Pixar’s Business Story

Posted on by MIKE

Supported by Greenhaven Road Capital, finding value off the beaten path.

For your listening pleasure.

https://soundcloud.com/mikesnotes/the-pixar-business-story/s-xi19G

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Pixar’s business success is a good lesson, but not for the reason you might expect. It’s a story with a happy ending but it’s a cautionary tale; this is everything that has to go right.
At TheWaitersPad.com we look at podcasts, videos, and books to learn lessons. That’s what we’ll do here, Pixar’s history and lessons in under an hour.

First a warning. There are no heroes in this book, only people. Some will appear wiser than others, but everyone was locally logical. The ‘dumbasses’ had succeeded while the times had changed. The ‘visionaries’ rode the winds of luck and skill.

We’ll draw mostly from Ed Catmull’s Creativity Inc. and Lawrence Levy’s To Pixar and Beyond. Catmull co-founded Pixar and still works there. Levy IPO’d Pixar and has moved on to new projects. Between these two – and a scattering of other sources – we’ll see how everything broke right.

The history book on the shelf, Is always repeating itself. — ABBA’s Waterloo, 1974

In 1974 Catmull graduated with a computer science Ph.D. and “a nice list of innovations under my belt.” He worked in New York and got his first taste managing a group that wasn’t grad students. “Once Alex (Schure) brought me in (to the New York Institute of Technology), he left it to me to assemble a team. I had to give that to him: He had total confidence in the people he hired.” This early example of a decentralized command would go on to be something Catmull made central to Pixar. He wrote about New York, “giving a ton of freedom to highly self-motivated people enabled us to make some significant technological leaps in a short time.” David Ogilvy advised the same thing, suggesting people hire “gentlemen with brains.

In 1977 Star Wars premiered and by 1979 Catmull worked for George Lucas in Marin County California. It was one hour north of Silicon Valley by car, and one hour north of Hollywood by plane. Lucas moved there because “he thought there was something a bit unseemly and inbred about it (Hollywood).” There, Catmull was able to continue his work. “The resulting environment felt as protected as an academic institution.”

Having space to focus helped Ken Burns too, who told entrepreneur.com, “I don’t live in Los Angeles or New York City. I live in a tiny village in New Hampshire, which permits us to do the deep dives, to do the necessary research and keep the sanity in the course of a 10-plus-year project.” Some paths require someone to be in a place; New York for finance, Silicon Valley for computers, Detroit (formerly) for auto. Other times the insidiousness makes doing new things hard.

In 1983 George Lucas was going through a divorce and sold the company in 1986 to Steve Jobs for five million dollars and a promise to invest five million more (it would go on to be fifty million more). Catmull reflected that his conversations with Steve Jobs were like the Maxwell Cassette commercial. Steve Jobs was the speaker, everyone else was the guy.

Pixar’s product was the Pixar Imaging Computer and Catmull was president of a hardware company. “There’s nothing quite like ignorance combined with a driving need to succeed to force rapid learning.” Today we can ‘Google it’ and Catmull did the 1986 equivalent, he visited the library. However, the needles of good advice were buried in haystacks of platitudes. Simple questions like ‘What to price our computer for?’ “had distracted me and kept me from asking more fundamental questions.” This led to one of the most valuable lessons from the early days of Pixar.

 

18 thoughts on “Pixar’s Business Story”

  8. […] This story is playing out today too as companies experiment with monetizing content. Making movies is a terribly hard business (hence Jason Blum’s angle). However, making movies and then selling character meetings (via theme park tickets), t-shirts, and stuffed animals is a much better business. Hence, The Pixar Business Story: […]

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  13. […] Movies are an interesting business. Some things have changed, but others haven’t. For marketers who better target customers, it’s a fuller theater. We’ll give the last word to Robert McKee, “For writers who can tell a quality story, it’s a seller’s market—always has been, always will be.” […]

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