Founders - #39 Walt Disney: An American Original

Episode Date: September 24, 2018

What I learned from reading Walt Disney: An American Original by Bob Thomas---He seemed eager to sum up the lessons he had learned and tell people how he applied them in his life. [0:01]He worked long hours over drawings in his room. Never revealing a project until he completed it. [5:32]Walt Disney's first business: Iwerks-Disney Commercial Artists [9:34]Walt Disney's second business: Laugh-O-Gram Films [13:30]Walt Disney's third business: The Walt Disney Company [17:03]"Should the idea or name be exploited in any other way, such as toys or merchandise we shall share equally." / Jeff Bezos on the importance of sleep [21:08]Committees throttle creativity [25:31]It is normal to doubt yourself when you are creating something. Walt Disney doubted the quality of Steamboat Willie. What would go on to be one of the most famous cartoons ever created. [33:28]People don't know what is good until the public tells them/Or how to get film distributors to come to you [37:10]The power of licensing Disney characters [42:06]Advice from Charlie Chaplin [47:17]You can't top pigs with pigs [52:29]A most unusual response to financial calamity [57:42]The Army takes over Disney's studio [1:00:53]An amazing meeting with the founder of Bank of America [1:04:00]Coming up with the idea for Disneyland [1:09:30]Maniacal focus on the customer [1:18:00]Disneyland prints money [1:22:30] ----Founders Notes gives you the ability to tap into the collective knowledge of history's greatest entrepreneurs on demand. Use it to supplement the decisions you make in your work.  Get access to Founders Notes here. ----“I have listened to every episode released and look forward to every episode that comes out. The only criticism I would have is that after each podcast I usually want to buy the book because I am interested so my poor wallet suffers. ” — GarethBe like Gareth. Buy a book: All the books featured on Founders Podcast

In 1965, a publisher suggested that I write a biography of Walt Disney. Knowing that Walt was heavily involved with a full production schedule, his television show, a proposed theme park in Florida, new attractions for Disneyland, and a host of other projects, I expected to write the book from file material. But Walt insisted on giving me four lengthy interviews. He dwelled on his early years on the farm in Marceline, as a newspaper delivery boy in Kansas City, and as a student and mailman in Chicago. He seemed eager to sum up the lessons he had learned as a boy and tell young people how he applied them in his later life. He died within a year after the interviews. So that paragraph comes from the introduction to the book that I want to talk to you about

today, which is Walt Disney, an American original. And I love how it explicitly states why we spend so much time studying these biographies and autobiographies of entrepreneurs, where he talks, where he says, he seemed eager to sum up the lessons he had learned as a boy and tell young people how he applied them in his later life, which is exactly the point of this podcast, for us to learn the lessons from people that have come before us that have built companies and apply those, what we learn in our own lives. Before I get into the book, I just want to remind you how you can support founders. If you value the work I'm doing here, if you're learning something, if you want to help support

the podcast, this podcast is ad-free. So once we get going, we just stick to lessons that we can all learn. I don't interrupt with ads at the beginning or the end or in the middle for that matter. So the only way I can do that is because of paid members. So if you want to become a paid founders member, paid members make founders possible and they receive extra podcasts from me every week. The links are always in the show notes, which you can get directly on your podcast player, or you can go to founderspodcast.com. As soon as you do that, you'll immediately receive an email from me with all of the past member-only episodes that I've done. So, so far, I've created three of them by the time you listen to them. And then every Monday, I email you with another link.

Another way for you to support the podcast is become a paid member of Founders Notes. Founders Notes helps you know what other founders are thinking. It's key ideas from interviews and talks with entrepreneurs delivered to your inbox every Sunday. And the one that went out yesterday was the largest one so far. It's over 3,500 words of just ideas and thoughts

from all kinds of different other founders. If you want to support this podcast at the max level, sign up for both the member-only podcast and Founders Notes. Some of you have already done that, and I think that's amazing. So links, as always, is in the show notes and again at founderspodcast.com. Okay, so let's go ahead and get into the book. I think this is a great quote that summarizes him. He had little patience with those whose thinking was earthbound. Okay, so one of his first jobs was selling and delivering newspapers. And because the work became a constant and numbing routine, it caused him to contemplate what he wanted his future to be.

So let's learn a little bit about this. So this is in addition to his newspaper routes. Walt delivered prescriptions for a drugstore and sold newspapers on street corners. During the noon recess, he swept out the candy store across from school in return for a hot meal. Work became a constant numbing routine. Sometimes, as he dressed before dawn, he fell asleep while tying his shoelaces. Two weeks free from the ordeal

of delivering the times every morning gave Walt time to think about his future life. He discarded notions of being a doctor or lawyer. He realized he had been an indifferent student. And besides, none of the Disney sons had ever been afforded the luxury of a college education. As a matter of fact, Walt Disney never even finished high school. Cartooning interested him the most. His drawings had evoked chuckles from the patrons of the barbershop and his fellow students at school. He enjoyed the children's art classes at the Kansas City Art Institute

more than his regular schoolwork. By the time Walt's foot healed, he had an injury, that's why he wasn't delivering newspapers for two weeks. By the time Walt's foot healed and he returned to his newspaper routes, he had decided to become a cartoonist. And we're going to see a little bit about even at a very young age he had an immense amount of focus and a large capacity for hard work so he winds up some of his cartoons that he's writing or that he's creating gets written about in the high school newspaper.

And it says, Walt Disney, one of the newcomers, had displayed an unusual artistic talent and has become a voice cartoonist. Voice is the name of the magazine, rather. Walt, at last, was getting his cartoons published. They were humorous and reflected his own impatience to join the war effort. This is World War I. He studied anatomy, pen technique, and cartooning three nights a week at the Chicago Institute of Art. He worked long hours over drawings in his room, never revealing a project until he completed it.

He sat for hours scribbling down jokes for cartoons. When Walt finished his freshman year at high school, he and a friend applied for summer jobs at the post office. The friend lied about his age and was hired, but Walt admitted that he was 16 and he was turned away. He went home and penciled a few lines on his face, borrowed his father's suit and hat, and returned to the same employment window, declaring he was 18. He was hired. Walt worked from 12 to 14 hours a day, sorting the mail and making special deliveries throughout the city. So skipping ahead a little bit, he wants to go to war. He fails a physical, so the army won't admit him. He winds up lying about his age, and his mom helps him forge his father's signature so he could drive ambulances for the Red Cross in France. So he does that for a few years, and then now he's coming back, and he decides that he wants to be an artist.

So it says, a return to high school was unthinkable after Walt's European experiences, nor would he consider a job his father offered at the Jelly Factory for the handsome salary of $25 a week. Dad, I don't want that kind of job, Walt insisted. Elias reminded him, Elias is his father's name, Elias reminded him that thousands of unemployed veterans would welcome such a position, but Walt remained firm. Then what do you want to do, Walter? The father asked. I want to be an artist, Walt replied. And how do you expect to make a living as an artist? Elias asked. I don't know, Walt admitted that that that exchange is very reminiscent of if you listen to the podcast on George Lucas about how George is trying to convince his dad that he wants to go to film school.

So his older brother, Roy, actually helps Walt get a job at this place called Commercial Art Studio, and they're producing basically advertisements for companies. And he's doing some drawing and some jokes there. So it says, the new employee was assigned to create rough drawings of advertisements and letterheads for farm equipment and supply companies. Lou Pessman, who taught night school at the Fine Arts Institute, had noted that most young artists resented criticism. Not Disney. One day he was working on a layout for a company and

pessman looked over his shoulder erased some lines added others and walt welcomed the changes so disney was constantly trying to get better and it says at the end of the week the two partners announced that their new assistant would be would be paid fifty dollars a month that'll do fine said walt not looking up from his work. When he reported the news to Roy, that's his older brother, and also the co-founder of Walt Disney Company, he admitted that he would have accepted half that amount. And this is important. At this company, Commercial Art Studio, he meets somebody that becomes very important to the founding of the Disney company. It says, a co-worker was a stolid young Dutchman with a curious name, Oob Earworks.

So Oob Earworks is actually one of the most talented cartoonists that Disney ever meets, and he's the one that actually is credited with drawing the final version of Mickey Mouse, the one that we know today. Okay, so now we're going to get into Disney's first business. And it's talking about both young men men which is also walt and oob it says both young men turned out large volume of artwork for farm catalogs and christmas ads for department stores and theaters then the pre-holiday rush ended and both walt and oob were let go walt applied for work with the post office and he delivered mail until after New Year's.

Walt and Oob Earworks discussed going into business for themselves. So they start up a company and it says it became Earworks Disney Commercial Artists. Earworks did the straight drawing and lettering. Disney was a cartoonist and salesman. He hustled around to print shops, theaters, stores, and oil companies in search of work. The first month's business netted $135 more than they had been receiving at the name of the company they were working with. The Earworks Disney firm lasted only one month. And the reason it only lasted one month is because there's a company in Kansas City where Walt's living that was looking for a cartoonist and hired him at $40 a week. So Walt thought he should take the job. Ube agrees. Eventually, he says Walt persuaded the boss's name to hire Ube and Earworks Disney went into limbo. Walt had been introduced to something that intrigued him more than newspaper cartooning.

This is when he's going to start to learn animation. Now he was making cartoons that moved. The name of the company he's working for is Kansas City Film Ad. Kansas City Film Ad produced one-minute advertising films to appear in motion picture theaters. The animation was primitive. Human and animal figures were cut out of paper and pinned to a sheet. The joints of the figures were moved and then photographed, creating the illusion of movement. Walt was curious to learn how things worked. He made friends with the cameraman, who showed the young cartoonist how the paper figures

were photographed in stop motion to provide the illusion of animation. Walt wasn't satisfied with such a crude method of animation. He noted how others had made movie cartoons with greater realism. They were created with drawings, not cutouts, and Walt was determined to learn how. He found two books in the Kansas City Public Library, one a simple handbook by Carl Lutz on the essentials of animation, and the other is, I think the name's Edward Mewbridge, his classic study of human and animal motion. Walt pored over Mewbridge's photographs of running horses and athletes and movement, then had the pages copied by a photostat.

He returned the book to the library and kept a stack of photostats beside his desk as a guide for his drawings. His employers were delighted with the improved realism of the drawn cartoons, and he and Oob began turning them out for film ad. So he's working all day at film ad, and he's teaching himself animation at night.

It says, Walt worked all day at film ad, then spent hours each night in his garage studio. So he starts making these little animation films on his own, and he shows it around to other businesses, and some of them place orders. So now we're going to get into Walt's second business. Walt named the films Newman Laugh-O-Grams. A few of them have survived, and they show surprising skill in an artist so new to animation. This was less than a year after he started.

So let's learn a little bit about the second business. To achieve success, Laugh-O-Grams needed to progress beyond the one-minute program filler. The next step would be cartoon shots like those produced by the New York studio. So at the time, all the cartoon and animation businesses that existed were centralized in New York City. He devised plans for a series of cartoons based on traditional fairy tales, modernized and sprinkled with gags. For six months, Walt and his youthful filmmakers worked at night on their first production, Little Red Riding Hood. So when they say the word youthful filmmakers, he had put an ad out asking people if they wanted to learn how to do animation.

And he winds up learning a lot by teaching others. So he's like, I don't have any money to pay you, but if you come to my garage, I think it was in a garage, might've been a studio every night, I will teach you and then they all learn together. So they went up producing their first production, which is called Little Red Riding Hood. Walt was so pleased with the cartoon that he quit his position at FilmAd where he'd been earning an impressive $60 a week.

And on May 23rd, 1922, he incorporated Laugh-O-Gram Films with $15,000 he raised from local investors who contributed from $250 to $500 a piece. So something that I guess is going to be obvious now is in addition to being extremely hardworking and creative and a good drawer, he was what most people consider like a master salesman. Later on, when Disney is trying to raise millions of dollars to do feature film animated movies, there's no market for it. He was the one that pioneered it. And as such, he had to convince bankers to lend him millions of dollars for an unproven new field. And parts of the books and some of the other like uh additional research i did for this podcast talks about how once he got in the room with the bankers like they were just basically putting his hands he was very convincing and uh he could he could convey he convinced them to to lend money and he also said he was very good at like rallying his employees

and motivating them and he was very gifted in that regard so said walt and you can see again he's very persuasive walt persuaded uber airworks to leave film ad and laugh-o-gram films took over the remaining assets of airworks disney commercial artists they were joined by five other young animators the laugh-o-gram office was an exhilarating place to work the president of the company was 20 years old, and he declined to act the role of executive. He did some of the animation, operated the camera, and washed the celluloid cells for reuse. So this young company gets a deal with a company out of New York called Patorial Clubs, sends them $100 and then a note promising $11,000 for six cartoons. So they start producing this, and then they run into trouble by the autumn of 1922 it was becoming

more and more difficult for the youthful filmmakers to maintain their exuberance the fairy tale cartoons were being shipped off to pictorial clubs but no money returned under the contract no payment was required until six months after signing, and by that time, Pictorial Club had gone bankrupt. For producing the half-dozen seven-minute cartoons, Laugh-O-Grams had been paid only the deposit, $100. With salary checks growing thinner, Laugh-O-Gram employees began to drop out. Oob Earworks left the company to return to film ad. Walt found himself unable to pay his rooming bill, and for a couple of weeks he roomed with Oob Earworks. Then Walt took up lodging in the Laugh-O-Gram offices. Since the office had no bath, Walt made a weekly journey to the railroad

station, where he bought a warm tub, a towel, and a bar of soap for a dime after the bath he stood on the platform the train port platform where he had seen his parents his sister and roy depart for the west his family had all moved from kansas city a few months prior he couldn't avoid tears as he watched the passengers leaving for other towns and cities. It was so lonesome, he recalled, in later years. So his second company goes bankrupt, and he's like, you know what? I'm leaving. I'm going to Hollywood. I'm going to try to work in show business, and I might try to become a director.

So he tried a bunch of different things. Nothing really worked out. So he starts his third business and uh while he was in kansas city he did he made a movie a short movie called alice in wonderland and it was a combination of live action so a human uh girl playing alice and then cartoons and uh so that gives him an idea and so this is the genesis of his his third business he pursued another possibility he believed that alice's wonder, which he had made in Kansas City, might still provide him with his entree into the cartoon business. He printed some stationery with the letterhead Walt Disney cartoonist, and he sent off a letter to Margaret Winkler, the cartoon distributor in New York.

So this is Walt Disney writing. It says, this is to inform you that I am no longer connected with the Laugh-O-Gram Films Incorporated of Kansas City, Missouri, and that I am establishing a studio in Los Angeles for the purpose of producing the new and novel series of cartoons I have previously written you about. The making of these new cartoons necessitates being located in a production center that I may engage trained talent for my casts and be within reach of the right facilities for producing. I am taking with me a select number of my former staff and will in a very short time

be producing at regular intervals. It is my intention of securing working space with one of the studios that I may better study technical detail and comedy situations and combine these with my cartoons. So he manages to send MJ Winkler a copy of what he made in Kansas City, this Alice in Wonderland. And on October 15th, she writes him a telegram.

And it says that basically she's ordering a series of these short movies based on Alice. And it says, we'll pay $1,500 each for each negative for first six. And to show my good faith, we'll pay full amount on each of these six immediately on delivering of the negative. So they go into production. In a few weeks, they have the first one done. It says, the first reel was finished on schedule. And on the day after Christmas came the joyous telegramgram from mj winkler this is her writing now day at sea the name that's the name of the first film received

today satisfactory mailing today draft on los angeles bank with detailed letter the arrival of the first check cheered the disney brothers he's working with Roy at this time. In February of 1924, Walt hired his first animator and moved into a small store. The store window bore the letter Disney Bros Studio. Okay, so that's the third business. Disney Brothers Studio is going to eventually turn into the Walt Disney Company. So that is what is now a multi, multi-billion dollar business. First started out with a check of only $1,500 in 1924. Okay, so we're going to skip way ahead. The business is still really young. He starts to learn, and he's really young at this time, he starts to learn very important lessons. This starts with late payments from a third party. So

Winkler winds up getting married to a guy named Mintz and then Mintz starts running the company instead of her and that Causes all kinds of problems. So we're gonna get into that says the 23 year old filmmaker Walt Disney was receiving his education in the movie business Creators of movie entertainment unless they controlled their own releasing companies were at the mercy of the distributor it and the distributors mints it wasn't enough to be an original and creative artist disney learned survival in the film business required a jungle toughness so mince winds up screwing them over really bad so we're gonna get so the note i self i left myself on the next page, it says, a glimpse into the future, meaning Walt Disney's future, his future. It says control, which is the first thing I wrote.

He's obsessed with control, and there's a good reason why, because now we understand how he got, anytime he lacked control, he wound up getting screwed over by other people. It says high quality, which is something he solely focused on. Merchandise ownership of the characters, which again, this decision he's about to make here in this letter is something that he carries with him for the rest of his life. It's one of the most important decisions he ever makes. And it's very, again, it's very much in line with what we learned about George Lucas, how important it was for him to negotiate. Instead of a higher salary, he negotiated the merchandising rights to Star Wars.

And as we found out in that podcast and in the great biography of George Lucas, he made three times as much on merchandise that he did on the actual Star Wars films. So another note I left myself is while I was reading this book, I came across this article talking about some ideas that Jeff Bezos has. And specifically this idea that he has on why he prioritizes sleep and that most of your life is based on a small number of important decisions. And the reason I'm going to read you this quote from Jeff Bezos right now is because this one decision by Disney is extremely important. If you think about how much merchandising

has added value to the entire Disney brand, and you think about the extension of the theme parks is kind of an extension of the merchandise on such a grand scale that no one's ever done before. Okay, so this quote is Jeff Bezos talking about sleep. He goes, I prioritize it, Bezos said of sleep. I think better. I have more energy. My mood is better. As a senior, and then this is his quote, and he's going to use the word as a senior executive for our purposes. Let's put it as a founder. As a founder, you get paid to make a small number of high quality decisions, he said. Your job is not to make thousands of decisions every day. Is that really worth it?

If the quality of those decisions might be lower because you're tired or grouchy. So what he's saying there is like you have to sleep. You have to be well rested because you shouldn't be making a bunch of small decisions that don't matter every day. You should be focused on the very few decisions you actually make that set the trajectory for your company. And in this case, this is what Walt Disney is learning as a very, very young man. So he's negotiating with Mintz, and they're going back and forth. He says they finally agree on an offer, and it says, It was a variation of the terms they discussed, but it contained stipulations which were to be basic elements for the Disney operation of the future.

See, this is very important. Walt agreed to make each picture in a high-class manner. That's what he's known for. And insisted that all matters regarding the nature of the comedies are to be left to me. That's him saying I want complete control. He also stated that should the idea

or name of Alice be exploited in any way other than motion pictures, such as toys, novelties, newspaper strips, et cetera, it is agreed that we shall share equally in profits derived therefore. Most importantly, Walt's proposition was subject to my ownership, these are direct quotes from him, subject to my ownership of all trademarks and copyrights on Alice comedies accepting only rights relating to the series which you purchased under past contracts.

So saying, hey, moving forward, we're going to fix what you screwed me on in the past. Roy reasoned that a single name could have more box office appeal and identification. And so the Disney Brothers Studio became the Walt Disney Studio. So a few pages later, he comes to the realization through trial and error. I think what a lot of people know to be true today, which is committees suck. So it says Oswald the Lucky Rabbit, which is one of Oswald is a character. So think of Oswald as like the precursor to Mickey Mouse. So he makes mickey

mouse right which becomes a cornerstone of disney because mince winds up screwing him over on oswald the lucky rabbit and we're going to get into how he does that but uh right now they're making these movies are the series of movies with uh the main character being this rabbit it says walt disney's first venture into the all-cartoon medium provided an important lesson for the young filmmaker. He realized what he had known instinctively, that a strong, attractive central character was essential and that a good storyline was needed,

but too much plot could destroy laughter. He also learned that film company committees could throttle creativity. Because there's a lot of back and forth where they're the creative aspect of this partnership. Then they send them out to distributors. And the distributor sends them off notes to people who have never even made a movie. Or any other kind of creative endeavor. So that drove Walt mad. So now we're going to get into him being double crossed and where walt arrives at the conclusion

that i will never work for someone else again and it says even though he has his own company the distributor basically is holding all the power in this situation so said the oswald contract was scheduled to conclude in february of 1928 walt treated Lillian himself, Lillian is his wife, Lillian, and himself to a train trip to New York for the renewal negotiations with Mintz and Universal. Universal Pictures is the distributor. They have a relationship with Mintz. Mintz controls that relationship and keeps, so basically he's buying the raw product from Walt and then turning around and doing a deal with Universal.

But Universal only has a relationship with Mintz. It's important to remember. And Oob is now back working at Walt Disney Studios. So it says, Oob had become suspicious of the confidential talks that George Winkler had been having with other animators at the studio. So George Winkler is Mintz's brother-in-law. So Mintz is based out of New York. George Winkler lives and works in the entertainment industry in Los Angeles. So he'd come by every so often and check on the progress at the behest of Mintz. But what was really going on is that they

were basically trying to push Walt Disney out. So they wind up successfully recruiting all of his animators. So it says, So that's the lady that was sending him telegrams, which is now Mintz's wife. The conversation was warm, but Walt detected a hollow note in Mintz's geniality so when Walt had arrived in New York he gets this letter from UB saying hey something weird is going on Walt was very optimistic so he just dismissed he's like oh no everything's fine he's all excited

because he's everything's going well in the company he's like we're just gonna renegotiate we're gonna make more money this is gonna be great so it says negotiations for the new Oswald contract were held in Mintz's office Walt began by suggesting that in view of the unquestioned success of oswald and they were very successful the price per cartoon should be raised from two thousand two hundred and fifty dollars to twenty five hundred dollars i'll give you eighteen hundred mince replied eighteen hundred dollars for each cartoon would mean a loss for the Disney studio. Walt asked for an explanation. Either you come with me at my price or I take your organization away from you, Mintz announced.

I have all of your key men signed up. Walt couldn't believe it. Had Mintz actually plotted to steal away the Disney animators? And would his boys, to whom he had taught the cartooning trade in Kansas City, desert him to work for from him. Walt told Mintz he needed time to consider the ultimatum. Walt hurried back to the hotel and telephoned Roy the news of Mintz's bombshell. Roy made an investigation and discovered that virtually all of the animators except Oob Airworks had committed themselves to Mintz. Now Mintz had played his trump card.

By contract, Oswald was the property of Universal Pictures, not Walt Disney. Walt was disheartened. All of his hard work and creative effort had created a valuable property which he didn't own. When he told Lilly the sorrowful news, he vowed, never again will I work for somebody else so up to this point we know that hey the founding of this giant conglomerate that becomes the walt disney company starts off with a 1500 check a few years later it um it basically he has to start again from scratch he loses everything so now on the train ride back

from new york to um to los angeles uh the lore of mickey mouse and we don't know if this is true some people swear it is because walt repeated his whole life a lot of people say no it's not true that's where he got the idea for mickey mouse he drew the direct the rough sketch he was calling mickey mouse mortimer mouse his wife lily which we know this is actually true said no no it needs to be mortimer is a terrible name so he's like so she's like excuse me um you know what about mickey and that winds up sticking so we're going to skip ahead uh Walt's really optimistic, and he just gets right back to work, and he starts building back up his company. And so this is the traumatic experience of technological surprise. And I got that sentence from the book last week, Space Barons.

I thought that was a great description, and that's a description of why DARPA at the time was ARPA was created because the Russians beat the United States in getting into space first and they they said that that Arpa was created to combat the traumatic experience of technological surprise and I just think that's wonderful writing all right it says as Walt continued his dealings with New York film world he became more convinced of the future of sound so what's happening now he makes a bunch of these Mickey Mouse cartoons, including Steamboat Willie, which is really, really famous. And while he's doing this up until this point, not only was everything in black and white, but it was silent. And one

thing about, again, I hate to keep repeating myself, but there's so much parallels now that I have read the George Lucas book with George Lucas and Walt Disney. And every time there was new technology out, Walt would basically, just like George, he would drop what he was doing and embrace it 100% because he was convinced there's a future. And so once he saw sound movies, he's like, oh, well, this kind of makes everything else we're doing look silly. So that's what I mean by the traumatic experience of technological surprise. And what he's talking about with New York is now he he's like i'm going to deal with distributors directly i'm not going to give away like i'm going to own mickey mouse and i'm going to find somebody to distribute this for me i don't need third parties anymore so it says as well continued his dealings with the new york film world he

became more convinced of the future of sound he wrote to roy and oob that talkies that's what they used to be called if you could believe it or not, were still a mystery to most of the movie executives. And this is a direct quote from Disney. None of them are positive how it's all going to turn out, but I have come to this definitive conclusion. Sound effects and talking pictures are more than a mere novelty. They are here to stay and in time will develop into a wonderful thing. The ones that get in on the ground floor are the ones that will more likely profit by its future development.

That is a great thought right there. And he's 100% right about it. I am convinced that the sound on film is the only logical thing for the future. So I love this idea how he's very resolute as we can hear in his own words just oh just it's obvious to me but the people that are already entrenched in the industry like oh you know we don't know how it's going to go we're not positive and maybe just novelty something we talked about last week i don't talk about all the time is like why as humans we live in a world that's constantly changing yet because of incentives or who knows the actual root cause, sometimes we delude ourselves into thinking, oh, no, things are just going to stay just as they are.

They never will. So let's hopefully keep that lesson in the front of our mind. I just want to read this because I think it's important. Anybody that's tried to create something has to deal with the doubts and the mental back and forth that goes on. Getting excited about what you're doing, then going into being disillusioned and going back and forth and trying to figure out what you actually feel about what you're working on. And so it's just a reminder. It's normal to doubt yourself. It's normal to doubt yourself when you're creating something and you see walt disney who you know at this time he's not the walt disney the wonderful thing about this book and the other

books because we see these people we learn about them before they turn into who we know them for you know walt disney up until this point hasn't really done much you know he started a bunch of businesses but mickey mouse is not has not built the disney empire he's not he he's got 30 or 40 years ahead of him in his career about 40 years actually um so this is a young walt disney doubting himself and he says personally i am sick of this picture steamboat willie every time i see it the lousy print spoils everything. Maybe it will be a different looking picture with sound. I sure hope so. I am very nervous and upset. And I guess that has a lot to do with my attitude in this matter. So that's a direct quote from Disney. This is Walt Disney telling you he's doubting himself. Steamboat Willie becomes one of the most famous cartoons ever made, ever.

And he's not sure if it's good enough. So I don't know. I find that extremely reassuring for my own life, and hopefully you do as well. By this point, Walt decides, hey, Steamboat Willie, it cannot be. It has to have sound. And Roy and other people are saying hey we don't have the money for that like we're drowning here like we can't afford this what are you doing and walt decides to go all in and this is him describe explaining why and it's wonderful

language that he uses i am figuring out a good release walt assured roy and ube i don't think we will have any trouble getting it. This may mean the making of a big organization out of our little dump. Kind of predicting the future here, isn't he? Why should we let a few dollars jeopardize our chances? I think this is old man opportunity wrapping at our door. Let's don't let the jingle of a few pennies drown out his knock see my point so slap as big a mortgage on everything we got and let's go after this thing in the right manner okay so right after this they put sound in steamboat willie walt loves it and he's going out trying to sell steamboat willie and he's finding out something that is extremely important because history doesn't repeat, but human nature does.

And he learns a lesson right here. He goes, Walt was convinced that Steamboat Willie was a winner, and he couldn't understand why the companies weren't flocking to sign up a series of Mickey Mouse cartoons. Think about it. You're in hindsight now. He couldn't sell Mickey Mouse cartoons. Think about it. Is there another character that you could think of,

another fictional character that made more money than Mickey Mouse? I can't think of one. So it's amazing. It was explained to him by a show business veteran. This guy's name is Harry Reckenbach. And this is so important right here, what he's going to say. Those guys don't know what's good until the public tells them. So Reckenbach actually does, I don't know if he owns, does he own the company?

So Rickenback was a colorful promoter, publicist who was, yeah, okay. So he's operating this colony theater in New York. And he saw Steamboat Willie and he's like, hey, I want to put that cartoon up on the colony. And Walt's like, this is, okay, let me just read what walt says he says gee i don't know what replied i'm afraid that if i run it at a broadway house it'll take the edge off my chances to sell it to a distributor and this is so important for all of us to remember no it won't said the persuasive rickenback you can you can chase the cartoon all over town and those companies won't buy not until the public tells them it's good.

Let me run it for two weeks so the press can see it. You'll get good reviews and the people will come in droves. I'll give you $500 a week. Walt was immediately convinced. That was more money than anyone had ever paid to play a cartoon in a single theater. The $1,000 was desperately needed to shore up disney's finances steamboat willie opened at the colony theater and it was a sensation that walt had dreamed it would be so uh what happens is just like rickenback um predicted now instead of uh

the the tables are turned walt was going around trying to sell the cartoon. You know, humans are very lemming-like in that we follow what everybody else is into. People in the film business are human, so they're very much the same way. And now they're going after him. But very importantly, Disney learned from his mistakes. So he was very willing to experiment, but he did not make, he very rarely made the same mistake again so look and we see that in his negotiations and it says the talks with the film distributors followed the same pattern they asked how much he wanted to be paid each week for producing mickey mouse so that

sounds very much like his arrangement with mince right he replied that he didn't want to be paid by the week that he had his own studio and he wanted to remain independent they answered that they would either hire him by the week or buy the cartoons outright no said Walt he had to own the cartoons himself young Walt is learning oh okay um I'm skipping way ahead now um this the first sentence i'm going to read a paragraph but this first sentence is really a one after reading the book it is really a one sentence description of most of walt disney's career what most people don't understand is what was almost insolvent up until he created Disneyland, which he did only like, I think like five years, maybe five, seven years before he

actually died. Cause he dies rather young at 65 of lung cancer. He, he was not, he did not do this to make money. Now he winds up dying a wealthy man because of the profits Disneyland made the company, but he was adamant on making like he had a He's obsessed with the quality of his product like most of these founders are I would say almost every single founder we've covered is Um, so this is a one-sentence description of most of Walt Disney's career Animation as practiced by Walt Disney would always be a perilous enterprise with prosperous times when the products seceded and the threat of insolvency when it didn't. So let me continue. Money worries and the stress of leading a crew of volatile talented artists through uncharted territory began to wear on Walt. He became more irritable with his employees snapping at them for minor

offenses. A sudden disappointment could plunge him into a crying spell he spent sleepless hours in bed at night staring at the ceiling as he reviewed the day's events and planned the future in story sessions his mind went blank and he couldn't recall what was being discussed he consulted a doctor who advised him to leave the studio and seek a complete rest so he has to do this a few times throughout his career. Okay, so now we're going to get into the power of licensing and what this does for Disney. So it says, at this point, I'm obviously, you know, cutting out a large part of the book. I'm only going over parts that I highlighted and i just you know basically focus on ideas instead of just trying to keep this as a as a cohesive story so it says uh the craze of mickey mouse brought a new and

important source of income to the disney enterprise mickey mouse goes crazy um they wind up millions and millions of of kids are raised uh on mickey mouse basically. Walt, and it's kind of interesting that it still happens today. I have a daughter. She was born, let's see, 50 years after Disney died. And that would be 80 years after the creation of Mickey Mouse. And she was kind of raised on Mickey Mouse, too. Okay. So it says, important revenue source a source of income for Disney Enterprise.

Walt first realized the financial possibilities of licensing when he was in New York for negotiations. He recalled later that a man called at his hotel and offered $300 in cash for permission to imprint Mickey Mouse on school writing tablets. As usual, Roy and I needed money, so I took the $300, Walt said. The salesmanship of Mickey Mouse produced seemingly miraculous results. So he hires this guy, this guy named Kamen, who winds up being one of the first people to cold call Walt saying, hey, I want to run your licensing company, and I want to go out and travel and sell licenses for all of your products.

And they wind up having one of the best, well, this was really hard to work with, but this gentleman, they had like a 17-year partnership that was relatively trouble-free. He sold hundreds of millions of dollars of Mickey Mouse merchandise, if I'm not mistaken. And he tragically dies in a plane crash with his wife in France. And I think he was still pretty young. I think he was in his 40s.

So it says, the salesman of Mickey Mouse produced seemingly miraculous results. Cayman licensed the Lionel Corporation, a pioneer in manufacture of toy electric trains, so we know that, for the merchandising of a Mickey and Minnie wind-up hand car with a circle of track for the price of $1. So we know, well, maybe you don't know, but I played, I liked trains when I was younger too, and I remember Lionel trains. And it says, Lionel had been, but I didn't know this part, Lionel had been hit hard by the Depression, and it had filed for bankruptcy. Within four months, 253,000 of the hand cards had been sold and the association with

disney was credited by a bankruptcy judge as a major factor in returning lionel to solvency and it says the ingersoll waterbury company makers of timepieces since 1856 had been pushed close to bankruptcy in the early 1930s when Cayman licensed the firm to manufacture Mickey Mouse watches. Within weeks, demand for the watches caused the company to raise the number of its employees from 300 to 3,000. Two and a half million Mickey Mouse watches were sold in two years highbrow critics tried to analyze Mickey's popularity in terms of mass psychology Walt Disney was amused

but unimpressed by such intellectual izing he offered his own explanation he was quick to give credit for much of Mickey's nature to Charlie Chaplin we thought of a tiny bit of a mount we thought of a tiny bit of a weird sentence, but he's basically saying that he patterned Mickey's behavior off of what, off of the actions of Charlie Chaplin. And we're going to get to Chaplin in a minute because he idolized Chaplin and winds up meeting him later on and getting advice from him. So I'm going to cover that in a minute. But I want to delve into these few random paragraphs about his personality and working style,

which I'm always super, super interested in learning about. With his staff expanding, Walt Disney began to establish the attitude and modes of operation that would continue throughout his professional career. Not yet 30, he had been in the animation business a dozen years, and his maturity was beyond his years. Away from the studio, he could indulge in horseplay and be one of the boys. But during work hours, his attitude precluded casual intimacy. He was incapable of small talk.

His employees learned not to engage him in the banter that animators used as relief from the tedium of drawing. His mind was too involved with the problems of the moment, a storyline that defied solution, a cartoon that failed to evoke laughs at the preview, an overdue check for Columbia Pictures that threatened next week's payroll. His workers learned not to be offended if he passed them in the hallway without a word. They knew that he was preoccupied with a studio problem. Walt was developing one of his most valuable traits, the ability to recognize a man's creative potential and force him to achieve it. What I particularly like about this book is that a lot of it comes from firsthand accounts. So like he talked about, like the author talked about in the introduction, he had

extensive interviews with Walt Disney. He knew him before he died. This book, so the other podcast I did on Walt Disney, I think that book came out in like 2007, sometime around this. This book was first printed in 1974. So that's another thing I love about doing this podcast is that, you know, we're sitting here, what is that, 40, 50 years here what is that 40 50 years later something like let's 40 something years later and we're still being able to learn from somebody that's that's been dead you know quite a long time okay so this is the advice from chaplain and always pushing the technological boundary the proposal was extremely attractive to walt not merely because of the terms united united artists represented the tiffany's of the terms. United Artists represented the Tiffany's

of the movie business. So what's happening here is United Artists is trying to recruit Walt Disney, steal their business, not steal, get the business from Columbia and they want to distribute Disney's films and they want to do it on better terms. And this is, well's let's learn about why

walt was happy about this walt was especially thrilled at the prospect of being associated with the great chaplain because chaplain was part of united artists and one of his idols the comedian provided to be excuse me the comedian proved to be as much of a fan of the disney cartoons as walt had been of Chaplin's comedies. You're going to develop more. You're going to get a hold of your medium, Chaplin told Walt. But to protect your independence, you've got to do as I have done. Own every picture you make. Walt agreed with the advice. With the association with United Artists agreed upon, Walt determined to add a new element to animation, color. For years, okay, so before I get into this, remember,

everything was black and white at one point, and silent, then it's black and white, and talkies has sound, and now it's black and white with sound, and now they're going to color, and what do you think Walt's going to do? For years, Walt had been intrigued with the notion of adding color to his cartoons. He had told his technicians to experiment with nitrates and other elements that might provide color on the screen. Then, in the early 1930s, Technicolor developed a method of combining three negatives of the primary colors. By 1932, the process had not been perfected for live action photography, but it could be applied to cartoons. Technicolor showed a test reel to Walt Disney, and he was convinced Roy wasn't. So Roy is always like his, like, if you're Walt Disney,

picture on one shoulder, you have a version of yourself, that'd be like the little devil in this metaphor. Roy is like the angel, always saying, no, no, let's not do that. Let's be conservative. Let's take the easy path. Let's just build up our resources. And the devil's like, nope, all in, risk everything. And I think Walt Disney listened to the devil most of the time. All right, so we'd be crazy to take on the expenses of color just after we've made a deal with United Artists, Roy argued.

They won't advance us any more money for color. Yes, but don't you see, Roy, Walt replied. Maybe United Artists won't give us any more dough. But the pictures will create so much excitement that we'll get longer play dates and bigger rentals. That'll bring the money back eventually. Eventually, it'll be years before we see that money with all the advances that are charged against us already we can't do it roy said roy added his fears that the colors might not stick to the celluloid or would chip off walt's answer then we'll develop paints that will stick and won't chip for every

problem there's a solution that That's definitely what Walt believes. Roy remained unconvinced. He asked others in the studios to dissuade his brother from this disastrous course. Walt heard their arguments and became more certain that color would raise animation to new levels of creativity. I just love that. I really love that.

Walt used his brother's reluctance to evoke a concession from technicolor roy says color is going to cost us a lot of money that we'll never get back walt argued so if we take a chance on it you've got to assure us that every other cartoon producer isn't going to rush into theaters with technicolor the company agreed to grant disney two years exclusive use of the three color process roy grumbly consented to the contract that is a really smart play by walt right there okay so let's skip ahead um so another reminder that anytime you're going to create anything new or do anything new you need to expect to be criticized.

So here's an example of that. And then he has this great quote that acts as a metaphor, and it's you can't top pigs with pigs. When a print of the three little pigs arrived in New York, Roy arranged a screening in a projection room at the United Artists office. The salesmen, so this is for the salesmen that are supposed to go out, the salesmen that work at United Artists are supposed to go out and sell the film to the theaters. The hard-boiled salesmen remained silent during the cartoon, and one of them afterwards said, this is a kind of cheater, don't you think? Rory asked what

he meant. The last cartoon Walt sent us was Father Noah's Ark with dozens of animals, said the salesman. Now he only gives us four. I don't even understand why that would even be something you criticize. So they go on to sell the movie. The result is the success of Three Little Pigs was unparalleled in cartoon history. So now we're going to see the united in in after the movie sells like crazy their united ales artist salesmen change and now instead of doubting the the little pigs they want more so it says the united artist salesmen responded characteristically their message to walt was send us more pigs. He refused, never wanting to repeat himself. But Roy convinced him that bringing back the pigs would be good for business.

Walt made three more, the big bad wolf, the three little wolves, and the practical pig. None approached the sensation of the original, and Walt made a comment he repeated for years afterward. You can't top pigs with pigs oh and i love this part this is a uh this is several pages actually several chapters later and this is a little bit about more this is a little more on how disney worked walt seldom surveyed his animators work while they were creating he understood the fragile nature of the creative process, and he wouldn't intrude. But there was nothing to stop him after the animator had left for the day. Walt's nighttime visits to the offices became legendary, and animators often left their best work on the drawing table overnight, anticipating that Walt would inspect it.

But sometimes they arrived in the morning to find crumpled sheets of paper rescued from wastebaskets and pinned on a storyboard with the notation in the unmistakable Disney handwriting. Quit throwing the good stuff away. I love his level of dedication. He's perusing the garbage to find hidden bouts of creativity.

Okay, skipping ahead. The note I left myself is always pushing its limits. Within six months after the release of Snow White, so Snow White was the very first full length animated movie ever. And that's what I was saying earlier. They were, it cost millions and millions of dollars. I think actually 1.5. For some reason, I don't have it here. I think it's 1.5. It might have been $2.5 million at the time, which is an insane amount to spend. They didn't have it.

Walt convinces the bankers to lend him money, and this is the result. Within six months after the release of Snow White, they had paid off all of their bank loans. The $8 million that the firm earned in its first release was a phenomenal sum, considering that the average price for theater admission in the United States in 1938 was 23 cents. And a heavy percentage of those seeing Snow White were children admitted for a dime. So think about that. most of the people watching the movie are children uh even if it's half you're either paying 23 cents or you're paying 10 cents and that accumulates there's so so many people go see it it accumulates up to eight million dollars

in this sentence where it says the eight million dollars that the firm earned in its first release they're still making money off of Snow White to this day. This is happening, so the movie comes out, what, 1938? 1950-something, when Disney starts to make content for TV. They also start reselling some of their old movies and playing them on TV and getting paid from the television networks. And then they keep doing this over and over again, where even now, my daughter, who was born, you know, let's see, 70 years now,

70 years after this point, has seen Snow White. So it's like the gift that keeps on giving. It's amazing what that initial investment resulted in. But keeping with the topic of pushing his limits, going back to the book, features, which is long features, had to become the creative thrust of the studio. Walt realized that the company could expand

only by producing full-length movies to compete for theater rentals with the top flight attractions of the major studios. He began devoting his major attention to features, paying less heat to shorts. So what had built their business at this point is these short little movies like the three little pigs and and stuff like that and you know they just run for a few minutes uh thus began the pattern of his creative life as he discovered each new unexplored medium his interest dwindled in the one that he had previously conquered. I think that's very,

I admire that very much about Walt Disney. And I don't know how many of us would actually do the same thing. It'd be very comfortable. Hey, I have something that's printing money. Let me stay here and just ride this out. And he didn't seem to care about that. He was always putting himself in an uncomfortable position. And I think putting ourselves in uncomfortable positions is probably the only way we're actually going to reach our full potential. Let's see. Oh, so this is a most unusual response to financial calamity. And what happens is, so now they're going all into feature films. So when a feature film makes $8 million on, let's say, a $1 million dollar uh investment you know times are good at the studio but there's a lot of these feature films where they uh wall is so um determined to increase quality he spends way too much and they lose money on the pictures so it says when

roy disney uh okay here we go when roy disney asked walt to visit his office one day in 1940 walt realized that meant trouble when walt was summoned to roy's office one day in 1940, Walt realized that meant trouble. When Walt was summoned to Roy's office, that always meant bad news. Walt studied his brother's long face and asked, what's the matter? Roy outlined the financial reverses of the past year, how the profits of Snow White had been eaten up by the cost of Pinocchio, Fantasia, and Bambi. Now, how crazy is that? You probably all know these three titles, right of Pinocchio, Fantasia, and Bambi. Now, how crazy is that? You probably all know these three titles, right? Pinocchio, Fantasia, Bambi. They were money losers for a long time.

He didn't recoup the money on Bambi until they re-released it like 20 years later. Okay, so the Prophet of Snow White had been eaten up by these three movies, how the European war had caused a sharp decline in theater revenue, so that's World War II that's going on, how the company now had a thousand employees in a brand new studio that had cost them three million dollars to build. And now, Walt, Roy concluded, we're in debt to the bank for four and a half million dollars. Roy expected his brother to be shocked and concerned. Instead, Walt began to grin and then he burst out laughing. What the hell are you laughing at, Roy demanded. I was just thinking back, Walt said between fits

of laughter. Do you remember when we couldn't borrow a thousand dollars? Roy too began to laugh. Yeah, remember how hard it was to get that first $20,000 credit, he recalled. They regaled each other with memories of when they had to plead for loans to meet the weekly payroll. And now we own four and a half million dollars, Walt remarked. I think that's pretty damn good. So I think that's amazing. They wind up getting out of this. I'm going to read how they do that now. But I don't know. I hope I adapt this in my own life. Like he's faced with something that's, you know, could, could threaten the livelihood of his company. Although he does have complete confidence in the studio's ability to solve problems and to, and to produce content that people want to consume. And he just, you know, instead of getting upset or emotional,

he just laughs. He's like, well, that's, you know, we've actually, if you look at it in the right terms, we've actually come very far. So maybe we can keep this thing going. So they realize, especially Roy's idea, he's like, hey, we got to raise outside capital. And so they do their first stock offering. It says, both Disney's had resisted the issuance of stock. Theirs was an extremely personal business. And Walt despised the idea of having outsiders share in the decisions that he had made by himself throughout the company history.

They wound up doing it and it says the stock offering quickly sold out, contributing $3.5 million of much needed capital to the Disney company. Financial troubles were assuaged for a time. Okay, so I'm skipping ahead. This is something that's very i think a little known fact about the company history of disney and that the the united states army actually takes over the disney studio so it says on the afternoon of december 7th 1941 walt disney answered the telephone at his home the studio manager told him w, the studio police just phoned me. The army is moving in on us. Still shocked by the news that the Japanese had bombed Pearl Harbor, Walt asked what he meant.

The army, 500 soldiers, said the manager. They told me they're moving in. What did you tell them, Walt asked. I said I'd have to call you. Well, what did they say to that? They said go ahead and call them. We're moving in anyway. The soldiers commandeered the Disney soundstage, ordered the film equipment removed,

and installed gear for repairing trucks and anti-aircraft guns. An officer remarked that the stage was ideal because it could be used during a blackout. Next, the Army claimed the employee parking sheds and used me, that's the army claimed the employee parking sheds and used them for storing 3 million rounds of ammunition. Military police were posted at each gate and all Disney workers, including Walton Roy, were fingerprinted and given identification badges to wear at all times.

Artists doubled up in rooms of the animation building so that soldiers would have places to sleep. The army unit, which supported anti-aircraft installations in the mountains around los angeles remained at the studio for eight months it moved out when fears of a japanese attack on the mainland were over but other military personnel moved in the disney studio had been converted to war. So what happens, for four years, Disney Studio basically stops making cartoons, or at least cartoons for entertainment,

and they're hired by the U.S. government to make explainer movies about war bonds and training videos for soldiers and all kinds of different things. It says, Walt was stimulated by the challenge of interpreting complex subjects in a compelling and enlightening way. He applied his skill to explaining bomb sites

and factory methods with the same zeal that he had to recounting the exploits of Mickey Mouse and Snow White. So eventually, the Disney studio gets back to producing feature-length animated films. And the story I'm about to tell you is an amazing meeting with the founder of Bank of America. As in the depression, the Disney studio failed to share in the prosperity of the motion picture business. The other companies were grinding out war movies and musicals for an entertainment-hungry nation, and theaters were earning huge profits.

But not with Disney pictures. There was no Snow White and the Seven Dwarfs to rescue the Disney brothers from debt. The studio issued a dozen short cartoons annually during the war. Returns on them were limited by the economics of the movie business. The training and propaganda films contracted by the government barely paid for maintaining the staff and studio. The indebtedness to the Bank of America climbed to more than $4 million,

and some of the bank's board members expressed concern over the revolving line of credit extended to Disney. So they're called up to Bank of America's headquarters, I think in San Francisco, and they're sitting in a room with a bunch of Bank of America executives, and they're all waiting for the founder of Bank of America to come in. So he said, nothing could proceed until the arrival of A.P. Gianni, the founder and chairman of Bank of America. After 15 minutes, he entered. He declined to take a chair, listening to the discussions as

he walked around the table. As he passed the Disneys, he nudged them in the backs and muttered, don't look so downhearted. It isn't going to be that bad. Walt and Roy found reason for hope. AP had long been their champion. When traveling in Europe, he sometimes sent them postcards with the message, I saw one of your pictures, and it was pretty good. The matter of the Disney loan came before the board, and Walt and Roy explained how war conditions had interrupted the studio's profitability. Gianni began interrogating the directors. You've been lending the Disneys a lot of money.

How many of their pictures have you seen? Which ones? He demanded answers from each board member and he discovered that several of them had seen none of the Disney movies. Well, I've seen them, Gianni remarked. I've been watching the Disney pictures quite closely because I knew we were lending them money far above the financial risk. But I realized that there's nothing about those pictures that will be changed by the war. They're good this year, they're good next year, and they're good the year after. Now there's a war going on and the Disney's markets are in trouble. Their money's frozen, meaning the money that's in some of these countries in Europe, they won't let it be expatriated back into the United States. their money's frozen or else they can't get into

countries you have to relax and give them time to market their product this war isn't going to last forever so moving ahead this is actually a really good idea walt has about finding the right way to do something by seeing it done the wrong way walt employed a pair of writers who seemed to produce nothing of value. He admitted their incompetence and explained why they remained. Because they always do the story the wrong way. And once I've seen how they do it, I know the right way. That's funny. Let's see. Okay. So he has this saying, and this is now skipping ahead. The bankers are still giving him some pressure. They think that he should cut his staff or limit the production and the scale of his ambition,

and that's something Walt would never do. But Walt refused to cut down his staff or curtail production. His answer was the same as it had always been in beleaguered times. We can lick them with product. That was his credo. When times were bad and the bankers were complaining, the studio needed to get its entertainment before the public. And this is how he's turning a constraint into an opportunity.

So I mentioned earlier, and so did the founder of Bank of America, that some of their revenue, so like particularly in England, at the time of the war, if you made money in that country, they wouldn't let you take it out. So this is how he's turning a constraint into an opportunity and how a $1.8 million bet makes him $4.1 million. The economics of the post-war movie business provided the opportunity for Disney's first

completely live-action feature, meaning no cartoons, just people. Like most war-damaged countries, England had frozen the payments due to American film companies, and Disney had amassed millions of dollars that could only be spent in the United Kingdom. RKO, who's a distributor at this time, suggested Walt use it to make films in England. He decided to use the frozen funds to make a live-action version of Treasure Island.

He was stimulated by the challenges of live-action filming. So he's over there in England doing this. When he returned to Burbank, he needled his animators. Those actors over there in England, they're great. You give them the lines and they rehearse it a couple times and you got it on film. Then it's finished. You guys take six months to draw a scene. The animators took his kidding good-naturedly,

but they understood what was happening. Walt had found a new toy, said one of the animators. Okay, so we're going to skip ahead because I want to get to the point with Disneyland. Because what that animator just said, we realized we're going to lose him. There was a, not only did the war disrupt the Walt Disney Studio, but then there was a strike that really affected Walt Disney for the rest of his life. And he kind of fell out of love with cartooning. And the majority, I would say the last decade of his life was spent with his true love and his true love was actually Disneyland. So I want to talk a little bit about that. And this kind of follows the theme that the book has taught us, which is he never rested on his laurels. He would master one thing and then once he felt he did it to a level, like to the

maximum level of his abilities, moved on and even though at this point Walt Disney Studios massive it's moderately profitable not nearly as profitable as Disneyland is gonna make the Disney company but wins Academy Awards he's famous his characters are famous and yet he kind of walks away from it so let's let's learn a little bit about that here. The vision of an amusement park grew in Walt Disney's mind. On each trip to Europe and during his travels through the United States, he attended outdoor attractions of all kinds. He visited county fairs, state fairs, circuses, carnivals, national parks. He studied the

attractions and what made them appealing, whether people seemed entertained or felt cheated. His most depressing experience was seeing Coney Island. It was so battered and tawdry and the ride operators were so hostile that Walt felt a momentary urge to abandon the idea of an amusement park. His spirit revived when he saw Tivoli Gardens in Copenhagen. It was spotless and

brightly colored and priced within reach of everyone. The gaiety of the music, the excellence of the food and drink, the warm courtesy of the employees, everything combined for a pleasurable experience. Now this is what an amusement park should be. Walt and his planners watched how people at the Los Angeles County Fair responded to the attractions. They traveled to Knott's Berry Farm and measured the walkways and observed how the traffic flowed. Walt was particularly interested in the movement of people. He watched them as they walked freely from one attraction to another, then pointed out how they grew irritated when crowds jammed up. The plans for Disneyland

grew. He continued to pour his creativity into Disneyland and his money. When he had borrowed the limit on his insurance policies, he sold the house he had built in Palm Springs as his vacation home. Roy Disney pointed out that the company remained in debt to the Bank of America, and it was doubtful that any bank would lend for an amusement park. Walt would not be discouraged. Okay, so what they're talking about there, as far as insurance policies, just like that one-sentence description I read earlier about his career, he's barring to plan Disneyland because no one's giving him money. Roy's turning him down.

He's selling his house, his vacation home, and a bunch of his assets. And he's also barring against his life insurance policy, which is really crazy when you think at this time he's about 55 years old and he's been smoking cigarettes almost like a chain smoker is how they describe him. So he's been smoking cigarettes nonstop for about 30 years. And he's barring against his life insurance policy to do Disneyland. Okay, so it says Walt would not be discouraged. So we find out he's got this great idea. And it says Disneyland became a crusade with Walt, more so than sound cartoons, color, animated features, and all other innovations he had pioneered he told a reporter the reason for

his zeal i love this the park means a lot to me it's something that will never be finished something i can keep developing keep adding to it's alive it will be a living breathing thing that will need changes when you wrap up a picture and turn it over to Technicolor, you're through. Snow white is a dead issue with me. I just finished a live action picture, wrapped it up a few weeks ago. It's gone. I can't touch it. There are things in it I don't like, but I can't do anything about it.

I want something live, something that would grow. The park is that. Not only can I add things, but even the trees will keep growing. The things will get more beautiful year after year, and it will get better as I find out what the public likes. I can't do that with a picture. It's finished and unchangeable before I find out whether the public likes it or not. So a few paragraphs later, he figures out how to finance the park. He knew he would have to discover a way to finance the park. He found the solution while lying sleepless in bed. Television, Walt told his brother the next morning. That's how I will finance the park. Television. To Roy roy it was the first thing uh thing walt had mentioned about

disneyland that made sense like all major corporate decisions this one had to face approval of the board of directors of the walt disney company walt disney usually prevailed but the wisdom of entering two new fields television and an amusement park was questioned by the conservative members of the board. Walt took the floor to explain his reasoning. Television was an important medium for acquainting the public with the Disney films. The two Christmas specials had demonstrated that. A weekly show would expend a vast amount of creative effort and money, with little or no profit except for creating bigger audiences for Disney films

in the theater. If I'm going to devote that much talent and energy to a television show, I want something new to come out of it, Walt said. I don't want this company to stand still. We have prospered before because we have taken chances and tried new things. To board members who complained that Disney was not in the amusement park business, he replied that the company was in the entertainment business and that's what amusement parks are. There's nothing like it in the entire world.

I know because I've looked. That's why it can be great because it will be unique great idea I love I love that uh that point by him so they wind up agreeing he's a super salesman after all and Roy is then tasked with finding a partner and they come up with another good idea here they're gonna sell so disney's a a great well-known brand right and all the all three major television networks in the united states at the time wants the shows on their network but roy makes them he's like listen you get the tv show but you have to invest in disneyland so said roy began discussions with the three television networks with potential sponsorships for an hour-long weekly television show.

Roy stipulated that whoever wanted the television show would have to invest in Disneyland. This was genius because they wind up ABC. Let's see. What's it? So ABC puts up $4.5 million for the development of Disneyland. And I don't know if I'm going to cover it here. Let's see. for the development of Disneyland. And I don't know if I'm going to cover it here. Let's see.

But the television show winds up being integral in the success of Disneyland because the TV special that Walt Disney makes promoting the opening of the park is seen by 90 million people. Imagine having an ad for your business that's consumed voluntarily as entertainment by 90 million people. Okay, so skipping ahead a little bit, we're going to talk a little bit about some of the development of Disneyland.

Specifically, well, there's only one way to do it, and that is my way. So this is really another elaboration on that you have to expect to be criticized and that human nature doesn't change. And so Walt Disney hires a group of Stanford researchers. So it's the Stanford Research Institute that's trying to figure out the optimal location for Disneyland and solving some of the civil engineering problems they're going to run into. So these researchers also go to a convention of amusement parks. So a lot of owners of amusement parks are there. So that's setting the stage.

This is what happens. Stanford researchers had a memorable encounter with the owners of amusement parks at their convention in Chicago in November of 1953. In a late night session, the park operators studied Walt Disney's concept of a new kind of amusement park. The decision was unanimous.

It won't work. There was not enough ride capacity. Too much of the park didn't produce revenue. The newfangled rides would cost too much to maintain. Mechanical failures and year-round operation would be epidemic. The park owners advised Walt Disney to save his money. So another example of entrenched people in the industry,

just assuming that you know the way they do it is the only way it can be done and that things aren't going to change but we know that that's not true so this is just this is just some so now these are some anecdotes of what I would what I'm calling the maniacal focus on the customer. Several of the founders that have been profiled on this podcast have this. Maybe everyone, you could argue. Different degrees, of course.

Walt Disney definitely possesses. I think that might be his main trait. So it says, to some of the bankers, Walt seemed prolific. You can't put a price tag on creativity, he argued. That had been his theory from the beginning. So it says, argued that payments from distributors were not enough to cover production costs, Walt's answer was, if we make better cartoons, we'll get more money next time. He was unable to establish budgets for Snow White, Fantasia, Bambi, and other cartoons because he was pioneering with new mediums and new techniques. The same with Disneyland. He set no budgetary limits on his planners and engineers they were exploring unknown territory and only at

the end of the correct of that quest would walt know what it cost that's an that's amazing to have that much belief in your abilities that you're not gonna have a budget and you're just gonna say hey we're just gonna make the bet the single best thing we can and you know you you want to know what it's gonna cost well wait till we're done and we'll tell you how much it's going to cost. Here's another example of that. So one thing that he didn't like to hear was like, just like Elon Musk and other people, don't tell him no. So it says, sometimes the engineers told him that effects he could easily accomplish in motion pictures were impractical in an amusement park.

They learned not to say that to Walt Disney. To an engineer who pointed out the impossibility of a Disney proposal, Walt replied, you know better than to kill an idea without giving it a chance to live. We set our sights high. That is why we accomplished so many things. Now go back and try again. Another example of this, members of the park staff urged him to build an administration building no he replied there isn't going to be any administration building the public isn't coming here to see an administration building besides i don't want you guys sitting behind desks i want you out in the park watching what people are doing and finding out how you can make the place more enjoyable to them when joe fowler this is one of the guys he hired to build Disneyland,

proposed a dry dock for the Rivers of America ride, Walt opposed it. He argued that it would be unattractive and would add nothing to the customer enjoyment. Another example of maniacal focus on the customer. Walt visited the Anaheim site during all phases of construction. He made his suggestion as to the sizes and proportions, always keeping the overall pattern in mind. This is genius what he's going to do here. Often, he squatted down and commented, can you see little kids looking up at this? Most of his planners had never considered looking at the theme park from the vantage point of a child. And another example of maniacal focus. During the day, he walked through the park observing the people and their reaction,

asking questions of the ride attendants, waitresses, store clerks, janitors. From the beginning, he insisted on utter cleanliness, remembering the tawdry carnivals he had visited with his daughters. He had told his staff, if you keep a place clean, people will respect it. If you get it dirty, they'll make it worse. He didn't want peanut shells strewn on the sidewalks. Only shelled nuts were sold. No gum could be purchased inside the theme parks. Young men strolled through the crowds, retrieving trash as soon as it was discarded. He never seemed to tire of striding through the park and watching the people and their reactions to Disneyland. Look at them, he enthused to a companion. Did you ever see so many happy people,

so many people just enjoying themselves? And so this is the result of Disneyland. Within seven weeks, a million visitors had come to disneyland prediction of attendance had been exceeded by 50 and customers were spending 30 more money than had been expected disneyland was destined to be an enormous financial success and we're just going to see how financially successful it was. And we're going to close on this. After three decades in Hollywood, Walt Disney had finally achieved financial stability. Disneyland was successful beyond his own dreams. He had produced four hit

movies in a row. Although the two television series did not provide profits, they contributed to the health of the Disney endeavors in other ways. Walt himself was slow to realize his new prosperity. He told this story. One day I was driving home and I was waiting at a stop signal and I looked in a showroom and saw a beautiful Mercedes Benz coupe. Gee, I wish I could afford that, I said to myself, and then I drove on. I had gone a couple blocks when I said, but I can, so I turned right around and went back and bought

it. But change in fortune had little effect on Walt's personal life, nor did he glory in the company's financial health. I've always been bored with just making money, he said. I've wanted to do things. I wanted to build things, to get something going. People look at me in different ways. Some of them say, that guy has no regard for money. That is not true. I have had regard for money, but I'm not like some people who worship money as something you've got to have piled away up in a big pile somewhere. I've only thought of money in one way, and that is to do something with it, you see. I don't think there is a thing that I own that I will ever get the benefit of except through doing things with it. The five years that followed the opening of Disneyland

were a period of great expansion for Walt Disney Productions, which had begun the 1950s with a gross income of $6 million and had leaped to $27 million in the first year of Disneyland operation. By the end of the decade, that figure was $70 million. So think about that. That goes from $6 million after one year to $27 million, and a few years after that, $ 70 million dollars so think about that that goes from 6 million and after one year to 27 million and after a few years after that 70 million so 10x over 10x increase where they were just off of this and this is the last thing i'll read on april 25th 1961 walt and roy disney marked an historic occasion in the history of their company.

The loan from the Bank of America was finally paid off. For the first time in 22 years, revenue from the motion pictures would go directly to Walt Disney Productions instead of the bank. If that's not a story of perseverance, I don't know what is. So if you want to read the full story and you want to support the podcast at the same time, buy the book. If you go to founderspodcasts.com forward slash books, you can buy, you'll see this book there and you can buy any of the other, I think I'm up to 39 books that I've read so far for this podcast. So if you want to pick some of those up, it's a great way to support the podcast because Amazon sends me a small percentage of the sale at no additional cost. And if you would rather listen to the book instead of read it, you can get two free audio books using the link that's in the show notes or by going to

founderspodcast.com. And just a reminder, this podcast relies on your direct support, the support of people that like the podcast, that get valued on the podcast, that learn something from the podcast. And you can do that in two ways. Become a paid member. Paid members make Founders Podcast possible. It's because of paid members that I'm able to dedicate so much time and to continue doing this. And in return, not only is every podcast that I do available for free to everybody and ad free, but paid members also get extra podcasts from me every week that I email out on every Monday. And I'm having a lot of fun doing these because it's letting me experiment.

I'm finding all different kinds of sources for the paid podcasts. The first one was on Samuel Zemuri, who we covered a few weeks ago. And it's called Innovating. The title of that podcast is Innovating Your Way Out of Ruin. And it's a quick short story about what do you do when your entire business gets disrupted by war, when the ships that transport your products are shot down by German submarines, when countries say that your product is a luxury and they impose caps on how many bananas you can sell in their country when some markets are closed off. He lost 20% of his market overnight because of the war. Very interesting story. It's amazing what we can learn from that guy. I did another one on the life of Andy Beal, who if you listened to Space Barons podcast last week, he was a main figure in that book. And in many ways, he was a precursor to Elon Musk. Now, Elon Musk is one in a billion person, so I don't want to compare them, but they're both very interesting polymath-like people.

Andy Beal spent over, I think, $200 million or $100 or $200 million of his own money developing rocket technology, private rocket technology years before Jeff Bezos or Elon Musk did. He somehow survived that. I just looked up the other day. He's still very, very successful. He's a mathematician, a genius. He's got like $11 billion net worth even to this day. He's a really interesting, fascinating guy. I'm surprised there's no other books written about him like a biography Um, at least I can't find any so I did a podcast on him Uh that's available to paid members. So if you sign up you get that right away and then I did a podcast based on a book that I read like four or five years ago and highlights of a book

and it has to do with The band who i'm not wasn't familiar with before and i'm still not familiar with their music But it's the business model of the band who I'm not, I wasn't familiar with before, and I'm still not familiar with their music, but it's the business model of the band Fish. And it's a fascinating story. These guys have made hundreds of millions of dollars and yet they've never had like a top, their albums have never sold. They, I think they made like 833 songs that never had a top 100 hit. They figured out something by accident through trial and error and a lot of practice how to become extremely profitable and in a way they were one of the very few music acts that were largely unaffected by napster and the and the move to digital music that has occurred in our lifetime so fascinating story again uh every podcast i make i'm trying

you know my goal is i'm only i only include stuff that I think we can all learn from. And the paid podcasts that I'm making, like I like it because I'm able to experiment in different ways. So I'm going to keep doing that. Sometimes they're going to be on the same subject, like the Samuels and Murray, that came from the same book that I covered. And sometimes it's just going to be other things that I learned and other founders and entrepreneurs that we can all learn from. And then another way to support the podcast is Founders Notes. I am giddy with excitement over the Founders Notes that went out Sunday, so yesterday by the time you hear this. I love what I'm doing. So I saw this other – I don't want to call it an email newsletter

because Founders Notes is a service. To me, it's going out and collecting ideas from entrepreneurs and delivering them to your inbox. So I just happen to use email as a medium for that. But it's not a newsletter. But I have been looking at studying other newsletters just like I study other founders and other podcasts and so on and so forth. And I saw one that there's this newsletter people subscribe to

that are helpful for their business having to do with China and what's going on in China. And a review of that podcast said it's the equivalent of the presidential daily briefing on China. So obviously referencing what the president of the United States gets every day where they get this presidential daily briefing on China. So obviously referencing what the president of the United States gets every day where they get this presidential daily briefing, notifying them of the threats and stuff that they need to know, right? And I love that as a metaphor for using that presidential daily briefing, basically saying, hey, this is the one source you want to use if you want to

learn about China or the one source you want to use if the president needs to know about security threats etc and what I really want to do is do the same thing for for founders because what founders notes is really doing it's giving you superpowers it's letting you know it's the easiest way for you to know what other founders are thinking and their ideas though the strategies that they apply to their businesses how how they got started, how they think about customer acquisition, the tools they use, the books they use, the thoughts on their industry, that's out there for anybody to grab because they're constantly giving speeches, interviews on podcasts, YouTube videos, whatever the case is. It's just you have to spend hours going on and collecting that. So I spend that time because I'm fascinated by the subject and it kind of dovetails with exactly what we're doing here, spending hours studying the books and the bi-aggressive people. I feel it's almost like a two-pronged attack. So Founders Podcast is books, right? These are entrepreneurs mainly of history, you know,

because they're not going to write a book about your company until you've actually done something yet. While Founders Notes covers people still in the arena today. And I read the email myself. This one, the one that I did that came out on Sunday, 3,500 words. And that's 3,500 words all sign signal no noise. No fluff. No bull crap Nothing I put at all that I basically take notes pull out the ones I think are most interesting and put them in size of like a tweet and so I think it's unbelievably valuable I think it's a steal for for $10 a month

And some of you guys have even astutely signed up for a yearly subscription, that price is going to go up soon because you're getting basically six months free right now. So anyways, it's something I'm really proud of. I just got started, even though I've been taking notes on podcasts and interviews with entrepreneurs for years. So I have, I told you before on past podcasts, when I put all of them into a Google doc, it was over 60 pages long. And I add to that all the time. So I don't know. I'm really, really excited about it. I guess I keep repeating myself, but I am. I think it's such a useful tool, especially for people. Let's say you're

already a founder, an entrepreneur. I think it's a no brainer to sign up because there's no other occupation in the world, maybe besides pure investors, which are kind of entrepreneurs too, that can exert that much leverage over useful information. And it's definitely something that if you already have a company, I'd put on your company account, make it tax deductible because it's continuing your education. It's making you smarter. I don't know. I really like it. Just to give you, let's see if I can find it real quick. So, so far I've done, these are the people that, oh, so not only, let me tell you, not only do you get a weekly email from me, but you have access to every single one I've ever done. So, so far I've

done the one that went out, the last one I've done, the third, it's now the third issue, included ideas from founders of Amazon, Basecamp, The Information, Front, Tuft & Needle. Then you had Dropbox, Twitter, A16, Idris and Horowitz, Spanx, Twitch, Product Hunt, Earn, AOL, FlexPoint, Wikipedia. They're not just tech companies. They're going to be founders from every single industry because I think every business and the founders of every business, they think long and hard about their businesses. And if we can get the distillation of their knowledge, I don't know if I pronounced that word correctly, but if we can get the main ideas of their lifetime of knowledge in a format that we can easily digest, I think that's incredibly valuable so um i don't know i i

don't want to i don't want to keep repeating myself other than i think i made something that's that's pretty valuable and that is extremely useful uh it'd mean the world to me if you test it out i mean sign up at least for the first month if if you don't like it you can always cancel it's just month to month i don't think you're going to sign up and be like oh this wasn't worth the money i think that's next to impossible um and i'm gonna work really hard on that and spend a lot of time doing it because i really enjoy it just like i've been enjoying this podcast so um that's it i think i've talked enough uh like always i want to close with the thank you um i love podcasts i love making them i reading books. And if it wasn't for you,

I wouldn't have the opportunity to do this. So I'm very grateful for that. And hopefully I'm working really hard and producing something that's valuable to you. So thank you for listening. Thank you for spreading the word. Thank you for sharing on social media. Thank you for reviewing the podcast.

Thank you for all of that. And I will talk to you next Monday.