Steve Jobs on Pixar: Building a Studio

Why did you buy a computer animation company? I met Ed Catmull, who was running the computer division of Lucasfilm, in 1985, and Ed showed me what they were doing, and he shared with me his dream about making the first computer animated feature film. And I bought into that dream, both financially and spiritually, and it took us 10 years to do that, but we did it. And the first computer animated feature film, the first totally computer synthetic film of any kind, which was Toy Story, fortunately, it came out really well, and it became the third most successful animated film of any type, in terms of box office success.

So the things that captured me were, I've been involved in graphics most of my life, the Apple II, most people don't remember, was the first real color computer that you could get your hands on, a cheap one, the Macintosh obviously was graphics, the Laser Writer was graphics, but it was all 2D, and we'd done some 3D work at Apple, and I was certainly aware of the field, and the stuff that Ed and his team were doing was way ahead of anything I'd ever seen anyone do. And I think Pixar still holds that mantle today, and I think it's the mecca of high end computer graphics. You bought Pixar from Lucasfilm. What kinds of things did you need to do, both personally, as learning to become a filmmaker, along with everything else you are, and as a businessman, to put the company in the position that it's in today, and basically head and shoulders above anything else in the industry, and put it in a position where it's literally starting to operate like a studio?

Yeah, well Pixar is a studio. I'm not a filmmaker. I don't direct our films, John Lasseter does, and I think he's the most brilliant director working in animation today. What I try to do is help create the environment where all these incredible people can make films. So, we've got a whole creative team, which is about a hundred people now, and we've got an incredible technical team, and we've got an incredible production team, and we figured out a way to have all those people work together as peers. That's a really unique thing in the industry, in that the very best creative people will only go to work at a few places, Disney, Pixar, possibly DreamWorks. But the very best people, it's very hard for these other places to get them.

In the same sense, the very best computer scientists in computer graphics will only go to work at a few places, and Pixar is one of those. But most of the studios are not, because they don't have that level of a technical culture there. And I think Pixar is the only place in the world that can hire the best from both of these areas. And we've worked for ten years to figure out a way to have them all work together, which is not easy, because they come from very... The Hollywood culture and the Silicon Valley culture are really different, and we think we've picked the best from both. That leads into another question I have. What's Sillywood? Well, Sillywood is a term for a lot of...

Sillywood is a term that was invented for the space that a lot of companies were in so they could raise investment, but they never produced any products. It was sort of technology meeting Hollywood. And Pixar is the only company I know where Silicon Valley and Hollywood have met where there's actually been any offspring that have been successful. It's a very difficult thing to do. How's that working out? It's working out great. Now, you have a relationship right now with Disney, but at a certain point, you're going to break off on your own. Is that... I mean, what's... Where are you taking Pixar now? What's on the boards for the next few years, and do you want to get into the distribution end of it yourself, control more of the product and the ancillaries?

Well, we have a relationship with Disney now, and it's turned out great, actually. We had some fears going into it. I'm sure they did, too. This was the first time Disney ever went outside for mainstream animation. And so I'm sure we both approached it with some degree of fear, and it's turned out to be far more successful and far more fun than we ever imagined. So the relationship's going really well with Disney. We love working with them creatively. From the marketing side, they have very good people. So that's going pretty well, and we have a three-picture deal with them, and at the end of that deal, we'll have to make some decisions. Should we sign up for a longer relationship with Disney? Should we sign up with another studio? Should we do some more of the marketing ourselves and just rent a studio for distribution?

And we don't have to make those decisions for a few years, and we're busy educating ourselves to understand what our options are, and I think we are getting our hands around that. This is a new way. This is really a new kind of existence for computer animation as a business. We talk a lot about where has computer animation gone in the last 20 years, and how Pixar clearly is well beyond where anybody else has gone in terms of computer animation as a business. How has the business changed? Most people doing computer animation never got paid for it. They did it as a labor of love, as you know. And the ones that did get paid for it, the business model evolved to doing commercials and flying logos and special effects.

Those were the primary ways that people would get paid for their avocation, to turn it into a vocation. And Pixar did that for a while. We made television commercials. We won most every award in the book. The problem with doing commercials and special effects is that the business model has eroded over the last several years. I mean, it's all work for hire. You don't share in any of the upside of what you create. You just get paid for the work once. So if Listerine sold more Listerine because of our commercials, we didn't make any more money for producing the commercials. And the margin in that business, the amount of profit you can make, has been under pressure because more people have been coming into the special effects business and the commercials business.

And it's been going down and down and down and down. And Pixar always operated at the high end of that business because we could do things with character animation that very few others could do. But nonetheless, I think that's a pretty poor business to be in. And there's really kind of no way out of that business. You work harder and harder to make the same amount of money, and it's pretty difficult. We actually pulled out of the commercials business this year. We love the commercials business. It was fun making them, and it was a great stepping stone for our company. But we had 25 incredibly talented people there doing work for hire when we have all these other opportunities where we own a piece of what we create. So we reluctantly pulled out because great people are hard to find, and we couldn't afford to have 25 of them making commercials anymore.

Now you've been a hardware producer and a software producer, and with Pixar you're a content producer. Right. And I found it interesting that you didn't want to refer to yourself as a filmmaker, but how is your relationship with Pixar different from say, Louis V. Mayer, or some of the great studio heads who may not have been directors or producers themselves, but certainly had a great deal to do with what was done? Well, we're a small studio, and so we don't want to let any of this go to our heads. And we hope... What we're trying to do is to build a great animation studio. We stay very focused on that. Because if you...

The other great animation studio was, of course, Disney, and they've done an incredible job. And as a matter of fact, feature animation is really at the heart of Disney, if you look at it. They've created all the character franchises that really breathe life into the theme parks. And if you look at where the profits come from from Disney, it's a tremendous amount of it is from feature animation and the videos and stuff directly, or it's really sort of dependent on feature animation, as are the theme parks. And what we're doing is just a pure play, to build a feature animation studio. And so my role in that is to try to understand the pieces we need to put in place to do that, and then to work with everybody to attract and retain the people to do that, and get a clear strategy in place, and help with the relationships with Disney and other people.

And I enjoy it tremendously. We've got an incredible collection of people at Pixar. So I learn a lot. I learn a lot. Do you like to... I mean, to what degree are you involved with the technical side or the creative side? Do you like to get in there and play? Well, I like to get in there and help where I can. But my greatest joy is when we have people that are much better than I am at something, so I can not forget about it, not worry about it, and get on to something else where I can help. So, you know, what happens is that... This is the same in technology as it is at Pixar and on the creative side, which is where you've got incredibly talented people that are also rare and in demand. If you don't treat them right, they can go get another job in 10 minutes, right?

So the strange thing happens, which is that sort of the hierarchy of power inverts, and the CEO is actually at the bottom. So I sort of feel like I work for most of these people, because... They're the ones that are doing all the brilliant work, you know, and it's the same same in the in software It's the same thing The best people are you know are very hard to come by and so it's you know It's management's job to support them because they're on the front lines doing the work. So that's kind of how we run the place How do we do that We do that by creating the right environment a very rich environment And removing obstacles out of their way and putting together the right teams of people Together and getting the right projects keeping the quality levels very high both in terms of people and strategy and projects Those kinds of things, you know helping to manage relationships like the ones with Disney that we have Those kinds of things. I mean as an example, our studio has grown tremendously this year We started off at about 175 people and we'll be about 300 people by the end of this year And one of our major challenges was not to lower the quality bar one iota And we managed to accomplish that we put together a you know, a very strong recruiting group We did a lot of other things that I'd rather not talk about Because there are competitive advantages and we were able to hire, you know, 125 a-plus people this year Now that was something that was incredibly important to the studio As an example of the kinds of things that you know management has to do

Toy Story is a good calling card Pixar is a very hot place to be right now. Yeah It now you thought about working with Disney being beneficial. What kinds of things did Disney teach you? I mean feature filmmaking is obviously a very specific kind of industry and feature animation is different from short films and commercials well as you know Making an animated film is entirely different than making a live-action film As you know when you make a live-action film a director typically shoots between 10 and 25 times as much footage as will end up on the screen They take that into the editing room and they build their film and hopefully they can do a good job Because if they can't it's too late. The actors are gone. The sets are down and Walt Disney Realized, you know many decades ago that Animation was so expensive that you couldn't afford to animate ten times more than what you need matter of fact, you don't want to animate even 10% more than what you need and Therefore the only conclusion you can come to is you have to edit your film before you make it so how do you go about doing that and Disney pioneered a lot of a lot of Techniques for doing that and they've refined those over the last 60 years Working with Disney gave us access to that wisdom because you can't buy it for love or money The wisdom and experience of having made you know tens of feature animated films and I think we learned a tremendous amount and we've even we've even been able to improve upon some of those things and in our own ways and I think that that education

Was not available, you know at any price to anybody else and we've been able to do that We were very fortunate to be able to work with some of Disney's best folks and they helped us a lot So, I think we learned a great deal on Toy Story and we've now internalized it into our company as well Getting back to the issue of working getting a team together and making making the environment healthy, I've heard that One of the things that I read a lot about in in the material from Pixar is that there's no contracts and that's different Sure Well, you know in this in this Blending of a Hollywood culture and a Silicon Valley culture One of the things that we encountered was that the Hollywood culture in the Silicon Valley culture each use different models of employee retention Hollywood uses the stick which is the contract and Silicon Valley uses the carrot which is the stock option and We examine both of those in in really pretty great detail both, you know, both economically but also sort of psychologically and and culture wise what kind of culture do you end up with and While there's a lot of reasons to want to lock down your employees for the duration of a film because if somebody leaves your you know You're at risk Those same dangers exist in Silicon Valley during an engineering project you don't want to lose people and yet they they managed to evolve another system than contracts and We prefer the Silicon Valley model in this case which Which basically gives people stock in the company so that we all have the same goal, which is to make create shareholder value

but also It Makes us constantly worry About making Pixar the greatest company we can so that nobody would ever want to leave You know when you sign a contract with somebody you can start to well I don't worry about that person for five years, you know And if you're real sophisticated, you'll have a little database that tickles you six months before their contracts up You can start paying more attention to them, you know and they're the most important person in the world for six months and then after they sign up again you put them in the drawer and Our system is a little different than that every single day we worry about how can we make Pixar a better company so that nobody will ever want to leave and We don't take anybody for granted Because if they don't want to be at Pixar and then probably they should leave anyway Whether or not they would ever have a contract So, you know, we've watched Silicon Valley, which is you know, four or five times as big as Hollywood Has grown up much faster than Hollywood and has grown up on this different model and we think it's a pretty good model So we adopted it and so far. It's working really well Now, where's all this going?

You're operating a significant studio Lucas is operating a significant operation up here in the Bay Area The is this you know, the technology allows for a significant amount of decentralization From what used to be the industrial part of the entertainment industry, which is Hollywood like the industrial heart Motor motor vehicle and automobile industry with Detroit and you also key, I mean one of the biggest impacts that you've had is the democratization of technology and putting putting high technology in the hands of people right on your desktop I'm in my fifth Macintosh. I still have the 128 sitting at home. It's a wonderful machine Brilliant design, absolutely brilliant is You were key and also involved in developing the graphic user interface making the technology that much more transparent Where is all this going?

I don't know. I mean, I don't think about this all the time You know one of the differences that I've noticed between content and technology selling technology boxes is that You can hardly find I mean I'll relate it to my own life for me But you can hardly find an Apple to around too much anymore. You still can in the schools, but that's about it It's not clear whether you'll be able to boot up a Macintosh five years from now or not And all the products all these technology boxes and all this software You know if it has a life of a year or two, you're very lucky if it has a life of five years It's extraordinary and every once in a while something has a life of 10 to 15 years And I've been lucky to be associated with a few of those products as well But sooner or later they all become part of the sedimentary layer, you know, which is the foundation for new innovation Disney Released its first animated feature film Snow White in 1937. That's 60 years ago a Few years ago. They re-released it on video and sold 28 million copies making Probably around a quarter billion dollars of profit 60 years after its initial release and I have a young son. We got it. He loved it. He watched it 30 40 times and it really Struck me that I know people on most of the continents of this world And I think I know I think everyone I know knows the story of Snow White I don't I don't think I know one person who doesn't who hasn't seen it and Watching my my son watch this it really hit me that these stories

Renew themselves with each generation of young children and you know, you read Joseph Campbell. I mean, these are our myths and Here's something that's 60 years old that's Regenerating itself in my son and other young children and you know, I think people are gonna be watching Toy Story in 60 years Not because of the computer graphics but because of the story, you know about friendship and That's something really amazing to me something very different than than the industry I worked in in the past and And To have the opportunity to put these stories into the culture like this if we can if we can work really hard and be lucky Again, and again is a rare opportunity and I think everybody at Pixar feels really really privileged to have this opportunity So that's that's what we're all about and we want to we want to make these products that Hopefully we'll be around for a long time and everybody will get a lot of you know enjoyment from and learn from I think you answer this question Oh that obviously, you know, yeah In motion pictures, historically, in old Disney animation, the animators and the filmmakers always put a little bit of themselves in the product.

What Toy Story character are you? Oh, I don't know. Toy Story came out of the heart and mind of John Lasseter. It was the toys he grew up with. So you should ask that to John. He's a better person to ask that to. I should ask him what character you are? No, what character he was. Oh, okay. I planned to do that, actually. I really did. So where's all this going? What's going to surprise us? Well, you know, on the visual side, ten years ago, when we made the landmark short film Luxo Jr., it took about three hours on average to render each frame of that short film.

Now, fast forward to today, Toy Story, computers are a hundred times faster. And yet in Toy Story, it took three hours on average to render each frame. And the reason was the frames were a hundred times more complex in many cases. And you know, we're throwing in between five and ten times more computer power at our second feature film, Codenamed Bugs, than we did at Toy Story. And it'll still take three hours to render each frame. And I think that's sort of a constant, that our ambitions visually are growing as fast as the technology can feed them. And so I think the worlds, the visual worlds which we'll be able to create will be much richer over time.

On the creative side, though, you know, I think the art of storytelling is very old. And no amount of technology can turn a bad story into a good story. I mean, John's taught me that. That's our mantra at Pixar. And you know, it's the story, stupid, if you will. And so, you know, I think storytelling is a real art, and that's something that we're always going to, you know, always going to be working on very, very hard. And I don't think it's changed in a long time, and I'm not sure it will. And I don't think it's something that technology has anything to do with. Thank you very much. Sure. Thanks.