Tuesday, May 6, 2014

Walt's Relationship with Money

In council with the Seven Dwarfs

During a recent visit to the Walt Disney Family Museum, I overheard one of the guests who had just finished viewing the portion of the exhibit on Mickey Mouse chuckle somewhat cynically and say; "Who'd have thought a mouse could make someone a millionaire?" 

Reflecting on his observation made me realize that the present success of Disney, with it's $140 Billion market valuation, might give some people the impression that Walt was successful from the start and mostly interested in the money.

There is no question that the availability of money made a big difference.  Walt once said that the lack of money was his biggest problem. But underneath that statement is a much deeper truth.

"Biggest problem? Well, I'd say it's been my biggest problem all my life. MONEY. It takes a lot of money to make these dreams come true. From the very start it was a problem. Getting the money to open Disneyland. About seventeen million it took. And we had everything mortgaged, including my personal insurance."

1950 was a turning point in Disney's financial future. Up until that time his drive to always
"plus it up" and do things which hadn't been done before had resulted in a string of financial shortfalls; near misses; being robbed a couple of times; a few break-evens and finally, after 30 years, enough of a success to nearly balance the books - or at least get the debt down to the point that Bank of America wasn't wondering what they'd gotten themselves into with this crazy Disney fellow.

That doesn't sound like the kind of rags-to-riches story that inspires many today, with some software startups getting stratospheric buyouts in a matter of a couple of years.

"Disneyland is a work of love. We didn't go into Disneyland just with the idea of making money."

Walt commented that most people didn't understand how he thought about money. For him, it wasn't something to be acquired and hoarded. It was a resource to be applied to making and improving things.

In 1956, Walt explained his attitude about money, to his daughter Diane, in this way;

"All I know about money is that I have to have it to do things.  I don't get any fun out of possessing it. On the other hand, there is no truth in the theory that I have no regard for money.  I do, but not in the way some people mean.  I think of money as tool. I don't want to bank my dividends from my Disney stock; I'd rather keep that money working."

In his book "An American Original"Bob Thomas quotes Walt a little differently:

"I've always been bored with making money, I wanted to do things, I wanted to build things. Get something going." "People look at me... some of them say; 'The guy has no regard for money.' That's 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 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."

When you think about it, money in and of itself, has no intrinsic value, particularly these days when it is often just a number in a few kilobytes of computer memory somewhere. It is what the money represents that creates the power.  Money is primarily the value of stored labor. Walt seemed to understand this instinctively.  Perhaps it was the result of his upbringing and all those years of working for his father, basically for his childhood room and board.

That being so, there is another principle at work here.  The need to get others to help out when the job gets too big for just one person. I suspect Walt's persuasive powers of storytelling helped out quite a bit there - and his persistent optimism. Walt didn't use Tom Sawyer's methods of selling whitewash.  Walt was sincere and committed to the idea that people were basically good and would respond to that in others.

That's part of the reason why Disneyland prospered when other theme parks failed. It was patterned after a world where there was a lot of good in everyone and everything.

Not exactly what Walt had in mind

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