To Pixar and Beyond

by Lawrence Levy

  Soon, the conversation turned to Pixar.

  “John, the film clip I saw is extraordinary,” I gushed. “I had no idea this was going on at Pixar.”

  “Not many really get what we’re doing yet,” John said. “We have this rare blend of the technology and the creative sides of filmmaking. I’m directing a film that’s breaking ground technically, but I’m not a technology person. It’s a partnership. I tell our technology team what I’d like creatively, and we go back and forth to try to make it happen. I don’t get everything I want, but we work it out. Our technical team is brilliant, amazing. It’s like a marriage.”

  “It sure shows in that clip that I saw,” I replied. “I can’t wait to see more. And what about Pixar as a company? How do you see its future?”

  John thought for a moment. His countenance shifted slightly; he became just a bit more serious, as if what he was about to tell me wasn’t easy to say.

  “I’ll tell you,” he started. “The effort that our people have put into this company is beyond extraordinary. It’s not been easy. Not easy at all. People have hung in there year after year, doing work that amazes me every single day, sacrificing for this company, and not asking much for doing it.”

  John had become really passionate about what he was telling me.

  “These are brilliant, creative, dedicated people, from the top to the bottom of Pixar,” he continued. “I want to see them gain the recognition and reward that they deserve. It has always been a struggle. But I want Pixar to succeed for them, for all of us.”

  By this point, John’s voice was all but quivering with emotion. It was as if he were the flag bearer for a deep injustice that needed to be corrected.

  We talked a little more about Toy Story. John explained how the idea had emerged from his earlier short films, how excited he was that Tom Hanks and Tim Allen had signed on to be the voices of Woody and Buzz, and that Randy Newman was doing the music.

  These were some big names. Tom Hanks had just come off a string of successes that was making him one of the world’s biggest stars—Sleepless in Seattle, Philadelphia, Forrest Gump—and the coming summer he was slated to star in a film with a lot of buzz, Apollo 13. Tim Allen had a hit TV show, Home Improvement, that was in its third season and experiencing great ratings. Randy Newman had enjoyed a stellar career as a recording artist and a composer of film scores.

  “They are a coup!” I said. “You must be ecstatic.”

  “I am,” John said. “And they are so amazing to work with. And the rest of the voice cast is amazing too. We’ve been very lucky.”

  As we were wrapping up, it was hard for a Silicon Valley guy like me not to feel a little starstruck. The movie business was light-years away from anything I’d done. And here I was having a conversation about how great the voice casting was for a company I might join. It felt a bit surreal, like I was on a Hollywood studio tour rather than interviewing for a job.

  As I sat there with John and Ed, my experience of the day was suddenly giving birth to a new feeling. These two leaders had dedicated themselves for years to their crafts, with almost no commercial success and recognition. I had no idea how, when, or where they might succeed, but one thing was becoming clear to me. They were winners. I might not know how that victory would come, but I was quite confident that, for them, somehow it would.

  Ed then introduced me to Pam Kerwin, Bill Reeves, Ralph Guggenheim, and a few others on Pixar’s leadership team, and before I knew it my visit was over. As I left the building, however, it didn’t take long for my starstruck bubble to burst. I was now back in Pixar’s dreary parking lot, with a view of the oil refinery across the street and a long, traffic-filled drive ahead of me.

  There wasn’t much point in jumping to conclusions yet; after all, I didn’t know if I would even receive an offer. It certainly depended on how Ed, John, and others I had met felt about me. At the personal level, I felt it would be an honor if they did want me to join the team. But at the professional level, Pixar remained an enigma. There was so much that was great about it, but there was an even greater number of red flags. No matter how impressed I was with Steve, Ed, John, and what Pixar was doing, my job would be to build its business, make it a commercial success, maybe even take it public. This would require much, much more than my watching a few amazing minutes of a film.

  Moreover, I didn’t have a feeling for this business. Filmmaking was foreign to me. It was alluring to see Pixar’s work, but I was no closer to wrapping my head around it than I had been when Steve first called me. In my head, a great film, great technology, even great acting talent, did not translate into a business strategy. No one had articulated what business Pixar was in, and Ed had hinted at resentments with Steve from Pixar’s past. I wasn’t at all sure if it would be a good idea to get in the middle of that. And I certainly didn’t want to join a company simply because I felt a little starstruck.

  The next day Steve called me on the phone.

  “Your meetings at Pixar went great,” he said. “They liked you and really thought they could work with you. I’m really happy about that. How did you feel about it?”

  “Thanks, Steve,” I replied. “I’m thrilled to hear that. It was an excellent visit. I was very impressed, blown away actually.”

  I wasn’t sure how much or how many of my doubts to reveal to Steve. It seemed he was working his way toward making me an offer, which I didn’t want to jeopardize even if I wasn’t sure what to do. But I had to say something about it.

  “I still have questions about Pixar’s business,” I said. “The products, technology, and team seem amazing. But I’m not certain where the business growth comes from.”

  “That’s what we have to figure out,” said Steve. “Pixar has this amazing collection of talent, doing work that no one has seen before. Now it’s time to turn that into a business. I think you would be great for this. How about we get together and discuss you coming on board?”

  I was excited to hear this. No matter what I thought about Pixar’s business potential, I felt more than a little flattered that they wanted me to join the team. Steve and I met a couple more times, including at a dinner at his home with Hillary and Steve’s wife, Laurene. The time for a decision was not far off. I needed to get closer to figuring out what I would do.

  I turned for advice to my old friend and mentor Efi Arazi, founder and CEO of Electronics for Imaging, where I was still CFO. It was Efi who had given me my big break in business.

  Efi was just shy of sixty, an Israeli-born entrepreneur who was heralded as one of the fathers of Israel’s high-tech industry. The company he had founded in Israel, Scitex Corporation, revolutionized the field of color printing and graphic design. Ironically, Efi was often described as the Steve Jobs of Israel, partly due to his pioneering efforts in the Israeli high-tech field, partly due to his flamboyant and larger-than-life character, and partly because, in 1988, he had abruptly left the company he founded because it lost its way after its early successes.

  Efi then moved to Silicon Valley with dreams of founding a new company that would continue the revolution in digital color printing. That company, Electronics for Imaging, was located in San Bruno, California. Shortly after its founding, Efi had contacted my firm’s senior partner, Larry Sonsini, in search of a lawyer. Efi needed someone with experience crafting complex technology deals. Larry asked me to take the assignment. We first encountered Efi when we drove to the offices of his new company, about a half-hour drive north from my office in Palo Alto.

  Efi greeted us in the lobby. He was tall and strikingly handsome, with deep blue eyes and curly hair that was heavily receding. He was immaculately dressed in tailored pants and a perfectly fitting silk shirt, and he had a distinguished, almost regal walk. Despite a somewhat thick Israeli accent, he was also very well spoken in English.

  “Greetings,” Efi said. “May I offer you some libation?”

  “Who says ‘libation’?” I thought to myself.

  So began a collaborati
on that would take Efi and me all over the world making deals with the titans of the office automation industry, companies like Canon, Xerox, Ricoh, and Kodak. Developing fair arrangements with these enormous companies was no small task for tiny Silicon Valley start-ups. In fact, my entire law practice was built around doing this. The habit of corporate giants like these was to try to tie up the start-ups every which way they could, often blocking their freedom to become independent, thriving companies. The large corporations often had impenetrable walls of bureaucracy that were stifling to the far nimbler start-ups. My job was to make sure these little start-ups got fair deals.

  As Efi and I spent more and more time together, a friendship blossomed that extended beyond business. Efi, who was over twenty years my senior, became like a favorite uncle in my family. He loved to fly sport kites, two- or four-string kites that could be made to fly exquisite patterns, and he would sometimes take my family kite flying at San Francisco’s beautiful Marina Green where views of the Golden Gate Bridge and San Francisco formed a stunning backdrop.

  When I began to question whether I wanted to continue to practice as a lawyer, it was Efi who gave me my first opportunity.

  “You could come work for us,” Efi said.

  “In what capacity?” I asked.

  “Whatever you want,” he said. “We’ll find something that works.”

  “It’s intriguing,” I replied. “But I don’t think I’d want to do so in the capacity of your lawyer. If I’m going to practice law, I’m in a great place to do it. If I come on board, I’d like to expand what I do.”

  “You can expand as much as you want,” Efi said. “I’ll give you the chance to develop yourself in business, and as long as you can handle it, you can keep growing.”

  It was a most intriguing opportunity, a chance to see a start-up from the inside, with someone I trusted. I felt this was as good a chance as I might have to gain that experience. With the full support of my law firm, I took the job.

  Efi proved to be a magnificent partner. He loved military history, and he saw business strategy as its modern-day equivalent. He could also be very stubborn and intransigent, habits that often got us into trouble. With Efi I cut my teeth quickly on standing my ground when it felt like we were heading in the wrong direction. Together with Dan Avida, the brilliant engineer Efi hired from Israel to run the company’s hardware division, we built Electronics for Imaging into a powerhouse in the field of color publishing. Along the way, we took the company public and I became its chief financial officer and vice chairman of the board. In Efi I came to see that beneath his outer flamboyance was a scholar, a deep thinker, and a big heart, and I could hardly have asked for a better mentor in business, not to mention a great friend.

  In 1994, Efi retired. He still visited quite often, though, and when he did he would saunter over to my office and stand in my doorway to say hello, always impeccably dressed, with his black ballistic nylon bag slung over his shoulder. Now, toward the end of 1994, I had something specific to ask him.

  “Efi,” I began, “my talks with Pixar have been going well. I think Steve will make me an offer.”

  Efi paused. He knew I’d been talking to Steve and understood I might leave Electronics for Imaging. He had met Steve a couple of times and had been an avid follower of his career and reputation.

  “And what are you thinking?” he asked.

  “I don’t know,” I said. “I’m torn. I think I have a great connection with Steve, but who knows what would happen once we started working together? The team at Pixar is extraordinary. But I can’t wrap my head around their business. They’ve blown through a lot of capital. A lot. They don’t have a clear business direction. Steve’s talking about taking the company public, but it’s not ready, not even close. It’s like I’d be going in blind.”

  “And what do you make of this film they’re producing?” asked Efi.

  “The few minutes I’ve seen look fantastic,” I said. “Brilliant, groundbreaking, but that doesn’t make it a business. How do I know I’m not simply falling for the allure of a high-tech company making a film?”

  “Lawrence, you have enough experience now to trust your instincts,” Efi said. “If you can’t make it work with Steve, or can’t get done what you think you should, you’ll leave.”

  And with that, Efi, the brilliant thinker and strategist, who of all people I would have expected to fully tear apart the idea of a tech company going into film, turned to discussing his latest escapades.

  Efi’s comment really struck me, though. Maybe I had needed some sort of tacit permission to work with Steve. People were hardly lining up to join him. If anything, they were running in the other direction. NeXT had downsized, and I didn’t know of any new executive who had joined Pixar in a while. I understood that Pixar was fraught with business risk; this came with the territory. But Steve brought another layer of uncertainty. I felt like I’d be the only person heading in his direction. Efi’s advice helped me with this. He essentially gave me the confidence that if I thought something was too far off, I could trust myself to fight for it, or I would have to leave.

  A few days later Steve made me an offer to become Pixar’s executive vice president and chief financial officer, and a member of an Office of the President that he would create with himself as CEO, Ed Catmull as chief technology officer, and me as CFO. I asked Steve if I could have a day to think about it.

  I had a habit of walking when I had to think through hard decisions. On that day, I must have worn down the pavement in my neighborhood.

  Rationally, it just didn’t add up. I had worked my way up into an enviable position as chief financial officer of a public company in Silicon Valley. I was about to give it up to go work for a little company owned by the notorious Steve Jobs, whose record for success had gone off the tracks, and the record of Pixar itself had fared no better. My friends and colleagues were hardly going to give me a hero’s sendoff.

  But there was just enough intrigue about the opportunity that I couldn’t get it out of my head. I didn’t know what it would be like to work with Steve, but did I want to turn down the opportunity to find out, especially after we had connected in person so well? I also had to admit there was an allure to joining a company making a movie, a family one to boot. My children would love that.

  I talked it over with Hillary.

  “I can’t help you much with evaluating Pixar,” she said—like most people we knew, Hillary had never heard of Pixar before Steve called—“so I trust you on that. But I believe Steve is genuine. He really wants to work with you. You’re ready to leave Electronics for Imaging anyway, so maybe this is worth a shot.”

  Maybe it was.

  A couple of days later, still not fully certain if it was the right move, I took the leap and accepted Steve’s offer.

  3

  Planet Pixar

  I arrived at Pixar in February 1995. Steve didn’t give me any specific instruction for what to do first. Ed greeted me and, over the first couple of days, walked me around Pixar, introducing me to the key players and describing my role.

  Everyone was friendly, welcoming, and greeted me with polite gestures like “Glad you’re here, let me know if I can help.” Something was missing, though. For as much as people were friendly and polite, I also felt they were a bit distant and aloof. There didn’t seem to be a lot of excitement that Pixar had a new chief financial officer. I felt that little effort was made to include me. Not many invites to lunch, or events put on my calendar. I didn’t expect a parade, but I thought this was a little muted. When I’d joined my last company, my calendar was quickly filled with meetings; they’d wanted to integrate me as soon as possible. I had the deep sense that Pixar’s guard was up, and I didn’t know why.

  But it didn’t take me long to find out. It started with Pam Kerwin, a Pixar vice president who was general manager of various business operations within Pixar. Pam was warm, gracious, and sharp. She was a little older than me, in her early forties, with strikin
g red hair and a sweet demeanor that quickly made others feel at ease around her. Pam was also fiercely loyal to and protective of Pixar. Her office was just down the hallway from mine, and she was one of the few people who offered to meet and to give me the lay of the land.

  “I don’t envy you,” Pam jumped in after some pleasantries, “but I don’t think you really get what you’re up against.”

  “Up against?” I asked.

  “You’re Steve’s guy.”

  I must have given Pam a terribly puzzled look, because I wasn’t sure what she meant.

  “Pixar and Steve have a long history,” she went on. “Not a good one. You don’t know it yet but Pixar lives in fear of Steve.”

  “How so?”

  “Steve doesn’t get Pixar,” Pam went on. “We’re artsy and creative. We’re like a family. We hug. And we’re not a top-down organization; everyone here has a voice.”

  I liked hearing about Pixar’s culture, but it was the strength of Pam’s emotions about Steve that caught my attention.

  “Steve is the guy who owns us—but he’s never been one of us,” Pam explained. “We’ve long felt unvalued, unappreciated. People worry that if he gets too close, he’ll ruin Pixar and destroy our culture. And now, you’re the guy he has sent to whip us into shape.”

  That much was true. My mission was to transform Pixar into a thriving enterprise. I was supposed to be an agent of change.

  “Plus,” Pam added, “he’s broken promises. And people are angry about that.”

  “What promises?” I asked.

  “Stock options. He promised them to us, and they’ve never materialized. Perhaps part of your job is to fix that, but every day that passes without a solution, people grow more cynical. Many here have been waiting for years to own a little piece of Pixar. All their friends at other companies have been rewarded, and now they’re frustrated. They feel used. It’s not going to be easy for you to win their trust.”