Walt Disney's journey to building one of the greatest businesses on the planet is a lesson in entrepreneurship. Yet, it was not always a fairytale. One pivotal moment in Disney's early career stands out as a cautionary tale, the loss of his first animated character, Oswald the Lucky Rabbit, to Charles Mintz in 1928. This event, often overlooked in favour of Disney's subsequent (and most famous) creation of Mickey Mouse, offers key lessons in the importance of managing your intellectual property (IP) and the key role it plays in building your business.
The Birth: Oswald and its significance
*Image credit: Wikimedia commons
In 1927, Walt Disney and his team created Oswald the Lucky Rabbit. The character was a joint venture between Disney and Universal Studios. At the time, Universal owned the rights to the character, while Disney was responsible for the creative direction and animation. Oswald quickly became popular with audiences, thanks to his charm and distinctive design, helping to cement the Disney brand in the animation world.
The character's success was a significant stepping stone for Walt Disney. It was Oswald who helped Disney establish a profitable animation studio and gain recognition in Hollywood. However, behind the success was a crucial flaw: Disney, in his eagerness to work with a major studio, had agreed to a business deal that did not protect his creative interests or ownership of the character.
The betrayal: How Disney lost Oswald
In 1928, Charles Mintz, who had previously worked with Disney and was a partner in the production of Oswald, abruptly changed the terms of their business arrangement. Mintz, having established his own production company under Universal's oversight, demanded that Disney accept a drastic cut in funding for the Oswald series. At the same time, he informed Disney that Universal now owned the rights to Oswald, including the character and all future revenue generated from it. In a final blow, almost all of the animators that were working for Disney at the time went to work for Mintz.
What followed was a bitter and humiliating moment for Walt Disney. Despite his creative contributions, he had no legal claim to Oswald or the related IP. The lack of proper contracts, combined with Disney's reliance on Universal for financing and distribution, left him vulnerable to Mintz's exploitation. As a result, Disney lost control over Oswald and his livelihood was severely impacted.
A new beginning: The Mouse
The loss of Oswald was a crushing blow, but it also acted as a turning point for Walt Disney. Determined not to repeat the same mistake, Disney embarked on a new venture: the creation of Mickey Mouse. This time, however, he made sure that he owned and controlled all of the IP he created. Mickey was initially called Mortimer, until Disney's wife objected to the name, and so the iconic "Mickey Mouse" was born. The first Mickey Mouse cartoon, "Steamboat Willie", was released in 1928, and it marked the beginning of one of the most successful media empires in history.
Key lessons
The story of Oswald the Lucky Rabbit holds several vital lessons for entrepreneurs:
- Never underestimate the importance of IP ownership
The Oswald debacle illustrates a critical lesson: entrepreneurs must ensure they retain ownership of their intellectual property. Disney's initial agreement with Universal did not stipulate that he would own the rights to Oswald. For modern creators, it is essential to secure intellectual property rights in writing, particularly when working with larger businesses or partners.
- Understand the risks
The legal agreements that define the terms of a business relationship must be carefully negotiated. Disney's earlier agreement with Universal ultimately led to his loss of Oswald. In the world today, the stakes are higher, and the value of intellectual property has soared. It is absolutely essential for entrepreneurs to have specialist IP legal counsel to guide them through this process.
- Fail Forward
Every entrepreneur knows that failure is a key part of success. No one knew this better than Walt Disney, who famously said, "I think it's important to have a good hard failure when you're young. I learned a lot out of that. Because it makes you kind of aware of what can happen to you".
Interestingly, the loss of Oswald led Disney to rethink his entire business strategy, especially in regard to IP ownership. He not only fought for full ownership and control over Mickey but also built a robust network of distribution channels, ensuring that his intellectual property would never again fall into someone else's hands.
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