The Walt Disney Company

0:00Have I ever shown you my Mickey Mouse impression?

0:05You've done your Mario impression for me in the past, but I have not heard. Yeah, they're a little similar. All right, give me Mickey, give me Mickey. Oh boy, will you look at that?

0:16That is really good. You sound like Walt himself doing Mickey. Right? Didn't he do Mickey for like 20 years? Yep, yep, yep. He didn't at the very first, and then one of the animators convinced him to do it, and then, yeah, he did it for 20 years. Have I ever given you my Donald Duck impression? Oh, wow. Okay, well, now, do I need to sit down for this one? You might need to. All right, here we go.

0:40Oh, that's about right. That's about right. I have a great Donald Duck trivia for you coming up, but I'm going to save it. All right, save it. Save it. You're going to be blown away. I'm pretty sure you didn't find it. Great. All right, on to the episode. Let's do it. Who got the truth?

0:57Is it you? Is it you? Is it you? Who got the truth now? Is it you? Is it you? Is it you? Sit me down. Say it straight. Another story on the way. Who got the truth? Welcome to the spring 2026 season of Acquired, the podcast about great companies and the stories and playbooks behind them. I'm Ben Gilbert. I'm David Rosenthal. And we are your hosts. Today, listeners, we finally tell the story of the Walt Disney Company.

1:27Unbelievably, in 11 years of doing Acquired, we have never told Walt's story. And it's been a glaring omission. It is the entertainment company, different than all the rest. It's over 100 years old. And it has played a prominent role in almost all of your childhoods. And if you're a parent, likely your parenting journey, too. Oh, yes. I'm looking at you, David Rosenthal. Oh, yes. And it has played a prominent role in Acquired history, too. Our very first episode, Pixar, done Lucasfilm.

1:59We've done Marvel, done ESPN. Although those are a whole different version of Acquired, we may need to decanonize those and redo them the proper way. Yes, as part of this. Listeners, since there are tons of biographies and documentaries and places analyzing Walt's psyche, we're going to focus today on Acquired's sweet spot, which is the business. What is it that Walt's merry band did from the 1920s onward that made them succeed uniquely well in Hollywood? And when you look at Disney's profits today, it is in a whole different league than Paramount

2:33or Universal or Warner Brothers or any of the other sort of classic Hollywood studios. The business of feature film production is a mediocre one, especially by the standards of what we study on this show here with Acquired, except for Disney. Yes, exactly. And I will say I am a huge Disney fan. I grew up on Aladdin and The Lion King. My first movie in theaters was Beauty and the Beast. I'm a huge Star Wars nerd and my wall was plastered with Toy Story posters growing up. But somehow I knew nothing about the company's early history before starting this research.

3:08Nor did I. For example, it started in Kansas City. There was a character that was supposed to be Mickey Mouse before Mickey Mouse, but was lost in a contract dispute. Or that many of the movies I watched in my childhood are actually from 50 years before I was even born. Snow White was produced before World War II, Pinocchio, Bambi. These films are from the 30s and 40s. They even predate the existence of televisions in people's homes.

3:39Yep. And importantly for Acquired's roots, this really is a technology story. Giant innovations that often bet the whole company on things like synchronized sound or the crazy idea of a feature length animated movie at all. Or the multi-plane camera to photograph the whole thing and turn it into a movie. And of course, building a giant theme park in Anaheim when nothing else like it existed. And they really did invent the entire concept of the flywheel business model that so many

4:10entrepreneurs are trying to copy. Oh, yes. So today, listeners, is the Walt Disney Company, part one, Walt's era. Woo. Well, big news from here at Acquired HQ. This episode has a companion PDF with visuals, charts, tables, and illustrations of key concepts, including Acquired's version of the Disney flywheel. We did a pilot of the idea after our Vanguard episode, and we got such overwhelming positive response that we are doing it again. So you can get access and follow along by clicking the link in the show notes.

4:42You might say we're building out our own flywheel here. We are. Eating our own episode cooking. And we're taking this timeless IP that we are developing and figuring out even more things to do with it. That's right. All right. So you can join the Acquired email list at acquired.fm slash email. That's where we'll send our big takeaways from each episode, past episode corrections, exclusive behind-the-scenes photos that we found in our research, and it's where you can vote on future episode topics. Plus, we will give away a little hint each time about the next episode topic.

5:13That's acquired.fm slash email. Come talk about this episode with us in the Slack. That's acquired.fm slash Slack. And before we dive in, we want to thank our presenting partner, JP Morgan. Yes. Just like how we say every company has a story. Every company's story is powered by payments. And JP Morgan is a part of so many of their journeys from seed to IPO and beyond. So with that, the show is not investment advice. David and I may have investments in the companies we discuss. And this show is for informational and entertainment purposes only. David, take us in.

5:44Well, first, a thank you to my main source for facts and Walt quotes on this episode, Neil Gabler's biography, Walt Disney, The Triumph of the American Imagination. And Gabler, I think, was the only author who had full access to the Disney archives. And all the research he did for that book is just incredible. Yes. Well, with that, we start in Chicago in December 1901, where Walter Elias Disney is born. And the family lore is that the Disneys are descended from the French Disneys of Normandy.

6:19How do you spell that? D-apostrophe-I-S-I-G-N-Y-S of Normandy, who came over to England with William the Conqueror in 1066. That's family lore. Unverifiable. Yes. At this point, lost to history. Yes. So, Walt's father, Elias, was sort of a frustrated entrepreneur. He was variously a carpenter, landlord, farmer, newspaper route owner, and eventually a failed jelly factory investor.

6:51But Elias' younger brother, Robert, Walt's uncle Robert, was the successful one in the family. He was a real estate speculator, among other things. And that is what brought the family to Chicago at the turn of the century. He had invested in a bunch of real estate in Chicago and the Midwest. And so Elias came also to seek his fortune there. Now, when Walt is four, Elias moves the family out of Chicago to an idyllic farm town, also in the Midwest, where Robert had just purchased another tract of real estate, Marceline, Missouri.

7:29And Lillian Disney, Walt's future wife, would say about Marceline, it was the most important part of Walt's life. He didn't live there very long. He lived in Chicago and Kansas City much longer. But there was something about the farm that was very important to him. And Elias moved the family because it was kind of like, let's get out of the dangerous city of Chicago and raise the kids right. So, sort of somewhere, a small town. I think Marceline was actually created because they needed somewhere for the Santa Fe Railroad's division point.

8:01Yes, yes. Like when it was going to maybe Chicago and Kansas City and they were like, and this place on the map looks good. And they started the town of Marceline. Exactly, exactly. And Robert, the uncle, had bought real estate there, kind of speculating again that this is Marceline's going to grow. So, Marceline was like basically a Disney movie. There's orchards and ponds and animals and farmhouses. There's also this charming little town that the railroad had created with a main street, a main street USA, you might say.

8:33But that's getting ahead of ourselves. So, while the family's living there, Uncle Robert's wife, Walt's Aunt Maggie, every time that they would come visit Marceline to check up on their real estate investments, she would bring Walt gifts. And one year, when Walt is probably six or seven years old, Aunt Maggie brings him a big chief drawing tablet and pencil set. And Walt is enraptured. He starts sketching all the time, drawing, sketching everything he can see. And as the legend goes, one day, Walt's retired neighbor asked the young boy to draw him a picture of his favorite horse.

9:11And the neighbor loves what Walt draws so much that he pays him a nickel for it. And he hangs it in a frame in his house. And Walt, his mind is blown, young Walt. He's like, my hobby, my art, it can make me money. Now, whatever the exact truth of that story is, there is no doubt that somewhere in Marceline, in pre-pubescent Walt's mind, a connection is forged between these two great forces, art and commerce.

9:45And that would go on to drive not only the rest of his life, but the company, the studio, the movies made change America. Absolutely. The thing about Marceline, though, you said it's idyllic and like it's out of a Disney movie. The reality of living in Marceline and life on the farm is that it was very hard. All the kids are involved. There's not, you know, magical economic prosperity everywhere. It's sort of a tough life, even though he can sort of remember it as an idyllic childhood, which I also think is quite the foreshadow of kind of the Disney-versification of things in the future.

10:22It is both remembered as idyllic, but also was hard as the real world is. Yes. And I think it's because of the age Walt was when he was there. So they lived in Marceline only from when he was like four to eight or nine years old before he gets really put to work. So he gets to just enjoy all this bliss around him. Yeah, the reality is it's pretty tough for the family to make a living. And in fact, they can't. So Elias adds farming to his list of entrepreneurial failures.

10:56And when Walt is nine years old, they have to move the family again out of Marceline to Kansas City, where Elias decides he's going to purchase a paper delivery route for the Kansas City Star newspaper. And he's going to put the family to work delivering papers. There are so many protagonists that we study on Acquired who started their career as newspaper boys. I was going to say, just like Jack Bogle from Vanguard delivering papers in his youth and having to get up at four in the morning and falling asleep at school because he has to work so hard.

11:29Like, this is quite the reversal here for Walt from Marceline. But he never stops drawing and he never stops making money from it. In Kansas City, he would draw frames for the local barber shop who would pay him either a nickel or a free haircut for each. And that would be Walt's spending money growing up that he would earn from his art. Yep. So later, when Walt enters high school, Elias moves the family back to Chicago again, this time for the Jelly Factory, which ends up failing, where Walt becomes the cartoonist for his high school newspaper.

12:03But he's not there long before he leaves high school to go join the Red Cross and get shipped off to France as an ambulance driver during World War I. Where, unfortunately, he would acquire a chain-smoking habit that he would keep up for the rest of his life and eventually would kill him way too young. Yep. But, while it's not in France for long, before the war ends, and in the fall of 1919, he lands back in Kansas City, where Roy Disney, his older brother, who is, I think, eight years his senior?

12:34Nine years, maybe? Eight, nine years older. Yeah, much older. Yep. Is living. And Walt has a plan that he's going to seek his fortune finally as a true professional cartoonist. So through Roy, he gets introduced to an advertising art shop that's looking for apprentices to help draw, like, flyers for the upcoming holiday rush. And Walt works there for six weeks through Christmastime and then gets unceremoniously laid off. But he gets two things out of this brief experience as an employee.

13:06One, he gets a credential. He can now say that he is a professional artist. All you have to do is get paid to do something and then you become a professional. Exactly. Exactly. And you get something else. A co-founder. Another young apprentice from the art shop named Ub Iwerks. I sort of think of Ub as the Steve Wozniak of Disney. Yes, absolutely. Walt is like the original Steve Jobs. And I think you can definitely make the case that Ub is the Steve Wozniak.

13:37Although I think Walt was more hands-on. Yes. Walt was also an animator. Ub was just a better animator. And Walt was a camera operator. And Walt was building stuff, doing things with his hand. And he was in the primary technology and artistic trade that his business was in. So after the two of them get laid off, Walt suggests that rather than go look for jobs again, they should just start their own studio together. I mean, hey, they're professional artists. Like, why not? So they create Iwerks Disney Commercial Artists Incorporated.

14:12Supposedly in that naming order so that it didn't sound like an optometrist shop like Disney Iwerks. How amazing is this? In the first Iwerks and Disney partnership, in Walt Disney's first business, he was not the main name on the door. At least he was not the first one. Yes. Not the main name on the door, but he is the driving force behind the business. So he goes out to pitch prospective clients around Kansas City for the services of this new Iwerks Disney Commercial Artists firm.

14:43And one of the clients that he goes to pitch is a up-and-coming company called the Kansas City Slide Company, which happens to have become the country's largest producer of advertising slides and short commercials that would get shown in movie theaters before feature films. And the Slide Co. has so much work at this point in time as films and movie theaters are taking off around the country that they say, hey, you guys seem talented.

15:15We don't want to just contract with you. Why don't you come work here full time? So Walt and Ub's first entrepreneurial venture quickly comes to an end and they go join the Slide Company. Now, the reason that they specifically wanted Walt and Ub is that they have a relatively new business line at the Slide Co., which is producing animated commercials to run in movie theaters before films. And this is what Walt and Ub end up getting put to work doing.

15:45And they both just fall in love with this new art form of animation. It's like everything that Walt and Ub, too, loves about drawing. But it's more than just art. It's technology. You need cameras. You need film. You need all these new inventions to make animation happen. And at this point, animation was really primarily used in advertising, right? There wasn't really a successful, thriving industry yet as entertainment of its own based on animation.

16:19It was like very, very early. And to the extent that it did exist as entertainment and shorts, short films, cartoons on its own, it was all based in New York, like not in Kansas City. Right. But the whole industry is only like barely 20 years old at this point in time because you couldn't produce animation on any sort of scale until you had widespread commercially available film cameras and film projectors. Like this whole art form is brand new. It couldn't exist before the technological innovation of film.

16:52Yep, exactly right. So part of the reason that cartoons are working well in advertising right now for the SlideCo is that it's this novelty, you know, almost gimmick. It captures people's attention. Yep. Even though they have no color, no sound, no story. It's just a series of like visual novelties. It's something they've never seen before. Of course, it's interesting. Yep. And in Walt's mind, who really is always thinking about how can I make a business out, a career out of this, this is also what makes it super attractive to him.

17:25Because the whole industry is so new of animation, he figures that he can quickly become as good or better than anyone else in the world at it. Unlike if he's going to try and be the best commercial artist in the world. Good luck, young Walt Disney in Kansas City, Missouri. Oil painting is thousands of years old. Right, right, right. But becoming the best cartoon animator. Small pool. Yeah, he and Ub might have a shot here. Yep. So Walt and Ub start experimenting on nights and weekends with their own work, just trying out, creating their own animations using the SlideCo equipment and cameras.

17:59And Walt puts together a few short cartoons that he creates all himself. He brands them as, quote, Laugh-O-Grams. And he ends up selling them on the side to a local movie theater chain to run before features. And the Laugh-O-Grams become a hit in Kansas City. Audiences love them. I love that the thing that led to the Walt Disney Company is called Laugh-O-Gram. Like Laugh-O-Gram. It reminds me of, what was the Rolex watch? The Turnograph.

18:29Oh, yeah, yeah. Yeah, it's such a, like, hokey name for, you know, what ends up becoming, well, this doesn't become Disney, but the spirit of which becomes Disney here. And the thing that they're doing, they're so primitive. There's no sound. There's no voices. There's no color. There's barely backgrounds. Yeah, it's so different from what you're used to today. Because of those limitations, you can't create a story or a real sense of character for any of the characters that are in there. Like, you can't build a relationship with the cartoons that are being made at this time like you can with Mickey Mouse or Donald or Goofy or Minnie.

19:04The only emotion you can invoke is humor, and the only real way to do humor is slapstick. So it's just these, like, super exaggerated, they call them gags, like things that a character does that isn't necessarily consistent with anything else that they've done within a few minutes of starting gag happening and ending. Or sometimes even a few seconds. Yep. And honestly, that's actually not that different than film itself overall at this point in time. Like, Charlie Chaplin is the big star in America and around the world, the big movie star right now in the silent era.

19:40And most of his movies are exactly what you described, Ben. Honestly, it's all physical comedy, sort of slapstick. It's the stuff that my toddler laughs at. You could re-summarize every scene of every comic in most movies by going, oh, he fell down! Ha ha ha ha ha! Exactly. Exactly. So, in May of 1922, at 20 years old, Walt decides that these Laugh-O-Grams that he's making are having enough success that he's ready to leave the slide company, go out on his own, again.

20:10And he founds Laugh-O-Grams Films, Inc. And once again, he convinces Ub Iwerks to quit and come along, too, along with a few other animators from the slide company. And it's another failure, because despite the Laugh-O-Grams' local popularity there in Kansas City, by the time we get into 1922, 1923, animation and cartoons in general around the country are starting to lose their appeal.

20:41The novelty is wearing off. The fad is dying down. There's actually a survey of theater managers right around this time, in like 1922 or 1923, where one of the questions is, what filler options do your audiences like to see around the feature film that you're showing? Because it also would be newsreels or live comedies or short serials. Remember, there's no television. There's not even really radio at this point in time. If you want to get news or any kind of entertainment, you go to the movie theater. All right, I got a stat on this. In the 1920s, the average American went over 40 times per year to the theater.

21:18This is what you did every week for entertainment. Wow, yeah. Compare that to today, where, like, maybe you go once a year. It's two. Yeah, two. The average American goes to a movie theater twice a year now. Yeah, I mean, back then it was like you could go to the movie theater, or you could go see a live show, ballet or opera, or like a sporting event, like a baseball game, or you go to the movie theater. That's it. And when you go to the theater, it was a bundle. I mean, yeah, you were there for a production, but I think the point you're trying to make is there were also these cartoons with gags.

21:49There were newsreels. There was the feature you're there to see, but it's sort of this, like, bundle of, all right, let's see what the theater has in store for me today. Yeah, exactly. So this survey of theater managers, only 23% of respondents say that they show cartoons as part of the bundle and that their audience is like it, which is by far the lowest of any of the other filler options. So Laugh-O-Gram can't really find a market outside of their local popularity in Kansas City. And in 1923, the company goes bankrupt and shuts down.

22:20And Walt is now this sort of 1.5 times disgraced entrepreneur here in Kansas City. Pauling right in his dad's footsteps. Yeah, yeah, yeah, exactly. And he raised money from people in Kansas City, friends, family. He went and lost people's loan capital that they gave him. Yep. So Walt goes to rich uncle Robert for advice on what to do, given his failure. And Robert says, you know, kid, best thing to do if I were you, I would just skip town. Get out of there.

22:53Which actually is really sound advice for back then, you know. People's reputations did not travel with them. Nope. Your credit was the credit locally that you had with the people in your town and no other way to find you otherwise. Now, it just so happens that both Robert and Walt's older brother, Roy, have just also skipped town from Kansas City and moved out west to Los Angeles. So Walt packs his belongings, which is basically nothing at this point in time, hops aboard the Santa Fe train bound for L.A. and joins them in Hollywood.

23:29And when he arrives there in the summer of 1923, he's 21 years old. He stays with Uncle Robert. And initially, you really can't make this up. I couldn't believe this when I read it. Walt at first thinks that he's come to Hollywood. He's going to get a directing job in Hollywood at one of the studios there. Well, yeah, he has abandoned the idea of animation. He basically thinks he's too late. And he's seen some of the stuff that comes out of the New York cartooning scene.

24:00And he's like, well, I'll never be as good as them. So I need to go start over something completely new. Right. Which is sort of, you know, silly and wrong in and of its own. But also like the hubris that he thinks that he could just show up in Hollywood with no directorial experience and become the next D.W. Griffith. That is Walt for you. Do you know this story of the Universal lot? No, no, no. So he rolls up to the Universal lot after getting there, having no job, no money, borrowing a bed. And he goes and has fake business cards made that says he is with Universal.

24:33He's just the Kansas City representative. So no one at Universal would really know who he is. And he gives it to the receptionist on the Universal lot. And he walks in and so he spends at least a day, from what I could tell, roaming around and learning as much as he could about film production and like internalizes a lot of those lessons. And then he tries to come back in future days and say like, oh, yeah, I'm sort of like with Universal and now I have experience. And can you give me a job? And he ends up running out of money and doesn't get a job. That is amazing. I didn't know that story.

25:05So once he inevitably gets rejected at all the major Hollywood studios, he says later, when things began to look hopeless, I got my cartoon things out again. And he sets up shop animating again. He's like, well, as you said, Ben, this is the one thing I know how to do. I should try that. And at this point, pretty much the only popular cartoon left in the industry is Felix the Cat, which is created by Pat Sullivan out of New York and distributed by the pioneering Margaret Winkler, also in New York.

25:44So Walt has one thing, one asset left over from his failed Laugh-O-Gram days, which is a reel of a hybrid live action cartoon short that he had created with Ub right before he left Kansas City called Alice's Wonderland about a real life little girl who interacts on screen with cartoons that they've drawn. Over the film, which is like completely pioneering technology.

26:17The other people who were doing animation this time were just doing cartoons. These Alice comedies, as they came to be called, were a new process by which you could go and film a real life actor and then have them interact on screen with cartoon characters and put them in the cartoon. Yes, very cool. And also had the unique property of being cheaper to produce than full animation because you only had to animate the characters, not all the backgrounds and everything. Right. Yeah, there is this funny counterintuitive thing that live production is much faster and cheaper than animation.

26:52You just have a film camera and you point it at something in the world that exists and you kind of get everything that you're pointing it at for free. Like the actor is interacting with a bunch of stuff and when you're making an animated film, you need to draw literally everything from scratch. It's much harder and you need to do it frame by frame by frame by frame rather than the world just sort of happening around you and you taking these exposures in a video camera. Yep. So Walt sends Alice's Wonderland off to Winkler and she likes it. So she commissions Walt to create 12 more Alice comedies for like $1,500 to $1,800 each.

27:28Which she does. And David, did you know we have seen this contract? Was this in the documents that we saw in the Disney archives? Yes. So listeners, for this episode, David and I went and spent a few days down in Burbank looking through the corporate archives and one of the things that the archivist pulled for us was this contract. And I have a photo of it. I'm looking at it right now. Agreement entered into this 16th day of October 1923 between Walt Disney of 4406 Kingswell Avenue, Hollywood, California, blah, blah, blah, blah, blah. And yeah, you're exactly right.

27:59For 12 negatives of subject series and then in all caps, Alice comedies. And I also have a picture of this on the last page of this contract because this is effectively the contract that puts Disney in business. I mean, this becomes the Walt Disney Company. Yeah, this is the moment. This is the beginning of Disney. You can see his signature, which is much less flowery than the version that you see in the Disney logo. He would sort of evolve it over time. But yeah, this is the moment. Disney, Walt is in business.

28:32It's his first actual commercial big time deal. Yes. And I think when Walt sort of gets word from Margaret, he runs into his brother's room. His brother, Roy, actually has tuberculosis at this time. It is in like a hospital ward. And he sort of runs in, shows him the contract and says, we got it. We got it. We got it. We're in business. We're doing it. And, you know, $1,500 to $1,800 a film is a lot of money at this time. And Roy talks through with him and says, OK, let's get right to work. And he literally stands up and leaves the hospital ward. It's like, all right, my tuberculosis is behind me.

29:02And the two of them found the Disney Brothers Cartoon Studio right there in October 1923. As a true partnership between the brothers, Roy manages the business and the finance. Walt manages the creative. And they get to work. Yep. So Walt, of course, writes of iWorks back in Kansas City and several of the other talented animators that they knew there and says, all right, guys, I got it this time.

29:34Come on out to California. We finally got a deal. We're going to build a real company and a real animation studio. And they do. The behemoth we know as Disney today is the Disney Brothers Cartoon Studio. And a whole bunch of Kansas City guys that moved out to join Walt to start cranking away. Yep. And the Alice comedies become a moderate success in the marketplace. Again, I think the novelty of cartoons plus live animation audiences are entertained for

30:06a few years. Ultimately, the Disney Brothers studio produces 57 of the Alice comedies from 1923 to 1927. And then in 1927, Winkler's relatively new husband, Charles Mintz, who actually got to start working for her in the business. By this point in time, he has taken over as sort of head of the business. He is no longer getting along with Pat Sullivan, the creator of Felix the Cat.

30:36Big opportunity. Big opportunity. And he has brokered a little arrangement with Universal Pictures, the big New York film distributor, to on the sly create a new character to rival Felix. Now, mind you, he and Winkler are still the distributor for Felix, for Sullivan. And they're creating a new character to compete with him on the side. Sort of like they're building their own chips while still buying NVIDIA. Yeah.

31:07And so he turns around and taps Disney. Says, hey, Walt, can you make us a new series and a new character? You know, like Felix, but not Felix. Like, maybe not a cat. Right. We need it to be plausibly different while still having everything that made Felix successful. Yes. So Walt and Ub cast about, what can we come up with? It's like a cat, but maybe shares a lot of the same recognizable attributes, like, you know, a lot of white fur, a tail, some big ears, easy to draw in black and white.

31:40And they come up, not with Mickey Mouse, but with Oswald, the lucky rabbit. And Oswald is a big hit. It's got the backing of Universal distribution behind it. That's a big hit for Universal, a big hit for Winkler and Mintz, and a big hit for the Disney Brothers cartoon studio. And it's not surprising because if you give the creative brief to Walt and Ub, take something that's kind of working, but apply your style.

32:11Their style was great. I mean, they were emotional animators. There's a great quote in the book, Walt Disney, an American original by Bob Thomas that says, before Disney cartoons were slapdash, two dimensional characters in bizarre movement before elemental backgrounds. Disney insisted on rounded, humanized figures. He wanted the humor to come out of the character, not the outrageous action. So it's sort of like, hey, here's the template, but Disney-fy it or I works-fy it in a way

32:41that really can speak to people. Well, I think it really was the partnership of the two of them. I think I works had like immense artistic talent as an animator and was able to do that. And Walt had taste like he recognized it and he knew when and where to apply it. Yep. So on the back of the Oswald success, the Disney Brothers cartoon studio grows pretty quickly from this ragtag group from Kansas City to like a real operation, like a real, you know,

33:14at this point bordering on major animation studio. They hire about 25 employees and start churning out Oswald cartoons. Yep. They move into a real studio building on Hyperion Avenue in the Silver Lake neighborhood of Los Angeles. And when they move there, Walt and Roy decide at a unclear which brother's instigation that they need to rename the company and the studio from the Disney Brothers cartoon studio to

33:45the Walt Disney studio. So there's two stories about this. I was going to say, I've seen both. One is that it was actually Roy's idea. Yes. Because he's like, hey, you know, we need to start building a brand and like people need to know who is making these Oswalds and it should be the Walt Disney studio. And you're very clearly the front man. You know, you're selling, you're the visionary, you're the sort of creative talent. And this is a creative company. Of course, it should be you. Yep. The other story is that Walt's always had a dream since he got to Hollywood of having

34:16his name up on a neon sign. Now that they have their own real studio, he wants a neon sign constructed that says the Walt Disney studio, which I think does happen. Yes. We'll put the photo in the email. The Hyperion Avenue studio has this really cool sign or did for a long time before it got knocked down. And I think it's a strip mall or something today. And in that vein, now that the studio has become a real operation, Walt moves from actually doing a lot of the animation and camera work mostly to overseeing the studio, which you

34:50have to with an operation of 25 artists and creative people and camera folks, you need someone who has an overall vision and taste to drive everything. Yep. Now, as Walt is transitioning from sort of doer to really studio head. And worth knowing, the ownership of Walt Disney Studios that would become Walt Disney Productions that would become the Walt Disney Company was at this point 60% owned by Walt and his

35:21wife and 40% owned by Roy and his wife. Yep. So Mintz, the husband of Winkler back in New York, who has sort of already proved his stripes by his dealings with Felix, the cat and Pat Sullivan, he senses another opportunity. He thinks that Walt has become superfluous and that it's actually just the animators who really matter. And because the Walt Disney Studio doesn't actually own the IP of Oswald, the lucky rabbit

35:57universal does. Although the Walt Disney Studio was acting like this was sort of their creation that they owned. Yeah. I don't think Walt or Roy really read the fine print on the contracts here. So in early 1928, Walt and his wife Lillian, who Lillian also was an early studio employee. In the ink and paint department. Ink and paint department, that's right. We'll get to that. They make a fateful trip as a couple to New York, where one of the items on the agenda is for Walt to go meet with Mintz and ask for a raise in the amount that the studio is

36:33getting paid per Oswald short. So Walt sits down with Mintz and Mintz is like, well, I don't know about paying you more. I don't think I like that idea. In fact, I'm not even really sure, Walt, what you are doing around here any longer. But I'll tell you what. I'm a nice guy. I'm willing to let you and your little studio stay involved here and keep making the Oswalds. But we're going to have to pay you less, not more. Like $500 per cartoon.

37:04Less. Which my understanding is that basically wiped out the margin. And they were saying, we'll pay you cost to make these Oswald cartoons. Yeah. I think Mintz had basically calculated, okay, if Walt takes this, then I'm willing to let his studio keep making it. And if he doesn't take it, then it's all equal to me. I'm just going to steal his animators and go make it myself. And crucially, before this meeting even happens. He's already stolen the animators. Mintz has an ace in the hole. He has, I think, signed contracts with nearly all the animators except Ub Iwerks.

37:39He has sort of, through an act of subterfuge, gotten in touch with each of them individually and brought them over. Yeah, only Ub and I think maybe two or three other animators refused to sign these secret deals with Mintz and stayed loyal to Walt and to Roy. Once Walt realizes this, there's nothing he can do. Like, it's a free country. He can't force his animators to stay. He doesn't have employment contracts with them. And he also doesn't have any control or rights to the actual Oswald IP, so he has no leverage.

38:15He's got nothing. He's got no customer contract. He's got no employees. He's got no intellectual properties. Suddenly, the enterprise value, so the entire value of Walt Disney Studios is effectively zero. Yep. It is a extremely bitter lesson for Walt and for Roy, and it is one that you can bet they never forget for the rest of their lives. And really, like, everything in Disney's history and all of the enterprise value that Disney has built that we will see all across the rest of this episode traces back to this moment.

38:49It's a hard reaction to this lesson. Totally. I have a fun bit of trivia for you, Ben. Ooh. So, as I think you know, Disney eventually does get the rights to Oswald back. This is going to be my trivia for you. Oh! All right. Actually, ask your question. We might have different takes on it. Disney eventually does get the rights to Oswald back in 2006. Bob Iger, one of his first acts as CEO, did the deal. Yes. Do you know how Bob got Oswald back for Disney?

39:23So, let's see. By this point, Disney had acquired ABC. Yep. Which had acquired ESPN. And who owned Oswald at this point? It was Universal, which was owned by NBC, which is now owned by Comcast. Correct. So, there's an ABC asset that Bob effectively trades in exchange for Oswald. And I think that ABC ESPN Monday Night Football asset is Al Michaels. Al Michaels, the Monday Night Football commentator.

39:54Like a sports team trade. To NBC in exchange for the IP rights to Oswald the Rabbit. And Oswald is repatriated, and NBC gets Al Michaels, and all is right in the world. Amazing. So, back to 1928. Walt and Roy are basically back at square one here. They have not really just nothing. They actually have less than nothing. Because Mintz, ever the, well, really just kind of weasel is the right word.

40:24Yeah. He makes Walt and Walt Disney Studios finish out the current Oswald contract, which still had a few cartoons left to animate on it, and pay all of the animators who had all betrayed him and were all about to defect. Mintz is like, no, no, you've got a contract. You're going to keep paying these folks while they finish up the last couple shorts on this contract. Just brutal, absolutely humiliating for Walt.

40:57And so then, as legend has it, on the long, long train ride back home from New York, Walt is struck by a bolt of inspiration. And he scribbles a sketch for a new cartoon character right there on his drawing pad on the train trip. A character that wouldn't just reverse all the woes of the Oswalds and turn around the company's fortune, but would maybe become one of, if not the most recognized figure in

41:31all of human history. But before we tell the story of Mickey Mouse, now is a great time to thank our friends at JPMorgan. Yes, our presenting partner. So today, we are sharing a story from one of JPMorgan's partners and a company that you may know, Bill, which is formerly Bill.com. Right. Bill is the financial operations platform for half a million small and mid-sized businesses, what they call the Fortune 5 million. They help manage and maximize cash flow for SMB companies. And Bill's DiviCard product is what employees at those businesses use to fund their operations

42:06day to day. So here's a scenario that many listeners may have experienced. Someone on your team maxes out the credit line on their corporate card with an unexpected purchase. You send a wire to pay off the card so you can continue using it, but it takes two to three days to clear. Meanwhile, your team can't transact. Yeah. Bill solved that for its half a million customers using an embedded payment solution from JPMorgan. With API-based sub-ledgering, they can manage millions of payments in real time on any platform, all with one bank account. Every Bill customer gets a unique virtual account number.

42:38So the moment a payment is received, the credit line is restored. The result is a way simpler way to receive and route payments at scale. And the actual numbers are awesome. Payment posting went from two to three days to seconds. Inquiries dropped 83%. Even Bill's own treasury team reclaimed 20 hours a week from manual reconciliation. For decades, these were Fortune 500-only capabilities, but Bill and JPMorgan figured out how to deliver that same infrastructure to the Fortune 5 million while also improving Bill's internal

43:10operations. You can read the full case study, as always, at jpmorgan.com slash acquired. And something else. If you want to join us and JPMorgan in person, we will be on stage at the We Are Developers World Congress in San Jose this September. Click the link in the show notes to learn more. Okay, so David, how does this Oswald catastrophe lead to Mickey Mouse? All right, so here's the story of Mickey Mouse, as Walt would tell it. It's March 1928. He and Lillian are on the long train ride back home to LA from New York.

43:43He's struck by the bolt of inspiration for a new cartoon scenario about a plucky mouse named Mortimer, who is attempting to fly an airplane just like his hero, Charles Lindbergh. And this would go on to become the Mickey cartoon, Plane Crazy. So Walt shows his sketches that he's making to Lillian, and Lillian says, I like it, but Mortimer? That's too sissy a name. How about Mickey? And thus, Mickey Mouse is born.

44:13Now, the real story is more likely that Walt and Lillian get back to LA, and Walt is like sweating. So he and Roy and Ub and the couple other animators who stayed loyal to them hole up and they start brainstorming ideas for some kind of new idea or new character that they can create to replace Oswald and turn around the studio's fortunes. And also, when you see Mickey and you see Oswald, it's not hard to imagine where Mickey Mouse came from. It's kind of like short in the ears, make them circles.

44:46You know, they both kind of have this white face and the black outline. I mean, it's really just the same brief that created Oswald. It was like, hey, take Felix and do something like Felix, except this time it's take Oswald and do something like Oswald. And make damn sure we own it. Yes, exactly. So they land on the idea of a mouse. And didn't Walt claim that he sort of like always had a fondness for mice because there were mice that would like jump in his trash can in Kansas City while he was animating? Sure, whatever. You know, it's all just part of the Walt myth.

45:18And at least according to the Neil Gabler book, most likely Ub is the one who first draws Mickey, not Walt on the train. But either way, Ub definitely was the primary animator of the first Mickeys for the whole first series of Mickeys, including Steamboat Willie. So by the summer of 1928, we finished out the Oswald contract and Walt and Ub and the small little Mary crew have gotten two Mickey shorts ready for production, Plain Crazy and

45:55the Gallop and Gaucho. And Walt takes them around to distributors. You know, the Walt Disney Studio is well known at this point. This seems like it would be promising new IP. And none of the major distributors are interested. They're like, yeah, I don't know. Mickey is like Oswald. But without all the, you know, thousands or hundreds of thousands of raving fans for it. So exactly, exactly. And then comes the Eureka breakthrough idea.

46:26One of the gang recalls that the jazz singer, the famous first popular talkie, you know, movie with dialogue and sound that had just come out the previous fall when they went to see it, that there was a cartoon screened alongside it. And Walt, when he hears this, puts the two ideas together in his mind of a cartoon and sound. And supposedly he says, that's it. That's it. That's what we've got to do. Stop all these silent pictures.

46:57Now, at this point, people had made cartoons with sound, but nobody had ever made a cartoon with sound like the jazz singer had sound. Synchronized sound. Synchronized. Yes, exactly. Where what was happening in real time in the cartoon was then played in sound, exactly synchronized in the movie theater. Yeah, the concept before was there's music that plays, but it's only loosely attached. And this is to the frame and to the beat of the music.

47:29Like if you see Mickey on screen bop into something, then you might hear a xylophone on the exact same downbeat play a note. Yeah, it's not just that like there's some music accompanying this cartoon that you're watching. It's that what is happening in the cartoon feels like it is producing the sound. Yes. There's a great business model lesson in this, which is with the first two Mickey's flopping, if you just do the same thing as an existing competitor who already has distribution brand

48:00customers, it's not enough. You need to go do something leveraging a new piece of technology or a new platform. You got to come at it from an orthogonal way in order to leapfrog and make people pay attention to you. Otherwise, you're just like smaller, worse. Also ran. Totally. And that could be anything. I mean, the only reason that the Oswalds worked, even though they were a rip off of Felix, was because they came built in with the universal distribution. But yeah, Walt taking out the Mickey's before bringing sound, like he's got nothing to bring

48:31to the table here. Yeah. So Walt lines up access to the cinephone sound recording system from a character named Pat Powers, who had actually helped create Universal some number of decades earlier. And then had gone on to become a sound accolade and entrepreneur developing a sound system for this new movie technology. And so Walt and Ub and crew animate a test sequence of a Mickey with sound and they screen it for all their wives and

49:04girlfriends. And Ub writes later of what happened next when they screen the synchronized sound Mickey for the first time. It turned out that sound was the critical enabling technology for animation to go beyond a novelty and allow the characters that are on screen to actually have personality that audiences connects with.

49:40So interesting. And it's not obvious at first. Until you do. I mean, it's obvious in retrospect, but you can totally see how when Walt had this insight and then they made the investment because doing a test animation and synchronizing the sound, like even to show a little screener must have been really hard at the time because none of the tools existed. They sort of had to invent the way to synchronize the way to synchronize the drawings with the music and the systems. It's sort of a big bet even to try and see if that creates personality. Right, right. And sound did the same thing for live action movies.

50:14But it's not that big a leap to have humans talking like humans talk. You know, sound just made it way better. Sound for cartoons was this giant leap. These characters, this art, can now be actual characters with personalities in a way that they couldn't before. Non-obvious at the time, completely obvious in retrospect. Yep. So they make Steamboat Willie as the third Mickey, but the first with synchronized sound. Which we're going to skip over the whole headache nightmare of creating this thing, but it was like Walt constantly going back and forth to New York, betting every last dollar that he had, inventing all these new processes, trying different ways to get an orchestra synced to the sound.

50:59Oh yeah, they like animated a little ball on the screen that would sync to the orchestra as they were playing. Yes, and he couldn't get the original conductor of the orchestra to actually use his method. The orchestra guy was like, eh, trust me. And then it was all out of sync with the screen. The net of it is, it's a giant, painful operational struggle to get this thing out. But my God, does it hit. Yes. Well, you know, this is the nature of the New York distributors. They get it made.

51:29Walt takes it and shops it around all the big folks in New York. And they're so conservative. They're like, well, this is cool, but I don't know how audiences are going to react to this. We kind of want to see a test first. I don't want to be first in line. Yeah, exactly. Exactly. Like VCs.

51:50So Walt decides that he's going to take matters into his own hands. And he goes directly to the manager of the Colony Theater in New York City and cuts a deal for $1,000 to run Steamboat Willie before the features that they're showing in the Colony Theater. So going around distributors just to get this in one theater as a test. And so Steamboat Willie premieres in New York City on November 18th, 1928, before the film Gang War.

52:21Nobody really remembers Gang War because Steamboat Willie is a revolution. Critics love it. Audiences love it. Yeah. Isn't there some famous story of people sort of standing up and screaming, we want Steamboat Willie again instead of playing the main feature? Yeah, yeah, exactly, exactly. But still, you know, Disney now needs to find a distributor. And now he's got the proof point. These New York distributors, they're still so conservative. They're like, well, you had one hit.

52:52I don't know that, like, we can really trust that this isn't just a fad, that the future sound Mickeys are also going to be a hit and that you can repeat the magic. And famously, one distributor, while Walt is meeting with him here, and he's trying to explain to Walt why he's going to pass again on the Mickey deal, picks up a package of Lifesavers candy. And he says to Walt, the public knows the Lifesavers brand. They know what these are. They don't know Walt Disney and they don't know your mouse.

53:23I mean, I can only imagine Walt sitting here just seething. Yeah. But this makes a huge impression on him. I think this is an important thing about Walt. He definitely has a huge ego, right? But he is very willing to learn, even from pretty obnoxious people. He's like, you know what? You're right. Oh, I think he's motivated by learning. He's motivated. I think he's an engineer. I think he loves picking things apart and learning the way they work. I think he's motivated to make the best art he can, in addition to making the best business he can.

53:55So if someone's going to offer him a lesson, a way to learn something, yeah. Yeah, he'll take it. He'll take it, even if he might be mad at the person. So he writes about this moment later. From now on, the audience was going to know if they liked the picture, they were going to know Walt Disney's name. Ultimately, what Walt does is he turns to Pat Powers, his partner in the sound technology, who had been one of the original Universal executives, and they cut a deal where Powers will be Disney's direct distribution agent in return for just 10% of the gross revenue on the Mickeys, which seems like a pretty good deal.

54:35Yeah, and indeed, it was kind of a too-good-to-be-true deal, because Powers, like all these New York guys, was basically plotting to do the exact same thing as Mince to Disney. He wanted to start working with Walt, give him a sweetheart deal, and then lure away the animation talent. Because Powers, remember, has the sound technology that he's given to Walt. So he's thinking, hmm, if I get the animators, what do we need Walt for?

55:08So this explains the sweetheart deal on distribution, because that wasn't the real prize he was after. And just a year later, in 1930, Powers does the unthinkable. He convinces Ub Iwerks to quit and leave Disney. He says, Ub, we're going to get you set up with your own studio. You're going to work with me. We're going to create new characters. It's the exact same thing that Mince did to Disney last time.

55:39Absolutely brutal. Except it plays out the exact opposite way. Because Walt's learned his lesson. Walt has learned his lesson. By the time this happens, over a dozen Mickey shorts with sound have come out. Every single one of them branded prominently, up front and at the end, a Walt Disney comic. And they had become huge hits. So even though Powers steals Iwerks away, nobody cares. Everybody still wants the Mickeys. Everybody still wants Walt Disney comics.

56:10Disney has made himself the lifesavers of animation. Disney first switches to Columbia for distribution and then to United Artists. And audiences just keep loving Mickey. In fact, they love him so much that it leads to the discovery of a whole new business model for Disney and the company. The intellectual property flywheel. And it starts with the Mickey Mouse Club. This is wild.

56:40I had no idea about the origins of the Mickey Mouse Club. Basically discovered by Disney by accident. Totally by accident. So in the summer of 1929, just a few months after Steamboat Willie and the first sort of nationally distributed Mickeys, the manager of the Fox Dome Theater in Ocean Park, California, contacts Walt with an idea. Why don't we partner to start a Mickey Mouse Club for kids?

57:11I've got like a thousand kids who keep showing up here at the theater every weekend. And all they want to do is watch the Mickeys again and again and again. I think we should capitalize on this. We can create a club, like a kids club, and we can charge parents a membership fee. The kids will love it. The parents will get them out of the house every weekend. It'll be great. And we can pilot it here at the Fox Dome Theater.

57:41And then if it works, I think we can franchise this nationally. And so this is exactly what Walt and this theater manager do. The way it works when they take it national is that theaters would buy a, quote, Mickey Mouse Club charter from the company, from the Walt Disney Studio. It's like a franchise type? Like a franchise right for $25. And then as part of the club, the kids and their parents would gain the right to buy exclusive Mickey merchandise.

58:15I mean, it's kind of amazing, right? Pay to become a member of a club to dedicate yourself to fandom so you have the right to buy more things. The right to buy more things. Yes, so like hats, buttons, banners, etc. And all of this revenue is getting split back with Disney. The $25 club charter and then all of the merchandise revenue. Pretty quickly, there are 800 Mickey Mouse clubs across the country with more than 1 million total members.

58:49That is more members than the Boy and Girl Scouts of America combined at this point in time. That's insane scale and insane speed of adoption pre-internet. Right, right? Pre-internet, pre-cable, pre-broadcast TV. The ability to get a million Americans doing something within a few years is, like, how did that even work? I mean, I'm trying to think how word could even spread that quickly. I guess through Disney's distributors to the theaters.

59:19Well, this is like a no-brainer proposition for a movie theater operator. You're going to take your Saturday or Sunday afternoons, which are probably reserved mostly for kids anyway, all your matinee showings. You're going to convert it into a Mickey Mouse club. Kids are going to love it. They're going to buy a bunch of stuff that you otherwise wouldn't have the opportunity to sell to them. Parents are going to love it because they get rid of the kids. And then for Disney, they're just getting this turbocharged distribution and brand recognition of Disney the company and Mickey Mouse the character.

59:55Yeah, it's amazing. Okay, so they take the learnings from the Mickey Mouse Club, right? And they kind of lean into Mickey in a big way at the corporate level. So just a few months after the Mickey Mouse Club kicks off, in January 1930, they launch a daily Mickey comic strip with King Features Syndicate in newspapers around the country. It gets published daily in 60 U.S. newspapers and then also internationally in 20 more countries around the world.

1:00:27So Disney is getting paid to produce a Mickey comic strip, which only costs them the salary of the one animator that they have making it every day, a 24-year-old named Floyd Gottfridson, who would do it every day for 45 years. Wow. Wild. So not only are they getting revenue for this, they're getting free daily advertising and IP exposure to...

1:00:57To probably 100 million plus people through this newspaper comic distribution every single day. And even if they weren't getting paid for it, the marketing on that so that people go see Mickey Films. Exactly, yeah. It never becomes a huge revenue or profit driver for them. But like that free daily marketing in most major newspapers around the country is incredible. Yep. Interesting to know, Oswald actually was on a candy bar back in the day. But when Walt, who at the time thought he owned Oswald, had the opportunity to monetize it, he was like, I didn't even consider it.

1:01:32It doesn't need to be an additional revenue stream. It's just really good for me if Oswald is on the candy bar. Right, right, right. So that's sort of, they're getting the seeds of like, okay, we're making some money on the comics, but it really is like a massive marketing engine. Well, you're teeing up the big one here, which is merch and consumer products. Yep. So pretty quickly after Steamboat Willie, Walt is walking the street in New York and a man comes up to him, like comes up to Walt Disney on the street.

1:02:02And offers Walt $300 to license the Mickey character to put it on a series of children's writing workbooks that he's producing there in New York. And this is like really early days. Mickey's just starting to work. The studio still needs money. So Walt's like, sure. Yeah, I'll take 300 bucks. Why not? And 300 bucks in 1929, it's a lot of money. I mean, this is the beginning of the Great Depression. Yes, yes. Mickey takes off during the Depression.

1:02:34In fact, he sort of becomes like a national champion. It's part of his success that people view Plucky Mickey's success as a mouse, as the underdog, as like something that Americans can identify with through the Depression. And life is hard. I mean, having a sort of way to disassociate a little bit and then just enjoy a like fun-loving, problem-free cartoon. I don't think people know this. Mickey's role in these early comics is exactly what you're saying, the underdog. He's getting himself into these tricky situations by someone that seems bigger and stronger, and he's able to figure it out and emerge.

1:03:05It's the American spirit. Yep, yep, yep. So back to the writing tablets. They take off and do huge, huge sales. Disney doesn't even know how much sales because all they have is 300 bucks and a handshake from this guy. So Walt and Roy figure, all right, we need to get smarter about merch. So they contact an ad man in Kansas City that Walt admired named Kay Kamen, who had owned an advertising firm, and they agree to do a deal where Kay becomes the exclusive commercial products agent for all Disney merchandise licensing beginning in 1933.

1:03:46And the deal they do is that Disney would get 60% of the first $100,000 in royalties that Kay is able to generate from licensing Disney brands and mascots. And then after the first $100,000, they would split every dollar of licensing revenue 50-50. And there would be a lot of dollars after the first $100,000. Okay, this is a huge moment. I mean, there is a real case to be made that besides Walt and Roy, and Ub, I works too, but at least on the business side, besides Walt and Roy, Kay Kamen was the third most important person in the first half century of Disney.

1:04:31All right, so make your case. What goes on to happen here? So within six months, Kay takes Disney merchandising from this hodgepodge of random licenses of guys that Walt met on the street. And many of which were a lot more than $300. Yes, yes, yes. To a real professional operation doing $6 million of gross merchandise sales within six months. That then grows over the next two years to $70 million annually of gross merchandise sales all around the globe from over 40 separate super high quality consumer product partners.

1:05:16So the most successful and famous example of this is the deal that Kay does in 1933, right after he takes over with the Ingersoll Watch Company. This is crazy that within just a few years, they can be at a $70 million level in 1935 of merch. I mean, there's so much pent-up demand to buy Mickey Mouse stuff that you can sort of explode out of the gate. I don't even really understand how Kay lined up 40 merchants and got all this stuff manufactured and distributed in such a short period of time.

1:05:54Well, I think part of it, though, is that he's like a real professional and well-respected in the industry with contacts. But yeah, to your point, Ben, there's just so much demand for Disney merch. So the $70 million is a gross sales to the end consumer number. So most deals that Kay would do would be for 5% royalties on the wholesale price of the goods. And the $70 million was retail.

1:06:25So if you assume 100% retail markup, that's $35 million in wholesale revenue. Disney and Cayman are splitting 5% of that number between them. But even that is $1.75 million split 50-50 between Disney and Kay. This is like an astronomical number. And it is a way, way bigger and better business than the cartoons themselves at this point in time.

1:06:56It's funny. I found the comment on the Disney Family Museum site that by the late 1930s, royalty income from merchandise had exceeded revenue from film rentals. But it wasn't even by the late 1930s. It was 1934. It was quick and it was by a lot. Yes. Yes. So just to illustrate the difference, the distribution deal that Disney does with United Artists for the Mickey Films and for the Silly Symphonies, which is the second cartoon series that Disney starts in the 30s, Disney gets an advance of $15,000 per film.

1:07:28But Walt is always investing ever more and more in the production of the cartoons themselves. By this point in time in the mid-30s, he's investing like $30,000 plus per cartoon. He's only getting a $15,000 advance. So it's not even guaranteed that each individual cartoon would be profitable. Usually they were, but they would have to earn out on the back end. Compare that to, you know, half of basically $2 million in pure margin, almost pure margin revenue coming in from Kay every year.

1:08:06It doesn't even matter that Walt is investing everything back into the cartoons. He's got this money spigot coming in. Right. So summarizing that, films are tens or low hundreds of thousands of dollars of profit coming in, and the merch is on the order of a million dollars. Yep. And film profitability is highly dependent on a film-by-film basis. It's got to play out in theaters, et cetera, et cetera. All right. So I cut you off on the Ingersoll Watch Company. Yeah. Just as one example of like the deals that Kay is doing, in 1933, right after he takes over,

1:08:40he does a deal with the Ingersoll Watch Company to manufacture the famous Mickey Mouse watch. And that watch would sell two and a half million units over the next two years. The Ingersoll Watch Company was about to go bankrupt during the Depression. It saves the company. Hmm. And wasn't it the most popular watch in America? I think that's right. At least for some point in time during the 30s. Fascinating. And of course, the modern Apple Watch, Mickey watch face is a reference to this

1:09:13because he's using his arms to point to the times on that original Ingersoll Watch. This is a whole different shape of a business than has ever existed before.