The Pixar Touch
by David A. Price, published 2008
It starts with Disney
The story of Pixar is interesting because it starts and ends with Disney, but under very different circumstances in each case. The two primary characters in the company’s founding and subsequent rise to glory, Ed Catmull and John Lasseter, were both Disney aficionados and aspiring animators from the get-go. At the time each was coming of age and establishing their careers, Disney was not only the premiere animation studio to work for, it was essentially the ONLY major animation studio to work for. But Catmull almost missed playing a pivotal role in the development of computer-animation when he decided, in high school, that he was not artistically cut out to be an animator. Lasseter, by contrast, found his high school experience to be an affirming one and it was during this period of his life that he knew for sure that an animator was what he wanted to become.
The two luminaries: Ed Catmull and John Lasseter
Though they had similar aspirations (with Catmull’s muted initially), Catmull and Lasseter took quite different paths to their eventual rendezvous at LucasFilm where they would come to create a Pixar Animation-in-the-womb.
Catmull went from the computer science department at the University of Utah, which was not only the scene of huge amounts of R&D spending by the Department of Defense’s ARPA project, but was also the unwitting locus of a number of individuals who would come to be highly influential innovators in the space of computer graphic design. It was here at the university where Catmull had a second awakening and decided that while he may not have a future as a traditional animator, he might become one yet by pioneering animation in the computer-generated space.
He eventually was scooped up by an “eccentric millionaire”, Alexander Schure, who drafted Catmull as well as a number of his computer science comrades from the University of Utah computer science department to come to his mansion-turned-technical institute (the nascent New York Institute of Technology on Long Island) and essentially tinker away at computer graphic design on his dollar. Catmull and company obligingly did so until personal and family pressures drove him to seek other employment, eventually finding his way to George Lucas’s design outfit in northern California where he and a number of other defectors worked on various technology-related odd jobs for Lucas’s studio.
Meanwhile, John Lasseter graduated from high school and went into the animation program at CalArts, an art school that was partially meant to be a recruiting ground for future Disney animation talent. He was subsequently hired into Disney’s animation studios only to be later fired in a political scuffle. He, too, wound up at Lucasfilm, where he teamed up with Catmull and the other NYIT veterans to develop the proprietary Pixar Image Computer. On the side, the ambitious would-be animators continued teaching themselves the craft of computer-generated animation, a technology they were largely innovating into existence on their own. Each year they attended the SIGGRAPH convention and showed off their latest minutes-long computer-animated film clips to an awe-struck and excited audience.
Even early on, Lasseter was showing a knack for story-telling beyond his years and experience.
Exit Lucasfilm, enter Steve Jobs
Having tired of losing money on the Pixar Image Computer and the Pixar company itself for long enough, Lucas looked for a buyer at an asking price of $15M plus an additional $15M to capitalize the spun-off business. Initially, there were no takers. At one point, an executive at Disney considered purchasing the entire company at $15M to subsume it into Disney’s animation facilities, but a young Jeffrey Katzenberg felt pursuing it was a waste of time.
Another series of failed deals followed (including one in which GM almost acquired the company before board member Ross Perot shot the idea down) when Steve Jobs’s offer of $5M for the company was finally accepted.
For the next several years, Jobs stuck $5M at a time into Pixar to keep in afloat, but he, too, had trouble finding anything to do with it. Initially imagined as a hardware design company, everyone ended up being frustrated as Catmull, Lasseter and their team were truly animators at heart (and certainly not businessmen) and Jobs was impatient and still reeling from the ego-blow of being booted out of his own company at Apple. He was looking for vengeance.
Jobs almost abandoned Pixar but at the last minute he decided to hold on to the company, realizing what he controlled was an outstanding group of talented individuals, not a failing hardware business. Soon after, Pixar inked its first deal with Disney animation (under Katzenberg, who had come to see the error of his earlier ways) to create what would become the smash, breakout computer-animation genre hit, Toy Story.
Jobs, always the savvy financier just as much as he was an outstanding technologist and businessman, took the company public on November 29, 1995, one week after the premiere of Toy Story. Still hot off the success of the film, Jobs brilliantly managed to hype the IPO by placing it so close to the release of their first major film even though he was technically supposed to be observing an SEC-enforced quiet period leading up to the IPO event. Jobs 80% stake in the company was valued at around $1.1B.
The story ends with Disney
Just over a decade after going public, Disney, the long-time partner of Pixar (and the long-time dependent, as Pixar’s computer-animated films essentially had become Disney animation, not the mention a substantial part of Disney’s total film and company-wide earnings) announced its offer to acquire Pixar on January 24, 2006, for 287.5M shares of Disney valued at about $7.4B.
Pixar’s fortunes, and the fortunes of its two central figures, Catmull and Lasseter, had now come full circle. What started with inspiration, dreams and ambitions based on the world of Disney had ended as a massive payoff from that very same studio. And along the way, these gentlemen and their co-creators not only revolutionized the world of animation, they created and popularized a genre, all while maintaining a nearly uninterrupted stream of critically-acclaimed, highly profitable film franchise hits.
The moral of the story
The Pixar story carries with it many morals: Always have the courage to follow your dreams; Don’t let the absence of something stand as proof of its impossibility; A lot of life’s magic and human progress is due to lucky happenstance.
But the most enduring lesson of all from the Pixar story is most likely the fact that greatness is hard to forecast, and the future is always full of uncertainty. Before Pixar was sold to Disney for $7.4B in stock, it was first nearly kicked to the curb by Lucasfilm for a song ($5M on the original asking price of $15M) and thought to be hopeless. And this was the view of it from a highly successful film studio whose chief architect was a successful technological innovator himself! From there, the group went on to suck millions of dollars out of Steve Jobs nearly to the point of exasperation before it finally had its first major breakthrough. How many failed deals came and went before Pixar turned out to be a multi-billion dollar enterprise?
Would the Pixar we know today even have existed if no one had ever thought to drop the frustrating hardware side of the business and let these technological entrepreneurs follow their true passion in story-telling and computer-animation?
The world could always be a different place than it is. It’s easy to see how obvious everything looks when you’re at the end of the story and not the beginning.
What kind of value would you have put on Pixar in the early 1980s?
A House Rises 