Lucas had indeed seen what he had—and he didn’t like it. Failing to grasp the possibilities in what he’d just watched, Lucas instead complained that the characters were primitive and that the story was awful. “He couldn’t make the leap from the crudeness of it then to what it could be,” said Smith. “He took it literally for what it was, and assumed that’s all we could do.”37 Lucas had had enough of Catmull and his movies. Catmull was frustrated, but so was Lucas; the computer division was becoming an expensive hole down which he was pouring his money and getting very little in return. He wanted them concentrating on his editing system, not making cartoons. Catmull and his Pixar group were living on borrowed time, and knew it. As far as Lucas was concerned, the only person inside Lucasfilm who had any business making movies was George Lucas.
Though Lucas had retired from the movie business, television was another matter. During the filming of Return of the Jedi, Lucas had become so enamored of the cute, cuddly Ewoks—and was convinced that kids would want to see more of them—that he began tossing around an idea for a live-action TV film. Still smarting from the disastrous Star Wars Holiday Special of 1978, however, Lucas was not inclined to cede control to outsiders; this time he would handpick his creative team. Still, one had to wonder just how serious Lucas was about the project. To serve as producer, Lucas hired Tom Smith, who had just stepped down as the manager of ILM and was looking for opportunities to produce or direct. The writing duties he handed to his own nanny, a young man named Bob Carrau, who had no experience as a writer—which suited Lucas fine, as he planned on dictating most of the story to Carrau anyway.
To hold it all together, however, he had hired as director his old friend John Korty—who, despite the failure of the Lucas-produced Twice Upon a Time, was still directing successful made-for-TV movies. “I couldn’t figure out if I was doing George a favor or he was doing me a favor,” Korty said later. “It’s not a film I would have chosen to do on my own.” And yet, even with the experienced Korty at the helm, Lucas couldn’t leave things alone, rewriting scenes and trying to manage Korty from afar. “As the shooting went on, George—his big thing is ‘Let’s have more conflict, let’s have more fights, let’s have more explosions,’” recalled Korty. “I was probably trying to deal with the relationships more, and at one point late in the shooting I got a memo from him or something about ‘We need another fight, and why don’t we do this to the monster and drop a bomb on him or something,’ and I wrote back and I said, ‘George, if we do any more to this monster, the audience is going to have more sympathy for the monster than for the heroes!’”38
The Ewok Adventure aired on ABC on November 25, 1984, and was successful enough that Lucas immediately began production on a sequel, The Battle for Endor, hiring filmmaking brothers Ken and Jim Wheat to write and direct. Producer Tom Smith, having learned his lessons from The Ewok Adventure, included in the overall budget a line item for what he called the “George Factor,” to cover the costs of shooting any new scenes envisioned by Lucas during filming and editing. Lucas kept largely out of the Wheats’ way, though ILMer Joe Johnston had gleefully provided Lucas with a set of three rubber stamps—reading GREAT, CBB (for “could be better”), and 86 (for “try again”)—that Lucas could use to stamp his comments on scripts and character designs. “He was like a kid with a new toy when he saw those,” Ken Wheat said later. “There was no way anybody could ever be confused about his choices.”39 Lucas, who apparently never seemed content with a sequel unless it was darker than its forebear, had also told the Wheats, “I want this to be all about death.”40 The resulting film, then, The Battle for Endor, would air on November 24, 1985, with a disclaimer advising “parents’ discretion,” since the Wheats had opened the film with a sequence in which a little girl’s family are killed by Marauders.
While not as successful as The Ewok Adventure, The Battle for Endor would still pull in respectable enough numbers that Lucas briefly considered another sequel before finally shelving the project indefinitely. Their success also encouraged him to invest in two Saturday morning cartoons for ABC, Droids and Ewoks, produced by the animators at Nelvana—the same company that had provided the Boba Fett cartoon for the Star Wars Holiday Special. Lucas publicly professed to having high hopes for the two cartoons, but when Police drummer Stewart Copeland, who had been hired by Lucas to write music for Droids, met with Lucas to discuss the series, he thought Lucas’s real motivations were obvious. “On his desk,” recalled Copeland, “he had rows of toys, and that was what the music was for. ‘This is the product, here are the toys.’”41 Any toy-related largesse wouldn’t last long; Ewoks would be canceled after two seasons, Droids after only one, pummeled in their time slots by The Smurfs.
By January 1985, Lucas had been running Lucasfilm himself, without a true president, for a little more than a year. While he liked running things his way, the company, with its various projects and disparate revenue sources, had grown to a point where Lucas couldn’t keep his fingers in everything. It was time to bring in a president who could serve as a project manager, preferably someone with a background in finance and, ideally, someone who could be a tough administrator and would put the interests of the company before his own popularity. But he refused to consider hiring anyone who had been affiliated with a studio, to give the keys to Lucasfilm to a Hollywood insider. “Down there,” as he would always call Hollywood, “for every honest, true filmmaker, trying to get his film off the ground, there are a hundred sleazy used car dealers trying to con you out of your money.”42
Lucas found his candidate sitting on his own board of directors in Doug Norby, a Harvard-educated former CFO of Itel, a company that had made, then lost, millions of dollars in underhanded deals involving the purchase and leasing of IBM equipment. When the bottom dropped out of the company, Norby cooperated with financial investigators to figure out what had happened—and on the basis of his findings, several of his Itel partners went to jail. Norby didn’t, and when he was brought on board at Lucasfilm, some staffers saw him as rather slick and quick to protect his own interests. But Lucas trusted him and liked his up-front, somewhat aggressive style. “Do what you have to do,” he told Norby, “and I’m just going to stay out of it.”43
Norby’s hiring was announced in February at an all-hands meeting held on the ILM soundstage. Norby made a better showing than Lucas that morning, sounding confident and enthusiastic as he outlined the hard tasks in the coming year. Lucas, by contrast, came off as a scold, grousing that it was time for staff to start acting as if they worked for a company, rather than like uninvited guests in his home who ate all his food and spent all his money.44 Norby, regaining the floor, diplomatically stated that it was simply time for Lucasfilm to start earning its keep. The company had to do more than just make money off licensing and merchandising, or wait for Lucas to make another movie. Lucas had supported the company out of his own pocket long enough. Lucasfilm had to start turning a profit. Every division was going to have to change.
That included even ILM. At the moment, ILM was working almost exclusively on films by Lucas and his friends, as well as the Star Trek movies, the one reliable outside franchise. But Norby wanted them to take on even more outside work, and issued a press release announcing that ILM was now open for business from anyone. Accountants at ILM were asked to develop a flat rate for the company’s services—generally about $25 million per film—as well as to determine more reliable costs for work such as model making or painting mattes so ILM could bid on contracts for those particular jobs. It was a major change in mentality for ILM, and some balked at the idea of doing work for hire, essentially going to studios hat in hand for commissions. “A lot of people were resisting the rendezvous with reality,” said Norby.45
Working with Lucasfilm’s new CFO Doug Johnson (staff would refer to Norby and Johnson derisively as “The Dougs”), Norby even trained his eye on Lucas’s pet project of the moment, Skywalker Ranch, where work was continuing at what Norby thought was an intentionally
glacial pace that permitted some of the contractors to play fast and loose with billable hours. Until he and Johnson had a better handle on the finances, Norby ordered all non-construction-related workers—essentially artists, glassworkers, and landscapers—to pack up and go home. Lucas may have raised his eyebrows in surprise, but he liked that The Dougs had no problem being the bad guys, taking care of the one big task that Lucas dreaded: dealing with people.
Cash flow continued to be a problem. Not only had the divorce settlement depleted most of Lucas’s cash reserves, but also one of the most dependable sources of revenue—toy money from Kenner—was starting to evaporate. In 1985, Kenner was in a state of flux, in a manner very similar to what was going on at Lucasfilm, as the company worked to separate itself from General Mills. In an effort to improve its finances, Kenner had saturated the market with a glut of Star Wars toys. But with no new movies on the horizon, the frenetic demand for all things Star Wars was more than just waning; as one toy sales expert told the Wall Street Journal, “It’s gone.”46 In 1985, sales of Star Wars toys plummeted to about $35 million, down from $135 million the year before. Doing the math, Norby calculated that Lucasfilm would run out of cash in about five months. Norby was willing to look anywhere to increase the company’s cash flow, even persuading Marcia—now married to Rodrigues, and with a new daughter—to permit Lucas to spread out payments for the divorce settlement over ten years. (Lucas would end up paying it off in five.) He even dared to broach the subject of more Star Wars films with Lucas—a surefire way to refill Lucasfilm’s coffers—but Lucas begged off, saying he was exhausted.
It was inevitable, then, that Norby had to begin laying off employees. That was fine with Lucas, who thought his company had grown fat with nonessential personnel. “I’d go off and make movies and come back two years later and find everybody had hired an assistant,” he told the New York Times in a display of public pique.47 Inside the organization, however, staff were convinced that Norby and Johnson were running roughshod over Lucas—that Lucas, if he really knew what was going on, would never permit something as coldhearted as layoffs. It was that perception among staff that Lucas could do no wrong, said Bob Doris, that showed Lucas’s true strength as an administrator. “It’s a George thing,” said Doris. “He’s successful at creating a myth for himself. I’m sure The Dougs weren’t doing anything more or less than George wanted them to do.”48 In truth, Lucas had always been a somewhat aloof administrator anyway; when Lucas was around, staff operated under an unwritten protocol they jokingly called “Queen’s rules”:
Do not approach George.
Do not chat up George.
Should George start a conversation, keep to work-related topics.
“It seemed to me the company was carefully designed to protect [Lucas], to keep the rest of the world away so he could do what he wanted,” said Pixar’s Malcolm Blanchard. “That’s his personality, a shy guy who likes to makes films.”49
And it was filmmaking, ultimately, that Lucas wanted his company to be about. Anything else—apart from the games division, which was one of the few arms of the company that were making any money—was considered scope creep. “This company has gotten too diversified,” Lucas complained to staff. “We’re going to concentrate on movies.”50 The graphics group was trying; the team had recently created another jaw-dropping special effect, this time for the Spielberg-produced Young Sherlock Holmes, which had featured a stained-glass knight—the first fully computer-generated character on a movie screen. The effect was credited to ILM, but the work had been done by the Pixar computer, based on a character design by John Lasseter. At this point, however, none of it seemed to matter; anything that wasn’t devoted to filmmaking was to be bundled up, repackaged, reorganized, or sold off.
That included the digital editing equipment. With EditDroid and SoundDroid, Lucas now had his digital editing system—or at least the beginnings of one. But both machines were buggy, and the technology, which relied heavily on videodiscs, was expensive. “George wanted to license all the cool technology that they had developed,” said Bob Doris, “but he had no interest in being the manufacturer.”51 EditDroid and SoundDroid, then, were spun off into a new division called The Droid Works, which entered into a joint venture with the editing equipment company Convergence, now also tasked with selling and marketing the editing equipment. Lucas would monitor the company at arm’s length, keeping an eye on the progress of the digital editing technology he had done much to establish—and waiting until it finally progressed to the point where it worked well enough to use for a movie.
That left only the graphics group and their Pixar image computer. “We can’t afford to fund this stuff,” Norby told Lucas, as he turned his eye toward Catmull and his division. “It was clear Lucas had to let us go,” said Alvy Ray Smith.52 For a moment, Catmull thought Lucas might dismantle the group altogether and sell the Pixar computer to the highest bidder, but Lucas was hoping to do for the graphics division what he had for The Droid Works: hook it up with a venture capitalist who might appreciate the potential of the technology. Lucas actually had noble hopes for the Pixar; he thought it might be useful in medical imaging or for scientific simulations, and there were serious discussions with Siemens and Philips, which saw its potential for high-resolution CAT scans. Neither discussion went anywhere. Most thought Lucas’s asking price of $35 million was too high, though they weren’t just getting the Pixar; they were getting Catmull and his entire graphics division as well. As discussions dragged on into late 1984, Alvy Ray Smith asked a friend of his, Alan Kay, if he knew of any potential investors—ideally someone with a bit of computer expertise who could appreciate what he’d be getting with the Pixar, and might also understand that getting Catmull and his team in the deal was worth the entire cost of the transaction. Kay thought he knew exactly the right person, and called on an old friend of his who happened to be both computer savvy and a multimillionaire: Apple co-founder Steve Jobs.
At once charming and volatile, Jobs—who at that moment was waging a war with the board of directors at Apple that he would ultimately lose—met with Catmull, Smith, and Lucasfilm accountants to discuss the Pixar and look at the numbers. When it came to the hardware, Jobs liked what he saw. “It was one of those sort of apocalyptic moments,” he said later. “I remember within ten minutes of seeing the graphical user interface stuff, just knowing that every computer would work this way someday; it was obvious once you saw it.” But Jobs, like others, thought the price tag was too high—“I’m more in the $10 to $15 million range,” he told them—and opted to bide his time to see if the price would drop.53
It did. In November 1985, after a complicated deal involving Philips Electronics and General Motors fell through at the very last minute, Jobs phoned Norby and found him eager to dispose of Pixar at a fire-sale price. While it would later be misreported that Jobs purchased Pixar from Lucasfilm outright, the truth was slightly more complicated. Jobs actually capitalized Pixar with $10 million, $5 million of which Pixar then paid to buy exclusive rights to the Pixar technology—though Lucas made certain that Lucasfilm would continue to be able to use the technology it had pioneered. The other $5 million was used to run the company, with Ed Catmull installed as president and Alvy Smith as vice president.54 The company, then, had actually been purchased by both Jobs and the forty employees of Pixar. The only real sticking point for the deal was where to sign it. Jobs wanted Lucas to come to Woodside, about seventy miles south of Skywalker Ranch; Lucas wanted Jobs to come to him. They settled on meeting in San Francisco, at the offices of Lucas’s attorneys, about halfway between both of them, completing the deal in February 1986.
To many, Pixar seems like “the one that got away” from Lucas. Under Jobs, it would eventually become a $7 billion company, responsible for successful family-oriented films whose profits surely had accountants at Lucasfilm wringing their hands over the missed opportunity. And certainly, Pixar was one of those rare instances where Lucas either misread or misunders
tood the enormous potential of his own technology. But it was a shortsightedness born of Lucas’s own kind of intense focus and drive. Giving up Pixar hadn’t cost him anything creatively—he’d still be able to use the computer, after all—and it hadn’t required him to compromise his own conception of films or filmmaking. For Lucas, getting rid of the company had simply been the right business decision made at the right time. “Once that [Pixar computer] was developed, then we didn’t need a company that manufactured computer hardware,” said Lucas plainly. “I didn’t particularly want to be in hardware manufacturing. So we sold that off.”55
“Entertainment is good ideas, not technology,” Lucas said later. “The truth is, I’m not that enamored with new technology; I just acknowledge its existence.”56
Skywalker Ranch was complete. The dream of Zoetrope—that glittering do-it-yourself film empire, far from the prying eyes and interfering hands of Hollywood—had finally been realized. But not by Coppola. And not completely.
The first phase—mainly the so-called Farm Group of administrative buildings, the Main House, and several outbuildings—was finished. But like Thomas Jefferson with Monticello, Lucas would never be truly done building Skywalker Ranch. Still, in the summer of 1985, things were in good enough shape that he could declare the ranch officially open for business. Lucas intended the ranch to be “like a big home, a big fraternity where filmmakers could work together and create together… create stories, and you need a place to finish the movie, to do the postproduction, sound and editing.”57 There were no soundstages, a throwback to the early days of Zoetrope, when he and Coppola had enjoyed shooting their films, guerrilla style, out on location. “Lucasfilm is not a production company,” Lucas stressed. “We don’t have a studio, we don’t have production heads. We have a producer who produces a movie.… The rest of Lucasfilm is really a series of companies [like ILM or Sprocket].… And now they’re service organizations for other people who make movies.”58 Almost any pre- or post-production work could be done on-site, far away from the prying eyes and interference of Hollywood suits. “They have no idea what making a movie is about,” Lucas said scornfully. “To them, the deal is the movie. They have no idea of the suffering, the hard work. They’re not filmmakers. I don’t want to have anything to do with them.”59
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