How They Started Read online

  Ed was looking for an animator who would bring the new tools to life. At the same time, a Disney animator was looking for a more visionary company where he could explore computer animation.

  John Lasseter had wanted to be a Disney animator from childhood, and studied under the studio’s top animators at California Institute of the Arts, where he won two student Academy Awards®. He was quickly hired by Disney and worked on films including The Fox and the Hound, but was frustrated in his efforts to sell the tradition-bound studio on the merits of three-dimensional computer animation. Minutes after pitching then-studio head Ron Miller his idea for a 3-D animated version of the popular children’s book The Brave Little Toaster, John was fired.

  While John was devastated, this was great news to Ed, who had seen John’s short-film work at computer graphics conferences. The two ran into each other at a conference aboard the Queen Mary in Long Beach, California, and Ed immediately asked John to do a freelance project for Lucasfilm. By 1984 John was working full-time for the Division.

  Ed was looking for an animator who would bring the new tools to life. At the same time, a Disney animator was looking for a more visionary company where he could explore computer animation.

  At first, John found Lucasfilm an intimidating place. “I mean, there I was, surrounded by all these PhDs who had basically invented computer animation,” John relates in To Infinity and Beyond! The Story of Pixar Animation Studios. “But then I realized they couldn’t bring a character to life with personality and emotion through pure movement like I could.”

  Though the animators in the Division were considered a sideline to the main hardware and software teams and were installed in offices down a back hallway, they were kept on because their work helped demonstrate the Division’s tools to other animators. At 1984’s SIGGRAPH computer graphics conference, John made a splash with his first work for Lucasfilm, a one-minute computer-animated short featuring a bumblebee, Andre and Wally B. The work was made possible by a new high-speed computer the Division had developed that was designed for computer animation and offered more rendering speed.

  With the computer’s creation, the need for a name arose. In a move emblematic of the company culture Pixar would develop, the name chosen was a collaboration. Division co-head Alvy Ray Smith, who’d grown up in New Mexico and learned Spanish infinitive verbs often end in “-er,” suggested “Pixer,” as a cool way of saying “pixel-maker.” Others countered that an “-ar” ending would sound more high-tech, and so it became the Pixar Image Computer. The name would soon serve as the company’s moniker as well.

  Time to go

  While the Division had some small success selling the Pixar computer to customers such as movie studios and medical-imaging firms, it faced an uncertain future. Two of its best products, EditDroid and SoundDroid, which broke ground in editing film and sound had been spun off and were no longer generating income for the Division.

  A tense two years followed the SIGGRAPH success, in which the Division faced repeated threats of shutdown. Ed fended off many attempts by Lucasfilm to fire key employees. He sensed it was important to keep together the brain trust he’d built.

  But George Lucas was growing increasingly uninterested in overseeing a technology company where the technology was still far from commercially viable. He sensed a large capital investment would be needed for the Division’s leaders to achieve their ultimate goals. He also didn’t want to run a hardware company. Lucas wanted to sell.

  Ed fended off many attempts by Lucasfilm to fire key employees. He sensed it was important to keep together the brain trust he’d built.

  Alvy and Ed realized they needed to learn how to run the Division as a stand-alone business. The pair headed off to a local bookstore, purchased a “how to start a business” book, and wrote a business plan for Pixar, envisioning a 40-person company. Now, all they needed was an investor willing to pay Lucasfilm’s asking price: $15 million plus another $15 million in funding for the new company.

  Enter Steve Jobs

  Time dragged on, and no buyer was materializing to buy Pixar. There was one bright spot, though: Apple Computer employee Alan Kay, who had attended the University of Utah with Ed, heard about the Division’s sale. He thought his boss, tech-wunderkind Steve Jobs, might find Pixar interesting.

  Steve did. Apple was known for its groundbreaking 2-D computer graphics. Initially, Steve envisioned that Apple would buy Pixar and apply the team’s talents to improving computer graphics. Smith and Ed declined the offer, as they wanted to continue toward their goal of using computer graphics for animated film. Turning down an apparent savior for their financial woes was a controversial move amongst Division staff that “nearly tore us apart,” Ed recalled.

  As it turned out, Steve was in a power struggle with then-Apple CEO John Sculley over low sales of the first Macintosh computer—a struggle he would ultimately lose. After Steve got the ax in spring 1985, he reconsidered Pixar’s goals. Seeing the animation work the team had done, Steve was converted to their mission of creating computer-animated films.

  “I ended up buying into that dream both spiritually and financially,” he recalled a bit ruefully in the documentary The Pixar Story.

  He contacted Lucasfilm again, with a plan to spin Pixar out on its own. While Pixar hung by a thread at Lucasfilm, the negotiations dragged on, leaving the team to agonize over whether Pixar had a future. It took until February 1986 to hammer out the deal.

  After Steve got the ax in spring 1985, he reconsidered Pixar’s goals. Seeing the animation work the team had done, Steve was converted to their mission of creating computer-animated films.

  With no other buyers on the horizon, Steve snapped up Pixar for a relative song: $5 million to Lucasfilm and another $5 million in guaranteed funding for the new company. At last, Pixar had won independence and fresh funding with which to drive toward its goal of creating feature films.

  The long climb

  Steve might have hesitated if he had known it would be nearly a decade from the day he inked the deal until Pixar would become financially self-sustaining.

  If $5 million sounds like a lot of money, it went fast at the highly technology-reliant new film-production studio. Pixar needed to both hire top animators and break new technical ground to develop the ability to create a realistic-looking, feature-length film entirely on the computer. The team was soon scrambling for ways to bring in revenue.

  From Lucasfilm’s San Rafael, California, headquarters, Pixar moved to a complex in nearby Point Richmond. The building quickly acquired a look that was a cross between a college dorm and an acid trip. Animators each decorated their cubicles in themes to suit—one looked like a wooden clubhouse, another an opium den. Workers rode scooters and teeter-totters in the halls, and generally let creativity run free.

  As at Lucasfilm, there was some success selling the Pixar computer, but the audience was limited. Pixar bundled the computer with software and sold it as CAPS: the Computer Animation Production System. Disney bought the system, which brought breakthrough effects to Beauty and the Beast, the first animated feature to be nominated for a regular Best Picture Academy Award®.

  Pixar continued to grab attention for its breakthroughs. Its next was a computer-animated short film, Luxo Jr., directed by John, in which an amazingly lifelike desk lamp and a smaller “child” lamp play with a ball. Computing power was so limited that a plain black backdrop was used for the short. Nonetheless, the film played to a standing ovation at SIGGRAPH, and playful Luxo would become the Pixar symbol.

  This was great for Pixar’s reputation, but still didn’t pay many bills. Only 120 computers were sold by 1988, and Steve was applying pressure to make the company profitable. Budgets were repeatedly trimmed.

  “He put us through a lot of pain,” Alvy Ray Smith recalled. “But, at the same time, he was unwilling to let the company go bankrupt.”

  Going commercial

  While Pixar continued to make successful short films, the company turn
ed to a more lucrative art form to bring in more cash: TV commercials. The first ad, “Wake Up,” was for Tropicana orange juice. The team became known for its skill in creating animated characters for commercials, including a boxing bottle of Listerine. John won a Clio award, the ad industry’s Oscar®, for “Conga,” an ad that featured gummy Life Savers candies dancing in a nightclub.

  Recruited for the commercial-making effort were two animators who would later direct films for Pixar, Andrew Stanton and Pete Docter. When Stanton arrived he had literally never touched a computer before. He was a quick study, and soon created a computer-animated Trident chewing-gum ad in which a spearmint-leaf singer sang at a cabaret piano.

  Goodbye, hardware

  The commercial side did well financially, but the huge cost of hardware and software development was crushing the company. The company had mushroomed to 140 employees. At the same time, the CAPS system needed ongoing support to maintain Pixar’s good relations with Disney.

  The studio was taking note of Pixar’s progress, and after each short film John would get a call asking him to quit and come back to work for Disney. That John kept turning Disney down bolstered morale greatly at Pixar. Even though Pixar constantly teetered on the brink of financial collapse, John chose it over the security of the big studio.

  When local hardware firm Vicom Systems offered to buy the Pixar Image Computer and CAPS system, Ed knew it was a major turning point. He felt strongly that the hardware-side costs would prove fatal to the company and that both sides of the business would fare better separately. The sale was made and Pixar shrank back to 50 employees, greatly lessening its overhead.

  Most of Pixar’s focus was on making short films and commercials. One of those shorts, Tin Toy, about a wind-up toy, triggered a fateful comment from Disney animator Joe Ranft, who had worked on Beauty and the Beast.

  Seeing the film with John at a 1988 Dutch animation festival, John recalls Joe’s enthusiasm for the concept: that toys could be alive. Joe thought many more stories could be told this way. And the wheels started to turn in John’s head about doing just that—telling a new, bigger story about toys.

  “I’ll always be grateful to Joe for seeing the larger potential in Tin Toy,” John says in To Infinity. “Who knows if I would have looked at it as a door to a bigger world if it hadn’t been for him?”

  Shortly afterward, Disney upped the ante with John. After a shareholder revolt, Disney’s leadership changed and Walt Disney’s nephew Roy Disney was now in charge. If the studio couldn’t hire John back, Disney reasoned, they would partner with Pixar to produce a computer-animated film.

  Steve served as Pixar’s negotiator, hammering out a three-picture deal in 1991 with Disney chairman Jeffrey Katzenberg. Pixar would produce, while Disney would promote and distribute. The terms were less than stellar, but Pixar had the machinery in place at last to make and distribute its first feature.

  It would take four long years for that first picture to make it to the screen.

  “It took us a long time to build the technical foundation,” Steve told TV personality Charlie Rose in an interview shortly after the release of Toy Story. “We were pioneering every step of the way.”

  The making, and remaking, of Toy Story

  The task facing Pixar’s animation staff was a daunting one. The team estimated it would take 100 early ’90s supercomputers two years to render all the animation needed for a computer-generated feature film. As it turned out, the production took so long that more powerful computers became available—but rendering the film still took a full year.

  “It took us a long time to build the technical foundation,” Steve told TV personality Charlie Rose in an interview shortly after the release of Toy Story. “We were pioneering every step of the way.”

  John soon discarded the idea of building the feature around the star of Tin Toy, and he developed an entirely new storyline featuring a cowboy ventriloquist dummy named Woody and a newfangled electronic toy spaceman, Buzz Lightyear. Later, Woody and Buzz both became 12-inch dolls so that they fit together better onscreen. The jealousy between old and new toys was at the heart of the film.

  But as production proceeded, Disney’s Katzenberg carefully watched its progress and issued copious notes. The story went through rafts of revisions as Katzenberg pushed to make the characters more “edgy,” more adult. In particular, Woody became an increasingly nasty character. John knew he was going down the wrong road when actor Tom Hanks, who was voicing Woody, noted that he rarely got to play jerks.

  Finally, a year into production, Pixar brought its assembled reels to Disney for a screening. The event became known at Pixar as “the black day.”

  The film was a disaster. It wasn’t funny. It didn’t have the heart that had won renown for John’s short films.

  Disney wanted to halt production, lay off most of the Pixar team, and move a few key Pixar animators to its own Burbank, California, headquarters to rework the film under close supervision. In John’s view, this was to be avoided at all costs. John begged Disney for two weeks in which to write a new storyline and prove they could complete a winning film.

  Energized by the reprieve, Pixar staffers worked around the clock to recapture the fun and joy they originally saw in the Toy Story idea. Woody became a far more likeable character, and the interplay between the toys crackled with jokes again.

  Incredibly, within the scant two weeks granted them, Pixar completely remade the entire first third of the movie. Impressed with the new version, Disney reversed its decision: production was back on.

  As the story continued to be animated, Ed’s technical team faced the daunting task of fully animating 80 minutes of film. Previously, the most computer animation in a film had been 10 minutes of dinosaurs in Jurassic Park. Rapidly, the team constructed programs that would allow networked computers to work together to speed the rendering process.

  In all, Steve would invest a staggering $55 million in Pixar prior to Toy Story’s release. The company would likely have faced extinction without his commitment, John recalled in a Facebook-page tribute the week of Steve’s death in October 2011: “He saw the potential of what Pixar could be before the rest of us, and beyond what anyone ever imagined,” John wrote. “Steve took a chance on us and believed in our crazy dream of making computer-animated films.”

  As Pixar readied Toy Story for release, there was a huge question hanging over the project: what would audiences used to 2-D animation think? Would they take to Pixar’s computer-generated toys? The first preview Disney held for the movie while it was still in process got the lowest scores in the company’s history. However, a later screening of the nearly completed film received high marks.

  “He saw the potential of what Pixar could be before the rest of us, and beyond what anyone ever imagined,” John wrote. “Steve took a chance on us and believed in our crazy dream of making computer-animated films.”

  The fears proved unfounded. Toy Story opened in November 1995 and was an instant smash. It would go on to gross more than $360 million dollars and spawn two sequels that would each gross even more. The movie won a Special Achievement Oscar® as the first-ever computer-animated film.

  Unfortunately, Pixar didn’t benefit much from Toy Story’s success. In particular, its agreement with Disney left Pixar with little participation in the lucrative merchandising associated with Toy Story. So the millions of Woody and Buzz toys sold did not enrich Pixar’s coffers. But Steve was thinking ahead about this, and had a plan to prevent Pixar from missing out on this revenue in future.

  The IPO

  Confident that Toy Story would be a success, Steve began pushing during late production for the company to do a public offering. John thought the idea crazy, thinking it would be better to wait until Pixar had two successful films under its belt. But Steve’s logic was that to better their deal with Disney, the company would have to put up half the production money for future films.

  To do that would take big money. Steve was at the lim
it of what he could contribute. Pixar needed to go public to get more capital to finance future pictures.

  In a high-risk gambit, Steve timed the IPO to debut the same week as Toy Story’s release. But with the film’s success, Pixar’s IPO was the largest of 1995, raising $140 million. With the IPO, Pixar changed its name to Pixar Animation Studios, signaling that its entire focus would be on animation going forward. With the IPO cash in hand, Pixar renegotiated its Disney deal, obtaining a 50 percent share of merchandising on future films.

  Where are they now?

  With each successive film, Pixar broke new ground in animation and it became known for developing moving, unique storylines that enthralled audiences. From animating hundreds of insects in huge crowd scenes for A Bug’s Life to creating animated fur in Monsters Inc., and realistic fabric and human hair for The Incredibles, Pixar’s team kept advancing the standard. Pixar films have won six Best Animated Feature Oscars®.

  Pixar’s deal with Disney had been extended through the years but was coming to an end in 1995, prompting a re-evaluation of whether the studio was the right partner going forward. A rift had emerged between the two: Disney wasn’t willing to accept Toy Story 3 as one of the movies Pixar owed under their contract, preferring an original feature rather than a sequel. Disney also announced it would make sequels of all Pixar films, with or without Pixar’s participation. In 2004, the two broke off renegotiation talks.

  The impasse played a role in another management upheaval at Disney. Then-CEO Michael Eisner was ousted in favor of Bob Iger. Iger wanted Pixar back in the fold, and made a new offer: to buy Pixar outright.

  In 2006, Disney acquired Pixar for $7.5 billion in stock. The move returned John to Disney at last as chief creative officer for both Walt Disney and Pixar Animation Studios, and Ed now serves as president of both Walt Disney and Pixar Animation Studios.