When Walt got home from the war, jobs were scarce. Two of his uncle Roy’s friends, named Pressman and Ruben, ran an art shop for the Gray Advertising Company and were in need of an apprentice. Walt went to see them, bringing samples of some of the illustrations he’d done in France. That portfolio was enough to get him hired. Initially, Ruben and Pressman didn’t even know how much to pay him.
After the first week, Ruben came by Walt’s drawing board, looked at his work and said “I don’t know.” Walt though he was about to be canned, but then Ruben added; “How about fifty a month?” Even though this was at time when the average income was about $1500 per year, Walt was so excited that he went to find his Aunt Margaret, one of the first people to encourage his artistic skills, and tell her that he was actually getting paid to draw pictures. Unfortunately, the end of the year brought layoffs and Walt was the first to go. By that time he’d picked up quite a few drawing tricks and was thinking of getting work on his own. One of the other employees at Gray was Ub Iwerks, who was good at calligraphy and airbrushing. Ub was laid off at the same time and very distressed about it. In typical fashion, Walt suggested that they go into business together.
As part of the deal for their first client, Walt suggested that instead of getting paid in cash, they’d take just enough space for Ub and him to work at. Their first month they brought in $135.00, and were rent free. Such was the founding of Iwerks-Disney Commerical Artists. Walt's first commercial venture would soon to end, but begin the process of teaching him important lessons along the way.
In 1921, Disney was contracted by Milton Feld to make twelve animated cartoons, which Walt called Newman's Laugh-O-grams. Laugh-O-gram Films incorporated on May 23, 1922, using the assets of the failed, Iwerks-Disney Commercial Artists company, plus $15,000 from local investors. Laugh-O-grams would also have problems making ends meet within a few months, Walt was living at the office, taking baths once a week at the train station and eating on the good will of local restaurants. Part of the problem was that he hadn’t learned how to correctly price his product yet.
Kansas City dentist Thomas B. McCrum wanted Walt to produce a short subject about dental hygiene. Pulling some of his old staff back together, Disney made Tommy Tucker's Tooth, which brought in $500, that was then re-invested in the live-action/animation demonstration film Alice's Wonderland. Laugh-O-gram Films would file for Chapter 11 bankruptcy in July 1923. Selling his camera to get enough for a one-way train ticket to Hollywood, Walt went to live with his uncle Robert and his brother Roy, bringing along an unfinished reel of Alice's Wonderland.
While in California, Walt continued to send out proposals for the Alice series, in hopes of obtaining a distribution deal. On May 14, 1923 Walt wrote to Margaret Winkler, a New York film distributor, inquiring if she might be interested in Alice's Wonderland. At this time Winkler was the top cartoon distributor in the world. That September she viewed the Alice pilot reel and was intrigued with the idea of a live-action girl in a cartoon world.
Margaret signed Walt to a year-long contract, knowing that that Laugh-O-grams had just gone bankrupt two months earlier. Disney formed the Disney Brothers Studio but changed its name to The Walt Disney Company on October 16, 1923. Margaret Winkler tutored Walt and insisted on editing all of the "Alice Comedies" episodes herself. In 1924, she married Charles Mintz, a film distributor who had been working for her since 1922. Soon after, she had her first child and retired from the business, turning the company over to her husband.
For the first two years, the Alice series did well, initially paying $1800 to $2000 per reel. But Charles Mintz was unhappy with the production costs and suggested they develop a new character, insisting that it shouldn’t be a cat, as there ere “too many cats on the market” already. At the same time, Universal Studios wanted to get into the cartoon business with a character of their own.
It was the contract with Universal Studios that lead to the creation of Oswald the Lucky Rabbit.
The first version of Oswald was rejected by Universal, who wanted a Charlie Chaplinesque character and thought the first version was too old and fat. Walt was apologetic, telling Mintz;
"I am sorry that the first Oswald was such a keen disappointment to everyone… This work was animated by a man of experience [Ub] whom I am willing to put alongside of any man in the business today,” "Hereafter we will aim to [make] Oswald a younger character, peppy, alert, saucy and venturesome, keeping him also neat and trim."
Going back to the drawing board, Disney and Iwerks, created a second cartoon, Trolly Troubles, with a much younger, neater, Oswald. It was released on September 5, 1927. The press and audiences loved it. Co-incidentally, Oswald was the first Disney created character to generate spin-off merchandise: a chocolate-covered marshmallow candy bar, a stencil set, and a pin-backed button.
On February 6th, 1928, Disney and Lillian traveled to New York City in hopes of renewing the Alice contract at a higher rate. The film was playing at all the best theaters and bringing in $2250 per reel. Walt wanted to raise that to $2500.
Mintz offered $1800, but promised large turnarounds if the studio's finances improved. (This was on the verge of the Great Depression and signs of economic weakness were beginning to show around the world. Black Tuesday was only a year and a half away.) Mintz also told Walt that his staff had all been offered more money than they were currently getting, if they'd come work for Mintz. Walt retorted to go ahead, that he'd build a new organization. In fact, Walt felt crushed. Back at the hotel, he told Lillian that the bottom had fallen out from under the studio.
Deeply distressed at Mintz’ actions, Disney decided to quit, which would leave Oswald and his animation staff behind. Everything Walt had worked for had been taken form him, except his old friend Ub Iwerks, who would not abandon him. Mint'z actions must have felt to Walt like the ultimate betrayal. (We'll come back to this later. -df)
On the long train ride home, Walt decided to create another character, and retain all rights to it. He and Iwerks developed Mickey totally in secret. Walt had learned some very hard lessons about trusting people, valuing your work, pricing your product and following your dream. Years later, he would be very careful about who he shared control and partnered with. It's also interesting to note that two of the people who first saw and encouraged his talent the most clearly were women.
As they say, the rest is history. Mickey would become the most popular and successful cartoon character in film history and the foundation of a global entertainment empire.
Postscript - Justice is Blind and Done
While things seemed to go in Mintz's favor for a while, Oswald’s animators Hugh Harman and Rudolf Ising asked Universal President Carl Lemmle to remove Mintz form the project and suggested they should be the ones to continue the Oswald series.
Laemmle denied their requests and terminated Mintz’s contact.