How Walt Disney Turned Disneyland Into A $3.8 Billion/Year Empire

Shaan Puri

So, Disneyland does about **$3.8 billion** a year in revenue. Every day, about **50,000** people come to the park. So, roughly speaking, they make just over **$200** per guest per year. And that's not counting the hotels, flights, and a bunch of the auxiliary stuff. A ticket into the park is about **$120**, and then you spend another **$100** on food and merchandise. So, what happened? Walt Disney's story is kind of amazing. He grows up, and he's actually from your hometown. I don't know if you know this, but he's from **Missouri**.

Sam Parr

I didn't know that

Shaan Puri

apparently there's a place in missouri called electric park have you ever heard of this no because this is the inspiration for disneyland when he's 8 years old he goes to this place called electric park and electric park was kind of known for 2 things 1 it was an amusement park and the second is it was really clean and that's like one of the biggest things about disneyland is disneyland is really clean so imagine having 50,000 guests over to your house but somehow everything stays really really clean and that was like he's fanatical about this so he goes to electric park and he wants to be a cartoonist he ends up working at an ad agency and then he creates his first business it's called laugh o grams and he's basically doing these like kinda like animated cards but you know a bad business deal leads it starts working but then he cuts a bad business deal where he's owed a bunch of money by one client and then they don't pay him and the business goes under and so he says okay let's go to hollywood and and and he tells his brother let's go to hollywood and let's create another business and so they go and they create disney brothers cartoon studio and this is where they create mickey mouse this is where they create snow white that's the first big hit so the company goes from like in debt or making no money to making 1,000,000 of dollars off of snow white that was like the big win and so he's like okay this is kinda working and the business is doing alright it's not going gangbusters but it's afloat and he's working on his next story he's working on pinocchio he's working on a couple other stories and he's always had this crazy idea about amusement parks ever since electric park and he takes his daughter to the local merry-go-round and he's like ah this is like so boring like why isn't there something more grand than just this merry-go-round like my daughter loves this but like this is so boring for the parents and this is just one ride like what if I made a place that was you know what if I made a place that was fun for both the parents and the kids to go to which is like a similar theme with all pixar movies and disney disney movies which is like the movie is enjoyable toy story is enjoyable to an adult and a kid it has like 2 layers to it both can enjoy a different piece of it and so he's like and so what how did they actually come about this how did they actually like figure out the idea so they started by doing research they went to every theme park they could find they went to the world's fair they went to a whole bunch of places getting inspiration and ideas and mesh and thinking about what is bad about this experience what can be made better so things being dirty blah blah blah and he's like okay and he starts thinking about the design of the place an electric park had this train that went around the whole park and so if you go to disneyland that's still the thing there's right when you enter there's a train and the train will take you around the whole circumference of the park and he's like alright I'm gonna build and he used to tell people one of these days I'm gonna build an amusement park and it is gonna be clean and he takes 2 guys off of pinocchio and he says hey listen I want you guys to start start working on like secret project x and he's like you know it's a shame that when people come to hollywood there's nothing to see here like people all around the world have heard of hollywood they come here there's the sign where it says hollywood in the in the letters on the hill but there's nowhere to see hollywood so he basically is like guys if if anybody came to even see our animation studio they just see a bunch of dudes hunched over over drawings it's not very not very impressive let's build something amazing in hollywood and the guys get super excited they start doing research but then reality hits they have to they're working on pinocchio they gotta ship it they're working on fantasia they gotta ship it then world war 2 happens so all of all of world war 2 happens and then he comes back because he hires this guy kimball to work in his studio and kimball's like this junior kind of animator guy and kimball invites all the coworkers over to his house for like a barbecue or a birthday party or something like that and in the back in the backyard of his house he's like oh by the way you guys don't know this but my hobby is I build these little trains almost like the steamboat style train but like it's like a life-sized thing it was very small it's it's like you know one one like whatever one link of a train basically have you

Sam Parr

have you his this guy's name is ward kimball if you Google him he looks like a cartoon

Shaan Puri

And you could see his train too. So, Walt goes to this thing, he's blown away. He's seeing the train up close and he's like, "Dude, Ward built this thing!" When he comes back to the office, he sends a memo saying, "Mickey Mouse Park is back on." He tells the shareholders, but they say, "Don't do it! The movie studio is already on edge. This sounds like a big distraction. It's against the charter of the company. We don't want you doing this." He says, "Okay, no problem. I understand. I'll create a new company." So, he just creates another company to create the park. He's like, "I'm still gonna do this, but if you don't want in, I will. I'll do this myself." He calls it something like "Red Law," which is "Walter" backwards. He starts working on it and thinks it's gonna take $5,000,000 to build Disneyland. In actuality, it ends up taking $17,000,000 to do it. So, he's like, "Alright, how do I fund this thing?" He takes his life insurance policy and takes a big loan against that, which gives him about $100 to go do this. Then, he sells a house that he had in Palm Springs, so that's like the next seed money. He goes through that pretty quickly. Then he thinks, "Alright, well I need some bigger money. How do I go get $1,000,000 for this?" He goes to ABC, the TV network, and says, "Hey, ABC, you're struggling right now. You don't have much TV programming. I will create this program called 'The Wonderful World of Disney' or something like that. I'll create a TV show for you that'll air every Sunday if you invest in my park idea." So, Disney basically puts down half a million dollars plus another about $6.5 million in loans and bonds, and they own 34% of Disneyland. That's how he got the next $7,000,000. Then, he did the same thing with two other companies and sold some sponsorships. He accumulates together the $17,000,000.

Sam Parr

he hustled his way

Shaan Puri

He hustled his way to doing it. The other thing that he did was, he was like, "Alright, you know, this thing works because I gotta have the rides work automatically." So, he created this system where, if you go to Disneyland now, you sit in a ride and it’s sort of like a stage play that plays out, but it’s all synchronized. When your little roller coaster cart enters a room, the lights go on, the character makes a sound, and then when you leave the room, it all folds back into its thing. That's called **animatronics**. Basically, audio animatronics was the thing he wanted to do. He wanted live animals, but it was too much work. So instead of live animals, he created these robotic animals. He said, "I'm gonna synchronize the movements to music on a loop." There was this one guy who was just working on this, and he was kind of in front of a green screen trying to make this puppet do this thing synchronized to music. Eventually, they finally figured it out, and that was the big breakthrough. So, let me fast forward a little bit. They opened the park. They built the whole thing in less than one year. They opened the park and he only invited about 1,500 people to it, or something like that—an invite-only launch. But somebody counterfeited the tickets, so double the number of people showed up with counterfeit tickets on day one. Because double the number of people showed up, everything broke. The plumbing broke because there were too many people using water in the park, more than the load was able to handle. They came to him and said, "Walt, we got a problem. The plumbing is broken. You have to make a choice: toilets or water fountains?" He said, "Toilets for sure." So, there was no drinking water that day. The asphalt was still so freshly poured that women’s high heels were getting stuck in the cement.

Sam Parr

oh no

Shaan Puri

Because it was like caving in. It was basically a giant disaster. He does some PR and basically says, "Look, we had to work out the kinks. Give me a month, and this thing will be smooth." Sure enough, within a month, the baby is humming, you know, humming. In 7 weeks, he does 1,000,000 visitors. So it was kind of an immediate hit once he did it because it was such a...

Sam Parr

Great idea! Famous was Disney, right off the bat. Or at this era, how famous were they? They were like... I mean, they were a big deal. They weren't like a...

Shaan Puri

They were semi-famous. They hadn't had, I mean, nowhere near what they are now, but they were semi-famous. The ABC show, which he was doing while he was building the park, was almost like the hype video for the park launch.

Sam Parr

was he just grinding the whole time

Shaan Puri

Yeah, a crazy amount of work. So, he creates this thing and, you know, it's basically the 6th or 7th most visited tourist destination in the world now. It's kind of, you know, this crazy place.

Sam Parr

I think, which is kind of shocking, Disney or the theme park division, prior to COVID, was the most profitable part of the company, wasn't it?

Shaan Puri

Except for, well, not profitable because it had a lot of expenses, but in terms of gross profit, yes. It had a lot of revenue and a lot of expenses. But now, Disney+ is like the bigger thing because Disney+ is like pure profit. Disney+ basically took all that intellectual property (IP) that people loved and created a streaming service that's...

Sam Parr

But before that, before COVID, I liked Disneyland. It wasn't a project; it was a major value creation. A lot of value was created there.

Shaan Puri

I wanted to know, is this a loss leader or is this a cash cow? It's more like a cash cow. It's hard to tell because every company's accounting makes everything look like it's losing money. You know what I mean? Accounting can make something look amazing or terrible, regardless of the reality. But you know, the Parks Division, Parks and Resorts, was doing about $1,000,000,000 and like $30,000,000,000 a year or something crazy like that. So it obviously became a smash success. When he wanted to do Disney World in Florida, he created five stealth companies because he knew Disney was a hit. He was looking for the second location, and he thought, "If anybody finds out where I'm looking, the price will go up." So he created five shell companies and started buying up land in Florida. Sure enough, it leaked out. The day after it leaked, the price per acre went from about $180 an acre to $18,000 an acre. Basically, he couldn't buy anymore once the news leaked. He had this kind of inspiring vision. He said, "Disneyland, I want this to be the happiest place on earth." He wanted people to have no problems with their hair; he wanted this to be an escape from their problems in real life. In Disney World, he created this thing called EPCOT, which I don't know if you've ever heard of EPCOT, but EPCOT is basically...

Sam Parr

a government agency

Shaan Puri

No, it does sound like it though. Epcot is right next to Disney World. It's this huge dome-looking thing, and it stands for "Experimental Prototype Community of Tomorrow." So, what he did was create Epcot, which basically takes the cutting edge of what the future looks like and creates a mini simulation of it. You can go and see what the future is going to look like in terms of technology. Did you...?

Sam Parr

you go

Shaan Puri

I've been once when I was a kid, and it's kind of amazing. So, he said, "I want this to be the happiest place on earth. I want parents and kids to have fun together." When it came to EPCOT, he mentioned, "I want this to be a living blueprint of tomorrow. I want this to be an always evolving thing. EPCOT is never gonna finish because tomorrow will always be different than today. Disneyland itself will never be completed. It will go on as long as there is imagination left in the world." Since then, they built the park for $17,000,000, but obviously, they pour in like $100,000,000 every year to upgrade the parks, change the rides, and update the themes. It's amazing how it continuously evolves.