How They Started (37 page)

Against the odds, by the end of the decade, CTR was growing and beginning to really show its potential. Herman’s influence was declining, and later Thomas would establish a robust engineering department that would work on and improve the tabulating machine. Although he was not an engineer himself, he managed to get the best out of his men. Sometimes, he would secretly set them the same task and then choose the best product, believing that rivalry brought better work. He tried many different techniques to bring out the best from his team, and repeated whatever seemed to work the most effectively. He also liked to have the slogan THINK displayed at various places across the company, another vestige of his NCR days.

On a blackboard, he wrote out the words “manufacturing,” “general manager,” “sales manager,” “sales man,” “factory manager,” “factory man,” and so on … He then crossed out all the words apart from “man,” suggesting that all were equal in the company.

In 1917, the company moved into Canada, and Thomas decided to call that company International Business Machines (IBM). He later used that name as the company moved into South America. In 1924 the CTR name was dropped completely and IBM floated on the New York Stock Exchange. Also that year George Fairchild died, and the last remaining barrier to Thomas’s dominance was removed. IBM was now truly Thomas Watson and would remain that way for the better part of 30 years.

Disney is the largest entertainment company in the world.
While we might naturally associate the company’s origins with Mickey Mouse, the real story involves a rabbit, and several years of hard work, creditor disagreements and mutiny. With a failed business behind him at just 21, Walt Disney and his brother Roy started their company from their uncle’s garage in California in 1923. Armed with a truckload of talent and little else, the Disney brothers’ story is littered with highs and lows reminiscent of a rollercoaster found at Disneyland. The business, which today brings in more than $40 billion a year and employs 150,000 people, is a remarkable story of survival and creativity.

As you might expect, Walt Disney had always been fascinated with illustration. He took an active interest in drawing from a young age; he was even commissioned to draw his neighbor’s horse. Aged 10, he continued his love of drawing, attending Saturday school at the Kansas City Art Institute. But Walt soon realized he was not good enough to pursue traditional illustration and turned his attention instead to caricatures and cartoons.

When the family moved to Chicago, the teenage Walt became cartoonist for his school’s newspaper and took night classes at the Art Institute of Chicago. After leaving school, Walt intended to become a cartoonist. But with the advent of World War I, he joined the Red Cross as soon as he was old enough and served in France for a year in 1918. Throughout this time, he continued to hone his drawing skills, submitting numerous pieces to national magazines. Upon his return home in 1919, he started a concerted effort to find a job in illustration.

Walt received numerous rejections, but eventually got a job at a commercial art studio that produced marketing materials and corporate stationery. Here he met Ub Iwerks, the man who would later become his first business partner and eventually a loyal member of the Disney empire. Both men were quickly let go from the studio once a busy period ended and, at a loose end, they decided to set up their own company in January 1920.

Iwerks-Disney Commercial Artists was a short-lived venture but gave Walt valuable business experience. The pair won a few small contracts producing content similar to that of the studio they had been fired from. However, it was all over within six weeks, when Walt accepted a position at the Kansas City Film Ad Company for $40 a week and persuaded his bosses to take on Iwerks, too.

The company made silent cartoon advertisements, mostly in black and white, and working at the ad company gave Walt a real taste for bringing his artwork to life. He decided to become an animator. He found he was able to improve the company’s basic and somewhat lackluster animation significantly, and started to work on his own cartoons in his spare time. His boss at the ad agency let him borrow a camera with which to experiment at home.

Walt began working on a series of cartoons with the aim of selling them to the nearby Newman Theater. He called them the Newman Laugh-O-Gram Films, and presented them to the theater manager, who was impressed enough to ask how much they cost. For all the time he’d spent on the cartoons, Walt hadn’t actually worked out how much he’d need to charge to make a profit. Without thinking, he offered up a price of 30 cents per foot—the price it had cost Walt to produce them—and the theater manager promptly accepted.

The deal was done, and it was too late to renegotiate the price to try to make a profit, but Walt had his first commission and didn’t intend to waste the opportunity. Walt needed to get help to produce the cartoon strips, but with no money to pay staff, he had to come up with another way of attracting talent.

As a way around his staffing problems, Walt placed an ad looking for boys who wanted to learn to animate. He offered applicants training and a share of any future profits. He put together a small team, including colleagues from his work, and they spent evenings after work creating a series of cartoons that could be made into films and sold to theaters. The Laugh-O-Grams were a great success and became popular in theaters throughout Kansas.

Walt’s team began working on other projects and created an animation of
Little Red Riding Hood
that proved a hit at local theaters. This success gave Walt the courage to leave his job at the Kansas City Film Ad Company and concentrate on his fledgling business full-time. He persuaded some of his former colleagues to invest in the business and set up Laugh-O-Gram Films in 1922, having raised $15,000. At 20 years old, he owned his first company, although he later joked that it “was probably illegal” to be president of a company at that age. Now in charge of a “proper” company, Walt rented some studio space, brought in his former colleague Ub, and took on another handful of budding young animators who earned very modest wages.

The team began to work on more animations and worked nearly every hour of the day, producing some excellent results. But Walt desperately needed to find someone to distribute his products. With no advertising budget, Walt struggled to get his company noticed and eventually had to hire salesman Leslie Mace. Leslie took the films to New York and secured a deal with Pictorial Clubs of Tennessee, a company that hired out films to schools and churches. The deal was for a series of fairytale cartoons. Walt accepted a down payment of $100 on the understanding that a further $11,000 would come through once the series had been delivered.

But six months later, just as Laugh-O-Gram Films was about to deliver the finished series, Pictorial Clubs of Tennessee went out of business. With no income and salaries to pay, Walt saw his employees begin to quit. He was kicked out of his apartment for failing to pay rent and soon became the only member of the company.

At 20 years old he owned his first company, although he later joked that it “was probably illegal” to be president of a company at that age.

Walt spent the next year accepting meager commissions, including one from a local dentist who wanted a film encouraging children to brush their teeth. The dentist offered him $500 and asked Walt to come by and finalize the deal, but Walt couldn’t even afford the trip. Times were tough and his only pair of shoes was being held ransom by the cobbler until he could pay his bill. He finally admitted this to the dentist, who promptly paid the cobbler’s bill, and the cartoon deal was completed. The money allowed Walt some breathing space and he soon began working on a new idea—one that would eventually lead to the creation of the Disney Brothers Cartoon Studio.

Walt began to develop ideas for a new cartoon series based on Lewis Carroll’s
Alice’s Adventures in Wonderland
. New York distributor Margaret Winkler had expressed interest in the cartoon after Walt wrote to her describing it. However, Laugh-O-Gram’s debts were holding him back, and he didn’t have anywhere near enough cash to finish
Alice
. He had little choice but to declare the company bankrupt and move on. It was a tough period for Walt, but he later said he thought it was “important to have a good hard failure when you’re young.”

In 1923, Walt set off for Los Angeles, believing it to be the only place he could really bring his visions to life with any success. At the age of 21 and with just $40 in his pocket, he arrived in Hollywood, renting a room from his uncle, Robert Disney. His brother Roy was also in LA, having been transferred to a hospital there to receive treatment for tuberculosis.

Walt first approached the big movie studios to offer his services, but was turned down categorically. Encouraged by Winkler’s interest in the
Alice
cartoons, Walt decided once again to set up his own studio, this time in his uncle’s garage. He wrote back to Winkler informing her that he was “no longer connected with the Laugh-O-Gram Films Inc.” and that he was setting up a studio to produce the cartoons she was interested in. On October 16, 1923, a deal was made for the
Alice
series: six cartoons for $1,500 each, but with no advance.

Walt realized from his experience with Laugh-O-Gram Films that his skills did not lie in cash flow management. The solution was to bring in Roy, who discharged himself from the hospital, put up $200 of his own savings, and borrowed an additional $500 from their uncle. With both their sons at work on the same project, the boys’ parents also chipped in, re-mortgaging their home to put up another $2,500.

Walt and Roy then hired a small staff of animators, bought a second-hand camera, and hired a one-room apartment before setting to work on the cartoons. Disney Brothers Cartoon Studio was up and running. At this point, Walt declared to his father that the name Disney would eventually be famous all over the world.

Although the studio had a steady income from Winkler, the distributor proved to be a tough client. Continually demanding tweaks and improvements to the cartoons, Winkler soon reduced the company’s profits to virtually nothing. To stem losses, Walt decided he needed a more professional animator to join his team alongside the junior staff. His old friend Ub Iwerks had returned to the Kansas City Film Ad Company after the collapse of Laugh-O-Gram. Walt offered him a salary that was $10 a week less than what he was earning in Kansas, but Ub accepted it and moved out to Hollywood to join him.

Walt declared to his father that the name Disney would eventually be famous all over the world.

By 1924, payments from Winkler were becoming increasingly late, and the fee for each cartoon soon went from $1,500 to $900. Winkler had recently married, and her new husband, Charles Mintz, had taken over her business operations, much to the dismay of the Disney brothers. As their profit margins evaporated, the brothers had to face their client. Walt pleaded with Mintz, insisting that the quality of the
Alice
series could not be maintained if the right amount of cash was not proffered. His frankness appealed to Mintz’s better nature: another 18
Alice
cartoons were commissioned for $1,800 each as well as a share of any subsequent profits.

The arrangement continued for another three years and more than 50
Alice
cartoons, although this period was fraught with fee negotiations and more late payments on Mintz’s behalf. By 1927, the New York distributor grew tired of the
Alice
series and requested something new, possibly involving a rabbit ...

Tired of the
Alice
series himself, Walt found a new lease on life with his creation Oswald the Rabbit. Over the previous three years, Walt had realized that his talents were best placed as the creative force of the company, not in the animation itself. He declared, “Around here, we don’t look backwards for very long. We keep moving forward, opening new doors, and doing new things, because we’re curious.”

The Oswald series soon became immensely popular, and before long Mintz was paying $2,250 per cartoon. The production schedule was tight, and Walt later recalled, “In the early days of making these pictures, it was a fight to survive. I used to throw gags in because I was desperate. I didn’t even like them but I had to get one out every two weeks.” Despite the pressure on the studio, things were running smoothly.