ColdFusion - How Steve Jobs Rescued Pixar from Financial Collapse

Starting point is 00:00:00 Hi, welcome to another Cold Fusion video. This video is an extract from my book New Thinking, the story about the people who built the world around us. Today, we all know Pixar as the king of animated film, but what many people may not realize is that while they were trying to make the original toy story, they almost went bankrupt. Let's see how it happened. Pixar began in 1979 as the graphics group's subsidiary of the the Lucas Film Computer Division. This graphics group was headed by Edwin Catmel of the New York

Starting point is 00:00:43 Institute of Technology. The graphics group wanted to make a computer animated feature film. From 1979 they attempted to produce such a film for an early 1980s release. The project was titled The Works and it was to be 90 minutes long, but it would never be. The computers of the time were too slow and underpowered to create a feature-length film. During the process, one of the team members calculated the amount of time it would take to render the frames needed for the film. It would take seven years. Despite more powerful hardware becoming available, the film was eventually abandoned in 1986. The works would have been the first entirely 3D computer-generated film had it been finished as intended. By the time it was abandoned, just over one-tenth

Starting point is 00:01:30 of the film had been completed. In the same year in 1986, the Lucasfilm graphics group would spin out of Lucasfilm as Pixar, a standalone corporation with Edward Kattmills president. To fix the problem with the slow computers, the Pixar team decided to work on their own computer hardware. The result was the Image Pixar computer at a price of $220,000. This is Image Computing. The Pixar family of Image Computers consists of the original Pixar Image Computer, the new lower priced Pixar 2 and includes a C compiler and software toolkits for developing specific applications. Pixar's image computers are being used in medical imaging, remote sensing, graphic arts including 3D design and animation, and scientific visualization.

Starting point is 00:02:30 It was powerful for the time, around 50 times faster than conventional equipment. A scene that would traditionally take around 15 minutes to render was shortened to about 18 seconds. Each frame was computed in 8 to 10 minutes on the Pixar Image computer, roughly 50 times faster than mini-computer rendering speeds. As exciting as all of this was, the fledgling Pixar needed investment money. Steve Jobs, CEO of Next Computers, had just left Apple, and he liked the idea of combining art and technology. He would invest $10 million into the new company. From this transaction, Jobs became a majority shareholder acquiring 70% ownership. Despite the change in ownership dynamics, Pixar's ultimate goal was still the same,

Starting point is 00:03:21 to create a fully computer-generated, animated film. Walt Disney Studios subsequently bought a few Pixar-image computers and custom software written by Pixar. Disney wanted the technology to be part of their computer animation production system, or CAPS. With Caps, the painstaking and inking of 2D animation was now computer. assisted, saving effort and money. The first film to use Caps would be the rescuers down under in 1990. It was the first feature film to be 100% assisted by computers. Aladdin in 1992 and the Lion King in 1994 would both use the Capp system.

Starting point is 00:03:57 It would be used up until Pocahontas in 1995. With the limited clientele of Disney for Caps, the computer sales were lackluster for Pixar. Realizing that financial trouble was coming, Jobs suggested to release the Peechonels Pixar Image Computer to markets which would be interested, engineers, geologists and the medical field. To get this underway, Pixar employee John Lassiter went to work creating short, completely CGI demonstrations to show off the Pixar Image Computer's technology. The demos included Junior, the Pixar lamp in 1986 and Tin Toy in 1988. Lassiter, who had been obsessed with toys from childhood, had a knack for injecting inanimate

Starting point is 00:04:38 objects with personality and character. without ever having them talk. This was the critical essence for early Pixar films. It took us a long time to build the technical foundation to do this stuff. We were pioneering every step. The way Pixar invented all this stuff. But as John says, we don't view ourselves as a technology company. Our product is content.

Starting point is 00:04:59 We're an entertainment company. And all this technology really is just in the service of the storytelling, the service of the creative people. And computer animation is even a little bit of a misnomer. The computers don't do the animation. They do the drawing. and they crank on these drawings for like, you know, three hours by one of the fastest computers in the world, which is why the drawings are three-dimensional.

Starting point is 00:05:19 But the animators act. You know, I've watched John and his teamwork, and they're the heart and soul of the characters. They do all the acting, not the computers. The short CGI animated films caused Disney to realize the full potential in this kind of filmmaking. In an ironic twist, John Lasseter had originally been fired from Disney for pitching a fully CGI film. This was after he was shown Trun by two work colleagues. After seeing Junior, the Pixar lamp and the other short CGI films, Disney now wanted John Lasseter back.

Starting point is 00:05:49 Defiant, John chose to stay at Pixar. He would tell Edward Catmell, quote, I can go to Disney and be a director, or I can stay here and make history." Despite groundbreaking demonstration films, the Pixar Image Computer never sold well. In fact, only 300 computers were ever sold. Pixar tried making CGI TV commercials and selling software for Windows and Macintosh, but it wasn't enough. The inadequate sales threatened to put Pixar itself out of business, and financial losses grew.

Starting point is 00:06:24 Jobs poured more and more money into the project in exchange for an increased stake in the company. His total investment was approaching $50 million. This gave him control of the entire company, but almost drove him into personal bankruptcy. Pixar was still struggling and eventually had to sell off their computer hardware business lay off staff. It looked like it was going to be the end for Pixar, but they had an unexpected saviour. Luckily, by 1991 Moore's Law meant that animation-grade computers were finally just powerful enough to create and render a complete animated feature film and not just a small demonstration. Disney, who now realized that they couldn't get Pixar employee John Lasseter

Starting point is 00:07:04 back, decided to strike a deal with Pixar instead. It was a historic $26 million deal to produce three computer animated feature films, the first of which was Toy Story. Without this contract, Pixar probably would have closed its doors a few years later. Pixar got to work on Toy Story with John Lassiter as the director and Steve Jobs as the executive producer. The first 30-second test would be delivered to Disney in 1992 and the initial preview impressed Disney. All did not remain well though. The collaboration between the two companies became tense as Disney executives continuously scrapped script ideas brought forward by Pixar. For example, Disney casts Woody as an edgy, tyrannical jerk, as Tim Allen would remark,

Starting point is 00:07:53 while recording the voice of the character. At the halfway point of production in 1993, with heads and ideas clashing, a preview screening of Toy Story was shown to the upper management of Disney. It was a disaster. Upper management absolutely hated it, and indeed, so did John Lasseter. As Lasseter put it, the movie was a story filled with the most unhappy, mean characters I've ever seen. The movie production was shut down immediately

Starting point is 00:08:18 and it seemed like the dream of a CGI feature film would never come to pass. But Lasseter didn't give up. He told Disney that he would revise the script in just two weeks. He somehow delivered and the result was good enough for production to resume in 1994. For context, it's important to note that the production of such a film using early 90s technology

Starting point is 00:08:42 was no easy task. Each frame took between 45 minutes to 30 hours to render. This depended on the complexity and detail within the scenes. Every eight seconds of film in which a character was speaking took the animators a week to complete. Every shot would pass through eight teams and 300 computer processes running 24 hours a day. But disaster was still looming. Despite receiving funding, Pixar continued to lose money. The Pixar Image computers had been a failure, and there was a way.

Starting point is 00:09:14 there wasn't enough income coming from software and CGI TV commercials to offset the cost of the Toy Story project. Steve Jobs as chairman of the board and now as full owner was getting nervous. And who wouldn't be after spending $50 million of their own money on a seemingly failing project? Even as late as 1994, Jobs contemplated selling Pixar to Holmike cards and also Microsoft co-founder Paul Allen. Luckily, this sentiment would change as the film neared completion. As the beautiful computer-generated world of Toy Story began to take shape, Jobs marveled at what he saw and realized that Pixar would be historic after all. Toy Story represents the computer graphics community contributing not just special effects

Starting point is 00:10:02 to a motion picture, but the entire motion picture itself. It's a breakthrough on the scale of technicolor, snow white, and Star Wars. And I think that that is an achievement that many people in this room should take proud ownership in. Toy Story went on to gross more than $373 million worldwide. When Pixar held its initial public offering on November 29, 1995, it exceeded Netscape as the biggest IPO of 1995. And I'm sure when you saw Toy Story for the first time, you were just as blown away as I was. The film looked more realistic than any computer-generated imagery I had seen before.

Starting point is 00:10:41 leaf, every small detail was spot on. It captured my imagination and the imagination of a whole industry. Toy Story inspired video games, theme park attractions, merchandise, and three sequels. Toy Story made toys cool again for the 90s, and there was no doubt that Toy Story single-handedly saved Pixar. And the rest was history. Pixar went on to produce hits like a bug's life, the Monsters Inc series, the Finding Nemo series, The Incredible series, Wally, cars, and the list goes on. In 2006, they would be purchased by Disney for $7.4 billion. At the time, it made Steve Jobs the largest shareholder in Disney.

Starting point is 00:11:25 Pixar is now a beloved brand in the film industry, and their latest film, Toy Story 4, is still melting hearts. But after seeing all of this, it's strange to think that they were so very close to failing. I wonder how the computer animation industry would look today if Pixar went out of business all of those years ago. If you want to know about more amazing stories and the history of humanity in the context of science and technology,

Starting point is 00:11:50 and you want to learn about those people and teams who built the world around us and invented the things we use each and every day and just how all of this links together, definitely check out my book New Thinking. I've been so honored to have people reach out to me and just tell me how much they've learned and how much it's impacted their way of looking at the world.

Starting point is 00:12:08 So that wraps it up for this video. Thanks for watching. If you want to see stuff like this and much more, feel free to subscribe to this channel. Also, feel free to check out the Cold Fusion podcast. Anyway, this has been to Go-Go-Go, and you've been watching Cold Fusion, and I'll catch you again soon for the next video. Cheers, guys. Have a good one. Cold Fusion, it's new thinking.

ColdFusion - How Steve Jobs Rescued Pixar from Financial Collapse

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