Like most American Baby Boomers, I’d always associated the Walt Disney Company with Walt himself. He was the guy who pulled the curtain back on The Wonderful World of Disney, invented the feature-length animated movie with Snow White in 1937 and opened the gates to Disneyland in 1955. But it wasn’t until after the company hired me to write a book about its service delivery strategy in 2000 that I understood that the foundations of the Disney empire had been built by a brother act.
Walt was the act’s front man, but without his brother Roy by his side from Day One in 1923, the Disney name wouldn’t be the iconic brand the whole world knows today. “If it hadn’t been for my big brother,” Walt once joked, “I swear I’d have been in jail several times for check bouncing”—and that wisecrack contained a grain or two of truth.
Walt was a creative genius and a mercurial visionary. Before he turned 20, he was making crude animated cartoons in a makeshift studio in his family’s garage in Kansas City and selling them to a local theater. Over the next five decades until his death in 1966 he won 32 Academy Awards—by far the most ever awarded to an individual. (The runner-up is MGM art director Cedric Gibbons, with 11.) Walt had an uncanny connection to the entertainment desires of the American family, but he wasn’t an accomplished businessperson.
In the early 1920s, Walt founded a short-lived commercial art partnership and an animation company that quickly went bankrupt. It was only at Roy’s suggestion that he moved to Hollywood. Roy, who was recovering from tuberculosis at the time, was eight years older than Walt, but they were close even as children. “We had to sleep in the same bed,” Roy would say. “Walt was just a little guy, and he was always wetting the bed. And he’s been peeing on me ever since.” That comment reflects in some small way the intensity of the Disney brothers’ sibling rivalry—a relationship based on equal parts of respect and resentment.
Walt tried to find work as a director, without success. Then, with Roy’s encouragement, he returned to his entrepreneurial roots and pursued animation once more. In October 1923, Walt received an offer from a New York distributor willing to buy a series of short cartoons. This time, he turned to Roy as a partner. Together they founded Disney Brothers Studio, the first incarnation of today’s media giant.
Roy, a straight-talking, steady-tempered son of the Midwest who had worked in a bank back in Kansas City, handled what Walt called “the business end.” He raised the money to launch the venture out of his own savings and from family and friends. His managerial skills left Walt free to do what he did best, throwing himself into the production of a series of innovative and popular short films that placed a real-life child actress named Alice in an animated story—a distant ancestor of the company’s 1988 hit Who Framed Roger Rabbit.
Seemingly without conscious forethought, the Disney brothers had adopted a division of labor that played to their individual strengths. The Disney Company needed Roy’s business acumen as much as it needed Walt’s creative vision, and the synergies between those natural talents wielded a huge impact on their company’s development.
To be sure, most siblings grow up with a keen sense of their differences. From our earliest days, many of us get labels within our families—one child is creative, another an athletic team player, a third is mechanically adept and so on. For most siblings, such pigeonholing is reason to head in opposite directions, or perhaps to a therapist. Relatively few siblings ever consider how those natural differences in temperament and personality can be combined for business success.
When Walt pursued a creative vision, no price was too great to pay. In 1934, he began work on Snow White and the Seven Dwarfs, the first feature-length animated film. At an estimated cost of $500,000, the project frightened Roy, who worried that it would never turn a profit. Nevertheless, he raised the money—and kept raising more, even as costs ballooned to $1.5 million and the industry began calling the film “Disney’s Folly.” Released in December 1937, Snow White was a sensation. It earned $8 million in its first run, and Walt received a specially designed Academy Award that featured one normal-sized and seven dwarf Oscars.
Roy did more than finance Walt’s ideas. He also maximized their financial return. Because the visionary Walt was always thinking ahead, he rarely thought much about his past creations. After Steamboat Willie—the first animated cartoon, featuring Mickey Mouse—became a hit in 1928, Walt casually accepted $300 for the rights to put the mouse on a paper pad. It was Roy who protected the rights to Disney characters in court: In 1930, he established the company’s merchandising business, licensing the rights to create Mickey Mouse toys and novelties, books and music. Today, the retail sales of Disney-branded merchandise exceed $100 billion annually.
It was also Roy who conceived and founded the Buena Vista Distribution Company in 1953. Prior to that time, other companies distributed Disney films to theaters. The outside distributors took a percentage of the sales and, more disturbing to Roy, might or might not devote their entire attention to Disney products. With the formation of Buena Vista, Roy significantly reduced the company’s distribution costs and, for the first time, established complete control over the marketing of its films.
The brothers’ separate strengths could also protect the company from their individual shortcomings. Roy was temperamentally opposed to Walt’s investments in new technology. But on this issue Walt usually prevailed. At the same time, Roy’s tight-fisted approach to spending forced Walt to direct at least some of his creative energies toward the bottom line. In 1932, for example, Walt persuaded Roy to invest in new color film technology by negotiating a two-year exclusive deal with a then-new company named Technicolor. The result was the first-ever animated film in color, Disney’s Flowers and Trees, which earned the first Academy Award bestowed on a cartoon.
So much for the good news about the Disney brothers’ legendary teamwork. On the downside, their strategy of separating job responsibilities illustrates several traps that can threaten the well-being of a family business.
For one, Walt and Roy made the mistake of institutionalizing the differences in their personalities rather than their similarities. By the 1950s, the company’s workforce had become divided into two informal groups. “Roy’s Boys” worked for Roy in the financial and legal departments of the company; “Walt’s Boys” worked for Walt on the creative side. The problem was that the two groups had different—and often adversarial—cultures, which stemmed from their leaders.
Instead of working to smooth this schism, Roy and Walt tended to exacerbate it. Once when Walt saw one his “boys” eating lunch with Roy, he complained that Roy should leave his employees alone. On the other hand, when Walt was pursuing a new idea that needed funding, Roy was likely to remark loudly and disparagingly that “Junior’s got his hand in the cookie jar.”
The one saving grace of this rivalry was that while the brothers were quick to attack each other, neither brother allowed any of his employees to do so. They seem to have possessed the instinctive common sense to prevent the chasm between Walt’s Boys and Roy’s Boys from growing too wide to bridge.
Another trap that snared Walt and Roy was their occasional inability to agree on a contested issue—and, when they deadlocked, their lack of an established method to arbitrate a satisfactory resolution. On several occasions, this led to bitter disputes that jeopardized the future of the company.
Disneyland was one notable example. In 1952, Walt’s idea for a new kind of amusement park—what he called a “spectacular world of make-believe”—was widely seen as a losing proposition. Roy called it one of “Walt’s screwy ideas”—and, citing the company’s allegedly strapped economic condition, he steadfastly refused to invest any significant money in its development. Walt ended the deadlock only by forming a new company, WED Enterprises, and financing it with his own money borrowed against his life insurance and the sale of his Palm Springs home. But even as Walt began to spend more and more time on the project, Roy would not reconsider. It wasn’t until Walt came up with a plan to finance the park by creating a partnership with a television network that Roy realized that Walt was going to build Disneyland with or without him and their company. At that point, Roy finally relented.
Working together with Walt once more, Roy went to New York and structured a partnership with ABC. With that one deal, the company entered two new markets: amusement parks and television. The Disneyland park opened in Anaheim, Calif., in 1955 and was an instant sensation. In its first two months, more than 1 million people visited the park, and company revenues grew beyond the Disney brothers’ wildest dreams. In 1950, the company had $6 million in gross revenues; by 1959, gross revenues had grown to $70 million.
Yet instead of mending the breach between the brothers, Disneyland’s success seems to have driven them farther apart, creating a greater sense of independence and confidence in Walt that made it all the more difficult for Roy to reunite the two separate Disney companies. In 1963, fearing rightly that Walt’s separate WED company might create a conflict with Disney shareholders, Roy decided to buy WED, thus formally reuniting Walt with the studio. Roy broached the subject during a long weekend in Palm Springs, and the brothers ended up in a bitter fight over Walt’s compensation. Roy’s wife later said that the two men yelled at each other for three days.
Walt and Roy did not speak for months after that battle, and the company’s fate hung in the balance. Finally, with Walt’s contract coming up for renewal and the looming threat of his leaving the company altogether, lawyers began negotiating a settlement. They argued and remained stalemated until one afternoon, when Roy entered the conference room and told his negotiating team: “None of us would be here in these offices if it hadn’t been for Walt. All your jobs, all the benefits you have, all came from Walt and his contributions. He deserves better treatment than what’s being shown here.” Once again, the brothers’ underlying love and respect had saved their company; an agreement was reached shortly thereafter. On Roy’s next birthday, Walt showed up in his office with an Indian peace pipe. The battle was over.
Perhaps because they had come so near to losing each other, Roy and Walt seemed closer than ever after the reconciliation. They worked together for the rest of their lives. By 1966, Roy was busy raising the capital for Walt’s new dream: a bigger, better “Disney World” theme park, to be located in Florida, that would ultimately cost $400 million.
Walt was in the middle of designing the new park when he was diagnosed with lung cancer. After Walt’s death on Dec. 15, 1966, Roy continued on alone, building the park according to Walt’s wishes, even though by this time Roy was well into his 70s. When Disney World was completed in September 1971, Roy insisted that it be named Walt Disney World. Roy died less than three months after he dedicated the park to Walt’s memory.
Family members continued to lead Disney after Roy’s death, but the brothers’ peculiar synergy couldn’t be transferred to the next generation. Without its founders, the company’s performance stagnated (although even Walt himself might have been hard pressed to hold on to his audience during the counter-culture ’70s).
At the time of Roy’s death, Walt’s son-in-law Ron Miller, a former Los Angeles Rams tight end, and Roy’s son Roy E. Disney were executives in the company. Miller became head of production in 1977 and Roy E. resigned seven months later (but kept his seat on the board), leaving Miller and two non-family Disney veterans (Card Walker and Donn Tatum) to run the company. Disney was doing poorly when Miller was elevated to CEO in 1983, over Roy E.’s objections. In 1984, Roy E. helped engineer a management reorganization that put outsiders Michael Eisner and the late Frank Wells in charge of the company. In November 2003, Roy E. Disney resigned as chairman of the board and vice chairman of Disney’s Feature Animation Division, accusing Eisner of mismanagement and of effectively ousting Disney by omitting his name from the list for 2004 board elections. Last February, Comcast Corp. made an unsolicited takeover offer for the company.
Theodore Kinni (bizbooks@gte.net) of Williamsburg, Va., has authored and ghostwritten seven business books, including Be Our Guest: Perfecting the Art of Customer Service for the Disney organization (Disney Editions, 2001).
The Disneys: Recommended reading
There is only one biography of Roy Disney: Building a Company: Roy O. Disney and the Creation of an Entertainment Empire, by Bob Thomas (Hyperion, 1998). It’s the best single source for understanding the relationship between Walt and Roy, and the source of many of the quotes and anecdotes in the accompanying article.
Walt Disney: An American Original, also by Bob Thomas (Hyperion, 1994) is another good—albeit sometimes sanitized—source for understanding the relationship between Walt and Roy.
Ron Grover’s The Disney Touch (McGraw-Hill, 1997) describes the downturn in the company’s fortunes after Roy’s death, as well as its revitalization under Frank Wells and Michael Eisner.
—T.K.