Founders - #34 Creativity Inc: The Autobiography of the founder of Pixar

Episode Date: August 20, 2018

What I learned from reading Creativity Inc: Overcoming The Unseen Forces That Stand In The Way of True Inspiration by Ed Catmull. ---Lead with a light touch (18:59)Anchor yourself with your why (23:35)Bet on yourself (39:54)Decentralize problem-solving (52:56)People are more important than ideas (1:00:45)Analyze ways to improve your process after a project is complete (1:24:10)Keep a startup mentality (1:26:36) ----Founders Notes gives you the ability to tap into the collective knowledge of history's greatest entrepreneurs on demand. Use it to supplement the decisions you make in your work.  Get access to Founders Notes here. ----“I have listened to every episode released and look forward to every episode that comes out. The only criticism I would have is that after each podcast I usually want to buy the book because I am interested so my poor wallet suffers. ” — GarethBe like Gareth. Buy a book: All the books featured on Founders Podcast

I've said it before, but it bears repeating. Things change constantly, as they should. And with change comes the need for adaptation, for fresh thinking, and sometimes for even a total reboot of your project, your department, your division, or your company as a whole. In times of change, we need support from our families and our colleagues. I'm reminded here of a letter written by one of our animators, Austin Madison, which I found particularly uplifting. To whom it may inspire, Austin wrote,

I, like many of you artists out there, constantly shift between two states. The first, and far more preferable of the two, is white hot, in the zone, seat of the pants, firing on all cylinders, creative mode. This is when you lay your pen down and the ideas pour out of you like wine from a royal chalice. This happens about 3% of the time.

The other 97% of the time, I am in the frustrated, struggling, office corner full of crumpled up paper mode. The important thing is to slog diligently through this quagmire of discouragement and despair. Put on some audio commentary and listen to the stories of professionals who've been making films for decades going through the same slings and arrows

of outrageous production problems. In a word, persist. Persist on telling your story. story persist on reaching your audience persist on staying true to your vision i couldn't have put it any better my goal has never been to tell people how pixar and disney figured it all out but rather to show how we continue to figure it out every hour of every day how we persist the future is not a destination it is a direction the truth is as challenges emerge mistakes will always be made and our work is never done we will have problems many of which are hidden from our view we must work to uncover them and assess our own role in them,

even if doing so means making ourselves uncomfortable. When we come across a problem, we must marshal all of our energies to solve it. If those assertions sound familiar, that's because I used them to kick off this book. There's something else that bears repeating here. Unleashing creativity requires that we loosen the controls, accept risk, trust our colleagues, work to clear the path for them, and pay attention to anything that creates fear. Doing all of these things won't necessarily make the job of managing a creative culture easier, but ease isn't the goal. Excellence is. Okay, so that was from the end of the book that I want to talk to you about.

And that is Creativity, Inc., Overcoming the Unseen Forces that Stand in the Way of True Inspiration. And it's written by one of the co-founders of the company Pixar. So I'm going to go back to the beginning of the book and move through in a chronological order, as always hitting the highlights and the ideas that stuck out to me. And hopefully you find these ideas useful in your day-to-day as well. So I want to first talk, so I guess I should start here. Most of you know, especially if you've listened to all of my past podcasts, that Steve Jobs was one of the co-founders of Pixar. And as such, Ed learned a lot from Steve.

And we're going to cover a lot of the lessons that Ed picked up from Steve. I've read Steve Jobs by Walter Isaacson, and I also read Becoming Steve Jobs. And there's a few more books that I'll eventually, that talk about the life of Steve Jobs that I'll cover in future Founders episodes. But I have to say, even after reading those other two books,

there's a lot of Steve Jobs stories in here that I haven't heard anywhere else. Okay, so this is from the introduction of the book. This is the working environment at Pixarar and what ed thinks makes pixar successful i am struck by the unique culture that defines this place although i've made this walk thousands of times it never gets old pixar's 15 acre campus was designed inside and out by Steve Jobs. It has well-thought-out patterns of entry and egress that encourage people to mingle, meet, and communicate. Steve wanted the building to support our work by enhancing our ability to collaborate. The animators who work here are encouraged to decorate their workspaces in whatever style they wish.

They spend their days inside pink dollhouses whose ceilings are hung with miniature chandeliers, tiki huts made of real bamboo, and castles whose meticulously painted 15 high styrofoam turrets appear to be carved from stone. The point is, we value self-expression here. This tends to make a big impression on visitors who often tell me that the experience of walking into Pixar leaves them feeling a little wistful, like something is missing in their work lives. A palpable energy, a feeling of collaboration and unfettered creativity, a sense, not to be corny, of possibility. And I think by reading this book, we may never visit Pixar, but we're going to be able to learn a lot of the ideas from this book that maybe can apply to things that we feel is missing our own work environment.

But Ed's getting to his point here. But that's not what makes Pixar special. What makes Pixar special is that we acknowledge we will always have problems, many of them hidden So at the very introduction to this podcast, you kind of heard a mirror of that, something that's very important to him. And what I like about Ed is he'll repeat ideas over and over again. And it's not monotonous in any way. He's trying to, in my opinion, hit home why it's important from many different angles. So I think after reading the book in full, you have a much better understanding of why that's expected or why

that's important to him rather. So a few pages later, the next note I have is the unexpected melancholy of reaching a goal. So what we're going to do here is we're in the introduction, it's taking place arguably in present day, and then we're going to go through flashbacks. But the whole point of writing this book is because of this melancholy, the unexpected melancholy taking place arguably in present day and then we're going to go through flashbacks but the whole point of writing this book is because of this melancholy the unexpected melancholy of reaching one of his lifetime goals so i want to explain that to you because it's fascinating and i think all of us it's like uh all of us it's like part of human nature i think all of us can experience this so he even though the our goals might be different the feelings are probably

very similar the making of toy story the first feature film to be animated entirely on a computer had required every ounce of our tenacity artistry technical wizard wizardry and endurance the hundred or so men and women who produced it had weathered countless ups and downs as well as the ever-present hair-raising knowledge that our survival depended on this 80 minute experiment for five straight years we fought to do toy story our way we resisted the advice of disney executives who believed that since they had such success with musicals we should fill our fill we should fill our movie with songs we rebu we rebooted the story completely more than once to make sure it rang true. Despite being novice filmmakers at a fledgling studio in dire financial straits, we had put our

faith in a simple idea. And I love this part. If we made something that we wanted to see, others would want to see it too. For so long, it felt like we had been pushing that rock up the hill, trying to do the impossible." Skipping ahead a little bit, Toy Story went on to become the top grossing film of the year and would earn $358 million worldwide. But it wasn't just the numbers that made us proud. Money, after all, is just one measure of a thriving company, and usually not the most meaningful one. No, what we found gratifying was what we had created. Review after review focused on the film's moving plotline and its rich three-dimensional characters, only briefly mentioning that it had been made on a computer.

While there was so much innovation that enabled our work, we had not let the technology overwhelm our real purpose, making a great film. And now here he's getting to why, well, there's kind of a paradox inherent in all this. On a personal level, Toy Story represented the fulfillment of a goal I had pursued for more than two decades and had dreamed about since I was a little boy. Growing up in the 1950s, I had yearned to be a Disney animator, but had no idea how to go about

it. Intrinsically, I realize now I embrace computer graphics, then a new field, as a means of pursuing that dream. If I couldn't animate by hand, there had to be another way. In graduate school, I had quietly set a goal of making the first computer animated feature film, and I worked tirelessly for 20 years to accomplish it. Now that the goal that had been a driving force in my life had been had been reached there was an enormous sense of relief and exhilaration at least at first everything was going our way and yet i felt adrift in fulfilling a goal i had lost some essential framework is this really what i want to do? I began asking myself. The doubts surprised and confused me, and I kept them to myself. I couldn't deny that achieving the goal that had defined my

professional life had left me without one. Is this all there is? I wondered. Is it time for a new challenge? There was plenty to occupy my working hours, but my internal sense of purpose, the thing that had led me to sleep on the floor of the computer lab in graduate school just to get a few more hours on the mainframe, that kept me awake at night as a kid solving puzzles, had gone missing. I had spent two decades building a train and laying its track. Now the thought of merely driving it struck me as a far less interesting task. Was making one film after another enough to engage me, I wondered?

What would be my organizing principle now? I'm going to continue, but this whole idea, I love the way he puts it, the idea of having an organizing principle around your life. And like I said, I do believe that it's fundamental to human nature. I believe that that's why most of us, if we just sit around and do nothing, are deeply, deeply unhappy. I think the human species is one of builders, and I think we need a purpose, which is why I think it's so important to invest in your work because it's going to take up so much of your life. So he finishes this paragraph right here says i would take a full year to for the answer to emerge um so we're gonna get to his answer in a minute um but there's something that happens in the book that i want to uh that i want to first talk about, and then we'll get his answer,

and the entire reason he wrote this book. So this is an intro to George Lucas and how Ed finds his next challenge. As I think everybody knows, George Lucas is the creator of Star Wars, and Ed worked for him at one time. And we're going to talk a lot about George in this podcast, actually. I couldn't have arrived at a more dynamic and volatile time. So he's talking about, again, we're talking present day. He's reflecting, but the timeline is going to jump around.

So at this point, George hires him to work for him in 1979. And he's talking about how dynamic this Northern California region is at the time. And he says, I couldn't have arrived at a more dynamic and volatile time. I watched as many startups burned bright with success and then flamed out. My mandate at Lucasfilm to merge moviemaking with technology meant that I rubbed shoulders with the leaders of places like Sun Microsystems and Silicon Graphics, several of whom I came to know. I was first and foremost a scientist then, not a manager. So I watched these guys closely, hoping to learn from the trajectories their companies followed. Gradually, a pattern began to emerge. Someone had a creative idea, obtained funding, brought on a lot of smart people, and developed and sold

a product that got a boatload of attention. That initial success begat more success, luring the best engineers and attracting customers who had interesting and high-profile problems to solve. As these companies grew, much was written about their paradigm shifting approaches and when their ceos inevitably landed on the cover of fortune magazine they were heralded as the titans of the new i especially remember the confidence the leaders of these companies radiated supreme confidence surely they could only only reach this apex by being very, very good. But then those companies did something stupid. Not just stupid in retrospect, but obvious at the time stupid. I wanted to understand why. What was causing smart people

to make decisions that sent their companies off the rails. I didn't doubt that they believed they were doing the right thing, but something was blinding them. Something was keeping them from seeing the problems that threatened to upend them. As a result, their companies expanded like bubbles, then burst. What interested me was not that the companies rose and fell or that the landscape continually shifted as technology changed, but that the leaders of these companies seemed so focused on the competition that they never developed any deep introspection about other destructive forces that were at work. Over the years, as Pixar struggled to find its way, first selling hardware, then software, then making animated short films and advertisements i asked myself if pixar

is ever successful will we do something stupid too can play can paying careful attention to the missteps of others help us be more alert to our own or is there something about becoming a leader that makes you blind to the things that threaten the well-being of your enterprise in the difficult year after toy story's, this is where he's going to find his challenge, I came to realize that trying to solve this mystery would be my next challenge. My desire to protect Pixar from the forces that ruined so many businesses gave me renewed focus. I began to see my role as a leader more clearly. I would devote myself to learning how to build not just a successful company, but a sustainable creative culture. Hence the title of the book, Creativity, Inc.

Okay, so now, as with every biography, I want to spend a little bit of time talking about their youth. And not into too much detail but this is a what strikes me is almost every single one of these stories that you you see examples of them being inspired by people that came before them and uh i would call this like the importance of having idols so it says this is now ed talking walt disney was one of my two boyhood idols the other was albert einstein to me even at a young age they represented the two poles of creativity Walt Disney was one of my two boyhood idols. The other was Albert Einstein. To me, even at a young age, they represented the two poles of creativity. Disney was all about inventing the new.

He brought things into being, both artistically and technologically, that did not exist before. Einstein, by contrast, was a master of explaining that which already was. I read every Einstein biography I could get my hands on, as well as the little book he wrote on his theory of relativity. I loved how the concepts he developed forced people to change their approach to physics and matter, to view the universe from a different perspective. Wild-haired and iconic, Einstein dared to bend the implications of what we thought we knew. He solved the biggest puzzles of all, and in doing so, changed our understanding of reality. Both Einstein and Disney inspired me,

but Disney affected me more because of his weekly visits to my family's living room. So they're talking about this show that Disney used to host, which I actually don't remember the name of, but I guess it's not important. Here's the lesson. I guess this is the more important thing to focus on. Watching Disney one Sunday evening in April of 1956,

I experienced something that would define my professional life. What exactly it was is difficult to describe except to say that I felt something fall into place inside my head. That night's episode was called Where Do the Stories Come From? And Disney kicked it off by praising his animator's knack for turning everyday occurrences into cartoons. That night though, it wasn't Disney's explanation that pulled me in, but what was happening on the screen as he spoke. An artist was drawing Donald Duck.

As the artist's pencil moved around the page, Donald came to life. Putting up his dukes to square off with the pencil lead, then raising his chin to allow the artist to give him a bow tie. The definition of superb animation is that each character on the screen makes you believe it is a thinking being. Whether it's a T-Rex or a slinky dog or a desk lamp, if viewers sense not just movement but intention, or put another way, emotion, then the animator has done his or her job. This is what I experienced that night for the first time as I watched Donald leap off the page. The transformation from a static line drawing to a fully dimensional animated image was a sleight of hand, nothing more.

But the mystery of how it was done, not just the technical process, but the way the art had imbued with such emotion, was the most interesting problem I'd ever considered. I wanted to climb through the TV screen and be part of this world. Okay, so it's right then and there that he decides, hey, I'm going to become an animator. I want to do this. So that's when he was a young boy. Later on, he tries to draw. He realizes he's not very good at it. So he winds up going to college. He gets two degrees, one in computer science and one in physics. And he initially said, okay, maybe I'll just learn how to design computer languages. But he goes to graduate school

at the University of Utah. And he winds up being a student of one of the pioneers of interactive computer graphics, this guy named Ivan Sutherland. And on the very next page, he's describing the environment. And so when I was highlighting this, it just made me think of something I kind of say a lot. It's like, listen, collecting ideas is useful because you never know when you might use them. And he's going to experience things and ideas in grad school that he winds up applying in his career almost 20 years later. So he's talking about the people that are running the department and Sutherland and this guy named Dave Evidence, who was the chair of the university's computer science department. They were magnets for bright

students with diverse interests. And they led us with a light touch. This is actually extremely important, this idea of a light touch. Basically, they welcomed us to the program, gave us workspace and access to the computers, and then let us pursue whatever turned us on. The result was a collaborative, supportive community, so inspiring that would later seek to replicate it at Pixar. One of my classmates, Jim Clark, would go on to found Silicon Graphics and Netscape. So you guys probably know who that is

because I did a podcast on him based on Michael Lewis's great book about him, The New New Thing. But if not, I would definitely recommend listening to the podcast and reading the book because he's a giant personality and very interesting. Another, John Warnock, would co-found Adobe. Skipping ahead, Alan Kay would lead on a number of fronts,

from object-oriented programming to windowing graphical user interfaces. In many respects, my fellow students were the most inspirational part of my university experience. This collegial collaborative environment was vital not just to my enjoyment of the program, but also to the quality of the work I did. This tension between the individual's personal creative contribution and the leverage of the group is a dynamic that exists in all creative environments. In creative environment,

I would just substitute the word company there. But this would be my first taste of it. On one end of the spectrum, I noticed we had the genius who seemed to do amazing work on his or her own. And on the other end, we had the group that excelled precisely because of the multiplicity of views.

How then should we balance these two extremes, I wondered. I didn't yet have a good mental model that would help me answer that, but I was developing a fierce desire to find one. And what's interesting at this point, I'm going to skip ahead, but I just want to give you a little summary here. So I think, well, just in case you don't know, I think a lot of you guys probably already know this, but the beginning of the internet was something called the ARPANET, which was started by ARPA, which is now DARPA. So one of the first four nodes on the ARPANET actually was located at the school he's at at this time, the University of Utah. And so he's talking about being able to see the

birth of the internet up close. And the lesson that he took away with it was that you need to trust your team to innovate. And he said, I had a ringside seat from which to observe this grand experiment. And what I saw influenced me profoundly. ARPA's mandate to support smart people in a variety of areas was carried out based on the unwavering presumption that researchers would try to do the right thing. And in ARPA's view, over-managing them was counterproductive. I want to read that again because I think that's so huge. If you have a group of smart people, or if you're one of them yourself, which you probably are if you're listening to this, then you know this.

Maybe know is the wrong word. You feel this. I think that's the best way. But overmanaging them was counterproductive. ARPA's administrators did not hover over the shoulders of those of us working on the projects they funded, nor did they demand that our work have direct military applications. They simply trusted us to innovate. And then what's the result when you do so? That kind of trust gave me freedom to tackle all sorts of complex problems, and I did so with gusto.

Okay, so the people he's working at in graduate school with, as you've heard, they were inventing all this new technology. He starts working with the idea, hey, maybe this is where that kernel comes from. Hey, I can't draw with my hand, but maybe I can develop new technology with computers and animate there. This is where he comes up with the idea of, hey, I'm just going to make – my goal in life is to make the first computer-generated animated movie. So they develop some technology, and they want to see if it can be used in the real world so he starts having meetings with other production houses and movie companies to see if they'll like use the technology and well disney's going to be one of the places he goes, obviously. And the note I left myself was you need to anchor yourself with why, with your why, and then focus. So really understand, I think what Ed had the benefit of having at a relatively young age, he knew his why. He knew what he wanted to do.

And so we're going to see something surprising here that he does. But later in the podcast, this comes up again and again again where he has an opportunity might sound good on the surface but he's like this is not in alignment with what i want to do my why so he he declined so um he's at a meeting with disney and they're just really dismissive this is in the 70s of uh of using you know using computers for animation i think the idea is ridiculous and of course it's easy for them to arrive at that conclusion because they've had great success for years drawing things by hand. So he said, they're like, listen, until computer animation can do this, then it has not arrived. They're not going to use it, et cetera. So he said, instead, they try to tempt me into taking

a job with what is now called Disney Imagineering, the division that designs the theme parks. Remember the context a few minutes ago, we talked about how he idolized Walt Disney. He was obsessed with the Disney company. So now they're like, they're offering him a job. It may sound odd given how large Walt Disney had always loomed in my life, but I turned the offer down without hesitation. The theme park job felt like a diversion

that would lead me down a path I didn't want to be on. I didn't want to design rides for a living. I wanted to animate with a computer. So his time at the University of Utah comes to an end and this is him reflecting on the lessons he learned. And so the note I have here is people is greater than ideas which means people are more important to ideas. It's just my shorthand for saying that. Therefore, the environment must be healthy. So this whole idea that people trumps ideas is something that Ed harps on in the book a lot and will appear in the podcast in other forms moving forward. But this is one of the first ways that he realizes that. And the reason he realizes it is because he credits the environment that Sutherland created at the University of Utah with being the, I guess, the genesis thated had taken hold largely because of the protective,

eclectic, intensely challenging environment I'd been in. The leaders of my department understood that to create a fertile laboratory, they had to assemble different kinds of thinkers and then encourage their autonomy. This whole thing about leaving them alone, don't overmanage, and leaving them autonomous is something he constantly does as Pixar. They had to offer feedback when needed, but also had to be willing to stand back and give us room. I felt instinctively that this kind of environment was rare and worth reaching for. Okay, so now we're getting into his start of his career. And he has the good fortune to work with what he calls working for three iconoclastic men with very different styles. Let me just read this part and then I'll explain why I include it.

So working for three iconoclastic men with very different styles would provide me with a crash course in leadership. In the next decade, I would learn much about what managers should and shouldn't do, about vision and delusion, about confidence and arrogance, and about what encourages creativity and what snuffs it out. So he kind of, it's kind of like what we're doing here, what we're trying to do here is in a way that we're trying to learn from not only what you should do, there's a lot of examples in all the books that we cover, but also what you shouldn't do. So in his case, he works for the first guy's named Alex. And Alex Schur, I think is his last name. The second person, the second iconoclast that he works for is George Lucas. And then of course, the third is when he partners with Steve Jobs. So this he's talking about, again, you're going to

see a lot of these themes that he just keeps learning over and over again. The importance of granting autonomy, hiring people that's smarter than you, and then having a relatively flat structure. So he goes to work for this guy, Alex, who's a multimillionaire and kind of a weirdo. And well, let's just get in there. This is a little background about Alex. Alex, who's a multimillionaire and kind of a weirdo. And, well, let's just get in there. This is a little background about Alex. Alex, a former college chancellor, had zero expertise in the field of computer science. At that time, that wasn't unusual, but Alex himself certainly was. He naively thought that computers would soon replace people,

and leading that charge was what excited him. We knew this was a misconception, if a common one at that point, but we were grateful for his eagerness to fund our work. He had a bizarre way of speaking that mixed bluster, non sequiturs, and even snippets of rhyming verse into a sort of Mad Hatter patois, or word salad, as one of my colleagues called it. This is an example here. This is Alex. Our vision will speed up time, eventually deleting it. I don't know what that means either.

Those of us who worked with him often had trouble understanding what he meant. Deluded, though, as he may have been about his own skills, Alex was a visionary. He was incredibly prescient about the role computers would someday play in animation, and he was willing to spend a lot of his own money to push that vision forward. His unwavering commitment to what many labeled a pipe dream, the melding of technology and this hand-drawn art form, enabled much groundbreaking work to be done. So that's what Alex is hiring Ed to do.

He's like, hey, I want you to start this department. I want to use computers to do animation. And I want you to basically run it. So he goes, once Alex brought me in, he left it to me to assemble a team. I have to give that to him. He had total confidence in the people he hired. This was something I admired and later sought to do myself. See, this whole theme keeps coming up and up.

Ed clearly does not waste his experience. He really tries to learn from everything. So one of the first people he hires is this really brilliant guy named Alvy Ray Smith, who winds up following him to Pixar. But the important part and why I'm including the podcast is because I think this lesson here is important. I had conflicting feelings when I met Alvy because, frankly, he seemed more qualified to lead the lab than I was. I can still remember the uneasiness in my gut, that instinctual twinge spurred by a potential threat. This, I thought, could be the guy who takes my job one day. I hired him anyway.

To ensure that it succeeded, I needed to attract the sharpest minds. To attract the sharpest minds, I needed to put my own insecurities away. The lessons of ARPA had lodged in my brain. When faced with a challenge, get smarter. What he's talking about there is when the Soviets beat the Americans to get to space first.

There was certainly a sense of urgency, but there wasn't a sense of despair. They're just like, okay, well, we just got to get smarter and we'll solve this problem too. So now he's talking about he's creating his first division in this company. He says, I put together a hierarchical structure, assigning a bunch of managers to report to me. Or excuse me, if I had put, I would have to spend too much time managing and not enough time on my own work. This structure in which I entrusted everybody to drive their own projects forward at their own pace had its limits. But the fact is, giving a ton of freedom to highly self-motivated people enabled us to make some significant technological leaps

in a short amount of time. Skipping ahead, this is going to be the transition to the Iconoclast number two. And it says, he realizes the limits. So again, he's really angered by his why. And I would also say the experience he has here reminds me of what we learned in the podcast on Peter Thiel, that all of today's conventional wisdom used to be a secret. So the paragraph I'm going to read you in a minute is kind of crazy when we think about it today, but this is happening in the end of the

70s. So for all the good work we were doing, however, I found myself in a quandary. Thanks to Alex, we were fortunate to have the funds to buy the equipment and hire the people necessary to innovate in the world of computer animation, but we didn't have anyone who knew anything about filmmaking. What he's discovering there is, yeah, they can animate stuff but uh just animating without the benefit of storytelling falls flat so he said we began making quiet overtures to disney and other studios trying to gauge their interest in investing in our tools if we had found an interested suitor alvy and i were prepared to leave and move our team to los angeles to partner with proven filmmakers and storytellers.

So instead of being filmmakers and storytellers themselves, they're like, OK, we'll have the technology. We'll we'll join up with some some people that already do storyteller, you know, peanut butter jelly. It's going to work. And but this is what happens. But it was not to be one by one. They demurred. It's hard to imagine now but in 1976 the idea of incorporating high technology into hollywood filmmaking wasn't just a low priority it wasn't even on the radar but one man was about to change that with a movie called star wars so now we're transitioning um he's going to meet george lucas and we're going to pick up some lessons on running companies from him. This part is about Lucas being relentlessly practical. And this is when he meets George. He goes, he and I seem pretty similar, skinny and bearded in our early 30s. We both wore glasses,

work with a blinders on intensity and had a tendency to talk only when we had something to say. But what struck me immediately was George's relentless practicality. He wasn't some hobbyist trying to bring technology into filmmaking for the heck of it. His interest in computers began and ended with their potential to add value to the filmmaking process. And he's going to describe the physical environment that he's working in. And all I could think about is, you know the animals that have evolved in strange ways in relative isolation in the Galapagos Islands? I feel George kind of had some of that going on. George had his own version of the Galapagos Islands.

And it says, Lucasfilm was based in Marin County, one hour north of Silicon Valley by car and one hour from Hollywood by plane. This was no accident. George saw himself first and foremost as a filmmaker, so Silicon Valley wasn't for him. But he also had no desire to be close to Los Angeles because he thought there was something a bit unseemly and inbred about it. Thus, he created his own island, a community that embraced films and computers, but pledged allegiance to neither of the prevailing cultures that define those businesses. The resulting environment felt as protected as an academic institution, an idea that would stay with me and help shape what I would later try to build at Pixar. Experimentation was highly valued, but with the urgency of a for-profit enterprise was definitely in the air.

In other words, we felt like we were solving problems for a reason. There's so many good stories about George in this book. You know how I always say that saying that I picked up somewhere, it's like books are the original links. Lead you from one idea to the other, just like the modern web does today. It caused me to find and start reading a biography on George Lucas. So this book is actually leading me to my next podcast. So next week's podcast will be about George Lucas. Okay, so now we're going to get to the first iteration of Pixar.

There's multiple ones. So this is the very first product they make. Alvy's team set out to design a highly – they get hired by George Lucas, and this is what he's hiring them to do. Alvy's team set out to design a highly specialized standalone computer that had the resolution and processing power to scan film, combine special effects images with live action footage, and then record the final result back onto film. It took us roughly four years, but our engineers built just a device,

which we named the Pixar Image Computer. So they start making all these great tools that Lucasfilm can make, and they run into an extremely important lesson for entrepreneurs. That is, when designing products and services, you have to understand humans' resistance to change. So it says, They were perfectly happy with the system they had already mastered, which involved actually cutting film into snippets with razor blades and then pasting them back together. They couldn't have been less interested in making changes that would slow them down in the short term. They took comfort in their familiar ways and change meant being uncomfortable. so this is now what I love because I think George is fundamentally an entrepreneur because this is all this is some of the lessons that that Ed learns from George and the reason I say and then George's analogies for building companies but the reason I say that at a fundamental level George is a filmmaker but he's an entrepreneur because he. But the reason I say that at a fundamental level, George is a filmmaker, but he's an entrepreneur

because he bets on himself. And I think that's what every entrepreneur does. If not, you would just go get a job. You know, you're by explicit in your desire to start a company is the idea that the market for your skills is fundamentally mispriced. Because if you thought that you were better, like if you thought your talents and skills could be rewarded in a company instead of needing to start your own company, then you just go work for somebody else.

Entrepreneurs just basically reject that. They're like, nope, I know what I want to do and I'm going to go do it myself. So this is Ed ed talking I remember going home late at night exhausted feelings feeling like I was balancing on the backs of a herd of horses only some of the horses were thoroughbred some were completely wild and some were ponies who were struggling to keep up I found it hard enough to hold on let alone steer simply put managing was hard no one took me aside to give me tips the books I'd read that promised insight on the topic were mostly devoid of content. So he just starts picking up managing and general business books and realizes that they're essentially paperweights. So I looked at George to see how he did it. I saw that his way seemed to reflect some of the philosophy he had put into Yoda. Just as Yoda said things like, do or do not, there is no try,

George had a fondness for folksy analogies that sought to describe, neatly, the mess of life. He would compare the often arduous process of developing his 4,700-acre Skywalker Ranch compound to a ship going downriver that had been cut in half and whose captain had been thrown overboard. We're still going to get there, he would say. Grab the paddles and let's keep going. Another of his favorite analogies was that building a company was like being on a wagon train headed west. On the long journey to the land of plenty, the pioneers would be full of purpose and united by the goal of reaching their destination. But once they arrived, he'd say, people would come and go,

and that was as it should be. But the process of moving towards something, of having not yet arrived, was what he idealized. Whether evoking wagons or ships, George thought in terms of a long view. This is so important. He believed in the future and his ability to shape it. The story had been told

and retold about how as a young filmmaker in the wake of american graffiti success this is a film he used he worked on before star wars he was advised to demand a higher higher salary on his next movie star wars that would be the expected move in hollywood bump up your quotes not for george though he skipped the rays altogether and asked instead to ret this is so important and asked instead to retain ownership of licensing and merchandising rights to star wars the studio that was distributing the film 20th century fox readily agreed to his request thinking it was not giving up much. George would prove them wrong setting the stage for major changes in the industry he loved. He bet on himself and won. So a few pages later we're introduced to another character in the

story named John Lasseter, who comes extremely important. He's the trilogy in Pixar. So it's Steve Jobs, John Lasseter, and Ed that are basically running it. So let's just touch on John a little bit. It says, John was a born dreamer. As a boy, he lived mostly in his head and in the treehouses and tunnels and spaceships he drew in his sketchbook. And this is another example of the importance of idols. Like me, John remembered discovering that there were people who made animation for a living and thinking he had found his place in the world. For him, as me, that realization was Disney-related.

It came when he stumbled upon a well-worn copy of The Art of of animation Bob Thomas's history of the Disney Studios in his high school library Bob Thomas also wrote a biography on Walt Disney that I have sitting on my nightstand and will eventually be a future episode of founders okay so now we need to transition to Icona class number three and George Lucas in the early 80s is going through a divorce. So he's got to sell Pixar. George hadn't lost an ounce of his ambition, but the new financial realities meant that he had to streamline his business. At the same time, I was coming to the realization that while we in the computer division wanted more than anything

to make an animated feature film, George didn't share our dream. He had always been most interested in what computers could do to enhance live action films. For a while, our goals, though disparate, had overlapped and pushed each other forward. But now, under pressure to consolidate his investments, George decided to sell us. So I want to talk a little bit about the numbers that, anytime I find them in books that I think are pertinent to these ideas, I want to include the numbers because it's all things that we all want to do, but it's all centered in financial reality that businesses have to make a profit or they'll cease to exist. So Lucasfilm wanted to walk away from the deal, meaning the sale of Pixar, with $15 million in cash. But there was a hitch.

Our computer division came with a business plan that required an additional infusion of $15 million to take us from prototype to product and ensure that we'd be able to stand on our own. So they need $ 30 million, really. This structure did not sit well with the venture capitalists they hoped would buy us, who didn't typically make such significant cash commitments when they acquired companies. We were shopped to 20 prospective buyers, none of whom bit. So in February of 1985, Steve Jobs comes calling. And this is the account of their first meeting with Steve and one of many just freaking hilarious Steve Jobs stories that are in this book that I'm going to include a lot of them. We met in a conference room with a whiteboard and a large table surrounded by chairs. Not that Steve stayed seated for very long. Within minutes, he was standing on a

whiteboard drawing us a chart of apple's revenues i remember his assertiveness there was no small talk instead there were questions lots of questions what do you want steve asked where are you heading what are your long-term goals he used the phrase insanely great products to explain what he believed in. Clearly, he was the sort of person who didn't let presentations happen to him, and it wasn't long before he was talking about making a deal. To be honest, I was uneasy about Steve. He had a forceful personality, whereas I do not, and I felt threatened by him. For all of my talk about the importance of surrounding

myself with people smarter than myself, his intensity was at such a different level. I didn't know how to interpret it. This is a great illustration. It put me in the mind of an ad campaign that the Maxwell Cassette Tape Company released around this time, featuring what would become an iconic image. a guy sitting low in a leather chair, his long hair being literally blown back by the sound from the stereophonic speaker in front of him. That's what it was like to be with Steve. He was the speaker.

Everyone else was the guy. So Steve talks about making a deal. He said, for nearly two months after that initial meeting, we had heard nothing, total silence. So I'm going to, and the reason they realize what happens in the interim, and it's Steve's forced out of Apple. He tried to do a coup to overthrow John Scully, and they remove him. So he disappears and then he comes back into, a few months later he comes back and he's visiting Lucasfilm now. He came to Lucasfilm one afternoon

for a tour of our hardware lab again. He pushed and prodded and poked. What can the Pixar image computer do that other machines on the market can't? Who do you envision using it? What's your long-term plan? His aim didn't seem to be to absorb the intricacies of our technology as much as to hone his own argument.

To temper it by sparring with us. Steve's domineering nature could take one's breath away. At one point he turned to me and calmly explained that he wanted my job. This is hilarious. At one point he turned to me and calmly explained that he wanted my job. This is hilarious. At one point, he turned to me and calmly explained that he wanted my job. Once he took my place at the helm, he said, I would learn so much from him that in just two years, I would be able to run the enterprise by myself. I was, of course, already running the enterprise

by myself, but I marveled at his chutzpah. He not only planned to displace me in the day-to-day management of the company, he expected me to think it was a great idea. I love that. Steve was hard-charging, relentless, but a conversation with him, this is really important, but a conversation with him took you places you didn't expect. It forced you not just to defend but also to engage. And that in and of itself, I came to believe, had value. Now here's another. Ed knows his why. As he spoke, so the next day they drive to Steve's house and Steve's giving him another pitch. And this is when Ed's going to turn him down because it's in direct conflict with Ed's why.

As he spoke, it became clear to us that his goal was not to build an animation studio. His goal was to build the next generation of home computers to compete with Apple. This wasn't merely a deviation from our vision. It was a total abandonment of it. So we politely declined. We returned to the task of trying to find a buyer. Time was running out. A few months later, Pixar gets a booth at this trade show,

and it says, we had a booth on the trade show floor where we showcased our Pixar image computer. Steve Jobs dropped by on the first afternoon. Immediately, I had sensed a change. Steve had founded a personal computer company next. I think that gave him the ability to approach us with a different mindset. He had less to prove. Now he looked around our booth and proclaimed our machine is the most interesting thing in the room. Let's go for a walk. Now, I want to deviate from this for a little bit because there's this really funny steve story and i just have to include all the funny steve stories um let's see and well there's also a lesson here that we can be blind to our own flaws and

all of us are as we talked we came upon so they're walking around the the um trade show floor they're just talking about pixar and it says as as we talk, we came upon Bill Joy, one of the founders of Sun Computer. Bill, like Steve, was an extraordinary, bright, competitive, articulate, and opinionated person. I don't remember what they talked about as we stood there, but I'll never forget the way they talked. Standing nose to nose, their arms behind their backs,

swaying from side to side in perfect sync, completely oblivious to anything going on around them. This went on for quite a while until Steve had to break off to go meet someone. After Steve left, Bill turned to me and said, boy, is he arrogant. When Steve came by our booth again later, he walked up to me and said of Bill, boy, is he arrogant. I remember being struck by this clash of the titans moment. I was amused by the fact that each man could see ego in the other, but not in himself.

They're going to make a deal. And there's three things that are interesting here. We learn how Steve resolves issues with people he disagrees with. We hear a hilarious negotiation story. And then Steve's opinion on loyalty. At one point in this period, I met with Steve and gently asked him how things got resolved when people disagreed with him. He seemed unaware that what I was really asking him was how things would get resolved if we worked together and I disagree with him. For he gave a more general answer.

He said, when I don't see eye to eye with somebody, I just take the time to explain it better so they understand the way it should be. There's just a different level of arrogance with this. And, you know, it works out. He winds up creating the environment which produces the world's most successful consumer product of all time. So, you know, we're going to label him a genius but if it didn't you know they call that arrogance so it's just interesting to me um later when i relayed this to my colleagues at lucasfilm they laughed

nervously i remember one of steve's attorney attorneys telling us that if we were acquired by his client we had better be ready to get on the Steve Jobs roller coaster. Given our dire straits, this was a ride Alvy and I were ready to board. The acquisition process was complicated by the fact that negotiators for Lucasfilm weren't any good. We're going to see this here. The chief financial officer in particular underestimated Steve, assuming he was just another rich kid in over his head. This CFO told me that the way to establish his authority in the room was to arrive last. His thinking, which he articulated out loud to me, was that this would establish him as the most powerful player since he and only he could afford to keep everyone else waiting. All that it ended up establishing, however, was that he had never met anyone like

Steve Jobs. The morning of the big negotiating session, all of us but the CFO were on time. So Steve's all there, all these other people that are pertinent to the negotiations. And at precisely 10 a.m., Steve looked around and finding the CFO missing, started the meeting without him. In one swift move, Steve had not only foiled the CFO's attempt to place himself atop the pecking order, but he had grabbed control of the meeting. This would be the kind of strategic, aggressive play that would define Steve's stewardship of Pixar for years to come. Once we had joined forces, he'd become our protector, as fierce on our behalf as he was on his own. In the end,

Steve paid $5 million to spin Pixar off of Lucasfilm, and then, after the sale, agreed to pay another $5 million to fund the company. After we signed our names, Steve pulled Alvy and me aside, put his arms around us, and said, whatever happens, we have to be loyal to each other. I took that as an expression of his still bruised feelings in the wake of his ouster from Apple, but I never forgot it. The gestation had been trying, but the feisty little company called Pixar had been born. There's just so many good things in this book. I could do a four-hour podcast on it, but the book's only a six-hour read. So there's just so

many good ideas. So I got to skip over a bunch of stuff. I'm going to hit some ideas now. This is how Ed learns from Japanese manufacturing history, which I found interesting. So he says, at the time, Pixar was a computer manufacturing company, so we had to learn very quickly what it meant to produce computers. It was at this time that I happened upon one of the most valuable lessons from the early days of Pixar, and that lesson came from an unexpected source, the history of Japanese manufacturing. In 1947, an American working in Japan turned that thinking on its head.

His name was Edward Deming, and he was a statistician who was known for his expertise in quality control. So it talks about, let me skip over that part. Let me just get to his idea. So in essence, this was his idea, and Pixar copies this approach. The responsibility for finding and fixing problems. So they're talking about, the background is they're talking about how to optimize car manufacturing. And so it's a way to decentralize decision making. So the essence was this.

The responsibility for finding and fixing problems should be assigned to every employee. From the most senior manager to the lowliest person on the production line. If anyone at any level spotted a problem in the manufacturing process, Deming believed they should be encouraged and expected to stop the assembly line. This was the exact opposite of what the Americans were doing at the time. Deming's approach, and this is why it's important, Deming's approach gave ownership and responsibility for a product's quality to the people who were most involved in its creation. Instead of merely repeating an action, workers could suggest changes, call out problems, and this next element seemed particularly important to me, feel the pride that came when they helped fix what was broken. This resulted in continuous improvement,

driving out flaws and improving quality. Okay, so a couple pages later, they're still struggling. You know, the computer they're making, they're trying to sell, I think, for like $120,000. They only sell like a couple hundred of them. And this is how Pixar's lowest point leads it to its solution and another iteration at Pixar's lowest point as we floundered and failed to make a profit Steve had sunk 54 million of his own money into the company a significant chunk of his net worth as the losses mounted it became clear there was only one path forward. We needed to abandon selling hardware. Of course, we had no way of knowing whether where we landed next would support our weight. The only thing that made this leap easier was that we had decided to go all in

on what we had yearned to do from the outset. This is so important computer animation this was where our true passion resided and the only option left was to go after it with everything we had on the very next page there's this story about how steve is figuring out pixar's value because we've just been told hey he's jumped he dumped he agreed initially we dumped 5 million to this company he dump $5 million into this company. He dumps $54 million after that. Three times between 1987 and 1991, a fed-up Steve Jobs tried to sell Pixar. And yet, despite his frustrations, he could never quite bring himself to part with us. When Microsoft offered $90 million for us, he walked away Steve wanted 120 million and felt their offer was not just insulting but proof that they weren't worthy of us Steve started with a high price and was unwilling to budge I came to believe

that what he was really looking for was not an exit strategy as much as external validation his reasoning went like this. If Microsoft was willing to go to 90 million, then we must be worth hanging on to. A big thing Ed talks about in the book is that he knows Pixar would never survive without Steve, but there was times when he wasn't sure it would survive with him. And through the process, Ed talks about, hey, listen, I worked with Steve Jobs for 26 years. So longer than anybody else did continuously. And he talks about how the common misconception that Steve was just some kind of asshole is just not true. Like when he was younger, it's really hard to deal with, but he's saying over 26 years,

he grew to be really wise. And even now they're about seven years into the relationship. He starts to see the benefits besides Steve's money of like his logic and strategy here. So let's learn a little bit about his logic and strategy. And this is how they first start to finally get traction. Steve negotiates a three picture deal with Disney. And it says, in 1999, we struck a three-picture deal with Disney, which would provide majority financing for Pixar movies, which then Disney would distribute and own. It felt like it had taken a lifetime to get to this point, and in a sense, it had. While Pixar, the company, was just five years old, my dream of making a computer-animated feature film was pushing 20. Once again we were

embarking on something we knew very little about. None of us had ever made a movie before. At least not one longer than five minutes and since we were using computer animation there was no one to ask for help. So that first movie we know is Toy Story. And it's not yet released. It's about to be released. We know that it goes on to be a huge financial success, right? But then this is another strategy where Steve just saw things way before anybody else. So this is Steve's idea to gain leverage with Disney. Okay, so it says, of course, one thing we could always count on was that at some point,

Steve would throw us a curveball. As we approached Toy Story's release, it was becoming clear that Steve had something much bigger in mind. This wasn't just about a movie. This film, he believed, was going to change the field of animation. And before that happened, he wanted to take us public. Bad idea, John and I told Steve. Let's get a couple films under our belt. We'll only increase our value that way. Steve disagreed. This is our moment, he said. He went on to lay out his logic. Let's assume that Toy Story is a success, he said. Not only that, let's assume it is a big success. When that happens, Disney CEO Michael Eisner will realize that he has created his own worst nightmare, a viable competitor to Disney. We only owe his studio two more films under our contract, then we could go out on our own. Steve predicted that as soon as Toy Story came out, Eisner would try to renegotiate our deal and keep us close as a partner. In this scenario, Steve said he wanted to be able to negotiate better terms. Specifically, he wanted a 50-50 split with Disney on returns, meaning the

revenue, the profit rather, a demand he pointed out that also happened to be the moral high ground. In order to fulfill these terms, however, we would have to be able to put up the cash for our half of the production budgets, a significant amount of money, and to do that, we would have to go public. His logic, as it often did, won the day. Steve turned out to be right. As our first movie broke records at the box office and all of our dreams seemed to be coming true, our initial public offering raised nearly $140 million for the company, the biggest IPO of 1995. And a few months later, as if on cue, Eisner called saying that he wanted to renegotiate the deal and keep us as a partner. He accepted Steve's offer of a 50 50 split i was amazed steve had called

this exactly right his clarity and execution were stunning okay so i'm skipping way ahead because i love this idea this is him this is now the explicit elaboration on his idea that people are way more important than ideas. So he says, The gestation of Toy Story 2 offers a number of lessons that were vital to Pixar's evolution. Remember that the spine of the story, Woody's dilemma to stay or to go, was the same before and after the brain trust worked on it. This will make more sense to you in a little bit. But don't worry about what the brain trust is.

And for now, don't worry about the central theme of Toy Story 2. He's going to explain the main point here. One version didn't work at all, and the other was deeply affecting. Why? This is what I want you to focus on. Talented storytellers had found a way to make viewers care, and the evolution of this storyline made it abundantly clear to me. This is one of the most highlighted passages in the book because I own

both the hardcover version and the Kindle and on the Kindle you can look up what other people like what the most popular highlights are and I think it's a great idea. If you give a good idea to a mediocre team they will screw it up. If you give a mediocre idea to a brilliant team, they will either fix it or throw it away and come up with something better. The takeaway here is worth repeating. Getting the team right is the necessary precursor to getting the ideas right. It is easy to say you want talented people, and you do, but the way those people interact with one another is the real key. Even the smartest people can form an ineffective team if they are mismatched.

That means it's better to focus on how a team is performing, not the talents of the individuals within it. There is an important principle here that may seem obvious, yet in my experience is not obvious at all. Getting the right people and the right chemistry is more important than getting the idea right. I made a habit when giving, this is a great summary. I made a habit when giving talks of posing the question to my audience, which is more valuable? Good ideas or good people? People think so little about this that in all the years, only one person in an audience has ever pointed out the false dichotomy. To me, the answer should be obvious. Ideas come from people. Therefore, people are more important than ideas.

Okay, so now we're going to get into one of his ideas about changing the word honesty and changing it to candor. If you're building a company in a creative environment. So he says, candor could not be more crucial to our creative process. Why? Because early on, all of our movies suck. That's a blunt assessment, I know, but I make a point of repeating it often. And I choose the phrasing because saying in a softer way fails to convey how bad the first versions

of our films really are. I'm not trying to be modest or self-effacing here. Pixar films are not good at first. Our job is to make them go from suck to not suck. This idea that all movies we now think of as brilliant were at one time terrible is a hard concept for many to grasp and this is why i love reading these books because you know we see the end result oh pixar is hugely successful but you don't see all the 20 years that he put in before that and it's really just a same metaphor what he's saying here

instead of uh uh all movies suck at the, almost all companies and products suck at the beginning. And this is as it should be, is what he says. And this is as it should be. Creativity has to start somewhere. And we are true believers in the power of bracing, candid feedback, and the iterative process. Reworking, reworking, and then reworking again until a flawed story finds its through line or a hollow character finds its soul. A new version of the movie is generated every three to six months and the process repeats itself. In general, the movie steadily improves with each

iteration, although sometimes a director becomes stuck, unable to address the feedback he or she is given. Luckily, another brain trust meeting is usually around the corner. So that's the second time I've said brain trust. What brain trust is, is a mechanism for their company to deliver candor. Okay, so that's a good way to think about it. And I'm just going to read this paragraph. So it says to understand what the brain trust does and why it's so central to Pixar, you have to start with a basic truth. People who take on complicated creative projects become lost at some point in the process. Every single entrepreneur knows that feeling. At some point, you're not going to create a company or a product that works, just takes off immediately and always works. You've got to iterate and iterate, and there's going to be

valleys and peaks. It is the nature of things of things in order to create you must internalize and almost become the project for a while and that near fusing with the project is an essential part of its emergence but it is also confusing there's a paradox when once a move where excuse me where once a movie's writer director had perspective he or she loses it where once he or she could see a forest, now there are only trees. The details converge to obscure the whole, and that makes it difficult to move forward substantially in any one direction. The experience is overwhelming. And they talk about how directors, you know, it doesn't matter. You can be the best director in the world you're going to get lost and the important part is is separating your idea from yourself just as maybe he doesn't realize that much of what he thinks is visible on the screen which in fact is only visible in

his own head this is what the brain trust reveals or maybe the ideas presented in the reels don't work out and won't ever work and the only path forward is to blow something up and start over. No matter what, the process of coming to clarity takes patience and candor. So just think about you need candor as a guiding principle and brain trust, the mechanism that Pixar uses, is the way to get there. And all the brain trust is, is a meeting where people can speak honestly, they separate the director's idea from the director themselves. And then one important part of it is that, let's say there's 25 people in a brain trust, the director's idea from the director themselves and then one important part of it is that they're like let's say there's 25 people in a brain trust the director's still in charge so he's listening to ideas about uh ways to improve his film but there's no um there's no authority to the ideas he has to take them on himself and the reason being is something that he talks about a few pages later which i really love this is we believe

that the most promising stories are not assigned to filmmakers, but emerge from within them. Think about that in your own life. Like, do you think if somebody said, hey, just go do this business. No, you've got to figure out what you want to do. Like, it's your idea. It comes from you. It would never work if entrepreneurs were assigned to tasks by other people, the business they want to create by other people. With few exceptions, our directors make movies that they have conceived of and are burning to make.

So it says, how is the brain trust different from any other feedback mechanism? There are two key differences. The first is the brain trust is made up of people with a deep understanding of storytelling, and usually people have been through the process themselves. While the director welcomes critiques from many sources along the way, they particularly prize feedback from fellow directors and storytellers. The second difference is that the brain trust has no authority. This is what I was just talking about. This is crucial.

The director does not have to follow any of the specific suggestions given him. After a brain trust meeting, it is up to him or her to figure out how to address the feedback. Brain trust meetings are not top-down do-this-or-else affairs. After a brain trust meeting, it is up to him or her to figure out how to address the feedback. Brain trust meetings are not top-down do-this-or-else affairs. By removing from the brain trust the power to mandate solutions, we affect the dynamics of the groups in ways that I believe are essential. We believe that ideas, and thus films, only become great when they are challenged and tested. Skipping over, but he continues, to set up a healthy feedback system, you must remove power dynamics from the equation. You must enable yourself, in other words, to focus on the problem, not the person.

They also talk about that candor overrules hierarchy. And one of the reasons the brain trust, they realized like you can't have too powerful of a personality. They wouldn't let Steve Jobs go to brain trust meetings because at the time he was already super famous and people wouldn't allow themselves to like engage in candor in front of him. Not many people would.

So he would still give notes to directors, but he'd do it one-on-one. And I love this idea he has a few chapters later. It says, how to tell if your company will be innovative or derivative. There's a quick definition, and it has to do with if you have a negative or positive definition of failure. There's a quick way to determine if your company has embraced the negative definition of failure. Ask yourself what happens when an error is discovered. Do people shut down and turn inward instead of coming together to untangle

the causes of problems that might be avoided going forward? Is the question being asked, whose fault was this? If so, your culture is one that vilifies failure. Failure is difficult enough without it being compounded by the search for a scapegoat. That's a really, really interesting idea. In a fear-based, failure-averse culture, people will consciously or unconsciously avoid risk. They will seek instead to repeat something safe that has been good enough in the past. Their work will be derivative, not innovative. So Ed is a really good storyteller because he explains his ideas,

but he makes them in narrative. So there's an entire chapter called The Hungry Beast and the Ugly Baby. So I'm just going to share two paragraphs from it, but it's worth reading. Ugly babies do not mesh well with hungry beasts, right? So what an ugly baby is, is like a brand new idea. So fragile, right? But a hungry beast is is like a brand new idea so fragile right but a hungry beast is what he noticed at disney why they're they eventually had to buy pixar because um they had a little bit of success uh in animation in the 90s after like a long drought and then they built this huge infrastructure that needed people doing things like off animation offices in like four different countries and all these people and instead of it being a creative endeavor it turned out to be like a manufacturer and what

they were manufacturing was really bad stories so some so he talks about he goes to be clear this happens at many companies not just in holloway hollywood and its unintended effects is always the same so it's talking about the hungry beast is the pressure to create and create quickly and it says the unintended effect is always the same. It lessens the quality across the board. And this is how it compares to an ugly baby. Originality, it's fragile. And in its first moments, it's often far from pretty.

This is why I call early mock-ups of our films ugly babies. They are not beautiful. They're not beautiful miniature versions of the adults they will grow up to be. They are truly ugly, awkward, and unformed, vulnerable, and incomplete. They need nurturing in the form of time and patience in order to grow. What this means is that they have a hard time coexisting with the beast. The ugly baby idea is not easy to accept having seen and enjoyed pixar movies many people assume that they popped into the world already striking resonant and meaningful fully grown see see what he's doing here he's repeating another idea that we just

covered a little while ago but this is you know a couple chapters in fact getting them to the point to that point involved months if if not years, of work. If you sat down and watched the early reels of any of our films, the ugliness would be painfully clear. But the natural impulse is to compare the ugly reels of our films to finished films. Again, I just want to interject here. This is the same thing people do with businesses. Your business, everything starts out, using the Jeff Bezos quote, every oak tree started from an acorn. So you can't compare the two. But the natural impulse is to compare the early reels of our films to finished films, by which I mean

to hold the new to standards only the mature can meet. Our job is to protect our babies from being judged too quickly. Our job is to protect the new. And he's describing now a few pages later what a lot of companies do. And I call this a real problem to a fake solution. I mean, a real problem and a fake solution. If inefficiencies results in anyone waiting too long, if the majority of your people aren't engaged in the work that drives your revenue most of the time, you risk being devoured from the inside out. The solution, of course, is to feed the beast, to occupy its time and attention, putting its talent to use. Even when you do that, though, the beast cannot be satiated. It is one of life's cruel ironies that when it comes to feeding the beast, success only

creates more pressure to hurry up and succeed again, which is why at too many companies, the schedule, that is the need for product, drives the output, not the strength of the ideas at the front end. So that's the mistake they're making. A suggested solution to that problem, and it's achieving balance. And it says, imagine a balance board, one of those planks of wood that rests at its midsection on a cylinder. The trick is to place one foot on each end of the board, then shift your weight in order to achieve equilibrium as the cylinder rolls beneath you. He's talking about balancing between the beast and the ugly baby. If there's a better example of balance and the ability to manage two competing forces, I can't think of one. And this is really important. But while I can try to explain to you how to do it,

show you videos and suggest different methods for getting started, I can never fully explain how to achieve balance. That you learn only by doing, by allowing your conscious and subconscious mind to figure it out while in motion. With certain jobs, there isn't any other way to learn than by doing, by putting yourself in the unstable place and then feeling your way out. And now he's going to quote something. It's from one of his characters in the movie Ratatouille.

There's a, the restaurant critic is called Anton Ego. And so, well, let me just read it. And it's, this is what I always talk about. It's like why I choose to be an evangelist of ideas I like instead of a critic of ideas I don't. Because I think we need to evangelize the new. He uses the word, the new needs friends, which is one way to put it. So he's talking about a speech that the director, I think Brad Bird wrote, that was delivered by the character Anton Ego. His speech similarly rocked me, and to this day sticks with me as I think about my work. In many ways, the work of a critic is easy, Ego says. We risk very little, yet enjoy a position over those who offer up their work and their selves

to our judgment. We thrive on negative criticism, which is fun to write and to read. But the bitter truth we critics must face is that in the grand scheme of things, the average piece of junk is probably more meaningful than our criticism designating it so. But there are times when a critic truly risks something, and that is in the discovery and the defense of the new. The world is often unkind to new talent, to new creations. The new needs friends. Towards the end, he just has a lot of practical advice. And unfortunately, I'm not going to be able to include everything here, but I want to hit some highlights that are interesting.

He has this idea of the hidden. He's like you need to always look for the hidden or the unknown problem. So here's an example of that. In 1995 when Steve Jobs was trying to convince us that we should go public one of his key arguments was that we could eventually make a film that failed at the box office and we needed to be prepared financially for that day. Going public would give us the capital to fund our own projects and thus to have more say about where we were headed steve's feeling wasn't that pixar survival could not could steve's feeling was that pixar survival could not depend solely on the performance of each and every movie the underlying logic of his reasoning shook me we were going to screw up it was inevitable

and we didn't know when or how. We had to prepare then for an unknown problem, a hidden problem. From that day on, I resolved to bring as many hidden problems as possible to light, a process that would acquire what might seem like an uncommon commitment to self-assessments. Having a financial cushion could help us recover from failure, and Steve was right to secure one But the more important goal for me was to try to remain vigilant To always be on the lookout for signs that we were screwing up without knowing of course when that would occur And that he goes which brings this is the important

Summer here which brings us to one of my core management beliefs If you don't try to uncover what is unseen and understand its nature, you will be ill-prepared to lead. So this is one example of how they found a hidden problem and one solution they found. So take this example which occurred at Pixar during what's called an executive check, a meeting to approve budgets and schedules on the production of the movie Up. A visual effects producer named Denise Ream was in the meeting and she spoke up with a fairly radical suggestion. Production would be cheaper and take fewer person weeks. Person weeks is the measure, is how they measure the amount of work like a single person could accomplish in a week's time and then they use that as a multiple to calculate

like the budgets they need for the movie. so it says production would be cheaper and take fewer person weeks if we did something that sounded completely counter to the goal delay when the animators started on their work denise who had the benefit of a broader perspective because before joining pixar she'd worked for years as an industrial at industrial light and magic was addressing a reality that she saw more clearly than any of us did, which was basically meaning it was hidden to them. The eagerness to get going, which gave the impression of efficiency, was ultimately counterproductive because animators often had to redo their work as changes were made. So they made changes to the storyline, which means they had to basically scrap out a bunch of work they used. From her vantage point, it seemed

obvious that we would use fewer person weeks if we gave animators bigger, more fully realized chunks to work on later in the process. Later in the process meaning when it's less likely to change. This is Denise talking. I believe that animators will work faster than you're giving them credit for if they have all the pieces they need when they begin. Boy, was she right. Even with all the usual snafus, endless story adjustments, and last minute re-rigging of particular characters, Up was made in fewer person weeks than we had originally thought possible. Recalling her decision to speak up in that meeting, Denise told me, They had us delivering the movie at what I felt was an arbitrary early date, and I said, I don't understand why we're doing this. Because you know we're always going to hit the brick wall.

No one ever finishes early. So why don't we just call a spade a spade now, two years before our deadline? To me, it seemed clear that you'd want as much time as possible to get the story working. My goal was just to push the back end off as long as I could, and it wound up paying off. That couldn't have happened if the producer of the movie and the company's leadership in general hadn't been open to a new viewpoint that challenged the status quo. That kind of openness is only possible in a culture that acknowledges its own blind spots. It's only possible when managers understand that others see problems they don gonna find now they're gonna see problems that you don't see from from a management perspective but they're gonna find solutions that you would have never thought of so he has this idea which I love and I always talk about it's a constraints force prioritization they

name it the the beautiful the beautifully shaded penny problem so there's a phenomenon that produces a picture called a beautiful shaded penny. It refers to the fact that artists who work on our films care so much about every detail that they will sometimes spend days or weeks crafting the equivalent of a penny on a nightstand that you'll never see. So this is coming from this lady named Catherine Serafin,

who's a producer. And she was a producer on Monsters, Inc. And she's talking. She goes, this is one scene that perfectly illustrates the beautifully shaded penny idea. It occurs when bewildered Boo. I haven't seen the movie, so I don't, at least I don't think I have,

so I don't know the characters. But there's a character named Boo, first arrives in Mike and Sully's apartment and begins, as toddlers do, to explore. As the monsters try to contain her, she wanders up to two towering piles of compact discs, more than 90 in all. Don't touch those, Mike screams as she grabs a CD case on the bottom, sending the piles crashing to the floor. Mike complains and then she waddles away. Okay, so that's the description of the scene, right?

The moment is over in three seconds. And during it, only a few of the CD cases are at all visible. But for every one of those CDs, remember they're 90 in total, Pixar artists created not just a CD cover, but a shader. A shader is a program that calculates how an object's rendering changes as it moves. Can you see all the CD cases, Serafin says? No. Was it fun to design them all?

Yes. Maybe it was an inside joke, but there was someone on the crew who believed that each one of those was going to be seen close up, and so they were lovingly crafted. I don't want to think about how many person weeks this consumed. This is really another interesting paradox. Clearly, something in our process had broken. The desire for quality had gone well beyond rationality, but because's the real problem. It's not that they're, it's really good that they take their work so seriously, but they didn't understand that it's only three seconds and most of them won't ever be seen.

So is it really smart to spend how many person weeks to do that? No. So they overbuilt them just to be safe. To make things worse, our standards of excellence are extremely high, leading them to conclude that more is always more. How then do you fix the beautifully shaded penny problem without telling people in effect to care less or to be less excellent? So he continues on, but the summary is that you need to limit it. You have to design with a constraint. So limits force us to rethink how we are working and push us to new heights of creativity. And I just want to hit one of another idea that he likes, and it's you're not required to justify everything. It's in this section where he's talking about short experiments. In most companies, you have to justify so much of

what you do to prepare for quarterly earning statements if the company is publicly traded, or if it's not, to build support for your decisions i believe however that you should not be required to justify everything we must always leave the door open for the unexpected scientific research operates in this way when you embark on an experiment you don't know if you will achieve a breakthrough chances are you won't but nevertheless you may stumble on a piece of the puzzle along the way a glimpse if, if you will, into the unknown. He has a deep love for experimentation because he understands the upside to it. And so there's another idea he has of a tool they use.

The note I left is postmortem. It's called postmortems. And this is the way the note I left myself to think about postmortems. So postmortems are a tool to analyze ways to improve your process after a project, movie, et cetera, is over. It's an experiment. Okay, so the goal here is to analyze everything that you could have improved after the project's over and that you understand that sometimes postmortems are going to yield beneficial results that you can apply uh in the future and sometimes they're just going to be a few uh an exercise in futility but it doesn't matter it has to be done

because you need to constantly experiment in a creative environment right so he says when the release date finally rolls around everyone is ready to move on to something new but we are not done yet at pixar there's one more essential phase of the process the postmortem a postmortem is a meeting held shortly after the completion of every movie in which we explore what we did and didn't work and an attempt to consolidate lessons learned. Companies, I love this quote, companies like individuals do not become exceptional by believing they are exceptional, but by understanding the ways in which they are not exceptional. Postmortems are a route into that understanding. To keep anyone from going too long, we have a 15-minute limit. Again, he's designing a constraint. See, all these ideas he repeats over

and over again, and they tie into one another. I think that's what makes this book so amazing. This postmortem, which took an entire day, they're talking about one that happened after a bug's life, delved into all aspects of the production. There was no aha moment, no epiphany that would turn our processes inside out. Instead, it's the spirit of the meeting that I remember most. Everyone was so engaged in rethinking the way we did things,

so open to challenging long-held ideas, I think that's hugely valuable and learning from errors we made no one was defensive everyone was proud not only the film but how committed we were to the culture from which that film had sprung remember environment people are more important than ideas and yet even more important than people are the idea the environment that you put those people into um so let's talk about we were committed for the culture from which the idea had sprung or from the film had sprung. Afterward, we decided we should do this kind of deep analysis after every movie.

Over the years, some were profound and others were a complete waste of time. And he says that as a great thing. And finally, we'll close here. And this is about keeping a beginner's mind and a startup mentality. When a new company is formed, its founders must have a startup mentality, a beginner's mind, open to everything because, well, what do they have to lose? This is often something they later look back upon wistfully. But when that company becomes successful, its leaders often cast off that startup mentality because they tell themselves they have figured out what to do. They don't want to be beginners anymore.

That may be human nature, but I believe it is part of our nature that should be resisted. By resisting the beginner's mind, you make yourself more prone to repeat yourself than to create something new. The attempt to avoid failure, in other words, makes failure more likely.