Walt Disney

#1In 1923, twenty-one-year-old Walt Disney was watching Laugh-O-Gram run out of money in Kansas City. The problem was built into the business. Cartoons cost money before they were finished, while payment often came afterward. Payroll fell behind. Bills went unpaid. At one point, Walt didn't even have decent shoes to wear to a meeting with a potential client.

#2Eventually, the company went bankrupt. Walt sold equipment to help pay for a one-way ticket to California. He carried "Alice’s Wonderland" with him, a short film made during Laugh-O-Gram's final days.

#3Hollywood didn't immediately give him another shot at animation. Walt first tried to find work in live-action film. He wanted to stay in the movie business, but the jobs he hoped for weren't coming.

#4So he went back to the thing that had already bankrupted him.

#5Distributor Margaret J. Winkler saw "Alice’s Wonderland" and offered him a series. Walt's older brother Roy O. Disney, who was recovering from tuberculosis in California, joined him. Together they started the Disney Brothers Cartoon Studio.

#6The first company was gone. But a few years later, the new studio finally had something Laugh-O-Gram never really did: a character audiences wanted to see again.

#7The character was Oswald the Lucky Rabbit.

#8Starting in 1927, Walt's studio produced Oswald cartoons with Ub Iwerks among its key animators, while Universal handled distribution. The series caught on. Disney made twenty-six shorts in roughly a year, and Oswald was already starting to appear on merchandise.

#9This wasn't another Laugh-O-Gram.

#10The cartoons were working.

#11In 1928, Walt traveled to New York with his wife, Lillian Disney. Production costs had been rising, so he expected to ask for a modest increase in what the studio received for each cartoon.

#12Charles Mintz had another idea.

#13He wanted Walt to take less.

#14Mintz could push that hard because he'd already been approaching Walt's animators behind the scenes. Ub Iwerks knew about it—he'd been approached too—and warned Walt before the trip.

#15Walt didn't fully believe how serious it was.

#16Once he got to New York, there wasn't much room left for doubt. A large part of his staff was ready to leave.

#17And then came the bigger problem.

#18Walt didn't own Oswald.

#19His studio had made the cartoons and helped turn the rabbit into a hit, but the contractual rights belonged elsewhere. Walt could keep making Oswald if he accepted the arrangement Mintz was offering.

#20He wouldn't.

#21Instead, he sent Roy a telegram back in Los Angeles:

#22"DON’T WORRY EVERYTHING OK."

#23It sounded reassuring.

#24Almost nothing about the situation was.

#25Walt and Lillian got on the train back to Hollywood.

#26Five years earlier, Walt had traveled west after losing a company. Now he was heading west after losing a successful character.

#27He needed another one.

#28In Walt's later recollections, the idea of a mouse became tied to that train ride. There's also the familiar story that he considered the name Mortimer before Lillian objected and Mickey became the choice.

#29But Mickey wasn't a finished character Walt simply invented by himself somewhere between New York and California.

#30Ub Iwerks was still in Hollywood.

#31That mattered. Many animators were leaving, but the man who had warned Walt about Mintz stayed. Walt and Ub began turning the new idea into an actual character.

#32They had to do it in a strange setting. Disney still had Oswald cartoons to finish under its existing obligations. So people preparing to leave were drawing Oswald inside the same studio where his replacement was being developed in secret.

#33One account has Ub hiding his Mickey work whenever someone came in, covering the drawings with Oswald sketches.

#34That's how Mickey Mouse began taking shape.

#35The first Mickey cartoon was "Plane Crazy." Ub handled an enormous amount of the animation, and Disney tested the film before an audience.

#36No distributor picked it up.

#37The next cartoon, "The Gallopin’ Gaucho," didn't change things either.

#38Now Walt had almost the opposite problem. This time, he had a character he could control.

#39That didn't mean anyone wanted it.

#40Meanwhile, sound was beginning to change movies. Walt decided the third Mickey cartoon would synchronize sound with the action on screen.

#41"Steamboat Willie."

#42The first recording attempt failed. Trying again meant spending money the studio could barely afford. Walt was prepared to sell his car if he had to, while Roy once again had to figure out how to finance his brother's next bet.

#43On November 18, 1928, "Steamboat Willie" opened at the Colony Theatre in New York.

#44This time, it worked.

#45The little mouse Walt and Ub had started developing after losing Oswald was suddenly a star.

#46You can tell this story in one clean line: Walt lost a rabbit, thought about a mouse on the train home, and that mouse became Mickey.

#47But the more expensive lesson wasn't about animals.

#48It was about who owned the character.

#49Walt had helped create Oswald without owning Oswald. Making the character successful hadn't protected him. If he didn't control the rights, the character could have a future without him.

#50That question followed Mickey outside the theater.

#51The mouse began appearing on writing tablets, books, toys, clothing and watches. In 1932, Kay Kamen began dramatically expanding Disney's character-merchandising business.

#52Roy later recalled that they hadn't gone into merchandising because they already understood how profitable it could become. After Oswald, part of the concern was protecting Disney's characters beyond motion pictures.

#53Then the protection itself turned into a major business.

#54Mickey merchandise spread quickly. By the late 1930s, royalties from character merchandise could bring Disney more money than film rentals.

#55A company that once couldn't keep control of its first hit rabbit was learning just how far a character could travel beyond a movie screen.

#56Losing Oswald didn't suddenly make Walt perfect at contracts.

#57Disney later ran into trouble with Pat Powers, who was involved in Mickey's sound and distribution. This time Roy became suspicious about whether Disney was getting a clear accounting of the money coming back from the films.

#58Then came a more personal break. Ub Iwerks—the animator who had stayed during the Oswald crisis and played a central role in creating Mickey—left Disney in 1930.

#59But that wasn't the end of the relationship.

#60About a decade later, Ub came back. His role had changed by then. He became a major technical innovator, developing camera and special-effects technologies that expanded what Disney could put on screen.

#61The company kept widening the areas it controlled too. Characters and merchandise were part of it, but production and distribution increasingly mattered. In 1953, Disney formed Buena Vista and began moving away from complete dependence on outside distributors.

#62Two years later, Disneyland opened.

#63Now a Disney story didn't have to stop at the edge of a movie screen. It could become a place people actually walked into.

#64It would be too neat to say all of that happened because of Oswald. Decades of financial crises, contracts, technologies, successes and failures came in between.

#65But Oswald had given Walt one very expensive lesson early on.

#66Creating something and owning it weren't the same thing.

#67Walt left Oswald behind in 1928. He never regained the character during his lifetime.

#68Then, in 2006, Disney CEO Bob Iger entered a broader negotiation with NBCUniversal. The deal involved Al Michaels, the ABC and ESPN sportscaster who wanted to move to NBC, along with several sports-related rights.

#69Oswald became part of the arrangement.

#70Rights connected to the character returned to Disney.

#71Seventy-eight years had passed.

#72In 1928, a contract meant Walt had to leave Oswald behind. In 2006, another agreement let the company he built bring the character back.

#73By then, of course, another character had long since become Disney's face.

#74It was the little mouse Walt and the people who stayed with him had begun making when Oswald was no longer theirs.

#75Oswald didn't come back just to sit in an archive.

#76In 2022, Walt Disney Animation Studios made a new hand-drawn Oswald short, putting the rabbit at the center of a Disney animated film again after nearly a century. Then, in 2026, Disney announced a new "Oswald" series from Jon Favreau. Its premise carries a strange echo of the character's real history: a cartoon rabbit hidden away since the 1920s emerges into the modern world almost a hundred years later.

#77In 1928, Walt Disney boarded a train home without Oswald.

#78Nearly a century later, the rabbit has a new story with his own name on it.