We Study Billionaires - The Investor’s Podcast Network - TIP 101 : Creativity Inc. - by Pixar's Ed Catmull (Business Podcast)

Starting point is 00:00:00 We study billionaires, and this is episode 101 of The Investors Podcast. Broadcasting from Bel Air, Maryland. This is the Investors Podcast. They'll read the books and summarize the lessons. They'll test the waters and tell you when it's cold. They'll give you actionable investing strategies. Your host, Preston Pish, and Stig Broderson. Hey, how's everybody doing now?

Starting point is 00:00:31 There, this is Preston Pish, and I'm your host for The Investors Podcast. And as usual, I'm accompanied by my co-host, Stig Broderson, out in Seoul, Korea. And today, we read a book. And this one was really a lot of fun for me. I really enjoyed this book. I don't know if Stig, did you like this? Yeah, that was really interesting. And a very different way of looking at leadership and success.

Starting point is 00:00:55 I don't think we covered this angle before, Preston. Yeah, so this was good. So the name of the book, since we didn't tell you, the name of the book is, is Creativity, Inc. And this was all about the founding of Pixar. This was written by Ed Catmull. He was one of the key founders of Pixar. And so he wrote this whole book.

Starting point is 00:01:13 And what he really captured in this book was a couple different things. Just from like a top level point of view, he tells his story of how he got involved in making 3D animation movies. And then he really gets into this idea of how do you create a business that focuses on creativity and doing things that have never been done before. And then more importantly, how do you protect that business from becoming obsolete as more competitors enter the market and time marches on? How do you continue to keep that startup feel and that creative energy flowing within the

Starting point is 00:01:51 business? So this was really interesting. Now, I want to highlight, you know, our show really tries to study billionaires and how people kind of achieve at that level. I do want to caveat this episode that Ed Catmull's, his personal net worth, the guy who wrote the book, is around $10 million. So he's way off the mark of being a billionaire. But I will say that he took a startup company, Pixar, and he was one of the key people that helped Pixar grow to this $7.4 billion valuation whenever it was sold off to Disney. And Ed was instrumental through that entire process.

Starting point is 00:02:29 along with Steve Jobs, who was really the main guy who owned all the equity in Pixar and was funding them through all of this while they were not profitable and really kind of gave them the start. So this is really kind of a story of Steve Jobs and Ed Catmull working together and a few other key players kind of building Pixar into what it was. So that's why we chose this book. So Stig, you liked it. I liked it. So what I'm going to do is just kind of tell the story of Ed Catmol kind of starting off, and Stig's going to chime in and kind of help me out. But then the thing that I really want to talk about are the four things. And Stig, I know has a couple of things that he wants to hit of really the key findings that

Starting point is 00:03:10 Ed came up with that really kind of set Pixar apart from all their competitors and how they were able to dominate this market. And I really want to talk about how they really kind of completely change the landscape of creating animation films. So we'll talk about that kind of in the second half. half of the show. So to kick this off, let's talk about Ed and his story and his journey of creating Pixar. So he starts off the book with this amazing story about watching at a very young age, do you remember his age Stig like 12 years old? I mean, he's like a young kid, right? Yeah.

Starting point is 00:03:47 But at a young age, he watched this video of Walt Disney. And Walt Disney was describing on this video how he has achieved so much success with animation. And his big point was that with the characters that he draws, he wants the emotion and the expression in their face to really come to life so that you can feel the emotion coming through that cartoon character. So if you were going to animate, for Pixar, they animated a lamp that's like their logo kind of jumping across the screen and then it kind of turns and looks at you and does like this thing, that you actually think that that's a living object. And that's really what Walt Disney

Starting point is 00:04:31 was describing in this video that Ed Catmull watched as a young kid. Well, that video had such a profound impact on Ed, even through adult life. And he never really forgot this interview with Walt Disney. It had such a profound impact on him. And so, like I said, Ed went on to major in college in computer science. He then started working for an ARPA, which is the one that I'm a little bit more familiar with is DARPA, which is this government organization that they put a bunch of money and they invest a bunch of money into. And the government makes these large leaps in technology and technological advancements because they're funding things that are like a 10x jump in capability. They have like these moonshots, if you will, in capability. So Ed Catmell went to work for

Starting point is 00:05:20 this at the time when he worked there, it was called ARPA. And one of the things that he did at ARPA was he was one of the pioneers, one of the first people that was creating a 3D animated objects on computers. And when he was doing this, it was at a time where really kind of 3D animation, there wasn't much processing power on the computers that they were using to actually do this well. like the objects that they were building were really generic and really basic. But Ed went through this. He ended up going to New York. He worked out in New York for a bit.

Starting point is 00:05:54 And then he finds himself working for George Lucas under Star Wars. And George Lucas actually stood up this division where George Lucas was really trying to leverage computers and computer animation into his original three Star Wars movies. And so he brought Ed Catmo out to really kind of run this division. of 3D animation and trying to mix it and synergize it with the way that they did special effects, just the old-fashioned way, with Star Wars movies. So this was really kind of where Ed got his start. He worked with George Lucas. He talks a lot in the book about how George influenced him, which I found to be a really interesting discussion, I'm sure Stig. And so he worked under George

Starting point is 00:06:39 Lucas and just really kind of had a lot of influential moments and learned a lot from George Lucas's leadership style. So that had a profound impact on him as he went on to be the president and kind of run Pixar later on down the road. And a lot of George Lucas's qualities kind of come out in his leadership style. Yeah, Ed was very impressed by George Lucas's determination for what he's told Ed was either you do it or you don't do it. Don't try doing something. That really leaves your room for a lot of failure. And this was definitely something that Ed brought him to Pixar later on as we'll call it later. Like he made a ton of mistakes, but it was not like, yeah, let's see how this goes.

Starting point is 00:07:21 It was more like, we're doing it and we might fail, but we are doing it. And that was a point that I really liked. So Pixar gets more advanced in their graphics and their animation that they're able to do. And they kind of get to this point where they're really kind of starting to make things that look like. I don't want to say it looks like the caliber of things that they're doing in today's day and age. but they're starting to make these 3D objects that are able to move and kind of move around the screen. And what I love about this book is he talks about how even back when he was a computer programmer and he was just starting to work on 3D technology on a computer, how his goal in life

Starting point is 00:08:04 was to create a full motion movie with three-dimensional objects on a computer. So this was like something he wanted to do when he was in his 20s, like way before the technology was even there. He wanted to make a movie. And this was something that he just kept telling himself, this is what I'm going to do. I'm going to eventually be able to do this. And it just seemed like he, along the way, like that was probably never going to happen. But he stuck to that dream and he stuck to this goal that he had. And so it was just amazing to hear the development of that.

Starting point is 00:08:37 But for me, it was amazing to hear that at such a young age as he was. going through the story of how this all unfolded. So got to a point where George Lucas really kind of, he's finishing up some of the movies and some of the technology, I think was a little bit further behind than where he saw it. And more importantly, George Lucas needed to raise some money for his follow-on films because they got in some budget concerns and things like that. So for George Lucas, it kind of made sense, hey, I can raise some money if I spin off this 3D animation company that I kind started on the side to take care of things. And so he started looking for potential buyers to try to sell Pixar, the division that he had created off into other things. So long story short,

Starting point is 00:09:20 along comes Steve Jobs later down the road. And Steve Jobs came in and he kind of talks about this long relationship where Steve Jobs was interested, but never really made a formal offer. And eventually Steve Jobs bought Pixar. And this is after he was ousted from Apple. Yeah, and the whole dynamic between Steve Jobs and Academy was just really interesting. And I think a lot of people have probably heard about how a lot of different business men and women over the years have trouble working with someone like Steve Jobs, because especially in the early days of his career, he was very, I want to call it, eccentric. And Steve Jobs always seems to know the right answer, but he didn't always agree with Ed. So before, Steve Jobs was actually acquiring. the company, Ed was asking him, so what if we disagree about a management decision? How is that going to work? And Steve Jobs responds where, I would just explain it to you until you understand that I'm right. And I just found that hilarious. Think about having a leader like that. I'll just explain it to you until you realize that I'm right. Well, Ed's question, just for a little

Starting point is 00:10:33 more context on what Stig's saying. So Ed asked this question to Steve Jobs whenever he knew he was a potential buyer of the company. So Ed was kind of like filling out all these new bosses, if you will, like, do I even want to work for this guy if he buys the company? And that was one of the questions. And basically Jobs' response was, well, I'll just keep explaining it to you until you agree with me. But the end of the day, whenever they start working together, Ed said that if they didn't agree, there are usually three things that would happen. And they were equally likely. And he said the one thing is that he would discuss it with Steve and he would actually sometime realize that Steve was right.

Starting point is 00:11:12 And other times they were discussed and Steve would say, well, you're right, Ed. And then the third and most interesting option was that they would still disagree after a few meetings. And Ed would just go ahead and do whatever he felt like doing. And the interesting thing is that Steve would never say anything to that because Steve didn't respect anything as much as passion. And he felt like if he was willing to go through all this hardship to do this anyway, even though like he was really giving him a hard time for it, it must really mean he was so passionate that he would ultimately be successful than that. I think that was really a redeeming character because there was a lot of very controversial things about Steve Jobs, but this was definitely one of the most redeeming characters about him, that he was actually so much respecting passion, which was just so important in a company like Pixar in the first place. And it was neat because Ed, that last option that Stig was describing there that Ed would exercise, he would just do it.

Starting point is 00:12:09 He didn't really find that out until he probably worked with Steve for five or ten years. It took him a while to figure that out. Like at first it was very emotionally charged and he didn't really know how to handle it. But after he had worked around Steve long enough, it was kind of like, I'm just an norm. And then he found out that Steve really never did anything whenever he did that. And what I really like about this book is that it cat will seem so authentic in everything he's saying because he's not afraid of making some vulnerable.

Starting point is 00:12:39 And that's one of the things that we're always looking for in these books that we're reading about these successful people. Are they afraid of making themselves vulnerable? Like really vulnerable. And he actually said that whenever he met Steve Jobs in 1985, in many ways it was not nice because he felt and knew that Josh was smarter than him and he actually felt threatened.

Starting point is 00:13:00 And for someone as successful as a catmult to actually admit that, even though clearly Steve Jobs was super, super smart, I think that gives a lot of credibility to the book. And he's not afraid of saying, I've met with some really cool people, they were smarter than me, I completely respect them. And not in the sense that you hear a lot of CEO saying something like, yeah, always people aren't smarter than me.

Starting point is 00:13:25 And you kind of feel like they don't really mean it. But Ed Capman was really sincere and authentic about some of the people that he really felt was a lot smarter than him. And when he's also so frank to say that I was actually feeling threatened, I mean, that's not impressed or anything like it was, who's using words like embarrassed and threatened by other people? And that's something that you really have to, you really have to give him credit for the honesty that he shows. The thing that I really liked about Ed's book is his writing style. is phenomenal, which is something you'd kind of expect out of a guy from Pixar. But his storytelling in the book is obviously phenomenal. His writing style is phenomenal.

Starting point is 00:14:08 You get the sense that he's just such a humble person and somebody that you would love to get to know. Okay, so we'll continue on the story here. So one of the things that I really liked about the story between Ed and Steve Jobs is he really kind of talks through a lot of Steve Jobs's. the way he saw the business evolving, the way that Steve thought of things from an owner, from like, hey, Disney's going to do this next. So you guys need to be prepared and set yourself up for this decision that, you know, Disney's going to come at you and they're going to want it

Starting point is 00:14:44 to renegotiate at this point. So we have to situate ourselves and maneuver ourselves into this key position before. So from like a business standpoint, if you're really wanting to understand acquisitions for large big billion dollar acquisitions and how some of these guys, some of these billionaires think through things. You got a little of that in this book and I really enjoyed that conversation. It was really, I'm not going to get into the specifics on the podcast, but if you would read this book, I think that for people out there to hear that conversation and to hear that thought process, it was really valuable reading. And I think that it was something that a lot of people will enjoy. So let's take a quick break and hear from today's sponsors.

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Starting point is 00:19:13 Sign up for your $1 per month trial today at Shopify.com slash WSB. Go to Shopify.com slash WSB. That's Shopify.com slash WSB. All right. Back to the show. Yeah, and just in really short, it was like Steve Jocks was explaining about the timing of different events. And he was saying, oh, yeah, we know that Disney wants to acquire us. We need to be successful.

Starting point is 00:19:43 We need to create Toy Story. That was, by the way, a type of movie that was never seen before. And they even had to invent new technology to make that. Steve Jobs were like, yeah, we're just going to invent new technology. Then we're going to create a new movie. It's going to be number one. Then we're doing the IPO one week later. And he was actually doing all of these things like that would happen.

Starting point is 00:20:03 He was doing the whole road show, the whole racing cabots on everything, just like it was 100% certain that toy story would just be a blockbuster. and it was. And then Disney, one week later or something, actually called them and renegotiated the contracts just as he said, and they offered him. What seemed an obscure amount of money, but it was exactly what Steve Jobs actually predicted. So as Preston said, there was a lot of great details in the book about this acquisition, but it was really impressive to see how certain job was that certain things would happen. And it was exactly how it played out. You know, I like the comment about Steve saying, so this is what's going to have.

Starting point is 00:20:42 happen at this point in time. This is what's going to happen next. And this is what we're going to do. We're going to have a number one film. And I kind of see that as a common threat amongst a lot of these billionaires that we study is they literally think in these terms of like, okay, so in five years, we're going to be here. This is going to happen. And I think that mindset is so important for people as they're trying to create things and to think in that positive direction as if it has already happened. It's an amazing mindset. Okay, so once you kind of get through this discussion of Toy Story, which was the first major big hit for Pixar that was just a total blockbuster, total game changer. Like we said, Disney came back. They wanted to renegotiate the terms because they felt very

Starting point is 00:21:27 threatened at that point. And Pixar really kind of established themselves as a major competitor to what Disney had been doing up to that point in time. So this is where Ed talks in the book about a real change in his own personal life because from the time he was in his 20s until this occurred, which I don't know what his age was when Toy Story came out, but I would guess he was, you know, 50 years. I really don't know what his age was, but he was older at this point. And the thing was is he had accomplished his major life's goal at that point. His major goal was to create a 3D animation movie, full-length movie at this point. And he did it. And he said, you would think that at that point it would be really exciting to go on and make the next film and the film after that.

Starting point is 00:22:14 He said, but to be honest with you, I went through a major emotional event in my life where I felt like I didn't really have anything else left to do. He really never felt so lost in his life as the way he described it in the book. And so he said, it took him a full year to really kind of grasp, but what it was that was next for him to do. And the thing that he kind of settled upon and that it really kind of gave him the passion and the motivation and energy to kind of move forward and move on to the next thing was this idea of how do I preserve and protect Pixar at this point from becoming like so many other creative companies out there that die and lose that touch, that initial foundational touch that the whole thing was all about in the first place.

Starting point is 00:23:04 And so he really kind of sets off on this journey of trying to capture what are those things that protect your company and protect your creative company specifically to maintain this standard. And that's what Stig and I are going to kind of outline right now of what we, because he talks about a bunch of things. He really kind of goes in this whole different direction and talking about their leadership style at Pixar. They talk about how once Disney bought them, Steve Jobs helped to negotiate that Ed would be in charge of not only Pixar now, but also all of Disney animation. And as Ed took on Disney animation,

Starting point is 00:23:40 they had all these problems because the management style within Disney was very robotic and not very creative at this point. And so he talked about that process. He talked about how he tried to preserve the process at Pixar. And he threw out a bunch of different things. And what I did is I made a list of the four things that I found to be most important that he talked about. And so I know Stig might have a different list and he might have some of the same stuff. But what we're going to do is just kind of a back and forth on our four main points of what we kind of captured for that idea. So the first thing that, just from an overarching point of view that I found, and this was more from the way Ed described things than the way that he directly told the reader

Starting point is 00:24:26 what he thinks people need to do. And the number one thing that popped into my head after reading this whole book was the idea of humility and being humble. And that really comes from the way Ed was a leader. And, you know, I've never worked at Pixar, so I might be completely wrong. You know, if you're an employee, you might think that Ed's a total jerk or you might completely agree with this. But from the information I gathered from the book and from reading his comments, he came across to me as being a very humble person and a person who doesn't see himself as being this big shot president of the company and the guy who's running the show. He was more of this figure that, yeah, I'm the president. And if you guys can't make the decision, I will make the decision.

Starting point is 00:25:11 But I'd rather sit in a meeting and allow everyone to take part in the creative process and be that balanced person that just provides good, candid feedback. And I want every person to be a part of that process. And so his humility to me was such an important part to the success. that he has had with Pixar and Disney animation because they went on to do big things. As soon as Ed took over, you saw them start having some enormous hits as far as the movies that they started making. So that was my first one. I want to hear what Stig's got for his. I think my first point is sort of like piggybacking what you just said. And it's about how people interact. I actually have another point about interaction too, but in the interaction terms of can everyone really speak their

Starting point is 00:25:59 mind. And this is actually, I think it's within the first two minutes, something like that on the book, when he talks about at Pixar they used to have like table cards. So they would say a catmull CEO or whatever other name and title they would have. And the problem about having that, it might seem practical, it should be avoid confusion, is that people go into a certain role. So it would say, you know, John Smith, create a designer. And when you're, you know, when you put in a box, you're not creative. That's basically what he's saying. And he was also very humble about that the good ideas didn't always come from the top. Like everyone should be able to participate. So for him, it was about creating the environment. That was also some of the points that

Starting point is 00:26:46 Preston was touching on before, but creating the environment to empower your employees and make them thrive. And he's very humble about him being at the very top and that's not always a good thing. He said that at some point of time he felt like there was actually no problems in the company. Like no one was showing up late. No one was like ever rude. Everything seems to be completely perfect. And he questioned that and he said, is that because everything is perfect now or is it because my reality is very different from the reality that my employees experience? And what he figured out, probably not surprising when you hear it, but what he figured out was that it was just his reality because he was now the CEO of this big corporation.

Starting point is 00:27:32 Then people would behave differently around him. They would give him more attention. They would listen more to his ideas. Like, that was not the way he actually worked at Pixar. Everyone couldn't just speak to each other the way he wanted to. That was a real strict hierarchy, which is not always good and creative environment. So again, this speaks about his humility as well and also speaks well of him in terms of being open to the idea

Starting point is 00:27:57 that his reality is not everyone's reality. And I really like that point. So my next one is refinement. And let me just provide an example. So have you ever, you know, when you were in college or high school or whatever, and somebody hands you a paper that they just wrote that was, you know, a creative process when you write something, it's a creative process because you're creating something that's never been written before. And this person would write this and they'd hand it to you and they say, hey, can you read this over and tell me what you think and, you know, if you see any grammar mistakes or whatever, you know, fix it or whatever, proof it. So what I find, and this is so common in so many people, is when they write something, they literally just finish

Starting point is 00:28:42 writing it. They hadn't even read the whole thing from beginning to finish and they've already handed it off to you to review for like the final product. Like they're getting ready to turn it in and they just want one person to look at it. And you can tell when you're reading it, the first time that the person themselves, it never even refined it themselves. They just looked at it. They just typed it and that was it. And I read a book a long time ago that was very influential for me as far as writing. And the title of the book is The Elements of Style. And this book is all about that idea of refinement. And it goes straight to the stuff that Ed was talking about in this book at Pixar is they are a

Starting point is 00:29:25 obsessed with refinement. They want to go, once they get something okay, it's a 10% solution. Let's go back. It's almost like a sculpture. You know, you knock off the big chunks at first, then you go back and you refine it a little bit more and then you refine it a little bit more. Then once you really kind of get, call it the hand on the sculpture, you can really start digging into the details and really kind of breaking it out. But you wouldn't start off with a sculpture by making the hand perfect and then trying to do the rest of it. And that refinement that they go through there is a very thoughtful process. And what they did is they actually stood up a thing called a brain trust within the company of just a couple people that would watch, you know, where the film was at, and they'd go through it. And they would make all their notes on why they thought maybe a certain scene or something wasn't working. And they would basically just identify problems. They wouldn't provide solutions at all. That was actually built into their model was just to identify the problems. And then they'd hand those problems off to the director and the person who was responsible for

Starting point is 00:30:29 implementing change. And that person could look at it and either, A, make the change, or they could completely disagree with it. They had that latitude to act in the direction that they wanted. But this brain trust acted kind of like the audience and the viewer, if you will, to provide feedback and comments. And they constantly were going through this refinement phase in order to make their product perfect and optimal.

Starting point is 00:30:53 So kind of going back to my initial example of writing a paper, I know you've also been handed a paper from a person who has gone over at 10, 20 times in your reading and you're just like, this is amazing. This is phenomenal. And that's a result of refinement. And so I think that when you talk about the creative process, it's so important to just go back, get many opinions. Some of them you're going to agree with.

Starting point is 00:31:18 Some of them you're not going to agree with. But you've got to go back and you've got to really, really work at things in order to make the quality just amazing. And that's something I really captured out of Ed's comments. Yeah, I really seem impressed in that the quality was just so important for everyone. And that's also a part of the mission and part of the purpose. Whenever they're doing, I think it was one of the Toy Story movies as well, but apparently it shouldn't be got into the theater.

Starting point is 00:31:42 It should be like a video version. It was really stressful for everyone because they felt that the quality was not good enough. And I really like that about an organization. like if everyone is stressed out about the quality and not so much in terms of, well, they're actually pretty sure it would make a decent amount of money. But it seemed like people didn't care about that too much. It was more about, well, quality because that was the purpose why they were there. So that was my third selection as well, Stig was about the quality. But where I would like to maybe even comment on that a little bit more of like, so why are they so obsessed with pumping out top

Starting point is 00:32:19 quality. And what it really comes down to is they care about their customer. They care about the viewer so much that they do not want to give them a bad product. So it's actually customer focus when you kind of pull back the onion a little bit more on it. Like, okay, so why are we so obsessed with quality? Because we want to make our customers extremely happy. And I think that where a lot of businesses miss the boat on when you take that approach of focusing like a laser beam, on the customer, which you're actually creating with the benefit of that is the long-term benefit. And I think that's the really key word here is the long-term benefit is that you are creating a brand with power over the long term.

Starting point is 00:33:04 And so that's why when you look at Steve Jobs with Apple, quality was like there was nothing more important than the quality of the product. You look at Pixar, which Steve Jobs owned it for the longest time. and Ed shared that vision of quality with him and that focus on customer experience. And that's why the brand got so strong. And what a common theme that we see. I mean, Amazon, you name it any big major company out there. And that is how they operate.

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Starting point is 00:36:58 Back to the show. One of my high points is about failure. And I always like this discussion about failure. and I think action speaks louder than words because a lot of companies are saying, yeah, it's, you know, it's okay to fail, we'll learn from our mistakes. But I don't think that many companies are actually really, I wouldn't say a passion about making mistakes. I think that would probably be wrong to say that, but really accept that as a premise of doing great work. Clearly, this comes for the CEO, but he actually brings up a very interesting example in terms of failure. So he's saying that at some point of time for Tor Story 2, the movie was actually more or less deleted and it was because of a personal error. Apparently some employee had typed in the wrong command and then 90% of the movie just disappeared.

Starting point is 00:37:51 And then, well, luckily they had a backup system in place. Well, the problem about that backup system was that they actually didn't install that correctly. So there's actually no backup. So this is pretty bad. They've been working day and night for this. for a year or something like that. So this was really, really bad. And this was actually really lucky. And one of the employees had taken her own back up because she was, I think she was pregnant

Starting point is 00:38:16 or she was in a maternity leave at that point in time. So she kind of had almost all the files that were automatically backed up at her computer back home. So they didn't lose the movie. But he said that actually happened next was really interesting. They didn't sit out to find and punish that person. Surely they were making sure that this. system worked and it wouldn't happen again. But he said that whoever did that, they weren't that interesting. And they never announced that. I don't know if they even realized who that person was. Perhaps it was to sugarcoat it, I don't know, but that was actually what he said. He said that his thesis was that his employees had good intentions. And even if they had good intentions,

Starting point is 00:38:56 they might still mean that random events occur. But at the end of the day, it's not a question about random events is a question about trust. And if you don't trust your employee, you can't have a good organization. And you said, it was just something that just happens. I found that part really, really interesting. And I think it's really admirable that they're actually not sitting out to find that person because I think a lot of organizations would look for the scapegoat. I think that would be the first thought that would come to people's mind. You know, if you're wanting to learn a little bit more about that concept, we did an episode. We did an episode on a book called The Speed of Trust. I don't remember the episode number, but it gets

Starting point is 00:39:36 into a lot more details of what Stig's talking about. And for me, I totally agree with you, Stig, the message that's now sent to the rest of that entire company is, you know, I think I can actually trust this company. I think that they genuinely care about me, even if I make a mistake. And boy, let me tell you, you're going to get some real performance out of people when they start thinking like that for you. And here's another comment I want to kind of make for maybe our younger listeners of the show, especially ones that are maybe at the point where they're thinking about what career field I want to go into and work in starting out is think about a culture that you want to work in. We talk a lot about the financial sector, and I can tell you one

Starting point is 00:40:20 thing for most companies, if you would make a major mistake, kind of like the one that Stig described at Pixar in the finance industry, not only would you be fired, but you would probably be paraded around in front of people, you would have been fired so bad. And that's the culture of that community. So each one of these industries, finance has kind of a cookie cutter culture within it. You go to maybe a more artsy kind of background. It has a culture that's built into it. The music industry has a culture built into it. And so what I would tell you is look at your own personality traits that you want to try to protect and keep and make sure that they totally align with that profession that you're looking to go into because the longer you stay in an

Starting point is 00:41:10 organization and a culture, it will change you. And it can take some of those things that you value most and pull them away from you. So be very conscious of that because it can really change and manipulate your life in a major way. Not that one's right or wrong with the main thing is, is what is your internal values, and you need to find something that when you go into that workforce, it's not going to rob you of the ones that you value most and that you do want to hold on to. So we'll come off the topic, but I think it's really important. I didn't really have anything else for the book. Did you have anything else, Stig? Yeah, I had a few points. And I think one of the points that are really liked, and this is actually to say something about

Starting point is 00:41:55 how authentic the book was and how we might sometimes be perceived by our own intentions. So in the last part of the book, and Katmel talks about the merger with Disney, which happened in 2006. And at this part of time, Catmell and John Lasseter, he was also one of the top guys. Both of them would be running a division between them in Pixar and Disney. So they were pretty much taking it over. And Ed actually talks about how he wanted to create a creative sustainable environment. And he ensured the Disney stuff that it shouldn't be like a mini Pixar or whatever you want to call it.

Starting point is 00:42:37 I mean, they should still have their own identity. He didn't want to merge cultures because he really respected that the cultures is really different. But as I was reading through this chapter, I was thinking, he is not seeing much as going on here. he was actually doing everything he could do to turn Disney into Pixar. And I don't think there's anything wrong with that. I'm just saying that leaders have to live the culture to be successful. They probably can't lead any other way. But to come as a leader and say,

Starting point is 00:43:10 I don't want to change anything with your culture, what you're doing is perfect. And then when Ed was doing, starting to pinpoint everything that was more or less wrong and firing people that he didn't like, there was too much Disney and not enough Pixar, I was like, did he even see what was going on? And I'm not saying that his intentions were bad or anything, but for me it was just very profound that even someone with the best intentions, he was actually doing the exact opposite of what he was promising himself and everyone else in the organization. So I'm really curious, Preston, what your thoughts were about that section in terms of changing the culture in Disney?

Starting point is 00:43:51 I guess I didn't read it that way. I kind of read it a little differently. I think he went in there with the intention of not changing it. But at the same time, I think there was things that were functioning poorly within Disney that did need to be changed. And, you know, he had a model over at Pixar that did work. I mean, that's why they were able to do what they did. And so he took some of the things from Pixar, brought it over to Disney, and implemented them. and people that I think he removed from Disney were the people that could not sit in a room and take criticism well

Starting point is 00:44:21 or provide comments of criticism to the group and just this kind of open kimono type sharing of information and being open and honest. If you didn't fit that way of interacting, then you just weren't a fit anymore. And I think that that was a little bit different to the previous Disney culture that existed. and I think that that was a good change. So I guess I read it a little differently than you stick. I really did. Yeah, and I'm pretty sure we agree with this, Preston, that he was actually turning the culture into something that was better.

Starting point is 00:44:55 I actually think he did that. But I think in that sense, and perhaps this is because there's actually no really good solution to this, sometimes it seemed to me that Ed was looking too much at symbols and not always at the reality. So one of the things that he said was it was very important for him to personally thank his employee to tell them how much they meant to him

Starting point is 00:45:22 and to applaud their effort. Whenever I read that, I felt, well, that's really, really nice. And in the way he told the story, it felt like one big family. Now, I've been on the receiving end of that whenever I was an employee. And I had the CEO that, well, he actually knew my name because I was at my office. I don't want to say my office. My tiny cubicle was just outside his office. So that was actually why we knew each other somewhat. But he had no clue about what I was doing. And he was walking around an entire day in the company and, you know, shaking hands and telling

Starting point is 00:45:57 anyone like specifically how important it had been. But I just found that so insincere. I mean, I think the intentions was good and the intention is really important, but he had no clue about like 95% of the staff. And it just seemed like, to me, it had the opposite effect. Whenever I read something like this, I'm also very cautious about what people are saying and what's actually the reality. And I'm really sorry if this comes out of something that's negative. I can see, Preston, you have a point. So I'm curious to hear that. Yeah, so I want to talk more about this handing out the checks thing.

Starting point is 00:46:31 So it's interesting because whenever I read the story of in the book about Ed doing this, I got a very positive vibe from it as I was reading it. And then as I hear your story stick, I can also understand and see that viewpoint of how you would have experienced that. And what I think is really the key variable here is in your scenario, you felt like you understood the true intent of your manager. and that was, you know, managers always hand out the checks and they go around and that's what they do. That was, in your example, that was the intent that you read on that manager that you had at that point in time. Now, the people at Pixar might have had a completely different read on Ed, depending on how they viewed Ed.

Starting point is 00:47:17 If he was a very genuine thing that he really wanted to go, get to know them, hey, what did you work on during this film? I really want to know what you did. You can tell, and this is the thing that I found in life, is that. human beings can sniff out an intention faster than anything on the entire planet. Okay, that's what I've learned. And so if you buy into that idea and you're listening to this, make sure that if you're doing something and your intent is to really just kind of not be sincere or be genuine, but it's actually self-satisfying what you're doing, people know that immediately.

Starting point is 00:47:55 it's not something that they actually have to be told or something that you have to disclose or hear from another person. They can sense it immediately, whether it's genuine or fake. So pay attention to your intentions because everyone around knows what they actually are. Interesting. And thank you for showing me the more positive angle. It could be really interesting to see what actually happened. I think we all have tried to be appreciated by your superior. It's just very different if you feel like that person actually knows this about you and are telling you that you're doing a good job. And then if another person is looking at you, he kind of know who you are. He might even know your name. And he's saying something like

Starting point is 00:48:42 XYC, I really appreciate your effort and what you have done for this company. We couldn't have done this without you. And then you just hear him say the same thing to the person sitting in the cubicle right next to you. And you just feel, oh man, we're just wasting each other's time. And you're just wasting each other's time. Or he has his assistant say, okay, the next person is Stig Broderson. He did X, Y, and Z, and you should thank him for this. Which happens. I mean, I have seen some of this just ridiculous behavior. But you know what? If as a leader, and I guess we're getting into more leadership discussion here, but as a leader, if you go up to the person and they're in your workforce and you say, hey, Stig, you know, hey, tell me all about what you've done this last month. I really want to

Starting point is 00:49:24 get to know you. Hey, what's the name of your wife? Do you have any kids? Like, have a candid conversation. It's obvious he doesn't know you. You don't really know him. But when you're candid and you just have a pure intention to get to know the other person, man, it makes such a difference. People buy into it. People respect that. They, you know, you're being real. You're being sincere. All right. So guys, sorry to kind of get off on a divergence. As you guys know, we like to teach other things than just value investing and all sorts of stuff that we kind of go off on a tangent. But we feel that it's very important information to talk about some of these things. And we enjoy talking about it. So that's why we go off on some of these tangents sometimes. In short, Creativity, Inc. is the name

Starting point is 00:50:08 of the book. We're going to send out our free executive summary of the book. It's like five pages long here. For anybody that's on our email list, we don't send out any spam. So make sure you guys sign up on that to get our executive summary of the book. I really like this book. I think it's a really important read for people that are looking at a couple different things. Corporate culture, how do I create a brand that will be enduring? How do I become more creative as a person? If you're in a business that requires creativity, this is a fantastic read. And just if you're kind of interested in the whole Steve Jobs, Pixar kind of business, I think it would also be a great read to pick up. All right, guys, that was all that we have for this episode. We'll see each other next week.

Starting point is 00:50:52 for listening to The Investors Podcast. To listen to more shows or access to the tools discussed on the show, be sure to visit www. www.theinvestorspodcast.com. Submit your questions or request a guest appearance to The Investors Podcast by going to www.w.com. If your question is answered during the show, you will receive a free autographed copy of the Warren Buffett Accounting Book.

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We Study Billionaires - The Investor’s Podcast Network - TIP 101 : Creativity Inc. - by Pixar's Ed Catmull (Business Podcast)

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