To Pixar and Beyond

• Lawrence Levy received a call from Steve Jobs to become Pixar’s CFO and to lead it towards an IPO.
• Jobs initially bought Pixar to make it a hardware company, but realized that that’s not what it was — it was an animation movie/entertainment company.
• Lawrence struggles to understand the business and industry, as the entertainment industry is fully controlled by Hollywood.
• Pixar and Disney have a deal: Disney pays for production, marketing, and distribution costs for the first 3 movies, but also receives 90% of its revenues.
• Lawrence and Steve come up with a 4 step plan to make the company a success.

As developed by Lawrence Levy and Steve Jobs

• Increase Pixar’s share of film profits to at least 50%. (4 times increase of the current deal with Disney at that time)
• Raise money to finance their own films. At least 75 million dollars to pay for production costs. (Pixar would have to pay all, or a large part, of production costs of its own films. This is a key requirement of negotiating for an increased share of profits)
• Expand the studio to increase the rate of producing films. (One film every 18 months instead of every four years)
• Build Pixar into a worldwide brand.

Factors that determine one’s capacity to affect change:

• Leverage (bargaining power or strength)
• Negotiation

Tactics you employ to extract the best terms you can, given your leverage:

• How you put the leverage to work for you.
• Courage, fear, tenacity, trustworthiness, creativity, calm, the willingness to walk away, to behave irrationally.

• Steve Jobs first became a billionaire from the Pixar IPO. 
• When going public for their IPO, investment bankers examined every aspect of the company, its history, assets, debts, products, profits, markets, distribution channels, management team, competition, and anything else relevant to its success.
• IPO preparations didn't go smoothly — Goldman Sachs and Morgan Stanley don’t want to do it, so Lawrence finds other 3 smaller investment banks. As part of the process, Steve also finds a couple of Directors for the Board.
• The IPO is a massive success, with Steve owning all of the shares (apart from a small employee share pool).

Toy Story comes out after 5+ years in production — it’s super hard to make animations back then as you need to think of every single detail and animate it and then put it back on film for the cinemas. It is a massive hit and becomes the 3rd top grossing animation of all time.

• Melding business realities with creative priorities was always integral to Pixar’s collaboration and business model.
• Pixar’s successful process relied much on the relentless critique of each other’s work, and the willingness to put aside ego enough to hear that critique.
• Pixar ceded creative control and decision-making to the creative team. This was contrary to the popular Hollywood model of executives making creative decisions.