The way the story usually goes, Walt Disney was the creative force in the Disney company and his brother, Roy, handled the financial side of the house. But Walt himself was a pretty shrewd businessman who built up a multi-billion dollar company from scratch. While re-reading Neal Gabler’s Walt Disney: The Triumph of the American Imagination, I was reminded of some of the business and financial lessons one can learn from a study of Walt Disney’s life.
As many of you may know, before Mickey Mouse there was Oswald the Lucky Rabbit, Walt’s first successful animated character. Walt had a distribution contract with a man named Charles Mintz. In early 1928, the contract was up for renegotiation. The Oswald cartoons had been successful enough that Walt expected there to be no problem in getting an increase in the price Mintz paid him per cartoon short. What Walt didn’t know was that Mintz had decided that Walt himself was unnecessary and had secretly entered into contracts with most of Disney’s animators whereby the animators would work directly for Mintz. He had also written the contract with the Disney Studios so that Walt had no rights to Oswald. Essentially, Mintz stole the Oswald character and the animators who drew him from Walt. When it came time to renegotiate the Disney Studios’ contract, Mintz insisted on taking over the studio and paying Walt and Roy as his employees. Walt refused and left New York City with no contract, no character, and very few animators left. In Gabler’s words, “When Walt left the city for Los Angeles on March 13, he had nothing . . . .”
It was on the train ride back to L.A. that Walt, out of necessity, came up with the idea for a new character, a mouse. (Gabler brings this legend into question, but I won’t.) After making a couple of silent Mickey Mouse shorts but being unable to find a distributor, Walt, partly out of desperation, decided to synchronize them with sound. The rest is a history we all know well.
What lessons can we draw from this episode in Walt’s life? Every setback is temporary. With a little determination, imagination, and maybe desperation, we can bounce back. A second lesson that we should all remember is that what may seem like a tragedy in the beginning may be a blessing in disguise. If you take a minute to think of an alternate chain of events in a world where Mintz didn’t steal Oswald from Walt, it very likely would have led to no Mickey Mouse, no Snow White, no Disney parks, and possibly even the failure of the Disney Studios as an animation studio. After all, who remembers any cartoon to come out of Mintz’s company?
After the wild successes of Mickey Mouse and the Silly Symphonies, Walt decided to make a feature-length animated movie. Since this had never been done before, there was a great deal of doubt about the project. Gabler quotes animator Joe Grant, “We saw it at first as Walt’s folly.” Gabler points out how even Walt himself wondered whether people would want to sit through a feature-length cartoon and whether audiences would have an emotional attachment to drawings. Finally, there was the problem of financing the film, since Walt and Roy had virtually no money of their own at this time.
Walt didn’t let these doubts dissuade him, however. He proceeded with his dream. When Roy couldn’t find anyone to finance the initial development of Snow White, he and Walt scraped together enough money themselves to begin. They eventually were able to get financial backers, but constantly were in need of additional loans to finish the production. After four years, the movie premiered on December 21, 1937. Imagine the nervousness Walt felt after investing so much time and effort, after taking out so many loans, to create something no one had ever done before; something that could succeed wildly or fail miserably. Well, we all know the outcome. But I like some of the quotes Gabler includes in his book about the opening of Snow White and the Seven Dwarves. My favorite is this one: “Cecil B. DeMille sent a telegram saying, ‘I WISH I COULD MAKE PICTURES LIKE SNOW WHITE.’” Time magazine called Snow White “an authentic masterpiece.” Gabler puts it this way, “[A]t least as far as animation was concerned, it ushered in a new era.” Not only was it a critical success, Snow White was a financial success as well. By May 1939, it was the highest-grossing American film ever.
While most of us will never make a movie as imaginative and successful as Snow White, there are a couple of life lessons we can take from Walt’s experience. First, greater risk brings the potential for greater reward. Walt could have taken the safe route and kept making cartoon shorts. But he would never have had the success, both creatively and financially, from Mickey and Donald that he got from Snow White and the following films. We can apply this to our own lives, whether in deciding which investment to make, deciding whether or not to start our own business, or even in getting up the courage to ask the prettiest girl in school/at work out on a date. In my own life, I used this advice three years ago in deciding to quit a well-paying job I no longer enjoyed so I could attend law school. After the paycheck quit coming, you can be sure there were moments when I questioned my decision. But that brings up the second lesson learned from Walt’s experience making Snow White: never let anyone talk you out of pursuing your dream; have confidence in yourself and your vision.
Walt Disney was never one to rest on his laurels, and by the 1950’s he had settled on a new vision. He wanted to build an amusement park. As was a recurring theme throughout his career, however, there was a problem getting enough money to undertake the new project. This time, Walt came up with an imaginative way to raise the money. He would create a television program for a network. By doing this, he hoped to both directly raise money for Disneyland and attract other investors in the project. He and Roy were eventually able to negotiate a deal with ABC for the Disneyland TV show. Fifteen percent of the funds from the show would go from Walt Disney Productions to Disneyland, Inc. to help pay for the park. In addition, ABC committed to make direct investments in the building of the park. Gabler has a good quote from Walt on the subject: “ABC needed the television show so . . . bad, they bought the amusement park.”
I see a very relevant financial lesson in the way Walt financed Disneyland. When you don’t have enough money, sometimes you have to find an extra source of income. For Walt, this was creating the Disneyland TV show. For people today who want to visit the Disneyland park (or any of its progeny), this might mean taking a second job to raise the money. For example, short-term, part-time positions are readily available around Christmas. You might take one and funnel all of your wages to help pay for a vacation next summer. Or, you might commit to a paper route in the mornings before your regular job. The Internet offers plenty of opportunities for home-based businesses. Finally, when brainstorming ways to raise money to fund your Disney Driven Life, be creative and think outside the box. Walt Disney Productions was the first motion picture studio to embrace television. Walt’s method of financing his park was sheer genius. Not only did he get ABC to help fund the cost of the park, but he used the Disneyland TV show to help promote both the park and his own motion pictures. On a much smaller scale, we can all find creative ways to fund trips to Walt’s parks and otherwise provide extra money for things we want in life.
If you haven’t read Walt Disney: The Triumph of the American Imagination, I highly recommend it. It’s full of background on the life of someone who has had such a huge impact on our lives, and in its pages you may find some important life lessons.
Contributed by: Mark Jeffries (NDD#102) Mark is the DDL Finance Blogger.