In the episode featuring Lawrence Levy, the first CFO of Pixar, the conversation delves into the intricate negotiations and strategic decisions that shaped Pixar's journey from financial uncertainty to becoming a multi-billion-dollar company. Levy recalls the challenges of aligning Pixar's business model with its creative ambitions, particularly in securing a fair deal with Disney that recognized Pixar's brand and shared profits equitably. Steve Jobs' unwavering belief in Pixar's potential, despite the company's initial negative $50 million net worth, is highlighted as a driving force behind its success. Jobs' negotiation skills, his distaste for positional bargaining, and his staunch stance on not yielding on essential terms like creative control and co-branding ultimately led to Disney acquiring Pixar for $7.4 billion. The acquisition marked a triumphant moment for Jobs, making his investment in Pixar the largest source of his personal wealth. However, for Levy, the emotional attachment to Pixar likened to that of a parent to a child, making the departure bittersweet, a testament to the personal investment that goes beyond business.
"Steve Jobs had been hunting for a CFO of Pixar and reached out to Jordan, who agreed to meet Jobs for breakfast. I show up in my suit jacket, Jordan recalled, and Jobs walks in in torn clothes 20 minutes late."
This quote illustrates the contrast between Jordan's formality and Jobs' casual approach, setting the stage for an unconventional interview process.
"Jobs had only two interview questions for Jordan. Question one, you went to Stanford Business School... Question two, how could you work at Disney for eight years? Those guys are fucking bozos."
Jobs' blunt interview style and challenging questions are highlighted, indicating his desire to understand Jordan's decision-making and ability to handle stress.
"When I first started talking to Steve about Pixar a little more than ten years earlier, in late 1994, the company had burned through almost $50 million of his money with little to show for it."
Levy provides context on the dire financial situation at Pixar before his involvement, emphasizing the company's struggles and Jobs' significant personal investment.
"My tenure at Pixar lasted from my first conversation with Steve in 1994 until the sale to Disney in 2006. This opportunity was one of the great privileges of my life."
Levy reflects on his time at Pixar, marking the period as a transformative and valuable experience in his career.
"It is about the strategic and business imperatives that enabled Pixar to flourish."
Levy's quote underlines the focus of his story, which is to provide insight into the business strategies that allowed Pixar to succeed.
"The making of Pixar was more akin to the high pressure grinding of tectonic plates, pushing up new mountains."
Levy uses a metaphor to describe the intense and opposing forces at Pixar that led to its eventual success.
"These two forces ground ceaselessly against each other."
This quote emphasizes the continuous struggle between the need for creative innovation and the realities of business survival at Pixar.
"Why would I join a company that had been struggling for 16 years and whose payroll was paid every month out of the personal checkbook of its owner?"
Levy questions the wisdom of joining Pixar, given its long history of struggles and dependence on Jobs' personal finances.
"These two leaders had dedicated themselves for years to their crafts, with almost no commercial success and recognition."
Levy acknowledges the passion and commitment of Catmull and Lasseter, despite the lack of immediate commercial success.
"I might not know how that victory would come, but I was quite confident that for them, somehow, it would."
Levy expresses his confidence in the eventual success of Pixar's team, despite the uncertain path to victory.
"But the more he's like, no, I can't do this. The more these quiet times in his mind, he's like, there's just something here, go do it."
The quote reflects Lawrence's internal struggle and eventual decision to follow his intuition, despite the risks involved.
"And he spent weeks and weeks like, this is nonsense. And that's when he, I think he eliminated something like 70 or 80% of the product line."
This quote illustrates Steve Jobs' methodical approach to streamlining Pixar's focus by eliminating the majority of the existing product line.
"Steve had an almost permanent intensity about him. Like, he was always in top gear."
The quote captures Steve Jobs' characteristic intensity and his all-in approach to work and decision-making.
"If I had known what I know now, I said, I can't imagine I would have taken this job."
This quote shows Lawrence's retrospective doubt about his decision to join Pixar given the daunting challenges they faced.
"Home video was turning animated feature films into big business. Bigger than we had ever imagined."
The quote highlights the realization that the home video market was a lucrative opportunity for Pixar to capitalize on.
"If the undisputed king of animation, of the animation world, hadn't pulled it off, what was the likelihood that anyone else could?"
This quote expresses skepticism about the viability of an independent animation company based on Disney's historical challenges.
"In animation, there is much more control. We iterate on the story over and over again, do storyboards, character modeling, animation tests, and other processes."
This quote by Ed Catmull highlights the iterative process of animation that allows for refinement and changes throughout the production, unlike live-action films where footage is fixed post-shooting.
"We cannot build a company without a brand."
Steve Jobs stresses the necessity of brand recognition for Pixar's success, indicating that building a strong brand is essential for the company's long-term strategy.
"Steve was pressing for a public offering, and here Vogel was holding up a big, bright neon warning sign."
Despite warnings from experts like Vogel about the risks of film companies going public, Steve Jobs pushed for Pixar's IPO, demonstrating his confidence in Pixar's potential.
"Steve called it down to t. He got it."
This quote illustrates Steve Jobs's accurate prediction of Toy Story's success and its positive impact on Pixar's IPO, showcasing his strategic foresight.
"Yes, John replied. I know that's asking a lot, but it is what I think we should do."
John Lasseter's conviction in the creative team's vision and the need to make films from the heart reflects Pixar's culture and approach to storytelling, which Steve Jobs supported.
"Sustained performance is the hallmark of business success."
Lawrence Levy's statement encapsulates the importance of maintaining a high level of performance over time, which is crucial for Pixar's continued success in the film industry.
"But did they have a John Lassiter? Steve mused, this was a great question. John and his young team seemed to be cut from a different Cloth. They were virtually inventing how to tell stories in the entirely new medium of computer animation."
The quote emphasizes the unique talent and innovation that John Lasseter and his team brought to Pixar, which Steve Jobs believed was crucial for the company's success and should not be stifled by executive oversight.
"Fear and ego conspire to rein in creativity, and it is easy to allow creative inspiration to take a backseat to safety."
This quote by Lawrence Levy captures the tension between creativity and the fear of failure, suggesting that innovation requires overcoming the constraints imposed by fear and ego.
"Disney wants to merge with us, meaning merge with Yahoo. Why would we ever want this seems so unbelievable."
The quote reflects upon a potential merger between Disney and Yahoo, showcasing Disney's leverage and influence, and aligns with the strategic points Jobs and Levy considered during their negotiations with Disney.
"Dreamwork is a threat to Disney. Then Steve made another entry in the Pixar column. Better deal if, wait, if we don't do a deal with Disney now, Steve said, we'll get a better deal later when this contract is over."
This quote demonstrates Steve Jobs' strategic thinking, using the potential threat of DreamWorks and the possibility of a better future deal to strengthen Pixar's position in negotiations with Disney.
"On January 24, 2006, Disney announced that it would acquire Pixar for $7.4 billion."
The quote marks the culmination of the negotiations, with Disney acquiring Pixar and reflecting the success of Jobs' negotiation strategy.
"Letting go of Pixar is harder than I thought, I said. I wasn't sure exactly why, though."
This quote from Lawrence Levy encapsulates the emotional complexity of selling a company that one has invested in personally and professionally, highlighting the personal connections that are often formed in the business world.