The Education of Millionaires - Michael Ellsberg [121]
Marx decided to go into the toy business himself, with his brother, David. “His working capital consisted of an old table from his Brooklyn home;.... the ‘office’ was a room so small that it was hard to close the door when the table and Dave and Louis were all present.
“Not having the capital to lease or buy factories, he set himself up as a very special sort of middleman. He would find, for example, that a chain store was selling for 10 cents an ‘automobile’ for which it paid 7 cents. He would study the 7-cent automobile exhaustively with this question in mind: which would be better—to build more automobiles for 7 cents or as good an automobile for 6 cents? When he felt sure of his answer and of a manufacturing solution, he would go to the large chain-store buyers and make his proposition. Having got his order, he would commission a manufacturer to make the goods.”7
Within years, in the early 1920s, Louis Marx and Company became the largest toy manufacturer in the world, and Louis Marx became a multimillionaire in his twenties—a multi-deca-millionaire in today’s dollars. Ferdinand Strauss went out of business. Louis bought his old boss’s assets and leased manufacturing space in the old Strauss factories.
In the fifties, Louis teamed up with the company of another non–college graduate named Walt. Young Walt had learned about business at age nine by running a paper route. Called “the second dumbest” in class by one teacher, he exhibited no interest in school—and little interest in anything except drawing cartoons. After dropping out, he briefly took a job at the post office to support himself as he drew. Then, in 1918, at age sixteen, he lied about his age so he could enlist in the army, and soon he was shipped off to France to drive an ambulance in World War I.8
After returning a year later, the twenty-year-old high school dropout started an animation company called Laugh-O-Gram. “The company had problems making ends meet: by the end of 1922, [he] was living in the office, taking baths once a week at Union Station” in Kansas City.9 The company went bankrupt a year later. Walt Disney then moved out to Los Angeles to live with his brother, where the two opened Disney Brothers Studios.
In the fifties and beyond, Louis Marx and Company was producing toys based on every Disney-themed character you could imagine, including Mickey, Donald, Pluto, Goofy, Cinderella, and Bambi. The company was the main face of Disney toys throughout that era.
By 1956—keeping the now ten-year-old baby boomers well supplied with their Christmas and birthday presents—Marx and Company was doing $50 million in business, around $390 million in today’s dollars. Louis appeared on the cover of Time magazine in 1956. In 1972, he sold the company to Quaker Oats for $50 million, about $253 million today.10
In his half-century career as a toy manufacturer, starting out as an errand boy, Louis revolutionized the toy business. He was responsible for introducing mass-manufacturing into the industry, employing at peak over eight thousand people in his assemblyline plants in the United States and around the world. For this reason, he was often called by the press “the Henry Ford of toys.”
The 1946 Fortune profile entitled “Louis Marx: Toy King” says: “The comparison is natural and valid. Both men are completely self-made; both became rich early in life by putting what had been essentially luxury items into the hands of the many; both did it by determinedly lowering prices through their own varieties of mass production and mass selling. Like Ford, Marx developed three things in the process: a vibrant and aggressive interest in general human affairs, an industrial kingdom in which his writ alone runs, and a resolutely individualistic way of doing business with which his rivals, like it or not, are obliged to reckon.”11
They had another