To Pixar and Beyond

1. Steve Jobs' call ignites an unlikely partnership with Pixar

"Hi, is this Lawrence?" "Yes, it's me." "This is Steve Jobs," the voice on the other end of the line said. "I saw your picture in a magazine a few years ago and thought we'd work together someday."

A fateful phone call. In November 1994, Steve Jobs reached out to Lawrence Levy, setting in motion a partnership that would transform both Pixar and the animation industry. Despite initial reservations about Jobs' reputation and Pixar's uncertain future, Levy was intrigued by the opportunity. His decision to join Pixar as CFO marked the beginning of a journey that would see the company evolve from a struggling tech start-up to an animation powerhouse.

Pixar's hidden potential. At the time of Levy's arrival, Pixar was primarily known for its computer graphics technology and short films. The company was burning through Jobs' personal funds with little to show for it. However, beneath the surface lay a team of extraordinarily talented artists and technicians, including John Lasseter, who were on the verge of creating groundbreaking animated features.

2. Pixar's creative brilliance masks financial instability

"For as much as I'd like to see it," I said, "everyone is balking at the idea of a film a year. But a film every two years makes the numbers all but impossible to work. If we miss on a film, that means we'd have a dry spell of four years. We'd lose too much lift."

Financial realities vs. creative ambitions. Despite the artistic talent at Pixar, the company faced significant financial challenges. The high cost and long production time of animated features meant that Pixar needed consistent blockbuster hits to remain viable. This tension between creative excellence and financial stability became a central theme in Pixar's story.

Innovative solutions. To address these challenges, Levy and Jobs developed a multi-pronged strategy:

• Increasing Pixar's share of profits from its films
• Taking the company public to raise capital
• Scaling up production to release films more frequently
• Building Pixar into a recognized brand

This approach aimed to balance the need for financial stability with the preservation of Pixar's creative culture.

3. Navigating the complex Disney-Pixar relationship

"Disney has to agree not to change Pixar," Steve said. "Ed and John have to be on board. They have to believe this is about preserving what we've created."

A pivotal partnership. The relationship between Pixar and Disney was crucial to Pixar's success but fraught with challenges. Initially, Disney held most of the power in the partnership, controlling distribution and keeping the lion's share of profits. Levy and Jobs worked tirelessly to renegotiate the terms of this relationship, seeking greater creative control and financial benefits for Pixar.

Balancing act. The negotiations with Disney required careful strategy and patience. Key points of contention included:

• Creative control over Pixar's films
• Profit-sharing arrangements
• Branding and recognition for Pixar
• Release windows for Pixar's films

The eventual success of these negotiations, culminating in a new co-production agreement in 1997, was a turning point for Pixar, setting the stage for its future success and independence.

4. The IPO journey: From skepticism to success

"Steve Jobs' Disney Deal." The first two-page spread of the story was, on the left side, a full-page, giant-size close-up of Steve's face, and on the right side a giant headline that read: "STEVE JOBS' AMAZING MOVIE ADVENTURE"

Overcoming doubts. The path to Pixar's initial public offering (IPO) was fraught with skepticism from major investment banks. Goldman Sachs and Morgan Stanley initially turned down the opportunity, citing the risks associated with Pixar's unproven business model. This rejection forced Levy to seek alternative paths to taking the company public.

A successful debut. Despite the initial setbacks, Pixar successfully went public in November 1995, coinciding with the release of "Toy Story." The IPO was a resounding success:

• Pixar's stock opened at $22 per share
• By the end of the first day, the stock price had risen to $39
• The company's market value reached close to $1.5 billion
• Steve Jobs became a billionaire overnight

This financial triumph validated Pixar's potential and provided the capital needed to fund future productions independently.

5. Fostering Pixar's unique culture and creative control

"We have to trust our story team," he went on. "They have to believe we trust them."

Prioritizing creativity. A crucial decision in Pixar's development was to grant complete creative control to the storytelling team, led by John Lasseter. This unconventional approach set Pixar apart from traditional studio models and was key to its consistent production of high-quality, innovative films.

Cultural foundations. Pixar's success was built on a unique culture that valued:

• Collaboration and open communication
• Risk-taking and originality in storytelling
• Trust in the creative process
• Balancing technological innovation with artistic vision

This culture became a cornerstone of Pixar's identity and a significant factor in its sustained success.

6. Balancing art and commerce in animated filmmaking

"It's a tradeoff," I said to Steve one evening over the phone. "The more often we release films, the more risk we take with creative quality. The less often, the more risk we take with Pixar's financial viability."

The animation dilemma. Pixar faced a constant challenge in balancing the need for consistent financial performance with maintaining the high quality of its films. This tension was exacerbated by the long production times and high costs associated with animated features.

Strategic solutions. To address this challenge, Pixar implemented several strategies:

• Developing multiple projects simultaneously
• Investing in technology to streamline production processes
• Building a deep bench of creative talent
• Carefully timing film releases to maximize box office potential

These efforts allowed Pixar to increase its output while maintaining the quality that had become its hallmark.

7. Pixar's success leads to acquisition by Disney

On January 24, 2006, Disney announced it would acquire Pixar for $7.4 billion. Steve still owned just over 50 percent of Pixar, giving his Pixar stock a value of almost $4 billion.

A transformative deal. The acquisition of Pixar by Disney in 2006 marked the culmination of Pixar's journey from a struggling tech start-up to a animation powerhouse. This deal was significant for several reasons:

• It valued Pixar at $7.4 billion, a testament to its success and potential
• It made Steve Jobs Disney's largest shareholder
• It brought Pixar's creative leaders, including John Lasseter and Ed Catmull, into key roles at Disney

Preserving Pixar's essence. A crucial aspect of the acquisition was the agreement to maintain Pixar's unique culture and creative independence. This commitment ensured that the qualities that had made Pixar successful would continue to thrive under Disney's ownership.

8. Personal growth and new horizons beyond corporate life

"I'm glad one of us is doing it," he said.

A new chapter. After years of intense focus on building Pixar, Levy felt a growing desire to explore philosophical and spiritual questions. This led to his decision to step back from his day-to-day role at Pixar and embark on a personal journey of learning and growth.

Balancing success and fulfillment. Levy's experience highlights the importance of personal growth alongside professional success. His journey raises important questions about:

• The nature of fulfillment in corporate life
• The balance between material success and inner peace
• The role of philosophical and spiritual exploration in a well-rounded life

This transition demonstrates that even at the heights of corporate success, there can be a yearning for deeper meaning and personal development.

Last updated: January 23, 2025