To Pixar and Beyond

To Pixar and Beyond Plot Summary

Introduction

In the autumn of 1994, a phone call changed Lawrence Levy's life forever. "This is Steve Jobs," the voice on the other end declared. "I saw your picture in a magazine a few years ago and thought we'd work together someday." With those words began an extraordinary partnership that would transform a struggling animation studio into one of the most successful entertainment companies in history. At the time, Steve Jobs was considered a has-been in Silicon Valley. His unceremonious departure from Apple a decade earlier had left him searching for his next big success, while pouring millions into a little-known company called Pixar with seemingly little to show for it. What followed was a remarkable journey of reinvention and creative vision. Together, Jobs and Levy navigated the treacherous waters between Silicon Valley's technological innovation and Hollywood's entertainment business, crafting a new kind of company that would revolutionize animation. Through this collaboration emerged not just groundbreaking films like Toy Story, but profound lessons about balancing creative excellence with business discipline. Jobs demonstrated an uncanny ability to see potential where others saw only risk, challenging conventional wisdom at every turn. His determination to maintain creative control while building a viable business model offers timeless insights for entrepreneurs and creative professionals alike, revealing how stubborn vision, when paired with strategic thinking, can transform industries and change how stories are told.

Chapter 1: Unlikely Partnership: The Phone Call That Changed Everything

When Steve Jobs called Lawrence Levy in November 1994, he was far from the celebrated tech titan we remember today. Having been forced out of Apple nearly a decade earlier, Jobs had weathered a series of commercial disappointments with NeXT Computer and was pouring millions into Pixar, a small computer graphics company he had acquired from George Lucas. Most of Silicon Valley viewed Jobs as yesterday's news, a once-brilliant innovator whose best days were behind him. For Levy, then a successful corporate attorney and executive at Electronics for Imaging, accepting Jobs' invitation seemed risky at best. The initial meeting between Jobs and Levy hinted at the extraordinary partnership to come. Jobs, dressed in his trademark jeans and black turtleneck, greeted Levy with surprising warmth and enthusiasm. "Come in, come in," he said excitedly. "I have so much to tell you." For nearly an hour, Jobs outlined his vision for Pixar with characteristic intensity. Despite his reputation for being mercurial and difficult, Jobs displayed none of that during this first encounter. Instead, he revealed a passionate belief in Pixar's potential that transcended its current financial struggles. When Levy visited Pixar's modest offices in Point Richmond, California—across the street from an oil refinery—he discovered a small team of extraordinarily talented artists and engineers working on something revolutionary. In a screening room filled with old couches and armchairs, Levy watched the opening minutes of what would become Toy Story. The experience was transformative. "My goodness!" he thought. "What is this?" As animated toys came alive on screen, Levy experienced something unexpected: genuine emotional connection to computer-generated characters. Within those few minutes, he glimpsed the magic that would soon captivate audiences worldwide. Despite this creative brilliance, Pixar faced enormous business challenges. The company had burned through nearly $50 million of Jobs' personal funds with little commercial success. Employees resented Jobs for unfulfilled promises about stock options, and Disney's restrictive distribution agreement left Pixar with minimal profits and limited creative control. The path forward was far from clear. Levy would need to craft a business strategy that preserved Pixar's creative spirit while building a financially sustainable company. Against the advice of friends and colleagues who questioned why he would risk his career on Jobs' struggling venture, Levy made the leap. What convinced him wasn't just the remarkable animation he had seen, but something more fundamental about the people behind it. In his meetings with John Lasseter, Pixar's creative director, and Ed Catmull, its technical genius, Levy sensed something special—a rare combination of artistic vision, technological innovation, and genuine passion. As Levy later reflected, "I didn't know how that victory would come, but I was quite confident that, for them, somehow it would."

Chapter 2: Creative Vision Meets Business Reality

The contrast between Pixar's artistic brilliance and its business challenges couldn't have been starker. While the company possessed extraordinary creative and technical talent, it lacked a coherent business strategy. Levy discovered that Pixar was essentially running three different businesses: selling RenderMan software to special effects studios, producing animated commercials, and developing short films—none of which generated significant revenue. Meanwhile, the company was pouring resources into its first feature film, Toy Story, under a distribution agreement with Disney that gave the entertainment giant most of the profits and all of the brand recognition. Digging deeper into Pixar's contract with Disney, Levy was stunned by its one-sided terms. For the three films covered under the agreement, Disney would keep the lion's share of profits while maintaining creative control and exclusive rights to Pixar's characters. Even worse, the agreement prevented Pixar from working with other studios until it completed all three films—potentially binding the company to Disney for up to a decade. When Levy calculated what Pixar might earn if Toy Story achieved the same success as Disney's Beauty and the Beast, the numbers were disheartening: approximately $17 million over four years of production time, while Disney would likely make ten times that amount. Jobs surprised Levy with his reaction to these revelations. Rather than defending the contract or explaining his reasoning, Jobs simply acknowledged the reality and focused on the future. This forward-looking attitude would become a defining characteristic of their partnership. "There's nothing you can do about where the pieces are," Levy reminded himself. "It's only your next move that matters." Together, they began exploring options to transform Pixar into a viable business. The entertainment industry presented unique challenges that neither Jobs nor Levy had encountered in their technology careers. Entertainment was an inherently risky business where, according to industry experts, only two out of ten films might be profitable. Unlike software or hardware, films required massive upfront investment with highly unpredictable returns. Financing a film company through the stock market was considered particularly perilous—described by one expert as a "long, torturous, and expensive obstacle course" that typically ended in "investment nightmares." Adding to these difficulties was the problem of "carrying costs"—the expense of maintaining a permanent animation staff even during production downtime. Unlike live-action filmmaking, where crews dispersed after production, animation studios employed artists year-round. If Pixar couldn't maintain a steady pipeline of projects, these costs could quickly drain its resources. This challenge had bedeviled animation studios since Walt Disney's time and was one reason why Disney had diversified beyond animation into theme parks, television, and live-action films. After exhaustive analysis, Levy concluded that Pixar had only one viable path forward: to fully commit to becoming an entertainment company focused on animated feature films. This would require raising significant capital to fund production costs, increasing the frequency of film releases, negotiating better profit-sharing terms with Disney, and establishing Pixar as a recognized brand. It was an audacious strategy that would stake everything on Pixar's creative talent and the still-unproven market for computer-animated films. As Levy later noted, the level of success Pixar needed to achieve was "not only unprecedented; it was almost unimaginable."

Chapter 3: Building the Animation Revolution

Transforming Pixar from a struggling technology company into a successful animation studio required addressing fundamental operational challenges. The first priority was completing Toy Story, a groundbreaking undertaking fraught with technical obstacles. Unlike live-action filmmaking, computer animation required creating every visual element from scratch—not just characters, but backgrounds, lighting, shadows, and textures. The task was so daunting that Pixar strategically designed Toy Story around plastic toys with uniform surfaces rather than human characters with complex skin and clothing. Even with these creative workarounds, finishing the film on schedule remained uncertain. Behind the scenes, Jobs and Levy worked to establish the foundation for Pixar's future. After heated negotiations, they implemented a stock option plan for employees, addressing a longstanding grievance that had fueled resentment toward Jobs. Although Jobs initially resisted allocating a generous portion of Pixar's stock to employees, Levy ultimately convinced him that it was essential for maintaining the talent that made Pixar special. This decision proved pivotal in preserving the company's creative culture during its transformation. As Toy Story neared completion in late 1995, Pixar faced the next crucial challenge: raising capital through an initial public offering (IPO). This move was essential to Pixar's strategy of financing its own films, which would give the company more leverage in future negotiations with Disney. However, convincing Wall Street to invest in an unproven animation company with no earnings track record seemed nearly impossible. When Jobs and Levy approached Goldman Sachs and Morgan Stanley, the premier investment banks in Silicon Valley, both declined to underwrite Pixar's offering, citing concerns about the unpredictability of blockbuster films. Undeterred, Levy turned to Robertson Stephens, a boutique investment bank with which he had previously worked. Despite lacking entertainment industry experience, Robertson Stephens was impressed by Pixar's creative potential and agreed to lead the offering. To address concerns about Pixar's entertainment credentials, Levy recruited Hal Vogel, a respected entertainment industry analyst, whose enthusiasm for Pixar added critical credibility to the offering. Against considerable odds, Pixar assembled an investment banking team willing to take a chance on its vision. The timing of Pixar's IPO coincided perfectly with Toy Story's release in November 1995. The film opened to critical acclaim and commercial success, grossing nearly $30 million in its opening weekend—far exceeding even the most optimistic projections. With this validation of Pixar's creative capabilities, investor interest in the IPO soared. On November 29, 1995, Pixar's stock began trading at $22 per share and quickly jumped to $39, giving the company a market value of nearly $1.5 billion. In a single day, Steve Jobs became a billionaire, and Pixar emerged as one of the most successful IPOs in Silicon Valley history. This dramatic financial success represented more than just a personal triumph for Jobs and Levy; it provided Pixar with the capital and credibility needed to realize its ambitious strategy. As the Wall Street Journal noted the following day, "Steve Jobs is back in the saddle again, becoming a billionaire in Pixar IPO." After a decade in the wilderness, Jobs had engineered one of the most remarkable comebacks in business history.

Chapter 4: The Fight for Pixar's Identity

With Toy Story's success and a successful IPO behind them, Jobs and Levy turned to the next critical challenge: renegotiating Pixar's relationship with Disney. Despite their initial achievement, Pixar remained constrained by the original Disney agreement, which limited both its creative autonomy and financial returns. As Levy assessed their leverage, he recognized that Toy Story's unexpected triumph had strengthened Pixar's position, but Disney still held significant advantages. Disney had no obligation to change the contract, could invest in developing its own computer animation capabilities, and offered distribution resources that no other studio could match. In early 1997, Jobs initiated discussions with Disney CEO Michael Eisner about revising their partnership. The negotiations proved challenging, with Eisner initially showing interest but then failing to follow through. This pattern of delays frustrated Jobs, who began to take the lack of response personally. Behind the scenes, however, Disney was grappling with how to respond to Pixar's unexpected success. Toy Story had demonstrated the potential of computer animation, raising questions about Disney's own animation strategy and its relationship with this emerging competitor. The negotiation reached a critical impasse over the issue of brand recognition. Jobs and Levy insisted that Pixar receive equal billing with Disney on all films and merchandise—a demand that Eisner initially refused. For Pixar, this was a matter of principle; they created the stories and characters and deserved proper recognition. After months of deadlock, Eisner made a surprising concession, offering Disney the option to purchase stock in Pixar in exchange for equal branding. This breakthrough led to a new agreement that transformed the relationship between the two companies. The revised contract, signed in February 1997, represented a stunning victory for Pixar. It granted Pixar creative control over its films, guaranteed favorable release dates, established a true 50/50 profit split, and most importantly, provided equal brand recognition through the "Disney•Pixar" co-branding that would appear on all films and merchandise. These terms were unprecedented in Hollywood, where studios typically maintained tight control over creative decisions and profit distribution. The New York Times reported that Disney and Pixar would be "essentially sharing a brand," acknowledging the extraordinary nature of this arrangement. This hard-won agreement represented more than just improved financial terms; it affirmed Pixar's identity as a creative force in the entertainment industry. By securing equal billing with the most recognized name in animation, Pixar established itself as a distinct brand rather than merely a technological service provider to Disney. This recognition was essential to Pixar's long-term vision of building a company that could stand alongside Disney as a creator of beloved animated entertainment. Throughout this transformation, Jobs and Levy continued to strengthen Pixar's internal culture. They made the pivotal decision to give Pixar's creative team, led by John Lasseter, complete control over artistic choices. Rather than imposing executive oversight as was common in Hollywood, they bet on their creative talent to produce exceptional films. This approach, while risky from a financial perspective, reflected a fundamental Silicon Valley philosophy: bet on innovation, not convention. As Jobs put it, "Why would we want anyone else to interfere with that? The focus should be on creative vision, not deadlines and budgets."

Chapter 5: A New Type of Entertainment Company

With its new Disney agreement in place, Pixar began to evolve into a different kind of entertainment company. Unlike traditional Hollywood studios that spread risk across many films with varying budgets, Pixar concentrated its resources on producing a small number of exceptionally high-quality animated features. This approach required enormous discipline in both creative development and production management. The company expanded its workforce, built sophisticated training programs through Pixar University, and developed a unique collaborative culture that balanced artistic freedom with technical precision. Pixar's production process reflected this distinctive philosophy. Stories emerged through a rigorous development cycle in which ideas were repeatedly refined, critiqued, and reimagined. The company's "brain trust"—a core group of creative leaders including John Lasseter, Andrew Stanton, Pete Docter, and Joe Ranft—provided candid feedback throughout production, creating an environment where the best ideas could flourish regardless of their source. This culture of constructive criticism became a hallmark of Pixar's approach, allowing the studio to consistently produce films that connected emotionally with audiences. The success of Pixar's model became increasingly evident with each new release. A Bug's Life (1998), Monsters, Inc. (2001), Finding Nemo (2003), and The Incredibles (2004) all achieved critical acclaim and commercial success, with an average domestic box office exceeding $250 million. These films also garnered numerous awards, including Academy Awards for Best Animated Feature Film for Finding Nemo and The Incredibles. This unprecedented streak of hits validated Pixar's creative strategy and solidified its position as the leader in computer animation. Beyond commercial success, Pixar established a reputation for creative innovation that distinguished it from traditional animation studios. Each film pushed technological boundaries while maintaining an unwavering focus on storytelling. Finding Nemo required developing new techniques for animating underwater environments, while The Incredibles pioneered methods for realistically depicting human characters. These technical advancements were never pursued for their own sake but always in service of enriching the narrative and emotional impact of the films. By 2005, Pixar had transformed from a struggling technology company into an entertainment powerhouse with a market value approaching $6 billion. Jobs, who still owned the majority of Pixar's stock, had become a multibillionaire, while Pixar's employees shared in this success through their stock options. The company that had once been on the brink of failure now stood as one of the most valuable entertainment properties in the world. As USA Today noted, "Pixar's stock had been a big star, too. The past five years, shares have gained 171%—that's 22% compound annual average growth." Despite this remarkable achievement, Levy recognized that Pixar faced new challenges. The company's soaring stock price created heightened expectations that would be difficult to sustain. Any disappointment in a film's performance could cause Pixar's value to plummet, potentially destroying years of hard-won progress. After careful consideration, Levy approached Jobs with a challenging recommendation: Pixar needed either to diversify beyond animation or to consider selling the company while its value was at its peak.

Chapter 6: The Disney Deal: Negotiating for the Future

As Levy contemplated Pixar's future, a significant change occurred at Disney. In September 2005, Michael Eisner stepped down as CEO, replaced by Bob Iger. This leadership transition created an opportunity to reexamine the relationship between the two companies. Iger, unlike his predecessor, recognized animation as central to Disney's identity and future. When Jobs, Levy, Catmull, and other Pixar leaders met with Iger, they found him refreshingly straightforward and genuinely respectful of Pixar's achievements. The cordial nature of this meeting marked a dramatic shift from the often contentious interactions with Eisner. Through these discussions, a new possibility emerged: Disney might acquire Pixar outright. For Jobs and Levy, this option would address their concerns about Pixar's sustainability as an independent company while preserving its creative culture. For Iger, acquiring Pixar represented an opportunity to reinvigorate Disney Animation, which had struggled to match Pixar's consistent success. The key question was whether Disney would commit to maintaining Pixar's unique approach to filmmaking rather than imposing Disney's corporate practices. Iger's response surprised and delighted the Pixar team. Not only did he promise to preserve Pixar's culture, but he expressed his desire for Pixar's creative approach to influence Disney Animation. This vision of Pixar transforming Disney rather than the reverse represented a dramatic shift in the power dynamic between the two companies. It also aligned perfectly with Pixar's long-term interests in maintaining its creative integrity while gaining the stability and resources of a larger organization. After careful analysis of Disney's business and assets, Levy concluded that the acquisition made strategic sense for Pixar's shareholders. Disney's diverse portfolio, which included theme parks, television networks like ABC and ESPN, and various other media properties, would provide stability that Pixar could not achieve on its own. This diversification would protect Pixar's value from the inherent volatility of the film business while allowing the company to continue its creative mission. On January 24, 2006, Disney announced it would acquire Pixar for $7.4 billion. Jobs became Disney's largest shareholder, with his Pixar stock converted into Disney shares worth nearly $4 billion. John Lasseter was appointed chief creative officer of both Disney Animation and Pixar Animation, while Ed Catmull became president of both studios. This arrangement ensured that Pixar's leadership would guide not only their own studio but also help revitalize Disney's animation division. The acquisition proved remarkably successful for both companies. Pixar continued its streak of hits with Cars, Ratatouille, WALL-E, Up, and Toy Story 3, while Disney Animation experienced a renaissance under Lasseter and Catmull's guidance, culminating in the release of Frozen in 2013, which became the highest-grossing animated film of all time. Disney's stock value nearly quadrupled in the years following the acquisition, making it one of the most successful corporate mergers in entertainment history. For Levy, the sale marked the end of his formal relationship with Pixar. After serving on Pixar's board of directors since 1999, he found himself reflecting on the extraordinary journey that had begun with that unexpected phone call from Steve Jobs twelve years earlier. While part of him felt a sense of loss, he recognized that Pixar had found the perfect home—one that would preserve its creative legacy while providing the stability needed for continued innovation.

Chapter 7: Legacy and Wisdom Beyond Business

The remarkable transformation of Pixar offers insights that extend far beyond the world of entertainment and business. At its core, Pixar's success stemmed from balancing seemingly contradictory forces: artistic creativity and commercial discipline, technological innovation and emotional storytelling, individual vision and collaborative process. This balance reflects a philosophy similar to what Eastern traditions call the "Middle Way"—finding harmony between structure and fluidity, between the pragmatic demands of business and the creative impulses that give our work meaning. Steve Jobs played a pivotal role in Pixar's journey, but his experience there also transformed him. The humbling commercial failures of his earlier career had taught him painful lessons about the importance of balancing vision with market realities. At Pixar, Jobs learned to trust the creative instincts of others, particularly John Lasseter and Ed Catmull, while providing the strategic guidance and protection the company needed to flourish. This evolution in Jobs' leadership approach would later prove crucial to his triumphant return to Apple, where he applied many of the lessons learned at Pixar. Jobs and Levy built Pixar with a fundamental respect for both the art and science of animation. They recognized that Pixar's true strength lay not in technological prowess alone, but in using technology to serve storytelling. This principle guided decisions throughout the company, from production processes to business strategy. When faced with the critical decision of who would have final creative authority over Pixar's films, they chose to trust their creative team rather than imposing executive oversight, a radical departure from Hollywood convention that proved essential to maintaining Pixar's distinctive voice. Pixar's culture emphasized collaboration, constructive criticism, and continuous improvement. The company created spaces where ideas could be freely shared and refined, where ego took a back seat to story, and where failures were viewed as necessary steps toward ultimate success. This approach required vulnerability and trust among team members, qualities that are rare in competitive corporate environments but essential for genuine innovation. As Lasseter often said, "Our films must come from the heart," a philosophy that guided the studio's creative decisions. Perhaps most significantly, Pixar demonstrated that extraordinary business success can coexist with human values. The company prioritized creating a workplace where people felt valued and inspired, where artistic integrity was never compromised for commercial gain, and where the ultimate measure of success was the emotional impact of the stories they told. This commitment to principle sometimes required difficult choices, such as when Pixar walked away from negotiations with Disney over the issue of brand recognition, but these decisions ultimately strengthened the company's identity and purpose. The legacy of Pixar extends far beyond its groundbreaking films or commercial achievements. It offers a model for how organizations can nurture creativity while maintaining discipline, how leaders can balance vision with collaboration, and how businesses can pursue excellence without sacrificing humanity. As Levy later reflected, "We can build extraordinary organizations that foster creativity, dignity, and humanity while respecting business disciplines. We just have to be tuned to it; we have to be willing to balance bureaucracy with the depth and subtlety of creative inspiration."

Summary

The remarkable journey of Steve Jobs and Pixar exemplifies how vision, perseverance, and strategic thinking can transform industries and redefine what's possible. From a struggling company burning through millions of dollars to a revolutionary force in entertainment, Pixar's evolution demonstrates that extraordinary success often emerges from the harmonious balance of seemingly opposing forces. Jobs' ability to marry technological innovation with artistic excellence, business discipline with creative freedom, created a unique alchemy that produced not just blockbuster films but a new approach to storytelling that continues to inspire audiences worldwide. What makes the Pixar story particularly valuable is how it illuminates broader principles about human potential and organizational culture. Jobs and his team showed that creating environments where creativity flourishes requires both structure and freedom, both high standards and psychological safety. They proved that commercial success need not come at the expense of artistic integrity—in fact, the opposite is true. The highest levels of achievement emerge when people are empowered to do their best work, guided by shared purpose rather than rigid control. This philosophy extends beyond business to our personal lives, where finding the balance between order and spontaneity, between discipline and joy, opens the door to our most meaningful accomplishments and deepest fulfillment.

About Author

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Lawrence Levy

LAWRENCE LEVY is a former Silicon Valley lawyer and executive hired by Steve Jobs in 1994 as CFO and member of the Office of the President of Pixar Animation Studios. He was responsible for Pixar's business strategy and IPO and guided Pixar's transformation from a money-losing graphics company into a multibillion-dollar entertainment studio. He later joined Pixar's board of directors. He then left corporate life to study Eastern philosophy and meditation and their relevance to modern life. He now writes and teaches on this topic and cofounded Juniper Foundation to pursue this work. Originally from London, England, he earned degrees from Indiana University and Harvard Law School. He lives with his wife, Hillary, in Palo Alto, California.

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