Page 126 - Harnessing the Management Secrets of Disney in Your Company

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distributor of his Oswald the Rabbit cartoons. Disney originally signed a con-
tract with a New York distributor, Margaret Winkler. Trouble began when
she married and her husband, Charles Mintz, took over her business. In a
1926 distribution deal involving Universal Pictures, Mintz persuaded the
Disney brothers—whom he always referred to as “the bumpkins”—to create
a new cartoon to compete with the very popular Felix the Cat. The result was
the imaginative and successful Oswald series.
Mintz, however, was determined to acquire the Disney studio. When
the distribution contract expired, he cut the studio’s payments by nearly a
third and threatened to take over the operation. After all, according to the
contract, he owned Oswald. Walt was devastated, but he had no choice other
than to comply with the contract.
That contract, however, was limited solely to Oswald, and Walt was
free to create new characters. In the end, the Oswald fiasco proved to be a
serendipitous turn of events, because the failed partnership led to the birth
of Mickey Mouse. But Walt never forgot that partnering with like-minded
people is critical to the success of the relationship. One need only look at the
list of highly touted mergers gone awry to understand the value of the lesson
Walt learned so early in his career. Philosophical and cultural differences are
frequently cited as the reason these unions fail.

Partnerships Take Many Forms
Business partnerships are entered into for a variety of reasons, of course.
Some are formed to carry out a specific project, whereas others are joined on
a long-term basis, like law partnerships.
One of Walt Disney’s first remunerative partnerships was with a small
New York stationery firm. He signed a contract giving the firm the rights to
sell schoolchildren’s writing pads with a portrait of Mickey Mouse printed
on them. The firm paid a mere $300 for the rights, but it was 1929 and
Disney was broke and eager for every nickel he could get. “As usual, Roy and
I needed the money,” he said later.
Although on its face the deal was a small one, it opened Disney’s eyes
to the possibilities of making money through ancillary uses of his creative
product. He never overlooked an opportunity to do so from then on, and
licensing arrangements became central to his management philosophy. A
couple of years later, he licensed the sale of Mickey Mouse watches, which
initially sold at the rate of about 1 million per year. Other similar agreements
brought in 10 percent of the company’s income over a decade-long period.