I agreed.
At that meeting we floated ideas of how the two companies might work together, ranging from a film distribution agreement as before, to a joint venture, to an outright acquisition by Disney. By the end of the session, all options remained on the table for discussion.
Afterward, it did not take long for the acquisition idea to gain momentum. From Pixar’s side, it came down to two issues. First, as would be typical for any acquisition, was the matter of price. Customarily a buyer will pay a premium for acquiring full control of a company, and there was much room for negotiation on what that premium might be. The second issue was a matter that would be considered unusual for an acquisition, and it became the defining concern in this one. We wanted Disney to agree that Pixar’s operations and culture would be fully allowed to continue to run the way they always had. We had worked incredibly hard to protect and preserve Pixar’s way of doing things, going back all the way to the time when we decided that Pixar’s executives would not intervene with its creative processes. This acquisition had to preserve everything we had worked for; there was no way that we would be willing to do it otherwise.
“Disney has to agree not to change Pixar,” Steve said. “Ed and John have to be on board. They have to believe this is about preserving what we’ve created.”
This, for us, was a deal breaker.
Iger came through immediately. He said that not only did he want to preserve Pixar’s way of doing things, he wanted that way of doing things to infect the culture of Disney Animation so that Disney would become more like Pixar. This was a vision we could all get behind.
The next step was for Pixar’s board of directors to assess Disney’s business and assets to make sure that we could recommend to Pixar’s shareholders that exchanging Pixar stock for Disney stock made good business sense. Along with our advisers and investment bankers, I spent some time at Disney learning about its businesses and financial status. What I discovered made me even more positive about the deal.
The strength of two of Disney’s businesses, in particular, surprised me. These were Walt Disney World and ESPN. These were rock-solid businesses that looked to me as though they were positioned marvelously for years of solid growth. Financially, this made the transaction look even better, an almost perfect fit. Shareholders of Pixar would be exchanging their investment in a highly risky animation company for a diversified investment that included some of the highest-quality media assets in the world, including Disney World, ABC, and ESPN. Those assets would also include Pixar, of course. I returned with a strong recommendation that, financially, this made great sense.
On January 24, 2006, Disney announced it would acquire Pixar for $7.4 billion. Steve still owned just over 50 percent of Pixar, giving his Pixar stock a value of almost $4 billion. In an instant, he became Disney’s largest shareholder. Both Steve and Iger emphasized that the takeover would not threaten Pixar’s culture, and Iger was quoted in the New York Times saying, “It is important that the Pixar culture be protected and allowed to continue.”13 John Lasseter became chief creative officer of both Disney Animation and Pixar Animation, and principal creative adviser to Disney’s theme parks. Ed Catmull became president of both studios.
In the ensuing years, the acquisition of Pixar by Disney proved to be one of the most successful corporate acquisitions of its time. Disney’s businesses soared in valuation, almost quadrupling the value of Disney’s stock a few years later. Former stockholders of Pixar enjoyed all the benefits of this run-up in valuation, all the while enjoying diversification into Disney’s range of businesses. Steve was now Disney’s largest stockholder, and the value of his stock in Disney would eventually soar to over $13 billion, making his investment in Pixar by far the largest source of his personal wealth.
Almost overnight, Pixar restored Disney’s dominance in animation, producing a string of hits including Cars, Ratatouille, Wall-E, Up, Toy Story 3, Brave, and Inside Out. Ed and John successfully turned around Disney Animation which, in 2013, released Frozen, which became the highest-grossing animated feature film of all time. Further, Steve, whose health tragically continued to decline, was freed of the burdens of running Pixar. He found in Ed, John, and Iger trusted friends and partners with whom he could share his ideas and advice and enjoy the triumphs that ensued. By every single measure, the acquisition could not have been more successful.
Every single measure, perhaps, except one.
“You seem like you’re down,” Hillary asked, about a week after the acquisition was announced.
“I dunno,” I said. “Maybe a little.”
“How do you feel?”
This was hard for me to admit. Every morsel of the lawyer, CFO, strategist, and board member in me told me the sale of Pixar was the right move, the fitting move, the best possible endgame in this phase of Pixar’s history. Of this I had no doubt. But it also spelled the end of the road for Pixar and me. As soon as Disney bought Pixar, Pixar’s board of directors dissolved, and all my formal ties to Pixar would come to an end. My journey with Pixar was over.
Almost twelve years had passed since that first phone call from Steve. Twelve years in which I hardly remember a day when I didn’t feel responsible for Pixar’s well-being. Even after I left my day-to-day duties, while I was a board member barely a week or two went by without some discussion with Steve that related to Pixar. Worrying about Pixar had been a big part of my life.
“Maybe letting go of Pixar is harder than I thought,” I said.
I wasn’t sure exactly why, though. After all, it was a business; it was a chessboard; it was about making the right moves. I had moved on from other endeavors before. But something about this one was lingering. I felt the way I did when I saw my children off to school for the first time, or went to their graduations. Why was I feeling this way?
Maybe it was because, in many ways, to me Pixar had been like a child: sweet, innocent, playful, and full of wonder and potential. It took a certain amount of vulnerability, humility, and delicacy for Pixar to work. Ed, Steve, John, and I had watched over that. We had poured ourselves into it, pushing each other, learning from each other, helping each other. We had tried all we could to nurture and protect all that made Pixar great.
I remembered those years in Point Richmond, California, where the oil refinery across the street was the most notable way of identifying Pixar’s unremarkable offices, a humble home that belied the wizardry within. I loved how Pixar had revealed itself to its visitors in a series of surprises that would awe them in ways they would not soon forget.
I recalled the challenges over Pixar’s stock option plan, and worrying whether our best people would stay and see Pixar through. I remembered how excited my family had been to attend Toy Story’s premiere, and how we’d all anxiously waited at home for the phone calls that would reveal the opening weekend box office results of Pixar’s films.
I could see myself at the desks of Pixar’s creative and technical wizards for the first time, awestruck at their work. I looked back almost comically at our first meanderings into the entertainment industry and how we had cobbled together our first film financial model. I recalled the way Steve and I had debated every permutation of every possibility that bore on Pixar’s strategy and business.
I remembered the triumph of Pixar’s IPO, and the obstacle course we navigated to make it happen, and I recollected the long, protracted negotiation with Disney that set Pixar on the course of making real profits and becoming a worldwide brand.
Yet now it was all behind me. Pixar was in new hands, safe hands, hands that would take care of it from here on out. No doubt other adventures awaited me, but I guess I was taking one last look back as this one disappeared from my view.
I could not help but think of the way Nemo’s dad, Marlin, felt in that exquisite scene in Finding Nemo when he cannot muster any more strength to continue the search for his son. Marlin’s newfound companion, Dory, in her endearing, quirky, innocent way, says to Marlin, “When life gets you down
, you know what you gotta do,” and then in her sweet, rapturous manner she begins to sing:
“Just keep swimming.
Just keep swimming.
Just keep swimming, swimming, swimming.”
That was exactly what I needed to do.
PART IV
25
Finding My Deli
After the sale of Pixar to Disney, I began to pour myself into a venture that had its origins several years before the sale. That venture had started back in late 1999, when I began to wonder if I should move on from my day-to-day responsibilities at Pixar. It grew into a new direction in my life that was perhaps wholly unexpected, one that would eventually bring me to see Pixar in a whole new light.
As 1999 came to an end, the strategic plan we had put in place at Pixar was working, and I had hired an extraordinary team to implement the business and financial details. I had no intention of dropping Pixar from my sights; it meant too much to me for that. But I just wasn’t sure if I needed to continue as its CFO.
I had always found much to enjoy in my work. As an attorney, I had prided myself on crafting complex deals and then artfully expressing them in written contracts. As an executive, I loved the creativity and finesse involved with developing and implementing a strategy, the thrill of negotiation, the opportunity to be part of a team aiming for great things.
Yet something was missing.
I saw the world of business and finance as a game of sorts. Although I could play that game, I felt the restrictions of corporate life. I understood it was, in the end, about products, profits, market share, and competition. These all matter a lot; I well knew that. I had made a career around all of them. I could see, however, that these priorities also generated challenges around identity and meaning. It is easy to lose ourselves in corporate imperatives, to feel we are beholden to forces that might not be aligned with our personal aspirations and priorities, or with how we wish to give expression to our lives.
I had worked for some brilliant leaders—Steve Jobs, Efi Arazi—and some wonderful clients when I was a lawyer. I couldn’t have asked for more, but I was still working at their behest. Now, I was beginning to wonder what it might feel like to spread my own wings.
After the 1999 release of Toy Story 2, Pixar’s third film, I found myself reflecting a lot about this. I often thought about a story from my own family, harking all the way back to 1974 when I was a fourteen-year-old living in London. One of my first jobs had been as a dishwasher, working in a tiny deli that was owned by my grandmother. My task was to gather the dishes from the counters—there was no room for tables—and load them into the small dishwasher that blasted me with boiling steam every time I opened it. I made a few shillings for my efforts and was allowed to sit at the counter for my lunch, staring out the window, gazing at the steady stream of passersby going about their business.
It was the origins of that deli that really stuck with me. Born in London in 1914, my grandmother Rose was the oldest daughter of five siblings, child to Jewish immigrants from Russia. She was petite, with auburn hair, a beautiful face, and deep blue eyes. Rose’s father, Sam, my great-grandfather, was a tailor. The family scraped together the best china and finest clothes that they could afford and put much stock in good manners and proper etiquette. Rose grew up to be a proper Englishwoman. Her home was spic and span, she was always immaculately dressed, and if you paid her a visit, it would not take more than a few minutes for her to be serving you tea and biscuits on the finest British china. Rose spent most of her adult life taking care of the home and raising her family.
In her mid-fifties, however, Rose grew restless. She and my grandfather Mick, who had retired from his business, were looking for a way to make some extra money. Nobody had an inkling that Rose was bristling to do something about it.
“We’ll open a deli,” she announced to my grandfather one day.
“You must be crazy,” my grandfather said dismissively.
It turned out she was.
That deli, called City Fare, was a tiny sliver of a shop in London’s financial district. Rose and Mick woke up at 4:00 a.m. every day to buy food from the market and to open in time to serve breakfast. Rose treated all her customers as if they were close friends visiting for tea. She remembered their favorite lunches and would have their food prepared and ready to go before they even reached the front of the line. It wasn’t long before those lines stretched out the door.
What always stuck with me about City Fare was how much Rose loved it. At just the moment when most people would have said she was an old housewife ready to retire, she jumped into something new. In that deli, Rose shed the mantle of traditional homemaker and doting grandmother and became alive in an entirely different way. Her years working there were clearly among the best of her life.
Now, I wondered what my deli might be.
Oddly, perhaps, the fire that was burning within me was the desire to learn more about religion and philosophy, particularly the Eastern varieties. For much of my adult life, I was fascinated by ideas that address human experience and enhancing our well-being. In what little spare time I had, I always enjoyed reading literature and philosophy that spoke to these issues. My favorite novel was The Magic Mountain by the Nobel Prize winner Thomas Mann, a literary masterpiece recounting the journey of its hero, Hans Castorp, to a tuberculosis sanatorium high in the Swiss Alps. I loved this book for its sweeping panorama of human experience—illness, love, death, philosophy—and its meandering tale of intellectual, emotional, and spiritual growth.
I also loved the words of Indian philosophers who wrote about our capacity to refine human experience. I was fascinated with ideas like those of Nagarjuna, who somewhere around the year 200 wrote, “There is no difference between samsara [suffering] and nirvana [contentment].” What did this cryptic idea mean? He seemed to be pointing to something that was really important.
I had also been inspired by these words from Annie Dillard’s The Writing Life: “The life of sensation is the life of greed; it requires more and more. The life of the spirit requires less and less; time is ample and its passage sweet.”14
Where time is ample and its passage sweet: this seemed the exact mirror opposite of corporate life. Was it a poetic cliché or something to which we could really aspire? I wanted to find out.
I felt embarrassed by my interests, however. What was a Harvard corporate guy doing thinking about philosophy? I was a business warrior, a corporate defender. I clearly knew how to play that role. But there lay the challenge. It felt like a role. For as much as I threw myself into that role, I still felt a bit like an actor on a stage. Deep down, something else was bubbling up.
Compounding these thoughts was an observation that Hillary and I had often made: For all the innovation and prosperity that modern economies generated, there seemed to be a corresponding increase in stress and anxiety. If knowledge and prosperity were the harbingers of the good life, we ought to be a race of enlightened beings by now. In our part of the world, education and material well-being had reached heights that had surely exceeded anything in history, yet we did not seem to have a particular advantage for gaining wisdom, joy, and peace of mind. On the contrary, stress levels and the drive to perform seemed more intense than ever. I also wondered, if the drive to succeed was so intense, what would eventually happen as illness, aging, or other reversals in life diminish one’s capacities?
On this front, Hillary and I were doing our best to guide our own children through the pressure cooker that characterized modern child raising. One time I asked one of Sarah’s teachers why there was so much homework in elementary school.
“This is what they’ll have to deal with in middle school,” was the answer.
“But they’re in elementary school,” I thought to myself.
I wanted to explore what we could do about the pressures and anxieties of contemporary life, and I hypothesized that there must be solutions in the words of the world’s philosophers and spiritual thinkers.
&n
bsp; So as things slowed down for me at Pixar, I sensed the time had come to say “enough,” to take a break from corporate life, and to take time to search for answers to the questions I was passionate about. Pixar’s success meant that I could now afford to take some time off, something I had never done before. Hillary and I had gone straight from college to graduate school to work to raising a family, without ever taking a breath. Through good fortune, I had come to a place where I could finally take one. Maybe I could put that time to good use.
I resolved to take a sabbatical to read, learn, and explore my interests more deeply. I thought I might take six months or a year to delve into it, and as the calendar turned from one century into the next, I decided to share my aspirations with Steve. I asked if we could meet at his house late one afternoon.
“It is hard for me to say this,” I began, “but it’s time for me to move on from my day-to-day duties at Pixar.”
I don’t think Steve was totally surprised. He knew Pixar was on a surer footing now, and that I had less on my plate.
“What do you want to do?” Steve asked.
“I want to explore philosophy and Eastern ideas for human well-being,” I said, “and how these might integrate with modern life.”
“How will you do that?” Steve wanted to know.
“I’m not really certain,” I said. “I have a long reading list, and some ideas to get me started.”
“Will you have a teacher?” Steve asked.
I knew Steve admired Zen Buddhist ideas and understood the importance of good teachers.
“I don’t have one right now,” I said. “I’ll have to figure that out as I go.”
Then Steve added something that stuck with me for a long time.
“I’m glad one of us is doing it,” he said.
To Pixar and Beyond Page 23