Neal says. “I probably never would have invested in Google. But because I saw these guys who were super successful and how it was working for them, I trusted it.”

While O’Neal won’t reveal how much he put into Google the first time around, in 2018 he told CNBC Make It that he got “a really big return” a couple of years later.

2. Do it for the people

Despite that early success, O’Neal has continued to look to others for investing advice. One person he admires is Amazon’s CEO Jeff Bezos, who O’Neal says taught him to “invest based on if it’s going to change people’s lives,” O’Neal told the Wall Street Journal.

“When I invest now, it’s never about the big hit for me,” O’Neal says. “As a father and businessman, it’s all about setting an example for people. I’m pretty set in my ways. I’ve been there and done everything. And so, now, I just want to create new partnerships, create new friends and whatever happens, happens.”

It’s this line of thinking that inspired O’Neal to invest in FORTO coffee. The ex-NBA star says he was a fan of the product even before reaching out to FORTO Coffee CEO Neel Premkumar about a partnership.

Another product O’Neal invested in because he believed it would help others is Ring, a home security start-up that was recently acquired by Amazon. After moving to Atlanta, O’Neal installed a Ring system in his home after refusing to pay the high prices quoted by other home security installment services.

“It works like a charm. If a fly flies by my camera, it will contact me anywhere in the world,” O’Neal laughs.

This experience helped O’Neal to realize the importance of accessible home security for all, he says. “Affordable home security is what the world needs. It’s not everybody that has the ability to call a security company. With Ring, which goes for around $200, a lot of people can afford it.”

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