Founders - #346 How Walt Disney Built Himself

Starting point is 00:00:00 Walt Disney was the first to bundle television programs, feature animation, live-action films, documentaries, theme parks, music, books, comics, character merchandise, and educational films under one corporate umbrella. He created the first modern multimedia corporation. In the year of his death, 240 million people saw a Disney movie, 100 million people watched a Disney television show, 80 million people read a Disney book, 50 million people listened to Disney records, 80 million people brought Disney merchandise, 150 million people read a Disney comic strip, and nearly 7 million people visited Disneyland. Walt Disney had changed the world. He had created a new art form and then produced several indisputable classics within it.

Starting point is 00:00:51 He had advanced color films and then color television. He had reimagined the amusement park. He had encouraged and popularized conservation, space exploration, atomic energy, urban planning, and a deeper historical awareness. He had built one of the most powerful empires in the entertainment world, one that would long survive him. Yet all of these accumulated contributions paled before a larger one. He demonstrated how one could assert one's will on the world. Walt Disney had been not so much a master of fun, or irreverence, or innocence. not so much a master of fun or irreverence or innocence.

Starting point is 00:01:26 He had been a master of order. That was an excerpt from the book I'm going to talk to you about today, which is this giant, comprehensive, 800-page biography of Walt Disney. It is called Walt Disney, The Triumph of the American Imagination, and it was written by Neil Gabler. I read this book for the first time nearly eight years ago. In fact, it was episode two of Founders. But the second reading after, especially after reading almost 350 of these biographies of history's greatest entrepreneurs, completely changes what I get out of the book, the context, the additional meaning. And I think particularly doing it right now after doing Quentin Tarantino, Steven Spielberg, and George Lucas. Tarantino, Spielberg, and Lucas all idolized Walt Disney.

Starting point is 00:02:05 They studied him intently. He had a huge influence on their work. And so over the last week, I've spent well over 50 hours reading, highlighting, rereading the last few days, just really trying to figure out what is the most important lesson that I'm trying to take away from this book. And in 800 pages, it's absurd to think that you can distill it down to just one sentence. But later in the book, there's this line that has really stuck with me as I go and read and reread all these highlights and notes. And it said that Walt Disney's key traits were raw ingenuity and a sadistic determination. And I sat and thought about that. Raw ingenuity and a sadistic determination. And I sat and thought about that raw ingenuity and a

Starting point is 00:02:46 sadistic determination. I think that is a very accurate description of him. Why was he like that? And what you realize is like he had to be he had to have this sadistic determination in large part because his dad, the relationship they had with his father, his father, Elias Disney, was excessively controlling and simultaneously unsuccessful. A man that was beaten down by life that failed at nearly every single thing that he tried. There is another filmmaker that I did a podcast on, Francis Ford Coppola. This is all the way back on episode 242. I'm going to put this book down and I'm going to pick up that biography because there's such a parallel before I get into this first story about this experience that Walt Disney is going to have with his father, that he's having nightmares, nightmares of 40 years later. Again, raw ingenuity and sadistic

Starting point is 00:03:35 determination. So let's go to what Francis Ford Coppola said about he had this, you know, this drive as well. And so he says, this is Francis Ford Coppola describing his childhood and his relationship with his father. I had spent a lifetime with a frustrated and often unemployed man who hated anybody who was successful. And that kind of person usually tries to belittle the aspirations or the dreams of the people around him, even if it's their kids, which is crazy. And he's so Francis Ford Coppola is telling us what his dad said. And he said, there can only be one genius in the family. And since I'm already that, what chance do you have? And so I want to pick up the story of Walt Disney.

Starting point is 00:04:10 He's nine years old. His father's already failed multiple times trying to provide a living for his family. They are now, his father has a newspaper route delivering newspapers. And he insists that all of his sons help him. And this is how Walt Disney remembered this. The route was not just a means of earning a living. It became a way of life for Disney's. Everything had to be subordinated

Starting point is 00:04:29 to the delivery of newspapers. He was only nine years old, and yet Walt was already tethered to the route. I was working all the time, he said. I never had any playtime. The route and its demands, the unyielding routine, the snow, the fatigue, the lost papers, it traumatized and haunted him.

Starting point is 00:04:46 40 years later, he was still wakening in a sweat with nightmares about the route, that he had missed some customers. And he remembered how much of his life he surrendered to this route and how hard he had to work for so little reward. And so that line there about he had to work so hard for so little reward, Elias Disney had a very bad habit of taking the money that his sons made and just keeping it. Walt had three older brothers. Two of them ran away because Elias kept taking their money. Walt was terrified of his father. He said

Starting point is 00:05:16 his father was unapproachable, that he barely talked to him. His father had an explosive temper and he would take the frustrations that he had with his own life and the external world out on his sons. So there's many stories in the book where he goes to the backyard, cuts a branch off a tree. They call it switching. They did this to me when I was a kid, too. And they would lay into the boys. You had to take your pants down and get a switching. The beatings were so bad that his sons are talking about this many decades later. So this, my parents beat the living crap out of me when I was a kid. They hit me with belts, switches, shoes, fists, and feet. It's not very different than the descriptions that are in this book. But what is fascinating is the decision that I made. It just proves like whatever happened to you in

Starting point is 00:06:00 the past, like you don't have to keep that trend going. So Walt Disney, the main, he's going to be criticized by a lot of people, right? He had this sadistic determination. He was by far a workaholic. If his eyes were open, he was working, but he was also simultaneously a great dad. His daughter wrote a biography of him, which I just found in the bibliography of this book and I ordered, but both of his daughters are in this book talking about how special he made them feel, how much time he made for them, how he made them a priority. And one of the greatest things about Walt Disney is that there's this other line in this book I read about him in the past. It says that he put that Disney put excellence before any other consideration. I think that's a great one sentence summary of his approach to his work.

Starting point is 00:06:40 But he also was a great dad. And even though he was abused by his parents, his dad hits him with a hammer, which we'll get to in a minute. He never did that to his kids. And I remember growing up and just thinking, this is very odd that the people are supposed to care for me and love me are beating the shit out of me. And I knew the day my daughter was born, there's no way I would ever do that to my kids. She's 12. My son is four. I've never laid a finger on them. And this is a theme that has reoccurred in these biographies.

Starting point is 00:07:09 It doesn't matter what past generations did. It only takes one person to change the entire trajectory of a family. And you see that with Walt Disney, the way he was a fantastic father. And an undeniable success in the way that his dad wasn't. His dad was not a good father. His dad was a failed human being, not only as a father, but also as a, he's a multiple failed entrepreneur. And so I think that's important to sit and talk about right at the very beginning, because again, raw ingenuity, sadistic determination, and this line, I think,

Starting point is 00:07:39 ties in what I'm trying to tell you. Walt Disney was so different from his father. It was almost like he was the antithesis of Elias Disney, almost as if he had willed himself to be so as a form of rebellion. And so this continues until Disney himself, Walt Disney himself, makes it stop. They're building, him and his father are building an addition onto their house, right? And every time Walt would make a mistake,

Starting point is 00:08:04 Elias would try to hit him with either the side of a saw or the handle of a hammer. And so the next time he made a mistake, Walt's 14 when this is happening, okay? Elias says, hey, go down to the basement. It's time for a beating. Now, this is nuts. It says Elias follows him down to the basement, grabs a hammer to try to strike him. But this time, Walt grabbed his father's hand and removed the hammer. Listen to what Walt Disney said about this. He raised his other arm and I held both of his hands. Now, again, this is a you're a young man going through puberty. You may not win a fight, a one on one fight with your father, but you can damn sure

Starting point is 00:08:41 inflict some kind of damage back to him in a way when you're seven or eight or nine, you can't. And so Walt says, he raised the other arm and I held both of his hands and I just held them there. I was stronger than he was. I just held them and he broke down and cried. His father never touched him after that. Elias was broken by work and now defeated in the family too. And that leads directly into another main theme of this book into how Walt Disney created himself. He retreated into his own world and then built his own. Maybe more than any other entrepreneur you and I have studied. This is the most obvious because he literally built Disney World or Disneyland, I guess, was the one that was completed when he was alive. That is a fantastic metaphor for what he was trying to do his entire

Starting point is 00:09:23 career. He wanted to escape and then control his environment. And this tendency was so pronounced. He only has like a seventh or eighth grade education. Okay. When he's in school though, the teacher thought he was the second dumbest person in the class. That is literally a quote, the second dumbest. But if you would talk to him away from school, you're like, no, no, this guy's clearly quick-witted. He's clearly smart. He's clearly driven. So why is the teacher saying you're the second dumbest person in the class? Because all he wanted to do all day in class was not classwork. He wanted to draw.

Starting point is 00:09:53 He would sit silently in a corner and draw. He was secluded in his own world. There's a line in the book that says he had never stopped drawing. He spent hours decorating the margins of his textbooks with pictures and then entertaining his classrooms, our classmates, by riffing through them to make them move. He drew constantly. He drew even though it was not always socially acceptable to draw. People would make fun of him. They said it was sissy. It was sissy for a man or a young boy to draw. But that did not deter Walt Disney. It became the primary source of his identification.

Starting point is 00:10:26 Even in our seventh grade classroom, we all knew you'd be a really great artist one day, some kind of artist genius of some kind. Because even in the seventh grade, that's all you did. And so it's remarkable that it mentions that, hey, he's sitting in class, instead of paying attention to class, he's decorating the margins of his textbook. Years ago, I read a biography of Dr. Seuss, whose real name is Theodor

Starting point is 00:10:50 Geisel, I think is how you pronounce it. And one of the things that's in that, it's episode 161. One of the things that's in the book is very fascinating. It talks about how he met his wife. And I think they're in college at this time. And she's sitting next to him in class. I don't even think they're dating yet. And he's not paying attention to anything that's going on in class. He's drawing. And so there's three highlights I want to pull from that book real quick. That is almost exactly what's taking place in Walt Disney's life at this point. She says, you're not very interested in the lecture. Then she leaned in, pointed at one of his drawings and said, I think that's a very good flying cow. And in this book, it says maybe the most important thing that anyone ever said to him comes from her.

Starting point is 00:11:30 You're crazy to be a professor, she told Ted. What you really want to do is draw. Ted's notebooks were always filled with these fabulous animals. So I set to work diverting him. Here was a man who could draw such pictures. He should be earning a living doing that. And just like George Lucas, he's going to fight against what his father wants to do for work. George Lucas's dad wanted him to work at the stationery store. And George is like, no, I'm going to make a living doing what I love. I'm going to be a filmmaker. You see the exact

Starting point is 00:12:01 same thing here. His dad wants him to work in like this jelly factory. He's like, no, I'm going to be a cartoonist. Now, before he does that, though, before Walt Disney has this idea, he's like, no, I'm going to be a cartoonist. He has to design his own curriculum. And this is so important. So he's spending all his time practicing drawing, living in his own world. Right. But it even says there's a great line in the book. It's like when he wasn't drawing, he was thinking about it. But he would also seek out additional help. So there's these cartoonists in his original idea for his life was not to build, you know, the world's first multimedia corporation. His idea was like, oh, well, there's cartoonists that people get paid to write, to like draw pictures. Who does that? Oh, newspaper cartoonists. Okay. So that's what I'm going to do. And so he would find

Starting point is 00:12:43 cartoonists that worked in newspapers that he admired do. And so he would find cartoonists that worked in newspapers that he admired. And in many cases, these cartoonists were also teachers. So he starts attending classes at night, taught by some of his favorite newspaper cartoonists. And there's a line here. This is the first time it says this, right? But this is something he does over and over again. It says Walt Disney was so entranced that he would not even take a bathroom break. I'm not even kidding. This was shocking to me how many times he gets so engrossed in his work that he he won't go even go. He won't even stop to go to the bathroom. And when I got to this paragraph, it made me think of Steve Jobs because Steve Jobs talked about his heroes over and over again. Two of his heroes were Edwin Land and Walt Disney. And so this idea, this total engrossment in his work,

Starting point is 00:13:29 that is very evident when Disney's first starting his career, all the way till he's in the hospital dying. He knows he's dying and he's going over drawings for Epcot. And so a trait that both of two of Steve Jobs' heroes, Walt Disney and Edwin Land, shared. This is from one of the biographies of Edwin Land that I read. I want to read you this paragraph. It's a 600-page biography I read on this patent lawsuit between Polaroid and Kodak. And it says, Edwin Land had learned early on that total engrossment was the best way for him to work. He strongly believed that this

Starting point is 00:14:04 kind of concentrated focus could also produce extraordinary results for others. Late in his career, Land recalled that his whole life has been spent trying to teach people that intense concentration for hour after hour can bring out in people resources they didn't know they had. And so there's one event outside of Walt Disney's control that is going to delay his getting a job as a cartoonist. And that is World War One. I mentioned earlier that he had three older brothers. They all go off to fight in World War One.

Starting point is 00:14:35 Walt Disney's not old enough. He's trying to get his parents to sign a waiver. They refuse to do so. He wants to join the army and fight just like his older brothers do. Right. So he wants to join the army and fight just like his older brothers do, right? Because he says he thought of it not as a war, but as an adventure, which is actually a very common theme among young American men in both World War I and World War II. So they would refuse to do that. But they did let him join the Red Cross, where he would be an ambulance driver.

Starting point is 00:15:01 And so just after he turned 17, he's stationed in France to be an ambulance driver for the Red Cross. Now, there's a line here I need to share with you because, again, everything is about escaping this world that he did not like, this childhood that he did not like. So he regarded his time with the Red Cross as another escape. Now, I have a hilarious anecdote that I came across in another book that I read. It is Ray Kroc's autobiography. I've read it twice. The last time I did an episode on it, it's episode 293. And what's hilarious is Ray Kroc is around the same age, right? Too young to fight in the war, but he signs up to be an ambulance driver for the Red Cross. Okay. And I'm reading the book one time, and this is the paragraph I come across in Ray Kroc's autobiography.

Starting point is 00:15:45 He says, in my company was another fellow who had lied about his age to get in. He was regarded as a strange duck because whenever we had time off, we would go out on the town to chase girls and he would stay in camp drawing pictures. His name was Walt Disney. About a year later, he gets back home and And this is where he's just rebelling against his father's offer to work at a jelly factory. This is just like George Lucas, what I just said. And again, this main theme of escaping, I'm escaping from this world I do not like, and I will create myself and build a new world. That's exactly what Walt Disney did. And him and his father go back to fighting verbally this time. And Walt says, he never

Starting point is 00:16:24 understood me. He thought I was a black sheep. He said it was nonsense that I wanted to draw pictures, that I should secure a stable job. He didn't understand why I would sacrifice the certainty of the jelly factory for the uncertainty of art. And listen to this description. So 17-year-old Walt Disney, newly armed with confidence and determined to avoid his father's fate, determined to avoid his father's fate, the joylessness and the constant disappointment Walt Disney would pursue his opportunity, he would escape. And so now we have a very young

Starting point is 00:16:59 Walt Disney. He's 18, 19 years old. He goes to Kansas City and he's determined to be successful. So this is where I mentioned, this is line in the George Lucas biography that I thought was interesting, where he would like shoot so much footage, as many as much as he can in like, you know, a handful of days. And then you spend like 10 weeks editing and really figuring out where this all goes together. I did something similar this week, just several days, just rereading over and over again about like, what is the main thing I'm trying to take away from this book? And this is when I realized I might title this episode,

Starting point is 00:17:28 Walt Disney, how Walt Disney created himself or something like that. Cause it's very obvious, like he made himself. And in doing so, that was the foundation, which he can lay on top of the company that he built, the empire that he built. But first he had to make himself. And so even when he's 18 and 19, he's meeting all these new friends in Kansas City, almost all of them remark on the same, they say the same thing, the same description over and over again. They say that he was determined to be successful, that sadistic determination, raw ingenuity and sadistic determination, right? He had absolute faith in himself. And this is why I always say that what's one thing that's obvious when you

Starting point is 00:18:03 read a bunch of biographies, that belief comes before ability. This is the Walt Disney version of belief comes before ability. He brimmed with a self-confidence that was neither entirely justified nor particularly well-directed since he had arrived without a plan. He was a go-getter who did not know where he was getting to, only that he would get somewhere. So there's all these companies in Kansas City that are doing advertisements. They're like drawing ads for companies. They're called commercial art shops is what they were called at the time. And he sees an ad where they're looking for an apprentice. And so he shows up. Here's the thing. When you show up, he gets a one. First of all, they hire by the way that this company hires is just by trial. It's like you're going to work

Starting point is 00:18:43 here for a week. We have no idea what you're going to get paid. We have to see if you're good or not. And so he's so anxious during this first week. What does he do again? He never leaves the drawing board, not even taking a break to relieve himself until lunch. He doesn't, this guy wants to pee his pants. He never pees his pants,

Starting point is 00:18:59 but he holds it until the meal breaks. And I know I keep pounding on that, but it comes up over and over again. I just think it's such an interesting, like total engrossment into his work. And so this trial ends, the founder of the company approaches him, looks at over all of his work and immediately offers him a salary of $50 a month. And I love this part. I love this part. Walt later admitted that he would have worked for much less. And he was so grateful, he said, that I could have kissed him.

Starting point is 00:19:27 They're paying me to draw pictures. They're paying me to draw pictures, he told his aunt. That's exactly what Steven Spielberg, if you listen to the Steven Spielberg episode, right? This is much later in his life. I think he's probably 50 years old at the time. An old friend of his comes and visits his movie set. I think it's the movie 1941, if I recall correctly. And he just looks around. He goes, do you know they pay me to do this? And so this part is just

Starting point is 00:19:49 incredible. He gets his first job and he's like, I should start my own company. One of my favorite facts about Walt Disney is by the time he was 20, his first company, by the time he's 20, he's already gone bankrupt with his first company. And then he just immediately starts over again and just does it better the next time. So it says for someone virtually without training or experience for someone who had just lost his job he was cocky i felt well qualified he would say and he was already thinking of opening his own art shop so he lost his job because that work was uh seasonal it was just around the the holidays the christmas holidays walt had met another animator this guy named oob earworks i think it's how you pronounce his name it's very weird and he he's like oh this guy named Uwe Ewerks, I think is how you pronounce his name. It's very weird. And he's like, oh, this guy's talented. And then impulsively, he's like, hey, why don't

Starting point is 00:20:29 we just go into business together? And so even though they were both high school dropouts, it says Walt Disney had grandiose big dreams. He had outsized aspirations. And one thing that his early partner said about him that Walt was completely self absorbed. But listen to this. So he says he once remarked that while he and other artists played poker during breaks, Walt would sit at his board drawing board practicing various renditions of his signature. He knew he knew one day he was going to do everything he could. He's going to make that signature world famous. This is not very different. This is very similar to a young Steven Spielberg.

Starting point is 00:21:08 Steven Spielberg, when he was a kid, he would practice accepting his, he would visualize himself winning an Oscar and then he would practice his acceptance speech in front of the Academy. Steven Spielberg, when he was doing this, was like 12 years old. And so then this is the first time that we're going to see something that Walt Disney does his entire career. This is something that Disney has

Starting point is 00:21:31 in common with other great filmmakers. He is always, always jumping on the new technology of his day. Think about the description of George Lucas in that biography. They said he was the Thomas Edison of the modern film industry. So he also did this as well. There's many examples of Spielberg doing this. And so he's like, okay,

Starting point is 00:21:49 I can be a cartoonist, but there's a lot of other cartoonists. But there's this new field called animation. And it really gripped Disney because he's like, oh, what gets what got him thinking is like, wait, animation is just making cartoons move. It brings life to my cartoons. And then this part describes why that was so important. It's five sentences, two paragraphs. This is Walt Disney, but it might as well be Edwin Land because I read this and then one, two, three times. I'm like, oh, this is just like Edwin Land. So why is he going to do this? Number one, it was a way to make his mark since unlike newspaper cartooning, animation was something that Walt thought he might do better than anyone else in the world because so few people at the time

Starting point is 00:22:31 were doing it and so few people had any expertise in it. The idea of being the best, the most noted, clearly appealed to him. That's number one. That reminds me of Edwin Land, his personal motto. He said his personal motto was don't do anything that someone else can do. And we'll see an animation. There was nobody in the world that could do animation in the way Walt Disney's going to wind up doing it. And he knew it too. There's a line that George Lucas says that somebody was describing a young George Lucas says that he knew how to do it. He was going to make sure everyone knew that he knew Walt Disney. He would hold his entire team to what many people would consider like an unreasonably high expectation of excellence. And one of the lines he has about this, he's like, listen, if we were not excellent,

Starting point is 00:23:15 we go to business, right? Because he thought quality was the only moat. That's not the word he uses, but that's the way I would describe his interpretation of that. That the only thing, like he's betting his entire company on excellence and quality of the product. And if we let that go, then our entire company goes out of business. And if our company goes out of business, the quality of the entire animation industry would fall. That is a wild, wild statement. Wild that he said it and wild because it's probably true. And so again, don't do anything that someone else can do, right? I want to jump into a new industry because I have a chance of being the best in the world at that industry.

Starting point is 00:23:50 Number two, Walt Disney, this is probably my favorite quote in the entire book. Walt Disney seldom dabbled. Everyone who knew him remarked on his intensity. When something intrigued him, he focused himself entirely on it as if it were the only thing that mattered. Now animation mattered. That is when he began an immersive self-education in the medium. How many times is he going to use

Starting point is 00:24:12 the same playbook over and over again? He jumps into something and he builds his own curriculum. So that is number two. Edwin Land. There's a rule that they don't teach you at Harvard Business School. It is. If anything is worth doing, it's worth doing to excess. And Edwin Land should know because he dropped out of Harvard twice. Number three, that idea that, hey, we're not dabbling here. We're not dilly-dallying. We're not dabbling. You know, everyone who knew him remarked on his intensity. When something intrigued him, he focused himself entirely. It was the only thing that mattered. That is another Edwin Land-ism. Edwin Land said, my whole life has been spent trying to teach people that intense concentration for hour after hour can bring out in people

Starting point is 00:24:51 resources they didn't know they had. Just like Edwin Land was only focused on Polaroid, we see now that Walt Disney's doing the same thing. Walt Disney was now focused on animation virtually to the exclusion of everything else. He would go to the garage after work each day. Walt Disney was now focused on animation virtually to the exclusion of everything else. He would go to the garage after work each day. Walt Disney's first studio, do you know Walt Disney's first studio? It was a garage in the yard that was 15 square feet. And this is his schedule. So he'd go to the garage after a full day of work. Then he'd work right after work.

Starting point is 00:25:19 He'd come out for dinner, then go back to the studio. He'd come back inside long after everybody else was in bed. Walt was out there, puttering away, working away, experimenting, trying this and trying that, drawing and so on. What his family did not seem to notice was that Walt Disney, who for years had been determined to become a newspaper cartoonist, was now suddenly just as determined to become something that to most outsiders was even more impractical. Something for which he had no real training,

Starting point is 00:25:45 and something for which a job did not even seem to exist. He wanted to become an animator. When he began puttering in his garage, animation was scarcely two decades old. What is going on here? Why is he obsessed with this? Remember, the animator creates his own world, a world which he has completely under his control. What did it say?

Starting point is 00:26:09 I don't think you know this, but the intro to this podcast came from the introduction and the epilogue, and it ends with saying that he was a master of order, a master of control. Why? Why was that so important to him? Walt Disney had a psychological connection to animation, a connection forged by his childhood experiences. The process of animation was a process of giving life, of literally taking the inanimate and making it animate.

Starting point is 00:26:34 It was a hubristic process. Everybody that meets Walt Disney talks about that he had a giant, giant ego. It was a hubristic process in which the animator assumed and exercised godlike control over his material. In the case of Walt Disney, this surge of empowerment was so great, one might even have concluded that animation took the place of religion for him. For a young man who had chafed under the stern, moralistic world of his father, animation provided escape. It provided absolute control. In animation, Walt Disney could be the power. And again, he does the exact same thing here,

Starting point is 00:27:13 determined to master ambition. He immersed himself in completely. This is how you know you're early to a field. So he's reading everything you can get. He's taking classes. He's practicing. And it says he took out the one book from the Kansas City library that there was on animation. And so before his company's doing like these, these freelance jobs, these advertisers, but his first product is going to be selling one minute animated shorts and he sells them to movie theaters, right? These are little one minute cartoons that are shown before movies. You know, you start out, okay, well, what's the first thing you can do?

Starting point is 00:27:48 The most rudimentary, almost like simple thing you could do. I can make a, you know, one minute animated cartoon. It's going to be black and white. It's not going to have sound. And then eventually I'm going to add sound and then I'm going to add color. And then instead of being one minute, it's going to be, you know, six or seven minutes. And then he has this idea, which changes the entire trajectory of his company. And he's like, I'm going to build the world's first full feature length animated cartoon. But it's fascinating. I

Starting point is 00:28:13 think that's the power of biography. One of the powers of biography is like, you just see, it's like, oh, it starts here. Okay. Now you see him learning. Oh, wait, he's figuring out. And then he keeps doing that unimpeded and he lets, he compounds for four decades. And then by that time, he's got movies, theme parks, television shows, radio, books, merchandise, everything. And so he calls his first product Laugh-O-Grams, and his dad is like, you're crazy, you shouldn't do this. Says his father, who had suffered so many economic setbacks of his own, advised him not to do this, warning that he could go broke. But remember, he's the antithesis of his father. Walt Disney was too independent minded, even at the age of 20, to think of himself as

Starting point is 00:28:51 someone else's employee. And that confidence, that unusual self-belief is actually going to power him through because it's not like there's a giant market. He's in a brand new industry. This is not like a strong demand for these cartoons. It's not why people are going to the movies. You know, so if you're a movie theater and you want to cut back on some expenses, it's not, people are coming to see the main feature. They're not coming to see these like one minute cartoons. So he's launching into a market with rather weak demand.

Starting point is 00:29:17 And I think there's two things that serve him really well. It's like intense drive and self-belief. It says, there's such a great line. He's one of the most unusual people you could possibly study with a podcast full of unusual people. It says he had the drive and ambition of 10 million men and he had the self-confidence to match. He says, listen, he's struggling. He's about to go bankrupt. He's going to starve. He's going to have to live in his office. That is, it's insane that he persevered through all this. But he says, I'm going to sit tight. I have the greatest opportunity I've ever had, and I'm in it for everything.

Starting point is 00:29:55 And he's relentlessly resourceful. If he can't sell cartoons, he starts doing more freelance work. He'll go to companies and say, hey, I can build cartoons for you. He winds up doing, to make payroll and to feed himself. He winds up even doing educational films on dental hygiene for a dentist. This is the state of affairs before he has a big hit. He's going to do this live action cartoon called Alice's Wonderland, not Alice in Wonderland. It's called Alice's Wonderland. And so there he can't pay rent. So he's sleeping in his office. He has to get his meals on credit when that credit runs out. Walt remembers I would remember I was so damn hungry that he would subsist on cold beans that he ate from a can since he's living in the office. He doesn't have any money. He only takes a bath or a shower once a week and he goes down to like the you know, the ymca and i think pays like a nickel or a dime so he can shower there and he's losing so much weight and he looks so bad that everybody around him the older like people in the community think he has tuberculosis and eventually he can't stave this off any longer so this is when he declares bankruptcy and it is during this time probably the darkest time in his young adult life, that one of his greatest traits is revealed. He's got this bulletproof optimism. Listen to this.

Starting point is 00:31:13 Throughout the failures, throughout the days without meals and nights with restless sleep, throughout the constant begging for funds, throughout it all, Walt Disney seemed never to lose his faith. I never once heard Walt say anything that would sound like defeat. He was always optimistic about his ability and the value of his ideas and about the possibilities of cartoons in the entertainment field. Never once did I hear him express anything

Starting point is 00:31:34 except determination to go ahead. He seemed confident beyond any logical reason for him to be so. It appeared that nothing could discourage him. And he has a great quote about this. He says, you have to take the hard knocks with the good breaks in life. A life is going to be composed of both. No one's going to get through it without hard knocks and good breaks. And so what he realizes is like, listen, especially this time in the early 1920s, if you want to be in the

Starting point is 00:32:00 entertainment field, you need to get your ass to Hollywood. He's in Kansas City. He's like, listen, there's nothing wrong with my aim. I got to change my target is the way I think about what his decision making here. He's like, OK, Kansas City is clearly not the right place. I'm going to scrounge every last dollar. He winds up doing a bunch of freelance work again, then winds up selling his camera just so he can make enough money and buy a train ticket and get from Kansas City to Hollywood. This was one of the most important decisions he ever makes. Think about how crazy this is, because we you and I know from our vantage point, the run that he's about to go on, right, is going to have tons of ups and downs.

Starting point is 00:32:34 But he gets to Hollywood in 1923. He's going to die in 1966. And if you think about what he builds in Hollywood over the next four decades, He arrives in Hollywood with nothing but a borrowed suit. And it says a peculiar self-confidence, a borrowed suit and peculiar self-confidence. And so he takes the same idea. He had this idea called Alice's Wonderland, which is you combine live action with some, you shoot like a live action, like little girl, right? And then you draw in post-production, you draw like animated characters around her. And it looks like she's, she's interacting with them, right? This is very rudimentary technology at the time. We're in 1920s for God's sake. But he had that idea. He's like, okay, I had this idea in Kansas city. I just ran out of money. I still think it's a good idea. He takes it to Hollywood,

Starting point is 00:33:21 starts developing it there. And he winds up immediately selling it to a distributor named Margaret Winkler. Margaret Winkler, interesting enough, was the first and only female distributor, film distributor in the entire country. So what Walt has sold is this series of very short films called Alice's in Wonderland. And she's making, you know, $1,500 each for the first six and $1,800 each for the second six. He's got a good break. Then as is in the case of his entire career, Walt Disney is going to be world famous by the time he's in his 30s. You look at him when he's in his mid-40s and he's just going through struggle after struggle.

Starting point is 00:33:57 His entire career, success is not a straight line. Success is not a straight line. It is up and down, valleys and peaks over and over again, up until he gets to Disneyland. And then essentially he doesn't have to worry about money for the rest of his life. But he's struggling, you know, even with a lot of successes. He has a ton of setbacks in his career. That's why I find this book takes an unbelievable amount of time

Starting point is 00:34:16 to read and to digest. But I do think the end result is you feel incredibly inspired. You know, throughout any normal week, you're going to have this entrepreneurial, emotional roller coaster. You have high highs and low lows. And every time I feel like a low low, I'm like, oh, I'm supposed to feel this way. And the only response to the way I feel right now is to be determined to push through. It's exactly what Walt Disney would do. And so even though he has a success, his distributor is going to marry this guy named Charles Mintz. Charles Mintz starts running the business because Margaret gets pregnant. And Charles Mintz is the reason that Mickey Mouse

Starting point is 00:34:49 exists because Charles Mintz steals Disney's company from him. This is so important. And to understand why this happened, you understand what was important to Walt Disney. He was not, he's like a reluctant entrepreneur. And I think these two sentences give you an idea of that. Walt was never interested in building an operation or running a business. He was interested in improving product as a matter of personal pride and psychological need. What does that mean? He sincerely wanted to make good animations and sincerely wanted to be counted among the best at his craft. The one difference between Walt Disney and Steve Jobs, though, Steve Jobs said that those exact same desires and need. It's like I have to make literally you never chase the market share.

Starting point is 00:35:30 Think about the decades people made fun of him because Microsoft had all this market share. Steve's like, I have to be the best. I have to make the best products. And that means I don't have the most market share. I don't give a shit. I'm going to make the best products. Walt Disney was the exact same way. The difference was Steve understood that he had to build a great product or a great company because a great company was a foundation on which would allow him to continue to make great products. Disney struggled with that for his entire career, nearly his entire career, maybe the last like 10%. He had finally figured that out. And so one of the mistakes Disney makes here, and I don't think he had a choice,

Starting point is 00:36:05 so I think he had to make this mistake. I think this is inevitable, and I think this wound up being one of the best. Undoubtedly, it had to be one of the best things that ever happened to Disney, because without this, it's not at all clear that he would have invented Mickey Mouse. And later in his life, Walt Disney said,

Starting point is 00:36:20 I only hope that we never lose sight of one thing, that this was all started by a mouse. And it's this theft by Charles Mintz of his characters, of not only Alice in Wonderland, or Alice's Wonderland, but also this rabbit, Oswald the Rabbit, that Disney invents. And then Mintz is also going to lead a coup and overthrow Disney out of his own company. And so Disney has to start over again. But again, this terrible thing had to happen for Disney to create his greatest invention. And one of the mistakes is, and again, I don't think he had much of a choice at the time he did this, but you're going to a middleman. So Disney signs

Starting point is 00:36:53 a contract with a middleman. The middleman has a relationship with the ultimate distributor, which is the main movie studios. Later on, Disney is just going to cut out the middleman and go direct. And that's important because the middleman has the contract with the distributor. The distributor controls all the money. And so the middleman can just say, hey, he's essentially reselling Disney's product. And over time realizes, hey, I'm just going to cut Disney out. Instead of him making anything, I'm just going to take his animators and do this myself. And that's exactly what happens.

Starting point is 00:37:20 Disney's overthrown by a coup. You know, I've talked about this many times. Opportunity is a strange beast. It frequently appears after a loss. This had to happen. It made him a better and smarter. It made him a better businessman, smarter person, and helped develop skills that he needed to continue to build his company because he's just going to start over again after

Starting point is 00:37:35 this. And so Charles Mintz starts doing these back channels to a bunch of the key employees that are working for Disney. Disney's also like a taskmaster, you know, very difficult person to deal with, very difficult person to work under. He has like these unrelenting, you know, standards for excellence that he's going to hold you accountable to. And he also is rather naive by his own admission. He says he was never a good judge of people. And so he didn't believe that his staff would ever double cross him. And in the process,

Starting point is 00:38:03 Disney realized he had signed a bad deal because in the process, Disney realized he had signed a bad deal because in the agreement, Disney had no rights to the character that he created. Remember James Dyson, episode 300? This happened to him well before. And again, this had to happen to him because he took it as a lesson. He's like, oh, okay, this is information. I will improve next time. He had this invention called the ball barrel, which is a wheelbarrow with a ball that doesn't get stuck in dirt. He's like, I can't understand why for hundreds of years people are using a wheelbarrow

Starting point is 00:38:30 and it gets stuck. I can improve this. He wind up, Dyson's mistake, which he never made again, was he signed over the patent that was in his name to the company. Then he gets kicked out of the company, so then he loses the rights to his invention because he doesn't have access to the company and the company owns the patent. Very similar situation here. He had signed a deal where the company. So then he loses the rights to his invention because he doesn't have access to the company. The company owns the patent. Well, very similar situation here. He had signed

Starting point is 00:38:48 a deal where the company that he no longer controls, all the ownership of the characters that Disney invented relied, resided rather with Charles Mintz's company, not his own. And so it says Walt had no rights to the character that Walt had created, thus leaving Walt no recourse. This is so important. Why? It says Walt had nothing, no character, no contract, no staff, save for the very few who remain loyal, no plan. He would talk often of this episode as a betrayal, saying that you had to control what you had or it could be taken from you. And now he had seen how duplicitous the business world could be. And so now he's on the train back home to Los Angeles. His wife is terrified. They have no money. He's got no characters. It looks like he doesn't have a business. She is crying.

Starting point is 00:39:35 And what happens? There's a line in one of these interviews I heard I was watching on Kobe Bryant one day. And he talked about this. It went through a ton of adversity. And he says, well, when you're going through something, what other choice do you have but to go through it? And Kobe's perspective, in other words, was that the solution that you seek is found in the work. The only thing you can do is get back to work. That is the only proper response. So on the way home on the train, he's got nothing. His entire business has been taken from him. And what is he doing? He's spending the entire time on the train drawing and sketching and trying to create new characters

Starting point is 00:40:12 and then using those characters as a basis to make more animated cartoons so he can sell the cartoons and get back on track. And so it is on this train ride across the country that he starts drawing a mouse. And thankfully, his wife was with that he starts drawing a mouse. And thankfully, his wife was with him because he draws the mouse. She thinks the character looks great, but she's like, that is a great character and a terrible name. Why? Because Walt Disney wanted to call Mickey Mouse Mortimer Mouse. And his wife said, that was a horrible name and I made

Starting point is 00:40:42 quite a scene about it. So they go back and forth after a while and Walt asked her, what do you think about the name Mickey? And I said, it sounded better than Mortimer. And that is how Mickey was born. So let's go back to this opportunity as a strange beast. It frequently appears after a loss. This causes him to invent the sound cartoon. Okay. So he starts drawing Mickey Mouse. I think so everybody, well, maybe everybody doesn't know this, but one of the, probably his biggest hit that he needed when he was younger, he's around 27, 28 years old at this point in his life. He makes the world's first sound cartoon. It is Steamboat Willie. It is actually the third Mickey Mouse cartoon, but the first two didn't get distributed because it was missing something.

Starting point is 00:41:26 And Disney believed that it was perfectly logical that, you know, you're watching other things. They're like, if sound is coming out of live action, sound is how we communicate with one another. Why isn't sound coming out of cartoons? At the time, people would criticize this. They said drawings are not vocal. Why should a voice come out of a cartoon character? That criticism is coming from within his field. That is other animators talking to Disney.

Starting point is 00:41:49 They said it was unnatural, peculiar, and off-putting. You know what he did? You know what Disney did? He previewed it. He put it in front of customers, in front of an audience. And how are they going to react to it? I like this. Why wouldn't they like it?

Starting point is 00:42:03 And this was the result. I never saw such a reaction in an audience in my life. The sound itself gave the illusion of something emanated directly from the screen. Walt was ecstatic. He kept saying, this is it. This is it. We've got it. And so this is going to allow him to sign a distribution deal. The distribution deal is going to bring money into the studio. But how did he finance Mickey? He borrowed every single thing. He had bought a house earlier. Him and his brother, who's his business partner, Roy, they put mortgages and second mortgages on their house. In addition to them taking out second

Starting point is 00:42:34 mortgages on their house, Walt Disney sold his car to finance his company. Steve Jobs did this in the early day of Apple. He was driving like a Volkswagen bus, if I remember correctly, and he had to sell it so they could get parts to build their first product. And so the distributor is able to put Steamboat Willie in theaters all over the country. The reaction from the audience is unbelievable, and so much so that they try to acquihire Walt Disney. This is very fascinating, and this one paragraph tells you a lot about Disney. One, that he's going to refuse to sell his company.

Starting point is 00:43:05 He's not doing it for the money. He's doing it for, like, Disney. One, that he's going to refuse to sell his company. He's not doing it for the money. He's doing it for like he wants to make great products. So why would he sell his company? And then he just believes that quality is his only advantage. The problem was that the distributors, all of them, wanted to buy Walt's studio, not just his cartoons. But Walt was adamant about not selling, about not surrendering control, no matter how badly he needed revenue. Why? Because he didn't want to just be another animation producer. He wanted to be the king of animation. Walt believed that

Starting point is 00:43:31 quality was his only real advantage. And so this commitment to excellence is something that Walt would repeat decade after decade after decade. Walt had passionately expressed his longstanding conviction that his salvation was in making a product that so excelled that the public would recognize it and enjoy it as the best entertainment and that they would demand to see Disney pictures. That is a direct quote from Walt Disney, that the salvation, our salvation is in making a product that so excelled that the public would recognize it and enjoy it as the best entertainment and that they would demand to see Disney pictures. Now, Walt Disney is expressing an idea that Warren Buffett picked

Starting point is 00:44:16 up on and analyzed. And it turns out Warren Buffett thought Walt Disney was obviously successful in what he was trying to do because he talked about later on, Warren Buffett would talk about the importance of building a brand that is special in the mind of your customers. And he uses Disney as an example to illustrate the point that he was trying to make. Warren Buffett said, everyone has something in their mind about Disney. When I say Universal Pictures or 20th Century Fox, you don't have anything special in your mind. If I say Disney, you have something special in your mind. So I say Disney, you have something special in your mind. So is a mother going to walk in and pick out a Universal Pictures video in preference to Disney? That's not going to happen. That is what you want to have in a business. That is the

Starting point is 00:44:57 moat. You want that moat to widen. And then the way that Disney did this, it's very similar to the Steve Jobs quote. Steve Jobs said, be a yardstick for quality. Some people aren't used to an environment where excellence is expected. Disney built an environment where excellence wasn't expected. At Disney, the atmosphere may have been casual, but when it came to work, everything was carefully planned. Every cartoon had an exposure sheet precisely outlining each scene, each movement, and each individual drawing. The biggest difference between the Disney studio and every other animation studio was not in preparation or specialization. It was an expectation. Listen to that.

Starting point is 00:45:38 The difference was an expectation. Walt Disney had to be the best. He insisted upon excellence. And he would give you the advice, train and educate your own team. He was so sick of these people coming from second class. If you hire from experience, the problem is their experience may be several levels below your expectation. He says this, it could be a struggle convincing men who have spent their careers thinking of animation as a throwaway, that they could and must accomplish something better. I have encountered plenty of trouble getting my new men adjusted to our method of working, Walt complained. Part of Walt's secret was that in insisting on quality from individuals of whom it had never been required, he inspired

Starting point is 00:46:25 commitment. This is one of his employees describing the environment. We hated to go home at night, and we couldn't wait to get to the office in the morning. We had lots of vitality, and we had to work it off. And so how did he train and educate his own team? He talks about, he uses this for animation. He uses this for full length movies. He uses this at Disneyland. He would hire for enthusiasm and youthful enthusiasm over experience. And he's just like, I'm going to make my own people. And so he winds up starting his own school. And so they'd work all day. And then at night he would preside over animation classes. I did an episode on Walt Disney and compared and contrast him with Pablo Picasso in episode 310. There's a line in that book. It says, Disney himself trained over a thousand

Starting point is 00:47:09 artists. And just like he held his staff to high standards, he held himself to high standards too. You have to understand. Unbelievably talented, unbelievably obsessed, unbelievably dedicated. He was also ruthlessly, ruthlessly competitive. Walt Disney wanted domination. Domination that would make his position unassailable. His larger quest was to become the animation overlord.

Starting point is 00:47:35 So at the time, the most popular animated figure, right, Mickey Mouse about to wax this guy, was Felix the Cat. He was determined that Mickey Mouse would supplant Felix the Cat. He was determined that Mickey Mouse would supplant Felix the cat.

Starting point is 00:47:47 And this was inevitable because it says Felix's creator, this guy named Pat Sullivan, had none of Walt Disney's drive or foresight. And so this is when we get into Disney building his cult. That is exactly how it is described in the book. And one way he did this, and I think this is a really good idea, is like he made you believe that by working with him and

Starting point is 00:48:11 at Walt Disney Studios, you were part of an elite team, that you were not just an animator, you were part of the best animation team in the world. There's a line in the book where one of his employees said, we felt like we were the elite class, like you would be at West Point. And this is where he tells them that the quality of not just what we're making rests on us, right? The quality of the entire animation industry rests on us. That self-belief that everybody notices from the time he's a young man, you know, now he's around to start in his thirties. It's still, it's like ever present. And that belief that he had about himself and what he could do was transferable to his employees. Walt struck me as being absolutely sure of himself.

Starting point is 00:48:53 He was positive about what he was going to do. He was positive about what we could do. And so Walt's modus operandi is let's make a bunch of money and then we're going to reinvest every single dollar and more so that they lose a bunch of money, too, into the quality of the product. And there's many times he does this in animation. He does this in movies. He does this in Disneyland where people are like, oh, we're going to, you know, there's a great way to do it and there's a cheap way to do it. He flips out.

Starting point is 00:49:20 His animations could not be compromised. They had to be better than anyone else's or he would not survive in this business. Again, excellence was Walt Disney's business strategy. His animations could not be compromised. They had to be better than anyone else's or he would not survive in this business. Excellence was Walt's business strategy. If you want to know the real secret of Walt's success, longtime animator Ward Kimball would say, it's that he never tried to make money. He was always trying to make something that he could be proud of. His hobby is his work. Every moment of his time is given over to it. There wasn't a night we didn't end up at the studio, his wife recalled. She would curl up on the couch in his office and sleep while

Starting point is 00:50:03 Walt worked. She would wake up at different intervals to ask how late it was, to which regardless of the time, Walt would answer, Oh, it's not that late, honey. Walt admitted years later, listen to this. This is insane. Walt admitted years later that he would turn back his office clock while Lillian slept so that she never knew how late he had worked. And if you know that improvement is his

Starting point is 00:50:26 mantra, that excellence is his business strategy, of course he's going to dedicate all this time to it. A couple of weeks ago, I did this book. It's episode 343. It is The Eternal Pursuit of Unhappiness. People love that episode. If you haven't listened to it, you should listen to it after this. Episode 343, Eternal Pursuit of Unhappiness, being very good is no good. You have to be very, very, very, very, very good. It's by David Ogilvie and the team at Ogilvie and Mather. And it is based, it's a very short book. It's very hard to find. I think it sold out really fast after that episode came out. But it's based on Ogilvie's idea of divine discontentment. And Ogilvie describes this. He says, we have a habit of divine discontent

Starting point is 00:51:06 with our performance is an anecdote to smugness. Ogilvy had that and Walt Disney had it too. Never content with the quality of what the studio produced. No matter how good a picture we turn out, he said, I can always see ways to improve it when I see the finished product. His entire life, he wanted something that was living, that was ongoing, a product he could always improve. He didn't find that until he was 55, I think. 55 or 56 when he made Disneyland. So much so that he could make the world, you know, some of his, many of his animated cartoons, his animated feature films, they won every single award. They made a ton of money. And Disney says,

Starting point is 00:51:45 I can't even watch them a decade later because all I see is the mistakes. All I see is what I could do better today. And yes, this habit practiced over a long period of time by supremely talented individual like Walt Disney is going to build a great product, but it can also break you down because just like he drove his staff mercilessly, he drove himself like this. He has multiple nervous breakdowns and health problems throughout his entire life because of this. He's around 29 years old when this is happening.

Starting point is 00:52:13 When he talked on the phone, he would suddenly and unaccountably find himself weeping. At night, he couldn't sleep. At the studio, he became physically ill, looking at his latest cartoon and unable to see anything but its flaws. The years of fighting and losing and then having anything but its flaws the years of fighting and losing and then having to fight back the years of having to maintain a brave front in the face of

Starting point is 00:52:29 loss and betrayal and the years of feeling compelled to produce cartoons so good that disney would be unassailable in the industry while struggling against oppressive unrelenting financial constraints that barely allowed them to survive and that even now had not loosened and then the setback in starting his own family. He's talking about he's got all his pressures at work. He desperately wanted to be a dad, but unfortunately had a few miscarriages. But all this built up, and it said all this had accumulated until Walt, who was usually so self-confident, cracked, and he suffered a breakdown.

Starting point is 00:53:02 This is such an important point. It's why I said out of every single book that I've ever read, my number one recommendation is still James Dyson's first autobiography, Against the Odds, by James Dyson. It's episode 25. It's episode 200. It's episode 300. It'll be episode 400 and 500 as well. I'm going to read that book every 100 episodes.

Starting point is 00:53:17 It's so important because we can celebrate Disney and his accomplishments after the fact. But going through this, it's so difficult that any logical person would quit. I'm going to read one paragraph from James Layson's autobiography. While it is easy, of course, for me to celebrate my doggedness now and to say that's all you need to succeed, the truth is that it demoralized me terribly. I would crawl into the house every night covered in dust after a long day, a long day of failure, by the way, exhausted and depressed because that day's work had not worked. There were times when I thought it would never work, that I would just

Starting point is 00:53:50 keep on making, he's trying to make a cyclone vacuum, making cyclone after cyclone, never going forward, never going backwards until I died. The source of his excellence is also the source of this divine discontent, this dissatisfaction, this relentless pressure that he puts on himself over and over again. And he's going to have many, many times where he breaks and gets completely disengaged. This is important to know because it is repeated over and over and over again in every chapter, in every decade of his work. Walt would not repeat, would not okay any animation that did not meet with his very high standards of acceptance. This meant that everything one did had to be analyzed, endlessly analyzed, to make sure it worked, to make sure

Starting point is 00:54:29 that it was up to standards, to make sure that it could not be improved upon. Everything was drawn and redrawn until we could say, this is the best that we can do. And so there's obviously both negative and positive externalities to this. Positive externality is if you have to keep pushing the pace of your entire industry, you're going to wind up inventing new technology. A bunch of the tools, right? Other animators are in this book saying almost every tool that we use was originated at the Disney studio. That emphasis on analysis would lead to the development of new techniques that would facilitate higher standards in animation and then soon become the standard operating procedure for the entire industry. He did not just innovate in technology.

Starting point is 00:55:12 He innovated in company organization, too. Before him, animation was looked at as some silly thing not to be taken seriously. It's all about gag. It's about one-offs. He's like, no, no, we're telling a story here. And actions express priority. Walt demonstrated that story was king. And he did so through his actions because he appointed, for the very first time in the industry, a head of a new department called the story department. There was no such thing as the story department in any other.

Starting point is 00:55:41 It was something unheard of in any other animation studio at the time. And this is not all upside like this relentless pressure it's changing him just like his work's changing it's changing him too when he was young he was like outgoing it says uh he was gregarious and outgrowing now all of his enthusiasm all of his time is eventually going to be split with his kids but at this point all of it is going into the studio. And now he's changed. His personality's changed. He is withdrawn outside of the studio. He essentially has two modes of his entire life, work and family, family and work, work and family. Remember the episode I did on the founder of Red Bull? If you haven't listened to it,

Starting point is 00:56:21 listen to it. I think it's one of the best episodes I ever did. It's episode number 333, Red Bull's Billionaire Maniac Founder. I'm going to read from that book because it sounds a lot like what I'm about to tell you in Walt Disney. This is the billionaire founder of Red Bull who just passed away. He doesn't place a premium on collecting friends or socializing. I don't believe in 50 friends. I believe in a smaller number, nor do I care about society events. It's the most senseless use of time. When I go out from time to time, it's just to convince myself again that I'm not missing a lot. So Dietrich Mastroits, I'm probably still mispronouncing his name, even though I spent dozens of hours studying that guy. This idea, it's like, I don't, I can't have 50 friends. I have a handful of friends.

Starting point is 00:57:01 Walt Disney probably had less than that. It says he socialized even less than before, claiming that it took too much of one's energy and saying that he preferred to get a good night's sleep as it leaves me in a better condition in the morning to carry on the work. He seldom traveled and admitted that he would rather spend vacation at home. That changes later in life. Him and Lillian would travel a bunch, especially after their kids are out of the house. And then let's get into another innovation. This is a business model innovation that Disney came up with. And this is just blew my mind. This is the importance. Again, everybody gets to the top of their profession. They understand that learning, what did Charlie Munger say? Learning from history is a form of leverage. What I'm about to read to you, and this entire thing is a huge theme. One of the largest

Starting point is 00:57:46 parts of Disney's business is going to be merchandise. For the life of me, this is happening decades before George Lucas is negotiating with 20th Century Fox about maintaining the merchandise. George Lucas wanted to make sure he maintained the right to do sequels and the right to own the merchandise for Star Wars. And they just gave it up. Like just completely collapsed. Here, take me. It's like a billion dollar, multiple billion dollar mistake. How can you do that? The only answer is you didn't even bother to study Walt Disney. The value of merchandise for movies and television was a known thing when that was happening. Because as soon as Disney finds the right person to run his merchandise division, it is an immediate and sustained success.

Starting point is 00:58:32 Disney does not have a track record of, you know, successful. He's a dictator for sure. He does not have a track record of, you know, longtime successful partnerships. Except with this guy named Herman Kamen. Herman Kamen is going to die in a plane crash 17 years into the future. His relationship, he ran Disney's merchandise. At the very beginning, Disney made him like a partner. It's like you get 50% of everything you bring in. Over time, that split would change and it would go like, you know, 70-30, 80-20 in Disney's favor. But this merchandise business was immediately successful

Starting point is 00:59:04 and grew like weeds for decades. There's something Napoleon said one time when I was reading about him that I thought was fascinating. He says, in war, men are nothing. One man is everything. In war, men are nothing. One man is everything. Herman Kamen was that one man when it came to Disney merchandise. And listen to his pitch. He goes in. He's like, listen, he sees what they're doing for merchandise. Like this is dog shit. Okay. He walks in, he goes, I don't know how much business you're doing, but I guarantee you that much business to match what you're doing. And I'll give you 50% of everything I do over. And so Kamen's pitch is like, I'm going to innovate in merchandise. Just like you guys

Starting point is 00:59:42 are innovating animation. This is a great pitch. Kamen set out to do for Walt Disney Enterprises, which is the new merchandise arm of the studio, what Walt Disney had been doing for Walt Disney Productions, the filmmaking arm. He was going to reinvent it, transform it into a sleek, quality-controlled, revenue-producing operation that would in time have the added effect of making Mickey Mouse even more popular as a brand than he was as a movie star. Kamen was a whirlwind. Within a year, there were 40 licensees for Mickey Mouse products. Within the first year, Kamen brought in $35 million of sales in Disney merchandise in the United States alone

Starting point is 01:00:19 and an equal amount overseas at $70 million in 1934 dollars. And just like George Lucas, it's inexcusable to not study history, to not use learning from history as a form of leverage. This is just like George Lucas. This was a known thing. Walt made more money from the rights to Mickey merchandise than from the cartoons. There was a line in George Lucas' biography. It's something like he made three times as much on Star Wars toys as he did the movies.

Starting point is 01:00:48 And Star Wars printed money, if I remember correctly, had $11 million budget and made $775 million at the box office. That's just Star Wars 1. And yet he's tripling that on toys and merchandise. Disney became the first studio to recognize that one could harvest enormous profits from film related toys, games, clothing and other products. So I want to go in this few ways that Disney built his cult. Remember, like there's a these chapters in this book are huge. Some of them are like 100 pages long. And one of them I could do individual episodes just on each chapter is how dense and detailed this book is.

Starting point is 01:01:26 But in the chapter on the cult, it really talks about his approach. And there's several pages that just remind me, it's like, wow, there's a lot of similarities between Steve Jobs. Number one, Walt Disney operated almost entirely by instinct. He trusted his intuition. Steve Jobs is famous for saying that he believed intuition was more powerful than intellect and that intuition following his intuition had a large impact on his career. But unlike Steve Jobs, trying to figure out what Walt Disney actually wanted you to do, they said there's a hilarious line in the book where one of his employees, I think, said something like figuring, sussing out what Walt Disney wanted was a matter of osmosis.

Starting point is 01:02:04 That in many ways is the anti-Steve Jobs. I always say Steve Jobs is the clearest thinker that I've ever come across. There's this book called Creative Selection that I talk about over and over again because I've read it a bunch of times. It's episode 281 if you haven't listened to it. But listen to this description of Steve, which is kind of like the opposite of Walt. In this case, I'd want to be more like Steve and less like Walt. It says, Steve was the center of all the circles. He made all the important product decisions. From my standpoint as an individual programmer,

Starting point is 01:02:29 demoing to Steve was like visiting the Oracle of Delphi. The demo was my question, and Steve's response was the answer. While the pronouncements from the Greek Oracle often came in the form of confusing riddles, this was not true with Steve. He was always easy to understand. He would either approve a demo, or he would request to see something different next time. Whenever Steve reviewed a demo, he would say, often with highly detailed specificity, what he wanted to happen next.

Starting point is 01:02:57 He was always trying to ensure that the products were as intuitive and straightforward as possible, and he was willing to invest his own time, effort, and influence to see that they were. Through looking at demos, asking for specific changes, then reviewing the changed work again later, and giving a final approval before you could ship, Steve could make a product turnout like he wanted. Much like the Greek oracle, Steve foretold the future. The opposite of that would be your employees needing

Starting point is 01:03:25 to decipher what you want through osmosis, something you don't want to happen. And then one area where Steve and Walt Disney were of like minds and saw completely eye to eye is Steve Jobs once said that the storyteller is the most powerful person in the world. Walt used this in his own products and in running his own company. He was a superb storyteller. Walt himself seemed to think it was his primary attribute. Of all the things I've ever done, I'd like to be remembered as a storyteller. Walt was a super salesman who believed so devoutly

Starting point is 01:03:53 in his studio and its cartoons that he could convince anyone, even the stodgiest banker who he'd fight with all the time, of their value. Don Valentine, founder of Sequoia Capitals, has one of my favorite quotes of all time. He says, learning to tell a story is critically important because that's how the money works. The money flows as a function of the story. He also went on to say that most

Starting point is 01:04:14 entrepreneurs are incapable. They're really bad storytellers. You should work on that skill. Another way that Disney built his cult, he was a micromanager. He was a micromanager. He stuck his nose into everything. And he actually has a really beautiful metaphor about the role of a founder. His way to do this is by, you know, putting his hands on every single part of the product. He compared it to a symphony with him as a conductor who took all the employees, the storymen, the animators, the composers, the musicians, the voice artists, the ink and paint people, and got them to produce one whole thing, which is beautiful. And when he was excited and enthusiastic, he had a reality distortion field. It said he had an overwhelming power of people and the voice of a prophet. That is how one of his employees described him, a voice of the prophet.

Starting point is 01:05:02 Another employee was at home talking about Walt and how amazing he is. And his wife gets snippy with him. And she's like, you talk about him as if he were a God, to which he replied, he is. And then to summarize this entire section, the Disney studio did not operate like a commercial institution at all. The Disney studio operated like a cult with a messianic figure inspiring a group of devoted, frenzied acolytes. They were disciples on a mission. And so at this time, they're doing a bunch of short animated films. They're making a decent amount of money, but they can have a good year and then a couple of things don't perform well.

Starting point is 01:05:38 They're never too far ahead where their success is assured. And so he has this idea and he's always, he called it plussing, which is basically improvement is my mantra. And he's like, okay, there's a lot of energy in his shorts. What if we just did one feature-length animated movie? And people are like,

Starting point is 01:05:54 just like Pixar, you can't make a computer, the world's first computer-animated feature film. They go on and do it. It changes the course of their entire company. Disney's version of that

Starting point is 01:06:03 is with Snow White. He's just like, how much would a full length, if we're making a little bit of money on these animated shorts, how much would a full length feature film cartoon make? And everybody's like, you can't do it. It's never been done again. And again, this goes back to storytelling.

Starting point is 01:06:19 This goes back to cult of personality. This goes back to enthusiasm. Walt told us this idea of developing the story Snow White, and honestly, the way that boy can tell a story is nobody's business. I was practically in tears during some of it. And I've read that story many times as a child without being particularly moved by it. If it should turn out one-tenth as good as the way he tells it,

Starting point is 01:06:38 it would be incredible. He was a spellbinder. He was a spellbinder. We were just carried away. And so he sells his entire company on, hey, let's marshal our resources. Let's be focused. No one's ever done this before, but if we can do it, we can make it a massive success. Here's the problem.

Starting point is 01:06:54 To make a feature length cartoon, Disney is going to need a lot of animators. I love weird ways people hire, weird ways people recruit. So what he does, he's like, okay, let's send letters to all the art schools across the country. We're going to list the kinds of skills that we need and encourage people that have those skills to apply. They do this for a long time, not just for Snow White. In the next decade, they're going to get 30,000 new applicants from just sending letters to art schools saying, hey, these are the skills we have. Are you interested in being the best of the best? Apply here.

Starting point is 01:07:29 His demand for animators far outstrips supply. And so he has to bridge the gap. He's got to hire these like veteran animators. And he's so pissed off about doing this. And so he says he griped that when he hired veteran animators, he had to put up with their goddamn poor working habits from doing cheap pictures. It was easier, he believed, to start

Starting point is 01:07:45 from scratch with young art students and indoctrinate them in the Disney system. And so their education doesn't stop when they graduate art school and come to Disney. Again, he has this, he has Disney University or whatever they call it, these mandatory classes for the entire studio. What is he doing? He's brainwashing them. The intention was not just education. It was infatuation. As always, Walt wanted the studio employees to be besotted as he was with the notion of excellence.

Starting point is 01:08:16 He wanted obsession. And so just like George Lucas went all in, he bet every single thing he had on the sequel to Star Wars. Walt Disney so believed in Snow White, he's going to be proven right here, by the way, that he was willing to bet every single thing. So he's like, oh, I could probably do this for $250,000. His estimates on money are never right, by the way. And so he's got to take, he's like, oh, we could do it for $250,000. Nope. They run through the $250,000 budget. Then he gets another, his main banker of Bank of America, he gets another loan for $630,000.

Starting point is 01:08:50 Less than a year later, he goes back to them for another $650,000. And this is what Walt said to a reporter at the time. I had to mortgage everything I owned, including Mickey Mouse and Donald Duck and everything else, to make Snow White. And so there's this constant theme throughout the book where he's fighting with financiers over and over again. This is why George Lucas said that he was intent. He was hell bent on controlling the money. I think he learned that in part by his own personal experience, but studying the struggles that Walt Disney had with all the bankers. But one thing that was so fascinating, it really did speak to the excellence of the product that he was making, is his main banker comes and sees like a rough cut. Like it's not fully finished,

Starting point is 01:09:25 but it's still unlike anything he's ever seen. So he's very quiet during it. He's like got no reaction, you know, kind of making them nervous because he needs like another loan of like 350,000 or the whole thing's going to go up in smoke. And so the banker's name is Rosenberg. They walk out into the parking lot. He's real quiet. There's no read on him at all. And he gets in the car, rolls down the window, says goodbye, and then just slowly says, hey, that thing is going to make you a handful of money. And he was right. Snow White made a ton of money. This is what? We're in 1939, the end of the Great Depression.

Starting point is 01:09:57 There's a line here that may be true. The nine months after Snow White debuted may have been the best months of Walt Disney's adult life. Remember, he's been struggling for two decades. He's unbelievably successful building great products. He's never making a lot of money. Walt Disney was not a very wealthy man. Snow White would go on to become the highest grossing American film up until that point. It had been seen by more people in America than any other motion picture theaters.

Starting point is 01:10:23 It was so popular. You had to make a reservation three weeks in advance to see it at a movie theater. And it was a merchandise cash cow. There were 2,183 different Snow White products. Let me just give you one example. Drinking cups, drinking glasses, Snow White themed drinking glasses. They sold 16.5 million units just of that. They had never experienced an influx of money like this. So this is fascinating. So this is something that I love this idea. It's in the George Lucas book. I don't think it put in the George Lucas podcast, but he kept making like hundreds of millions of dollars because you just hold on long enough. And then eventually there'll be a technology invented that can benefit your business that you need to have to develop so vh

Starting point is 01:11:08 vhs tapes dvds and then blu-ray every time there's a new better format he would just resell like oh now you can get star wars on vhs now you can get it on hdvd and now you can get on blu-ray it would literally drop hundreds of millions of dollars down to his bottom line steve jobs realized that because when he was doing pixar he said this when i'm about to read to you comes, Steve Jobs said this in 1997, 1998. He says, Pixar is putting something into culture that will renew itself with each generation of children. Snow White was released on video two years ago and sold over 20 million copies. It's 60 years old. I think people will be watching Toy Story in 60 years just the way they're watching Snow White now. He made the point in another book I read on him too,

Starting point is 01:11:49 that he's talking about putting it on, I think VHS or DVD at that point, that that 20 million copies dropped a quarter of a billion dollars directly to Disney's bottom line 60 years after Snow White was invented. And so it's this influx of money, why it said this might've been, you know, these nine months might be the best in his life because it's also going to be

Starting point is 01:12:10 tragedy. So he makes so much money. Their parents never, you know, they struggled their whole lives. So now the brothers, Roy and Walt, were able to chip in and buy their parents a house and relocate them closer to them in Los Angeles. So he had a problem. Obviously, you know, you can kind of read between the lines about his relationship with his dad, even when he was an adult, because his dad dies. Walt doesn't even go to his funeral, but he thought his mother was a saint. And I think the way his mother parented had a huge influence on the way Disney chose to parent his two daughters. So it says, as preoccupied as he was when it came to Diane and Sharon, he was a doting father.

Starting point is 01:12:45 This is one of, when you have kids, you read this and like, I get like choked up when he talks about this. So he says he was a doting father who sheltered them from his own fame. He enjoyed telling how six-year-old Diane asked him if he was Walt Disney. You know I am, he answered. The Walt Disney, she questioned? When he said that he was, she asked for his autograph. He would chase the girls around the house, cackling like the witch from Snow White. Or he would twirl them endlessly by their heels for hours and hours and hours.

Starting point is 01:13:14 Diane would say he would stand in the swimming pool and let them climb on his shoulders. I thought my father was the strongest man in the world and the most fun, she recalled. At night, he read to them. And on weekends, he would take them to either Griffin Park to ride the merry-go-round or to the studio. This is the part that really chucks you up if you have kids. Because he's saying this, you know, they're not little kids anymore. And I've already gone through this.

Starting point is 01:13:42 Like, the difference between a four-year-old and a 12-year-old, you know, like, you're not... The first five... My daughter, her friends are so important to her, more important than I am. And that's kind of heartbreaking. But when you're small, you are the most important person in their life. And Walt really just hits on this beautifully. He said, they used to love to go with me in those days, he would reminisce. And that was some of the happiest days of my life. They were in love with their dad.

Starting point is 01:14:12 Ooh, that gets you right in the heart. Okay, he did say something that's fascinating. And again, he never rests on his laurels. If he's going to go out and do something great, he's going to try to top it with something else. He's not going to just sit here. He has a saying that he actually keeps in his hat that he reminds him, but I'll get there in one minute. So he talks about Snow

Starting point is 01:14:30 White's successful. Donald Duck is a fantastic cartoon. At this time, Donald Duck has become more popular with Mickey, but his belief in Mickey Mouse never subsided. He said, of course you know Donald is the big thing now, but it won't last. Mickey is forever. Mickey will have his moments in the shade, but he'll always come out in the bright lights again. So almost 100 years after he said that, Mickey Mouse is still going strong. And so even after this success, he's got this persistent need to challenge himself. He was never going to stay in one field or build only one product. That was very obvious if you read about him. He has this ongoing need for challenge. And I think it comes from this inner turmoil. And he was afraid to get into a rut.

Starting point is 01:15:14 He said, if we quit growing mentally and artistically, we begin to die. I do not want to be relegated to the cartoon medium. It should not be limited to cartoons. We have worlds to conquer here. That is his line. We have worlds to conquer here. And so at this point, he is right now at the apex of his career. He has never known and dad a house. There's this gas furnace and it powers a central gas heater and it keeps getting backed up. And his mom is going to die in the house that he gave her a year after Snow White, which is his greatest success. Walt is 37 years old when this happens. We better get this furnace fixed or else some morning we'll wake up and find ourselves dead, Flora told her housekeeper Alma Smith. Flora is his mom, obviously. On the morning of November 26, 1938, Flora went into the bathroom. When she didn't return, Elias got up to investigate and found her collapsed on the bathroom floor. Feeling overcome himself, he staggered out

Starting point is 01:16:18 into the hallway and fainted. Luckily, downstairs, the housekeeper was there. She and a neighbor dragged Flora and Elias down the stairs and outside. Elias revived. Flora did not. She died of carbon monoxide poisoning from the defective heater. This was the most shattering moment of Walt Disney's life. His beloved mother had died in the new home that he had given her. Walt never spoke of her death to anyone thereafter. When years later, Sharon asked him where her grandparents were buried, Walt snapped, I don't want to talk about it. And so after the success of Snow White, he has a couple flops and he needs to figure out a way to get his business on more solid footing. And so this is the first time where they're considering selling

Starting point is 01:17:06 shares to outside shareholders. And what was fascinating is one of Walt Disney's heroes was for Henry Ford. And Walt Disney, shortly before Henry Ford dies, goes to Michigan to visit him. And he's talking about, he talks with Henry Ford about this idea for this issuing of stock to outside shareholders. And this was Ford's response. Ford was blunt. If you sell any of it, you should sell all of it. Ford had famously bought out his investors, you know, probably 25 years before this conversation and owned 100% of his company. So saying, if you sell any of your company, you should sell all of it. But Disney said later on, this left me thinking and wondering for a while, wondering if I had crossed a bridge and could never go back, wondering if he had surrendered ultimate control.

Starting point is 01:17:53 And so even with taking outside funding, he's going to have three battles. And this is where he gets in one of the most depressed states of his life. So some of these are outside of his control. He's going to have battles with the bankers. He's going to have battles with unions. And then the United States government during World War II essentially just takes over his studio. So during World War II, something between like 75 and 94 percent of all the production that came out of Walt Disney Studios was films and media for the government. And something Walt Disney is quoted as saying is after one of these battles that he has with the bankers made me think of a line that I read

Starting point is 01:18:29 in Will Durant's The Lessons of History. And so he's fighting with Bank of America because now he owes them millions and millions of dollars. And when he gets back to the studio, they ask him, it's like, hey, did you win the battle with the bankers? And Walt Disney snapped, you never win with the bankers.

Starting point is 01:18:44 And that just speaks to this reoccurring theme that it's really important to control the money as much as possible and not to rely on people for outside financing because if they can control you, there's a line in the Lessons of History from Will and Erika Durant, which I covered a few weeks ago, says, history reports that the men who can manage men manage the men who can manage only things, and the men who can manage money manage all. And so in addition to money troubles, and he's having to cut back on salaries, he's having to lay people off, they wind up, a bunch of his animators and a bunch of people inside the company,

Starting point is 01:19:17 which Walt Disney later on calls communists, winds up organizing. And they form into unions, and they eventually go on strike. And Walt Disney animation never, never recovers from the strike. The strike broke Disney's spirit and it never recovered. What happens after this is it causes him to, you know, have a half a decade of depression and to be in this constant search for something else that he could direct his obsession and his talent to and pour his entire love and soul into, like he did in animation earlier in his career.

Starting point is 01:19:50 And so Walt is 40 years old, just a few years removed from his greatest commercial and artistic triumph. Now he has a studio that he dislikes because of the strike. The World War II's full and full flames, and now his studio is essentially, you know, commandeered by the U.S. government. Again, success is rarely a straight line. He's 20 years into his career. He is 40 years old and he's in a terrible position. Disney Studio was no longer the Disney Studio. It was now an educational and industrial film facility

Starting point is 01:20:19 and an arm of the government. With Walt virtually commuting from Los Angeles to Washington, he was always frustrated that minor bureaucrats would review his storyboards and issue warnings and orders where previously he had been the ultimate power. That's exactly what he wanted. He wanted ultimate power, ultimate control. He wanted to micromanage. Anything that got in his way, his ability to micromanage. He hated, he disliked Disney, like a lot of the entrepreneurs in the United States. He hated

Starting point is 01:20:50 committees and the level of his micromanagement. It can't be overstated. This is crazy. So he would micromanage every detail down to the point where he even knew the entire inventory he had memorized. He knew the entire inventory of studio equipment, including the number of light bulbs they had in stock. That is when he's making films. He is like that later too. When he walks over every single inch of Disneyland, he memorized the exact heights of every single building in Disneyland.

Starting point is 01:21:22 This is the only way he knew how to work and is also the biggest complaint for the people that work for him. The most prevalent complaint I recorded about Walt by his producers, writers, directors, and management is that he would not delegate creative authority. In Walt's own words, a studio cannot be run by a committee. Somebody, one person has to make the final decision. And so he is looking for a new way to micromanage, a new thing to pour everything, all of his outlets into. Because here's the thing, the war lasts.

Starting point is 01:21:49 There's like a five-year break between doing all this war work and trying to go back to feature length animation, try to capture Disney's former glory. And it's over. You can't do that after a five-year break. And you just see that he's completely checked out. He had begun to lose his footing and his confidence.

Starting point is 01:22:06 His brother, Roy, was pressuring him to slash budgets and begin another round of layoffs. He had come to a terrible, almost crippling realization. Remember, this is a terrible, crippling realization because Disney put excellence of the product above everything else. Even if he were to move ahead with a few of his feature film ideas, they would never be as good as the films he had made before the war. Never as beautifully animated, never as deliberately plotted, never as painstakingly fussed over, never as fully the product of a near religious commitment to greatness. The studio simply did not have the financial resources, the time, or the talents. The cult was over. And if the films could never be as good as they had been, what was the point in making them? He began to talk about selling the studio or

Starting point is 01:22:53 leaving it forever. He was no longer the king of animation, only one among a group of pretenders to the throne. For years, everyone else was in a pack of greyhounds chasing a mechanical rabbit. Everyone had imitated Disney. One might imitate Disney, but one couldn't have matched him. Disney is the Tiffany of this business, and we were all the Woolworths. Animation was a sacred obligation to Walt Disney, a way to reimagine the world. For the rest of us, it had just been a product. So knowing Disney like we know up until this point, you know what his next move is.

Starting point is 01:23:29 He needs, he has, it's not that he wants, not that he desires. He needs to do something new, something different, something unusual. He has this maxim that he would remind himself that you can't top pigs with pigs. And he talks a little about this. He says, the thing I resent most is people try to keep me in well-worn grooves. We have to keep blazing new trails. He kept a slogan pasted inside of his hat. From the time he had been urged

Starting point is 01:23:55 to make a sequel to the Three Little Pigs, he made the Three Little Pigs movie. It was wildly commercially successful. So they're like, make a Three Little Pigs number two and Three Little Pigs number three. And he didn't because he had this mantra and he repeated it. And then he put inside of his hat to remind him. He says, you can't top pigs with pigs. And so this is where he gets his new obsession. This is Disneyland. This is the remarkable thing. So when shortly

Starting point is 01:24:20 before he died, he said the two things he was most proud of was starting and keeping control of a second company and then Disneyland. Disneyland is his greatest creation. And if you look at the arc and the career of most entrepreneurs, like world-class, history's greatest entrepreneurs, they do, in almost every case, they do the best work many, many decades into their career. Steve Jobs was, what, 25, 30 years into his career when he did the iPhone. Walt Disney is 35 years into his career when he does Disneyland. Surprisingly,

Starting point is 01:24:50 there is only one chapter in this book on Disneyland. It is far too important just to dedicate one chapter to it. What I'm going to do is a day after, maybe a day or two after I release this episode, I'm going to re-release this episode I did on, that's dedicated, there's an entire book I read called Disney's Land, which is about how he built Disneyland. And so almost as a way to preview that, I'm going to pull out a couple of interesting ideas from this chapter. And one is like, what is he doing? As we've seen for his entire life, he's like building these internal worlds. And then now he's like, okay, it doesn't have to just be internal. I will build, his company was an external world, but now he's going to be, it's going to be, he's going to build an external

Starting point is 01:25:24 world that other people that don't work at his company can actually partake and actually experience. And it's all about control. It has always been about control, about crafting a better reality than the one outside the studio and about demonstrating that one had the capacity to do so. Walt Disney hid an iron will

Starting point is 01:25:42 behind a facade of affability. And so now he's going to use that iron will to literally craft and build a world, an entire land where there was nothing. I think it was an orange grove before he developed it. And he has no inclination on doing this inside this old, because now his studio has essentially been taken over. It's like this big, old, unyielding bureaucracy. He's like, I don't want to do that. So he actually sets up a bungalow. He starts doing the initial work. He has this old bungalow at the edge of the studio lot. It's a different company entirely. And that excitement

Starting point is 01:26:14 of working in a small company with talented people chasing an unlimited opportunity is what he's captured again. And he talks about this. He's happier than he had been in years. He's running it through this company called WED, which is his initials. He says, so he's in the bungalow all the time, the very initial planning stages, working hand in hand with the people developing the idea for Disneyland. He had this idea that Disneyland should be an outdoor movie set, by the way. And he says, damn it, I love it here. This is just like the Hyperion studio. This is way before Disney was successful. It was like the very early days. This is just like the Hyperion Studio. This is way before Disney was successful. It was like the very early days. This is just like the Hyperion Studio used to be in the years when we were always working on something new. It was a small, joyous community. At WED, you no longer had any big departments to deal with. It was just fun to get back into that small scale again, he said.

Starting point is 01:26:58 And so he has this idea for the park, but he's got no money again. So he's like, what am I going to do? What do you think he does? He goes to build the prototype and to get the basic idea going. He goes and borrows another mortgage and he borrows against his life insurance policy. He also talked to a bunch of true believers inside the company and employees started loaning money to them to bridge the gap before he can get financing. And then he does something that's absolutely genius. So I didn't even cover this part in the book, but one of the most fascinating things is Charlie Chaplin was one of Walt Disney's heroes. And Charlie Chaplin starts this company with a bunch of other artists called United Artists. And eventually they start distributing some of Disney's films. They wind up having a

Starting point is 01:27:38 falling out. Disney and United Artists has falling out because they wanted him to relinquish rights for his intellectual property for this new medium called television. And he's willing to disrupt and break up with his distributor at a time. He said, no, he's like, there's no way in hell I'm retaining these rights. And you're like, OK, well, that makes sense. Like, why would you retain the rights television today? No, that's not when he did that. When he said no, there was only about 4000 TVs in existence. And so many years later, now TVs are much more established. He understood that this is a new technology. It is not a threat, but a tool. And that is where he's going to get the money to do Disney. I go into way more detail on the episode that I'm going to release in conjunction with this episode. But what he realizes is television is going to save him. And all these other motion picture moguls, which you could describe Walt Disney as at this point, are telling him that television is a threat. He's like, bullshit. It's the next coming thing.

Starting point is 01:28:38 It's a phenomenon. We can't stop it. You're not stopping the wave. It's not the enemy of the motion picture. It's its ally. And he realizes this is just going to help us advertise movies. It gets so crazy. I'm going to, there's a bunch more detail, but like, let me give you an example.

Starting point is 01:28:51 This is this movie, I think 20,000 Leagues Under the Sea that he releases. Before he releases that, he releases, because he's going to do this deal with ABC. This is how he gets his funding from Disneyland. But they start producing a bunch of content together. And so what he does is like, oh, let's make a documentary, interesting documentary, standalone, interesting documentary about how we made the movie. And it winds up just drastically increasing. Because if you sit through an hour long documentary on how this movie was made, you find it interesting. What do you think you're going to do? You're going to go buy a ticket. He's like, no, this isn't a threat. It's going to actually help advertise everything else that we're doing. It's going to help advertising his movies. It's going to help advertise Disneyland. He does. He did this a bunch of times. He would re-release. Remember, David Ogilvie gave you and I advice that you're not advertising to Standing Army, you're advertising to Moving Parade. And so he'd run the same ad in the same magazine for like 20

Starting point is 01:29:40 years. Disney would do that. He's like, well, if you like Snow White 15 years ago, you'll like it now five years ago or five years later and 10 years later and 15 do that. He's like, well, if you like Snow White 15 years ago, you'll like it now, five years ago, or five years later, and 10 years later, and 15 years later. So he starts taking all the movies that were successful and replaying them on television, reselling them. Remember, the movie's done. There's no other outline. He's not spending any more money. So then all that money, just like Steve Jobs realized when they resold Snow White on DVD, he's like, oh shit, he just dropped a quarter billion to their bottom line. He's now selling Snow White, which he doesn't have to pay for anything else,

Starting point is 01:30:09 to the television stations, to ABC, and then they rebroadcast it. The point he's making to the movie moguls is like it's making your existing assets more valuable and you're afraid of this. And so I just want to read you one sentence about this. But what the special really did was prove Walt's thesis about the value of television to the film industry that he was correct. A Gallup poll indicated that the program created new awareness of Alice. This is Alice in

Starting point is 01:30:34 Wonderland now and prompted Walt to talk about using TV as a point of sale. So he goes to ABC and he's like, I'm going to develop a television show about me building Disneyland. I will host it. It'll be every week. It's like one of the most popular. I think it's the it becomes the second most popular show on TV behind I Love Lucy, if I remember correctly. And in return for producing content on your show, when he does this to ABC, there's NBC and CBS, right?

Starting point is 01:31:00 They're so far. ABC's like an afterthought. And the content that Walt Disney makes for ABC makes them become makes them one of the big three. And this was hilarious. ABC would have its Disney program. Walt Disney would have his money for Disneyland. Or as Walt would later joke, ABC needed the television so, so damn bad they bought an amusement park. And so this love and obsession that Disney had for his entire career that had been absent for maybe half of a decade, maybe longer, is now restored. And the larger theme here, if you're just reading between

Starting point is 01:31:28 the lines, is like, what do you think about all the time? Like, what do you think about all the time? Whatever that is, do that. That's something Disney did his entire career. And when he didn't have that, he was depressed. It was Disneyland that Walt Disney cared about. The park was his dream now. Television was just a means to that end. Everyone knew that he was only tangentially involved with the other projects. The studios are still doing animated movies. He's completely checked out. The difference was that on weekends and evenings and sitting on the toilet and all that stuff, he wasn't thinking about our pictures. He was thinking about Disneyland. He was always thinking about Disneyland. And he uses the same idea for Disneyland as he did for the studio. He goes out and he visits. He's planning Disneyland. And at the time, amusement parks, you know, they were looked at as like places for suckers. They were dirty. They were terrible. And everybody was telling Disney, Disney's like, why would you do that? Like, they're horrible places. Like, that's the point. Ours won't. While we were planning Disneyland, every amusement park operator we talked to said it would fail.

Starting point is 01:32:32 And Walt would come out of these meetings even happier than if they'd been optimistic. He loved to fight. He loved the idea that he had to prove himself right again, waging the same old battles that he once had to wage when making the animated features. He didn't want anyone on the staff who had amusement park experience because he told them Disneyland wouldn't be an amusement park and because we want young talented people that are willing to learn and make mistakes. And of course he's micromanaging. Another line here. He walked over every inch of Disneyland. Another great line. Walt did not want to cut corners. He did not want to compromise his vision. When an employee suggested that he use cut glass instead of

Starting point is 01:33:03 stained glass in an attraction, Walt objected. Listen to this line. Look, the thing that's going to make Disneyland unique and different is the detail. If we lose the detail, we lose it all. It is the detail. If we lose the detail, we lose it all. He wanted to change everything about amusement parks, including the language that you use to describe it. I did an episode. It sounds funny, but one of the most impressive entrepreneurs I've ever studied is Balenciaga, which is episode 315. Balenciaga now, the brand, not good, right? The founder, for sure, based on what I read about him, would be rolling over in his grave. At the time, he was considered the best of the best. Coco Chanel said Balenciaga was the best. Christian Dior said he was the best fashion designer. Everybody in Paris thought he was literally the best, which is surprising given the position of the brand is now.

Starting point is 01:33:55 But one of the things I took away from studying Balenciaga is that you should create your own language. And so he would say, you don't wear a Balenciaga dress, you present it. You're not a customer, you're a patron. He would tell staff, we want to make the highest quality dresses in the world, one where you don't give it away. You bequeath it. You bequeath your dress to your daughter. And you see an echo of that idea in the way Disney talked about Disneyland.

Starting point is 01:34:16 It's an outdoor movie set. We don't hire. We cast. This is not a park. It is a set. You can't go on stage unless you're ready to give a pleasant, happy performance. That's how he would train the early employees at Disneyland. He had an obsession with cleanliness. It was calculated that a discarded cigarette butt will lie dormant for no longer

Starting point is 01:34:36 than 25 seconds before one of the cast members pick it up. And the opening day of Disneyland caused the largest traffic jam in Orange County history. You have, you know have 50 million people, whatever the number was, watching the TV show. Of course, that's going to translate. People are going to be watching a show about the creation of this thing. When the things are ready, they're going to come. And on the opening day, his daughter said that she had never seen him happier, that it was one of the best days of his life. And even on one of the best days of his life, this micromanaging managing trait, this inherent, this was just part of him. Listen to this. He had never been a man

Starting point is 01:35:12 to indulge his pride or rest on his laurels. At the end of the day, the longest and quite possibly the best day of Walt Disney's life, in spite of the numerous calamities, he had dinner on the patio with another one of his employees of the apartment that he had an apartment and he like lived at Disneyland. That's how obsessed he was with it, right? So he's having dinner with somebody that one of his employees on the patio of the apartment and he watched the fireworks display over the park. His employee noticed that Walt kept taking notes during the show. What was he doing? A stickler for detail, even amid the pandemonium, he was counting the rockets being shot off to confirm that he was getting the full number. And 35 years into his career, he finally

Starting point is 01:35:53 found what he wanted, a living, breathing, endless masterpiece. He told one interviewer that Disneyland will never be finished, that it will be a living thing that will need changes. He called Disneyland my baby and said I would prostitute myself for it. He said that working, planning, and developing it gave him endless pleasure. Walt Disney always needed action. I've got to have a project all the time, he said, something to work on. Otherwise, he had no place to direct his nervous energy. I want this Disney thing to go on long after I'm gone. Disney was run from the top down, but there were no middlemen, wrote one employee at the time. At the top, alone, like Napoleon, was our leader and captain, El Jefe, Numero Uno, the man,

Starting point is 01:36:39 the boss, Walter Elias Disney. All things started with Walt. And Walt had the final word. Always. And that is where I'll leave it. As you can imagine, 800 pages. There's a lot more for the full story. Buy the book. If you buy the book using the link in the show notes, you'll be supporting the podcast at the same time.

Starting point is 01:36:57 Another way to support the podcast is if you want to buy merch. I do not have an advanced Disney-level merch yet for the podcast, but I do have super comfortable sweaters, actually sweatshirts. Every time I'm on Zoom or some people see me in person, I'm wearing this thing. It's super comfortable. And they're like, how do I get one? I was like, how do people not know that you can buy one? Well, they don't know because I do

Starting point is 01:37:17 a terrible job of letting you know that it exists. If you want to get yourself some Founders merch, there's a link down below in the show notes and you can go to founderspodcast.com. That is a great way to support the podcast. Also, if you're interested in going to a live event, the first live event I did, the first conference I did, Founders Only, that was like four weeks ago, six weeks ago. It sold out. It was well regarded. I'm in the middle of planning two to three more that'll take place this year. If you want to be notified about any future Founders Conference, including the ones that are taking place this year, go to foundersonly.com. Make sure you put in your email. You can also join my personal email list

Starting point is 01:37:54 where I email you my top 10 highlights for every book that I read. I'll leave that down below as well. I would join both of those lists to make sure that you don't miss. And as soon as tickets are available, which should happen, I would say in the next week to two weeks at the very latest, I will announce it on the podcast, but also send you an email. And that makes 346 books down, 1,000 to go. And I'll talk to you again soon. I just finished re-listening to that entire episode.

Starting point is 01:38:18 And as I was listening to it, I was jotting down some notes to myself. And what was remarkable, one of the most remarkable things that jumped out to me is this idea of like all these other entrepreneurs that are mentioned in the episode, in addition to Walt Disney, all share this same trait. So I'm thinking Dr. Seuss, Francis Ford Coppola,

Starting point is 01:38:35 Steven Spielberg, George Lucas, Edwin Land, Steve Jobs, James Dyson, the founder of Red Bull, Dietrich Mastroits, Charlie Munger. And it's this idea I actually got from Charlie Munger about the importance that of learning from history is a form of leverage. There's a line in Port Charlie's Almanac that I think about all the time. I should actually, I don't wear hats normally, but I should start putting messages like there's a, there's a,

Starting point is 01:39:01 there's ideas worth billions in a $30 history book. I love the idea that Disney would put a maximum in his hat. So he would take off his hat and remind himself that you can't top pigs with pigs. Maybe I'll put them inside of my shirts or something. But the value of studying both the great and the terrible work that came before you. Think about the terrible, you know, Disney created his own curriculum, right? He's studying all these amusement parks. Like these are terrible. They're not living up to their expectations at all.

Starting point is 01:39:26 I can make a superior product of this and therefore greatly, greatly expand the market, which is exactly what he did. But it was also obvious listening to that episode, how devastating. You know, I was kind of induced into a state of rage thinking about the guy at 20th Century Fox not using, not learning from history.

Starting point is 01:39:43 That was a multi-billion dollar mistake. And it's a mistake that if it happened today, and if that executive from 20th Century Fox had access to Founders Notes, it wouldn't have been made because he could have simply searched every single one of my notes, every single one of my highlights, every single one of my transcripts, and found multiple examples of these phenomenal merchandise businesses that were built in the past by Walt Disney, by George Lucas, by Dr. Seuss. And if that executive didn't want to read or search through the highlights, notes, and transcripts himself, he could have just asked the founder's notes AI assistant named Sage. And Sage could have done all the work for him. The higher you go in your career, the value of your

Starting point is 01:40:17 judgment, the value of your decisions drastically increases. That is why it just just main thing that reappears over and over and over again has reappeared since this project started eight years ago. Anybody who gets to the top of their profession, anybody who comes great at what they do when you speak to them, when you read their writing, it is obvious that they study and restudy and study again the great work that came before them in the history of their industry. Spielberg would watch and re-watch movies that he loved. Decades later, entire scenes from those movies would appear in Spielberg's own movies, just like Steve Jobs intently studying Edwin Land. There's a ton of Edwin Land's ideas that show up

Starting point is 01:40:56 in Steve Jobs' companies and products. There's a ton of Sam Walton's ideas that show up in Jeff Bezos' companies and products. Henry Singleton's ideas show up in how Warren Buffett built Berkshire. In fact, there's a great quote, again, I know I love quoting Charlie Munger. In fact, Charlie is the icon for Sage. Because when I think of a Sage, when I think of an infinitely wise, older person that I go to for advice, it's exactly the role that Charlie Munger has played in my life through books and then obviously getting to speak to him. But he said that all Berkshire did was copy the right people. And I do really believe that one of the most important ideas that Charlie Munger ever distilled from us was this idea that learning from history is a form of leverage.

Starting point is 01:41:30 That is why if you have not done so already, I'm going to highly recommend that you subscribe to Founders Notes. I built this product in partnership with Readwise. I've been going on podcasts for years. I've been talking about it on this podcast for years, well before I knew I was going to work with them, that Readwise was the best app I paid for. Because for six years, I found it in 2018 because one of the founders of Readwise, Tristan, emailed me realizing, hey, you read a lot. You want a way to catalog all your notes, all your highlights into this giant searchable database so that you can recall it anytime you want. And so since then, we've collaborated on this product called Founders Notes. It's available at foundersnotes.com. It's founders with an S,

Starting point is 01:42:08 just like the podcast. And we've added a bunch of features. Originally, it was just a cut, like you could see exactly, you get a exact mirror image of my ReadWise. You can see exactly what I see. You can search just like I do. And then I've started adding a bunch of other features that I need to make the podcast so I don't forget all you know I've read how many hundred thousand pages for this podcast so far I love reading but I also want to remember and retain and actually use what I'm reading and so that is what I'm building and so founders notes now has every single note every single highlight every single transcript so that means it has you can search every single word I've ever uttered on the podcast which means now you

Starting point is 01:42:43 can do a keyword search by person, by subject. It's just this giant database of the collective knowledge of history's greatest entrepreneurs. If you don't have anything to search, you can go and read my highlights and notes by book. If you go to the highlights feed, the highlights feed will present all my notes and highlights in a random order. And I've been doing this for years. I've been searching by keyword.

Starting point is 01:43:01 I've been rereading highlights by book. I've been rereading highlights in random order on the highlights feed. But the last few months, this thing been searching by keyword. I've been rereading highlights by book. I've been rereading highlights in random order on the highlights feed. But the last few months, this thing has blown my mind. I have never got more DMs, emails, text messages about any feature ever. And what's hilarious is I didn't even come up with the name. I'm talking about Sage.

Starting point is 01:43:18 I was calling it, you can go back to past episodes. I was like, it's like the founders GPT or I've had all these names. Like these names are terrible. And so I actually got an email from an early beta tester. And he said, none of those names, actually, they're not good. And he said, you should call it Sage because Sage is a profoundly wise person that is often looked to for guidance and advice. Sage is like search on steroids.

Starting point is 01:43:36 Because when you ask it a question, it searches every single note, every single highlight, every single transcript. And it starts making these connections. So I've been using it to make every single episode. I also use it when I'm when I'm doing research, like before this, I one of the most common questions, I'm like, hey, tell me the most important ideas from X, meaning any founder, you know, Steven Spielberg, Walt Disney, any anybody that you're interested in anybody I've covered on the podcast, and I did it for the Walt Disney episode. And it gives me this list, this bullet point list and the summary of the 14 ideas it feels are the most important ideas of Walt Disney.

Starting point is 01:44:08 And so you can either read the summary, you know, in a minute or two, or you can actually click on expand and you can see every single highlight and note that it fetched. That's what it's called. And it shows you what book that highlight or note is from or what episode that highlight or note is from. And usually within those 40 different highlights and notes that it fetches, that it uses, that it reads for you to make that summary for you, you'll usually find half a dozen, eight different books. And it's starting to get really interesting because I get a ton of emails about prompts, about questions that what I would like to do eventually is like, one, I'm going to make it an app on your phone, right? I want it on my phone. I'm using it in the browser now. It it's on it stays up in my browser all the time but

Starting point is 01:44:49 i want it on my phone in addition to that and i want to be able to ask questions just like i can now but everybody's emailing a ton of people are emailing me questions that they love the responses for so now we can use this entire community of founders listeners and this is going to take me a little while to build but eventually not only can you ask any question you want but it's going to have like a database of say like the top 50 or top 100 or top 200 questions that other people listen to founders and other people that subscribe to founders notes have asked that's going to get real wild and obviously any feature that i add in the future is automatically included with your subscription and that's another important point it does require a subscription you can need to do an annual basis. A ton of people, when I, it was just annual at one point,

Starting point is 01:45:29 a ton of people were asking me, hey, is there like a one-time lifetime option? And so I tested that. I thought I was going to do it for a limited time. A lot of people are doing that. I'm almost positive it's not going to be for a limited time, but I'm not entirely sure because the demand was so high. But I just want to make sure that i'm building something sustainable something that is the platform that I can use that ensures that i'm able To distribute this podcast for free forever But the important part is there's no free trial available for founders notes The free trial is the podcast and so it is made for people already running successful companies or people already Well established in their career because that's who's going to get the most value out of it

Starting point is 01:46:03 Because sage can help enhance the decisions that you're already making in your company. And because I made this tool for myself, and because I use it myself every day, I really do believe a subscription to founders notes is the perfect companion. If you're going to invest, how much time are you investing in listening to this podcast? I had a friend of mine text me and he's like, Hey, I need another episode of founders. When's the next episode coming out? And I was like, well, this Walt Disney episodes killing me. It's taking me, you know, 10, I don't even know how long it's taken me 10 days, 11 days, 60 hours, whatever the crazy amount of time I put into more than that to make this episode. And I was like,

Starting point is 01:46:32 there's like 345 in the back catalog. He's like, yeah, I've listened to them already, all of them already. And so my idea is like, well, if you're investing tens of hours, dozens of hours, hundreds of hours listening to this podcast, why wouldn't you subscribe to a tool that's going to help you condense and clarify the collective knowledge of history's greatest founders? So then you can actually remember everything on demand of what you've been listening to. So if that sounds like you, if that fits the description of you, I highly recommend getting a subscription going to, and you can do that by going to foundersnotes.com, founders with anes.com. Founders with an S, just like the podcast. FoundersNotes.com.

Starting point is 01:47:06 I really appreciate the support. I hope you enjoyed this episode, and I'll talk to you again soon.

Founders - #346 How Walt Disney Built Himself

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