Becoming Steve Jobs

by Brent Schlender

  I’m just a toy. A stupid little insignificant toy.

  WOODY

  Whoa, hey—wait a minute. Being a toy is a lot better than being a Space Ranger.

  BUZZ

  Yeah, right.

  WOODY

  No, it is. Look, over in that house is a kid who thinks you are the greatest, and it’s not because you’re a Space Ranger, pal, it’s because you’re a toy! You are his toy.

  (from Toy Story)

  A few months after that 1991 interview with Bill and Steve, I moved to Tokyo with my family to be Fortune’s Asia bureau chief. Part of the reason I jumped at the Tokyo assignment was that the computer industry in the early 1990s had grown a bit dull now that Microsoft and Intel, collectively known as Wintel, had basically won the personal computer wars. Innovation seemed at a standstill, and the future seemed to be merely a game of cutting costs and optimizing the various PC clones that were being offered by the likes of Dell, Gateway, Compaq, and HP. Apple had pretty much fallen into irrelevancy.

  By the time I returned to Silicon Valley three years later, however, much had changed. Bill Clinton had unseated George H. W. Bush as president, after a single term. Bill Gates’s net worth had surpassed $10 billion, and he had edged out Warren Buffett to become the richest man in the world, according to Forbes magazine. John Sculley had been fired from Apple (but the company was still irrelevant). And, the computing world was starting to get interesting again. Netscape Communications had released beta versions of the first commercial Internet browser, which it would eventually call Navigator, and the terms World Wide Web and dot-com and URL were creeping into the vernacular. The Internet was clearly something that could change everything in computing, and that was a good thing for a technology and business journalist.

  In July 1994, I emailed Steve to tell him that Fortune had moved my family and me back from Tokyo, and that I’d call on him sometime to catch up, once I had leased an office and gotten settled in. A few weeks later the phone rang in our new home, on a Saturday morning when I was there alone refinishing the wood floors.

  “Hi, Brent, this is Steve,” he said, in the singsongy, laid-back, California-cool voice he often used on the phone, so pseudo-cheery that it almost sounded like a recording. Then he fell back into character. “So you’re back. What happened? Did Fortune get embarrassed when they put John Sculley on the cover as a savior the very same week he got fired?” He cackled. Here we go again, I thought. He’s interviewing me.

  “You should come over,” he said. “We can take a walk or something.” I said I had to finish what I was doing, but that I could get over to the house in an hour or so. “Okay,” he said, and promptly hung up.

  When I arrived at his home, Steve was fussing around in the kitchen, wearing his usual summertime garb: threadbare cutoffs with the white front-pocket linings sticking out of worn-through areas, and a faded, long-sleeved NeXT T-shirt. (He hadn’t yet started wearing the black mock turtlenecks custom-made by Issey Miyake.) His feet were bare, of course. A big, luxurious Japanese chow was lounging quietly under an expansive, rustic worktable in the middle of the room. The dog clearly had noticed me, but he wasn’t very interested.

  “I guess he isn’t a watchdog,” I said, hoping to get Steve’s attention. Steve turned around, and for one of but a handful of times in dozens of meetings and encounters over the years, engaged in a few minutes of small talk. Enough to let me know that the dog was really old, that Laurene was pregnant again, and that she and Reed weren’t around.

  “I wanted to tell you that I’m feeling really good about Pixar’s first animated film,” he said as he hooked a stool with his foot and pulled it underneath him. Then he motioned for me to sit down. “It’s called Toy Story and it will be another year before it’s finished. I’m not exaggerating when I say that it’ll be unlike anything anybody has ever seen before. Disney is considering making it the big holiday release next year.”

  WHEN PEOPLE LIST the many industries that Steve is said to have revolutionized, they often include the movies, since Pixar brought a whole new art form to the big screen. I’m not of that mind. John Lasseter and Ed Catmull are the men who brought 3-D computer graphics to the movies, and revived the art of animated storytelling.

  That said, Steve did play a critical role in Pixar’s success. His influence was constrained, because Catmull and Lasseter were the ones shaping Pixar, not he. But that constraint, ironically, freed him up to do what only he could do best, and he did it brilliantly.

  Just as significant for the trajectory of his life is what he learned by watching Lasseter, Catmull, and their incredibly talented employees cobble together their magic. At Pixar, especially when the company started down the path of actually making movies, Steve started absorbing an approach to management that helped make him much more effective when he returned to Apple in 1997. These are the years where his negotiating style gained new subtlety—without losing its ballsy brashness. This is when he first started understanding the meaning of teamwork as something that’s far more complicated than simply rallying small groups—without losing his capacity to lead and inspire. And this is where he started to develop patience—without losing any of his memorable, and motivating, edge.

  Steve was certainly lucky that things went this way for him at Pixar, a sideline outfit that he bought on something of a whim, that succeeded in a business he didn’t intend for it to pursue, and that made him far wealthier than the company that was his life’s true work. Ed Catmull has thought a lot about the role luck plays at a great company, and how businesspeople manage that luck. It’s all in the preparedness, he says, and in creating a culture that can adapt to the unexpected. “These things are always going to happen. What separates you is your response,” he says. Steve responded well, and that’s in part because of his greatest piece of luck: getting to work with Lasseter and Catmull. In many ways, his response to the principles he gleaned from them would be a catalyst for his later success at Apple.

  JOHN LASSETER HAD a love-hate relationship with Disney. As a teenager, he worked at Disneyland, and after graduating from the California Institute of the Arts, he landed a job as an animator there. While he loved the privilege of working with some of the great animators from the company’s historic past, he chafed under the company’s rigid management. “Leadership squished us,” he remembers. “They fired me, basically.”

  Hence Lasseter’s ultimatum when Disney’s Peter Schneider tried for a third time to lure him back to Burbank: the only way that he would ever work with Disney again was for Disney to make a movie with Pixar. To his everlasting credit, Schneider took him seriously, and summoned Catmull to his offices in Burbank. He told Catmull that he thought it was time for Pixar to make its own movie, for Disney. Catmull suggested that all Pixar was really ready for was a half-hour television special. Schneider scoffed: if Pixar could deliver thirty minutes of great entertainment, it could deliver seventy-five minutes. Catmull gulped, and then agreed.

  Now it was up to Steve to negotiate a deal with Jeffrey Katzenberg, Disney’s powerful head of animation. Dickering with Disney would offer a real acid test of both his negotiating skills and his self-discipline. Both Katzenberg and Jobs knew that Disney was the power player at the bargaining table. The storied studio was in the midst of a glorious run. Starting in 1989, Katzenberg’s team would deliver one hit after another for five years running: The Little Mermaid, Beauty and the Beast, Aladdin, The Nightmare Before Christmas (based on a story by another animator who had gotten away, Tim Burton), and The Lion King. So as much as Katzenberg admired Lasseter’s chops and regretted that he would not return to Disney, he knew that his company could survive perfectly well without a Pixar movie.

  Lasseter, Catmull, and everyone else at Pixar, on the other hand, fully realized that making a movie for Disney was probably their only chance to survive as a company. The negotiations were their last stand, and their fate was in the hands of Steve. Catmull and Lasseter were very comfortable with this. For years, Steve
had been the point man on Pixar’s negotiations. “He was tough,” remembers Lasseter. “He’d walk into the room and say, ‘Which one of you has the authority to buy our computers?’ If they said no one, he would just dismiss them. ‘I only want to negotiate with someone who can make the deal,’ he’d say, and leave. We always said that Steve would take a hand grenade, toss it into the room, and then walk in. He’d get everyone’s attention right away.’ ”

  But putting Katzenberg and Jobs in the same room held potential for catastrophe. Both men had powerful egos, and both were accustomed to getting their way. Katzenberg believed he’d be the next president of Disney, and took full responsibility for the successes of his animators. Smart, overbearing, difficult to work for, and yet somehow likable, Katzenberg also shared Steve’s certainty and faith in his own opinions. When he walked into the first negotiating session with Pixar, in a conference room near his office, he plopped a basket full of Disney baby toys in front of Steve, who’d recently been at Laurene’s side for the birth of Reed. It was a gift, but it was also a clear sign of who held the keys to the vault.

  Susan Barnes has observed that Steve entered every negotiation knowing exactly what he had to get, and what his position was versus the other side. In negotiating with Lucas, he had been able to exploit Lucas’s need for cash. This time Steve went in knowing that Katzenberg had the power, and that Pixar needed a deal to survive. He kicked off the negotiations with a certain brashness, saying that he wanted Pixar to be a partner on all aspects of the revenue from the film, something no neophyte studio filmmaker would ever get. Katzenberg promptly nixed that.

  The two had fundamental disagreements about the true value of Pixar. Jobs was convinced that Pixar’s technology could revolutionize the business model for animation, believing that computerizing the process would dramatically lower the cost of animating movies. He was offended by what he perceived as Disney’s old-school thinking. “They make the mistake of not appreciating technology,” he told me. “They don’t have a clue.” Katzenberg, who of course knew far more than Steve about the animation business, disagreed. “I was not interested in Pixar’s technology,” Katzenberg told me a few years later. “I was interested in Lasseter’s storytelling. Luxo the lamp had more emotion and humor in a five-minute short than most two-hour movies.” He was sanguine at best about the potential cost savings. “The idea that this technology is a new business model for animation is bullshit. Good luck with that! The artists and storytellers will want to continue to grow the technology, so this year’s technology will be obsolete in ten years.” Katzenberg was right, of course. No matter how much technology you throw at the art of making an animated movie, a good one will always be expensive. Pixar made Toy Story for around $20 million (a number that doesn’t include what Disney spent on it for promotion and distribution). Pixar’s 2013 movie, Monsters University, is rumored to have cost around $200 million, marketing included.

  These kinds of personal and philosophical differences with the brass at Disney were something Steve had been unable to manage at NeXT, where his anger and resentment helped sabotage the IBM deal. “The people at the top of IBM knew nothing about computers. Nothing. Nothing,” he raged in later years, still furious. In those negotiations he had let the IBMers know his true feelings about them, one of his many blunders as he overplayed his hand. But with Katzenberg he acted more deliberately. He made his points, and held out when necessary: Katzenberg asked for the rights to all Pixar’s 3-D computing technology, and Steve refused. But he mostly acquiesced, instead of raging against the more powerful man across the table. Pixar did not get ownership of the films or their characters. And Pixar didn’t get a cut of the video revenues, because Steve didn’t yet understand the huge market for family-oriented videos. But he did get a deal—Disney would fund the production of Toy Story and have the option to fund two more movies as well. Pixar would get 12.5 percent of the box office—and a new life. At long last, the Pixar gang was going to get its chance to make a movie.

  STEVE LOVED PIXAR, and he especially loved watching the team start to develop the movie that would turn into Toy Story. But he didn’t love losing money. In fact, he later admitted that he would never have purchased Pixar if he had known how much money he would spend keeping the company afloat. So in the early 1990s, both before and after getting the Disney deal, he shopped the company around, even though the few potential buyers were interested only in Pixar’s technology—not its movie-making promise. Catmull looked on as Steve negotiated with companies as varied as Hallmark, Silicon Graphics, and Microsoft, each with different ideas of how Pixar’s software could augment their own offerings. But none of the deals crystallized. In each case, Steve would not budge from an outrageous price tag that he’d put on the company. The repeated failures made Catmull wonder if he’d ever really wanted to sell. “I could see why it would happen. Some of the deals made sense. It wasn’t the dream we’d wanted, but you’re trying to keep things going,” he remembers. But nothing worked out. “Afterward, I’m thinking, What was that all about? Was he just looking for confirmation that he’d done something right?” Catmull came to think that Steve might have been subconsciously sinking each deal out of loyalty to Pixar. “He had this sense of what it means to be loyal and to give your word. As I was getting to know Steve more, I could see how this interplayed in complex ways. Not that Steve ever psychoanalyzed himself.”

  Catmull never discussed the deals with Steve in such a psychological way: “We didn’t get philosophical all that often. When we started to edge into personality and so forth, he’d just say, ‘I am who I am.’ ” So Catmull’s theory about loyalty must remain just that. But his conjecture reflects the complexity of what Steve was feeling then. He was losing way more money than he’d ever imagined, especially with things at NeXT going in the wrong direction. Yet he was far from poor: he had all the money he needed to raise a family and do the things that mattered to him. And as he watched Toy Story develop, he was starting to fall truly in love with Pixar. It was such a welcome respite from NeXT, far less intense and far less demanding.

  Steve started coming up to Pixar’s offices once a week, even though he often had little to do there. Catmull managed the process of staffing up after the movie deal was done, a process that could have been disruptive, given that Pixar had just downsized dramatically when Steve sold the hardware division. But under Catmull there was no “bozo period” at Pixar.

  Steve had no input on the development of the Toy Story plot. Lasseter, Andrew Stanton, Pete Docter, and Joe Ranft worked together to create the script, eventually with help from other writers, including Joss Whedon, who would go on to create the Buffy the Vampire Slayer TV series and to direct movies such as The Avengers. The team on Toy Story would turn out to be remarkably productive, and exceedingly close-knit. Stanton would direct Pixar’s second movie, A Bug’s Life, as well as Finding Nemo and Wall-E. Docter would direct Monsters, Inc. and Up, while Ranft would serve as cowriter and story chief on several pictures, until his death in a car crash in 2005. The four men became the core of what Catmull calls the Brain Trust—a collection of Pixar writers, directors, and animators who provide constructive criticism to the director of every Pixar movie. It’s a unique idea—the Brain Trust has no authority whatsoever, and the directors are only asked to listen and deeply consider the advice of its members. It became a powerful tool, helping to reshape movies like The Incredibles and Wall-E. But Steve was never a part of it. Catmull kept him out of those discussions, because he felt that Steve’s big personality would skew the proceedings.

  Watching Lasseter, Stanton, Docter, and Ranft develop Toy Story, Steve was witnessing creative thinking at its best—meaning it was chock-full of failures and dead ends. He always remained encouraging. “When we screwed up,” says Catmull, “it wasn’t, ‘Oh, you guys screwed up!’ It was always, ‘What are we going to do to move forward?’ When you’re out there on the edge, some things go right and some things go wrong. If nothing’s going wrong, you�
�re fooling yourself. Steve believed that.” That was a bright contrast to Katzenberg, whose severe critiques kept pushing the movie in a more sarcastic direction than the team was comfortable with. In fact, things with Disney would get so difficult that after a disastrous screening one Friday late in 1993, Schneider shut down production. For three months, Lasseter and his cowriters recused themselves to draft a new version of the script. During that time Steve and Catmull ensured that the production crew stayed together and got paid. And once Toy Story swung back into production, Jobs fought for more money to accommodate the changes made necessary by the new script. His battles with Katzenberg over the budget were intense, but eventually he and Catmull were able to wheedle a bit more cash out of Disney.

  “Watching our collaboration, seeing us make ourselves better by working together, I think that fueled Steve,” says Lasseter. “I think that was one of the key changes when he went back to Apple. He was more open to the talent of others, to be inspired by and challenged by that talent, but also to the idea of inspiring them to do amazing things he knew he couldn’t do himself.”

  IN THE YEARS after marrying Laurene and starting a family, Steve developed a few especially close friendships. These weren’t relationships he talked about much, at least not in any way that was personally revealing. Steve drew a hard line with reporters about his private life—those of us who had some access to it agreed not to write about it, unless we got Steve’s permission to relate a certain anecdote. Ed Catmull and John Lasseter became two of Steve’s really close friends, part of a very small group of people he would hold near and dear till the end of his life.

  “I liked him from the moment I met him,” Steve told me once about Ed. He found him an intellectual match. “Ed is a quiet guy, and you could mistake that quietness for weakness—but it’s not, it’s strength. Ed’s really thoughtful, and really, really smart. He’s used to hanging around really smart people, and when you’re around really smart people you tend to listen to them.”