Speaker 1: Brought to you by Bank of America Merrill Lynch, committed
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Speaker 1: That's the power of Global Connections. Bank of America North
Speaker 1: America member f D I C. This is Masters in
Speaker 1: Business with Barry Ridholts on Bloomberg Radio. This week on
Speaker 1: the show, we have a really fascinating guest. His name
Speaker 1: is Lawrence Levy. He is the CFO of Pixar, has
Speaker 1: a new book out about his time. They're essentially he
Speaker 1: was recruited by Steve Jobs. He's working in his office
Speaker 1: electronics for Imaging. He's a corporate lawyer from London to
Speaker 1: to Harvard too out into who Silicon Valley. And he's
Speaker 1: working at his desk one day and the phone rings
Speaker 1: and it's Steve Jobs. Hey, I have a company I'd
Speaker 1: like you to come look like to talk to you
Speaker 1: about um. He thought it was gonna be about next
Speaker 1: It turns out to be about Pixar, and he wrestles
Speaker 1: with the idea Jobs. His reputation precedes him, but he
Speaker 1: goes and gets a tour of Pixar, which you know
Speaker 1: is a horrible part of town, across from an oil refinery.
Speaker 1: It looks like a dumping What is why do I
Speaker 1: want to have anything to do with this? On the
Speaker 1: wrong is a long, ugly commuter. There was nothing appealing
Speaker 1: to it. And then he gets inside the building and
Speaker 1: starts to see the magic of of Pixar and just
Speaker 1: the collection of brilliant creative people, both on the technology
Speaker 1: side and the storytelling side, and early version of Toy Story.
Speaker 1: A few minutes he gets to see UM as part
Speaker 1: of his tour, and he's just you know, we take
Speaker 1: it for granted today, how brilliant these movies are. But
Speaker 1: he's just blown away. Imagine you see five minutes of Pixar,
Speaker 1: even of Toy Story, even a rough, un in version
Speaker 1: of it, and it's just mind blowing. It's unlike anything
Speaker 1: ever before um And ultimately wrestles with the question and
Speaker 1: decides to join the company, and he describes bluntly the
Speaker 1: company was a disaster from a business perspective. They had
Speaker 1: all these different lines, none of which could scale, and
Speaker 1: ultimately comes up with a creative business plan in order
Speaker 1: to turn the company into a real business, which really
Speaker 1: relied on all we have to do is shut down
Speaker 1: these three lines of business that aren't scalable and we'll
Speaker 1: never make money, pivot from technology and hardware into the
Speaker 1: entertainment business, and then come out with a series of movies,
Speaker 1: each of which has to be spectacular and record breaking
Speaker 1: at the box office. Easy peasy. How hard could that be? Well,
Speaker 1: it turns oh nps take the company public with a
Speaker 1: mercurial owner who just got tossed out of his previous
Speaker 1: company called Apple, and it turns out that his plan
Speaker 1: worked out really well. All sorts of things come out
Speaker 1: in the book he wrote, called to Pixar and Beyond.
Speaker 1: You learn about all sorts of things you had no
Speaker 1: idea about about Pixar, about the entertainment business, about Apple,
Speaker 1: about Steve Jobs. It's really a fascinating story, and I
Speaker 1: had a great time um speaking with him. As as
Speaker 1: an old mac heead and a huge fan of Pixars films,
Speaker 1: I found it to be just fascinating and I think
Speaker 1: you will too. So, with no further ado, here's my
Speaker 1: conversation with Pixars CFO Lawrence Levy. For those of you
Speaker 1: who are unfamiliar with Pixar, and I can't imagine there's
Speaker 1: anybody listening who is Fourteen of Pixar's films are amongst
Speaker 1: the fifty highest grossing animated films of all time. You're
Speaker 1: familiar with names such as Toy story Finding, Nemo, The Incredibles, Ratatui,
Speaker 1: while E Inside Out, Monsters, Cars. It just goes on
Speaker 1: and on. The studios are in sick teen Academy Awards,
Speaker 1: seven Golden Globes, eleven Grammys. He is also the author
Speaker 1: of a new book titled to Pixar and Beyond, My
Speaker 1: Unlikely Journey with Steve Jobs. Lawrence Levy, Welcome to Bloomberg
Speaker 1: High Burry. It's a pleasure to be here. So I
Speaker 1: have to tell you I'm almost done with the book
Speaker 1: and I've really been enjoying it. Let's start with you.
Speaker 1: You're born in London. How do you end up working
Speaker 1: in Silicon Valley as a lawyer. Well, yes, I was
Speaker 1: born and raised in London. I moved in my late
Speaker 1: teens over to the United States and then I ended
Speaker 1: up in the university. I was at Indiana University, Bloomington, Indiana,
Speaker 1: where I studied business and accounting that i'd go into
Speaker 1: Harvard Law School and then I started my law practice
Speaker 1: and I was practicing on the East Coast, and I
Speaker 1: was not happy whether this is sort of in my
Speaker 1: mid twenties, um, and I'm like, you know, what do
Speaker 1: I really want to do? And at that time, I
Speaker 1: was married, we had a one year old baby, and
Speaker 1: there was a request in the law firm to represent
Speaker 1: a software company and nobody was interested. This is like
Speaker 1: seven no one was interested in representing software companies. They
Speaker 1: didn't mean anything. And my hand shut up and I
Speaker 1: was like, this is what I'm gonna do, And so
Speaker 1: I did. This is just a tiny little company. I
Speaker 1: don't even remember its name, but I could see that,
Speaker 1: you know, by doing this, that this was sort of
Speaker 1: a land of opportunity and then technology, this technology thing
Speaker 1: is going to go somewhere. Even the law is associated
Speaker 1: with the protection of software and this kind I hadn't
Speaker 1: been sorted out yet. And so but I'm in the
Speaker 1: wrong place, you know, Where shall I go? And we
Speaker 1: had never been to California, We've never really even heard
Speaker 1: of Silicon Valley, but that was the place. So I
Speaker 1: came out to Silicon Valley and I interviewed with the
Speaker 1: biggest law firm out there, and the founding partner of
Speaker 1: that firm Larry Soncini, who's featured in the book Le
Speaker 1: Langendary Law Firm. And I said to Larry, you know,
Speaker 1: I just want to come out here and do technology transactions.
Speaker 1: And he said, you know, we have no one specializing
Speaker 1: in it. It's growing and growing. I'll let you do it.
Speaker 1: And that was the start of what became the rest
Speaker 1: and the biggest technology transactions law practice in in the
Speaker 1: legal business. That's that's worthy of a book. Unto itself.
Speaker 1: Let's talk about the phone call out of the blue
Speaker 1: from Steve Jobs. What was that like? So imagine that
Speaker 1: I'm sitting in my office. By that time, I was
Speaker 1: working for a company called Electronics for Imaging that had
Speaker 1: been one of my clients, and I went to to
Speaker 1: work for them, and I ended up becoming their CFO
Speaker 1: and we took that company public. They're still around. It's
Speaker 1: a great company. And my phone rings, and I pick
Speaker 1: up the phone and I hear on the other end
Speaker 1: of the line, High, this is Steve Jobs. I saw
Speaker 1: your picture in the magazine a couple of years ago.
Speaker 1: I thought we'd worked together. Someday I have a little
Speaker 1: company I want to tell you about. And I immediately
Speaker 1: thought to myself, next, he's talking about next computer. Now,
Speaker 1: this is some context. This was after he's tossed out
Speaker 1: unceremoniously from Apple eight years later. This he's tossed out.
Speaker 1: You know some years before you went to do next computer.
Speaker 1: But two years before next it's shut down. It's hard business,
Speaker 1: which so it was basically rumored to be done. And
Speaker 1: I thought to myself, Okay, he wants some help to
Speaker 1: turn around next And but then he says the company
Speaker 1: is called Pisarre, and inside I'm kind of going, what's
Speaker 1: picks are? And awardly, I kind of said, that sounds
Speaker 1: really cool. I'd love to you know, I'd love to
Speaker 1: learn about it. But you know, it, Picks alway was
Speaker 1: so unknown at that point that you know, maybe you
Speaker 1: sort of barely had heard of it. Um. But that
Speaker 1: was how the that was how everything got started. So
Speaker 1: so let's briefly talk about the genesis of Pixar. George Lucas,
Speaker 1: while working on Star Wars and other films, wanted his
Speaker 1: own facility. Why did he cleave the Pixar portion off
Speaker 1: and keep Skywalker Labs or studios or whatever it's called
Speaker 1: for himself. I think he cleaved it off for the
Speaker 1: because it was very expensive to run, and so I
Speaker 1: don't think he wanted to continue the investment in their
Speaker 1: computer graphics division and so um. And so that's when
Speaker 1: at Katmo av Ray Smith and decided to sort of
Speaker 1: try to take it as a spinoff, and they needed
Speaker 1: an investor to help with that. So Jobs invites you
Speaker 1: to come be the CFO at Pixarar. At that point,
Speaker 1: his reputation wasn't what it was today. He was sort
Speaker 1: of an on front every blow. How concerned were you
Speaker 1: about that before you said yes to join Pixar. I
Speaker 1: was extremely concerned. And that's why the first chapter in
Speaker 1: the book is is cool? Why would you do that?
Speaker 1: Because that's what a lot of people told me. It
Speaker 1: was maybe the lowest point in in Steve's career. You know,
Speaker 1: he'd had a string of basically four failures in the
Speaker 1: you know, the Apple Leasa computer, then the original Apple
Speaker 1: Macintosh computer that had a very hard time finding a market.
Speaker 1: Uh um, the next computer that Pixar Imagine computer. So
Speaker 1: there were books being written about you know him as
Speaker 1: done finished and so I I was very concerned about him.
Speaker 1: So you go to Pixar, You you meet everybody before
Speaker 1: you agree to say yes, what was your impression? Well,
Speaker 1: it's funny, you know, Pixar was at that time in
Speaker 1: Point Richmond, California, which, from the point of view of
Speaker 1: Silicon Valley was kind of like in the middle of nowhere.
Speaker 1: And so and it was in It's across the street
Speaker 1: from an oil refinery, and it's a dumpy building and
Speaker 1: there's nothing remarkable or inspiring about it whatsoever. And so
Speaker 1: I went in there scratching my head, and you know,
Speaker 1: I meet at Cat moll and a couple of other people,
Speaker 1: and then John John Lasseter, and then they take me
Speaker 1: to see this sort of footage of Toy Story, which
Speaker 1: is a year before Toy Story comes out, and it's
Speaker 1: just a few minutes and it's unfinished and there's no
Speaker 1: music and the voices on final and so there's all
Speaker 1: these caveats about what it's going to be. And I'm
Speaker 1: in a screening room that's full of like couches that
Speaker 1: look like they've been picked up from the end of
Speaker 1: a driveway, and I'm like, what's going on here? And
Speaker 1: the film begins to roll and I'm kind of like
Speaker 1: mesmerized by this. I'm looking at this saying to myself,
Speaker 1: somewhere in this building there is magic. I don't know
Speaker 1: where it is or what it is, but something is
Speaker 1: going on here. I'm Barry rid Hultz. You're listening to
Speaker 1: Master in Business on Bloomberg Radio. My special guest today
Speaker 1: is Lawrence Levy. He was the CFO of Pixar and
Speaker 1: he is the author of Two Pixar and Beyond, My
Speaker 1: Unlikely Journey with Steve Jobs. Let's let's talk a little
Speaker 1: bit about Pixar. When you first arrived there, they seem
Speaker 1: to have a lot of different businesses going on, but
Speaker 1: entertainment was almost an afterthought. Tell us, tell us what
Speaker 1: greeted you when you first joined the company. Yeah, well,
Speaker 1: entertainment wasn't afterthought. You know. Pixar was created as a
Speaker 1: graphics company, and it was hardware, software, software. It made
Speaker 1: a computer called the Pixar Imaging Computer, and so it
Speaker 1: was in these different things that it was making this
Speaker 1: random and software which was rendering these high end graphics,
Speaker 1: uh and creating them into computer images. It was doing
Speaker 1: animated shore films, it was doing commercials. It was doing
Speaker 1: this sort of thing called there's a lot of focus
Speaker 1: on toy story. Um so there was kind of a
Speaker 1: lot going on, and I realized right away, you know,
Speaker 1: I had kind of a lot to learn there, that was.
Speaker 1: And so when I first got there, I was just like,
Speaker 1: you know, I'm not gonna make any decisions. I'm not
Speaker 1: going to do anything. I literally took I got a
Speaker 1: pad of paper and a pen, and I asked, everybody,
Speaker 1: can I just follow you around and and see what's
Speaker 1: going on? And I literally did that. You know. I
Speaker 1: spent a lot of time just you know, sitting listening,
Speaker 1: you know, and just taking notes so I could sort
Speaker 1: of start to understand, you know, what was going on
Speaker 1: at the company. You look at three businesses, the hardware,
Speaker 1: the software, the short commercial business, and none of them
Speaker 1: scale to anything remotely approaching a public company. None of
Speaker 1: them could scale. They were amazing for the hardware had
Speaker 1: already been closed down, but the anime commercials, the animate
Speaker 1: short films, the rendom and software they couldn't scale. And
Speaker 1: the reason was because there's too high end. You know,
Speaker 1: there was like, how many people in the world at
Speaker 1: that point in time, We're gonna pay this very large amount,
Speaker 1: but it's unbelievable software, you know, to render unbelievably high
Speaker 1: quality image. You know, just studios. You know, studios not
Speaker 1: enough to build a business. So you decide the future
Speaker 1: of the company if, if it's going to have a future,
Speaker 1: is to pivot from technology to applying the technology to
Speaker 1: be a unique entertainment company. How hard was it to
Speaker 1: get Steve Jobs two, who is essentially a tech slash
Speaker 1: marketing guy at heart, how hard was it to get
Speaker 1: him to buy in on that vision? Yeah, well, decide
Speaker 1: is probably a bit of an overstatement. It was a
Speaker 1: strategy by default in a way. So you look around
Speaker 1: the company and this isn't gonna work, This isn't gonna work,
Speaker 1: This isn't gonna work. So then you look at this
Speaker 1: animated feature film thing, and so I started to learn
Speaker 1: about that, and I'm like, well, this is the worst
Speaker 1: possible business strategy. So you you specifically right, in order
Speaker 1: for this to be successful, we have to have a
Speaker 1: string of blockbuster hits, And then you go through the
Speaker 1: numbers and and send snow White in the Seven Dwarfs.
Speaker 1: In nineteen thirty seven, the two biggest hits that were
Speaker 1: animated were both Disney. One is a Laddin at two
Speaker 1: hundred seventeen million dollars, The other is Lion King at
Speaker 1: three hundred thirteen million dollars, And in order for the
Speaker 1: Pixar business model to make sense, you have to come
Speaker 1: pretty close to those two, you know, in in almost
Speaker 1: uh three quarters of a century, every three or four years. Yeah,
Speaker 1: I mean, and it's worse than that in a sense
Speaker 1: because if you looked at the Disney model, which I did,
Speaker 1: and I was like, why didn't Why aren't there more
Speaker 1: independent animated feature film, It's not like animated feature films
Speaker 1: there's a new product, right, it's been around for two generations, right,
Speaker 1: Disney releases snow White in the Seven Dwarves, the first
Speaker 1: animated feature film. So it's like every studio had an
Speaker 1: opportunity to get into that business, and none of them
Speaker 1: are in it. And it turned out that even Disney
Speaker 1: couldn't make it work because you know, he has a
Speaker 1: good run from He's got you know, Bamby and snow
Speaker 1: White and Dumbo and all these beloved films, but he
Speaker 1: couldn't keep that engine running financially. So he diversifies, right,
Speaker 1: he diversifies. He goes into five, he goes into theme
Speaker 1: parks early, he goes into television with the wonderful world
Speaker 1: of Walt Disney. Uh, he goes into distribution. He sets
Speaker 1: up one of us, the distribution. He's trying to diversify
Speaker 1: away from an animation because he goes to live action
Speaker 1: film Mary Poppins in this and that. So he built
Speaker 1: this diversified media company. And so I'm looking around and
Speaker 1: not even Disney is a good example of an independent
Speaker 1: animated feature film. But um, you know, you know, you're
Speaker 1: sort of looking at it qualitatively and quantitatively that was
Speaker 1: the only shot, and you're you're exactly right that in
Speaker 1: order to make that work, those films had to be
Speaker 1: you know, blockbusters pretty much, every single one of them.
Speaker 1: And that's what the business plan called for. You could
Speaker 1: call it crazy, right, You could say, well, that's a
Speaker 1: crazy bet to take, and I would agree with that,
Speaker 1: but what what other choice do you have? That In
Speaker 1: the book, so, so before we get to Toy Story
Speaker 1: and the subsequent films, a big part of the middle
Speaker 1: of the book is about the Pixar I p O.
Speaker 1: That sounded like that was a really fascinating experience. Yeah,
Speaker 1: well it was, you know how. And so the idea
Speaker 1: for the I p O essentially comes about from do
Speaker 1: you want to it's sort of all flows from this strategy.
Speaker 1: So you want to build an independent animation film company,
Speaker 1: that means you have to finance your own films. Those
Speaker 1: films cost a lot, so it could be you know
Speaker 1: at the time, seventy million, hundred million dollars. You know,
Speaker 1: So how are you going to get that kind of money? Right?
Speaker 1: And so no lender is gonna provide that kind of money,
Speaker 1: you know, for that kind of product, So you got
Speaker 1: to go to the equity markets, capital markets, and so.
Speaker 1: But the business model of Pixar had none of the
Speaker 1: characteristics that the investors and investment banks. So it wasn't steady,
Speaker 1: it wasn't reliable. It required a lot of one off
Speaker 1: success stories that had to be the best of their type.
Speaker 1: It really in advance, it's amazing anybody was willing to
Speaker 1: give you money. You laid out and impossible, here's what
Speaker 1: we're gonna try and do something that's impossible, and then
Speaker 1: repeated every three years from the next twenty years. And
Speaker 1: my take at the time was, in the world you said,
Speaker 1: which is layer it out, just lay it out right, um,
Speaker 1: put it out there, because and then investors are investment banks,
Speaker 1: they'll decide you know, I don't have to decide for them,
Speaker 1: I just have to lay it out. Steve presented, you know,
Speaker 1: grand vision for what Pixock would be. I would lay
Speaker 1: out all of the details together. We we we presented
Speaker 1: you know, this, this vision and this possibility, and then
Speaker 1: it was sort of up to investors to decide, and
Speaker 1: you know, fortunately some decided to go along for that.
Speaker 1: So toy story comes out. It comes out just before Thanksgiving,
Speaker 1: and you're hoping for a ridiculous millions. Steve is hoping
Speaker 1: for fifteen to twenty million opening weekend. What happens? So
Speaker 1: the opening weekend, you know, it turns out to be
Speaker 1: you know, thirty eight million, and you know, just faring
Speaker 1: on anybody's world. And he says, you know, by today's standards,
Speaker 1: that's not even even that huge. But in that time,
Speaker 1: but that film, it was like, you know, grand slam
Speaker 1: home run in the bottom of the ninth. I mean,
Speaker 1: he just couldn't have been better. We would just giddy
Speaker 1: from it. I'm Barry rid Helts. You're listening to Masters
Speaker 1: in Business on Bloomberg Radio. My special guest this week
Speaker 1: is Lawrence Levy. He is the CFO of Pixar Now
Speaker 1: part of entertainment giant Disney, and he is the author
Speaker 1: of a new book two Pixar on Beyond My Unlikely
Speaker 1: Journey with Steve Jobs to make Entertainment History. Let's talk
Speaker 1: a little bit about, uh, what took place with your
Speaker 1: relationship with Disney. There's a line in the book that
Speaker 1: I really enjoyed. You said, the darkest day in your
Speaker 1: life is when you were had already been working at
Speaker 1: Pixar and you reviewed the contract between Pixar and Disney.
Speaker 1: Why was that so awful? Yeah, Well, the darkest day
Speaker 1: in my career, that's for sure. Um. So, you know,
Speaker 1: Disney had Pixar had entered an agreement a few years
Speaker 1: before I came before the making of Toy Story, and
Speaker 1: you would have thought that me, a you know, well
Speaker 1: trained and experienced lawyer, would sort of understand what that
Speaker 1: was all about. And I told we had a challenge
Speaker 1: to look at it. But it was written in this
Speaker 1: sort of arcane language of entertainment law, which is totally
Speaker 1: different from any other type of law. It's its own rules,
Speaker 1: its own everything, its own language, everything. Because I didn't
Speaker 1: know that at that moment, right, So I just thought,
Speaker 1: you know, I can't I don't understand everything that says
Speaker 1: I'll figure it out later kind everything. That's that's what
Speaker 1: I said to myself. How bad can it be? Right? Well,
Speaker 1: anytime you ask that question, you usually find out. Yeah,
Speaker 1: usually find out, and it probably is. It probably turns
Speaker 1: out to be a good thing that I went in naive,
Speaker 1: because if I had known what I learned later about it,
Speaker 1: I kind of imagined I would taken that job. So
Speaker 1: but it just it turned out when I did understand it,
Speaker 1: that Disney had effectively tied Pixar up for what three
Speaker 1: films which could have been twelve fourteen years, and with
Speaker 1: almost no chance of sort of making money on those
Speaker 1: films that would be anything like what you would need
Speaker 1: to grow a business. To go over some of the details,
Speaker 1: they owned, the rights to the sequels, the merchandizing, the
Speaker 1: Lion's share of the profits, everything, I mean it worse.
Speaker 1: I mean like they and they had sort of exclusivity provisions.
Speaker 1: It's not even right a first refusal. It was them
Speaker 1: or nobody, Yeah, them or nobody. So it was like,
Speaker 1: you know, Pixar is not even allowed to work on
Speaker 1: other other film projects, you know, And I was asking,
Speaker 1: you know, the lawyer. You know that Sam Fisher about that,
Speaker 1: and he's saying yeah, because you know, like it picks
Speaker 1: us working on other things. They could take that better
Speaker 1: people and put them on other things. And Disney want
Speaker 1: to make sure has assets to the best people. And
Speaker 1: I was like, but that ties up a whole company.
Speaker 1: We could hire a thousand animators and they could only
Speaker 1: work for Disney. And but you know, my my protests
Speaker 1: were or for know it, it was what it was.
Speaker 1: So you you create a business strategy, which you describe
Speaker 1: as four pillars. In order to allow the company to grow.
Speaker 1: You have to change this contract with Disney, and briefly,
Speaker 1: you have to capture more of the profits on each film.
Speaker 1: You have to raise capital so you can self finance,
Speaker 1: which is part of the way to get to that
Speaker 1: greater profit share. You have to double or more the
Speaker 1: output of films. It can't be every four years. And
Speaker 1: you have to turn Pixar into its own standalone brands.
Speaker 1: How did you go about negotiating that with Disney? Because
Speaker 1: they could have said no, we have a contract to
Speaker 1: go away. They absolutely could have. And we learned that
Speaker 1: there are two things that talk in Hollywood. Um One
Speaker 1: is success, right, so you have a success here, celebrity
Speaker 1: of any kind, you have some cloud and the second
Speaker 1: thing that talks is money. Uh and so and so
Speaker 1: all of a sudden, from the I p O Pixel
Speaker 1: had money from Toy Story, Pixarl had success. And that
Speaker 1: means that in that you know, that is going to
Speaker 1: get attention. And so then Disney, you know it's Michael
Speaker 1: Eisener at the time, is sort of going to start
Speaker 1: to think about okay, um, Pixar is willing to invest
Speaker 1: in its own films, right, and so instead of Disney investing,
Speaker 1: you know, maybe the Pixar's willing is invest that's of interest. Secondly,
Speaker 1: you know, I want to keep closer attention to these
Speaker 1: guys because now they're successful, I don't want to risk
Speaker 1: losing them. And so that opened the door for a negotiation.
Speaker 1: Now that said, as I recount in the book, that
Speaker 1: negotiation was pretty rocky, but but it opened the door.
Speaker 1: And and just to reiterate, so you we mentioned earlier,
Speaker 1: Toy Story opens their first weekend at thirty eight million dollars,
Speaker 1: far better than anyone was even hoping in the company.
Speaker 1: How successful was Toy Story following that thirty eight million
Speaker 1: dollar opening as the first feature film for Picks Are. Well,
Speaker 1: from a box office point of view, it was unbelievably successful.
Speaker 1: It did like hundred ninety million dollars in the domestic
Speaker 1: box office, It did well in the nationally. It was
Speaker 1: the biggest film of the year. So from that perspective,
Speaker 1: it couldn't have been better. Doesn't mean it made Pixar
Speaker 1: a lot of money because it was still under the
Speaker 1: original agreement with Disney. So when you renegotiated the the agreement,
Speaker 1: how what did that change to? Well, when we renegotiate,
Speaker 1: it radically changed. And so if you looked at it
Speaker 1: on the original agreement, maybe pixel was gonna depends how
Speaker 1: it worked out, but ten twelve percent of the profits
Speaker 1: from the films under the new agreement, it was going
Speaker 1: to be and we're putting up answering, but what about marketing, sequels,
Speaker 1: ownership of of rights, et cetera. That was you know,
Speaker 1: Disney was always going to do the marketing, but that
Speaker 1: Picks Are regained sort of control over the creative side,
Speaker 1: So the sequels and those things. I'm Barry rit Hilts.
Speaker 1: You're listening to Master's in Business on Bloomberg Radio. My
Speaker 1: special guest today is Lawrence Levy. He is the CFO
Speaker 1: or former CFO of Pixar, currently the author of the
Speaker 1: book to pix On Beyond, My Unlikely Journey with Steve Jobs.
Speaker 1: So in the beginning of the book, I learned something fascinating.
Speaker 1: I'm a longstanding Apple fanboy mac head. I thought I
Speaker 1: knew a lot about Apple. I did not know that
Speaker 1: it was Pixar that turned Steve Jobs into a billionaire,
Speaker 1: not Apple. Describe what that impact on Jobs was like, Well,
Speaker 1: this was one of their inspirations for writing the book. Actually,
Speaker 1: I long known that this is a great story. I
Speaker 1: told it to people privately and publicly and always had
Speaker 1: fantastic reaction, and people were always that, you know, you
Speaker 1: should write this into a book. People don't know this story,
Speaker 1: and I didn't. It took me a long time to
Speaker 1: get inspired to do that. But one of the inspirations
Speaker 1: came in the aftermath of Steve's death. When we have
Speaker 1: this you know, endless amount of material I documentary, move
Speaker 1: his books, you know, on him, and you know, I
Speaker 1: began to feel that pis are and what happened and
Speaker 1: there was an afterthought and all of that. You know,
Speaker 1: it really wasn't. If it wasn't for Pixar, we wouldn't
Speaker 1: be talking about Steve Jobs. That's what set him up
Speaker 1: to go back to It was a setup. You know,
Speaker 1: It's all sounded as though like he started Apple, he
Speaker 1: goes back to Apple, and I was like, wait a minute,
Speaker 1: the stuff that happened to Pixar was really important to
Speaker 1: this story. And and you know because look, when when
Speaker 1: I met Steve right, he hadn't had a hit in
Speaker 1: ten years at Apple. So so Lisa was an expensive failure.
Speaker 1: McIntosh ultimately had effect did, but not the original one.
Speaker 1: Right at the time, it wasn't going anywhere by it
Speaker 1: was a successful but he was already gone by that.
Speaker 1: He was already gone by that. And then he did
Speaker 1: the next computer and the Pixar image. Next computer was
Speaker 1: a disaster with nowhere. Eventually they've developed an operating system. Um,
Speaker 1: but Next wasn't a successful hardware company, and it looked
Speaker 1: like Pixar was a yelling hardware company. Right, so he
Speaker 1: hadn't had a hit. He had put close to fifty
Speaker 1: million dollars into Pixar and lost it all. So explain
Speaker 1: I have to interrupt you here. Explain how completely unique
Speaker 1: and unusual. That is in in the late eighties early
Speaker 1: nineteen nineties in Silicon Valley for a founder to put
Speaker 1: fifty million dollars into his own company, well, it was crazy,
Speaker 1: and those days I have ventured. I guess only Steve
Speaker 1: would be Steve would be the only founder to do that.
Speaker 1: But you know that was Steve. I mean, Steve didn't
Speaker 1: do many things, but what he did do he did
Speaker 1: with sort of passionate intensity that was like second to nine.
Speaker 1: Did he have any other option at the time? I
Speaker 1: think that a lot of that. You imply in the
Speaker 1: book that he was kind of funding this and didn't
Speaker 1: want to admit it wasn't working, and didn't want to
Speaker 1: go to other venture capitalists, that this was really a
Speaker 1: partially a face saving exercise. Well, I think so. I
Speaker 1: think there are a couple of years before I came.
Speaker 1: Had he had the opportunity to sell out the company
Speaker 1: just to cut those losses, he would have just don't
Speaker 1: think that opportunity came along. And I don't think he
Speaker 1: wanted to close it down. You know, that just wasn't
Speaker 1: his nature. Um and so and so he hung in there,
Speaker 1: and that's a great credit. And you know, a tribute
Speaker 1: to to him as well, and so it was rare,
Speaker 1: but he still had fifty million dollars in there. And
Speaker 1: and he also had you know, sort of sort of
Speaker 1: a toxic relationship with with Pixar. And so you spoll
Speaker 1: forward a few years and this is really the arc
Speaker 1: of his story in the book, you know, and then
Speaker 1: all those things have changed. He's had this huge comeback
Speaker 1: um with the Pixar I p O and with toy
Speaker 1: story is fifty million loss is converted into now a
Speaker 1: billion dollars of of of of of of wealth. And
Speaker 1: and this is when a billion dollars was real money.
Speaker 1: It's when ill I know, that's right. You know, when
Speaker 1: I came out first, came out to Selicon Valley, we
Speaker 1: used to talk about millionaires like you know, now it's
Speaker 1: like there's a billionaire I to even to count Um
Speaker 1: and his and and his relationship with the how many
Speaker 1: had changed into you know, Um into really like a
Speaker 1: beloved you know, patriarch of soil. He gave all the
Speaker 1: employee stock options, probably not as much as they wanted,
Speaker 1: but they all did wildly successfully. It also all these
Speaker 1: changes that this arc of this I'm thinking, you know,
Speaker 1: you know, had to be important. You know, I know
Speaker 1: it was important and gave him a level of confidence
Speaker 1: and knowledge of the entertainment industry that mattered a lot
Speaker 1: when it came to going, you know, taking on the
Speaker 1: challenge at Apple. So Apple and the music industry, Apple
Speaker 1: and television and film. The experience of Pixar was formative
Speaker 1: to that. What I was there. We did it together.
Speaker 1: I mean, we imagine, I mean what I'm saying, we
Speaker 1: need to go into the entertainment industry. And you've got
Speaker 1: the two business guys running the company that don't know
Speaker 1: anything about that industry. Uh, And so we literally, you know,
Speaker 1: learned it and pieced it together. And so I think
Speaker 1: when he went back to Apple, he was the only
Speaker 1: CEO that had great sort of mastery over both industries,
Speaker 1: you know, of technology and technology and entertainment and you know,
Speaker 1: and and he was brilliant and so he put those
Speaker 1: things together in a way I'm not sure you know,
Speaker 1: anybody else could. So let's let's explain for people who
Speaker 1: have not yet read the book, how often you were
Speaker 1: speaking with Steve or you tell the book. You tell
Speaker 1: them earlier in the book that you lived around the
Speaker 1: corner from him. The two you would go for walks
Speaker 1: all the time. He was calling the house night and day.
Speaker 1: You would frequently like you must have spent thousands and
Speaker 1: thousands of hours with him, Oh, I would say. At
Speaker 1: that time, it was just a continuous dialogue. Started first
Speaker 1: thing in the morning, ended last thing at night. And
Speaker 1: you know, we have a phone by the fax machine
Speaker 1: in the kitchen, and it's every night, you know, he
Speaker 1: calls me. I call him on the weekends, come over,
Speaker 1: you know, go for walks. But it was there. It
Speaker 1: was just an ongoing dialogue, you know, and it was
Speaker 1: a back and forth. It was really a collaboration and
Speaker 1: it lasted for how many years, Well, it lasted were
Speaker 1: oute all the way through Pixar, so you know, I'm
Speaker 1: gonna say all the way through the Disney acquisition and
Speaker 1: then you know, and then he converted you and we
Speaker 1: became friends too. And then you know, after he was ill,
Speaker 1: I spent time with him then, um, and so it
Speaker 1: was it was a relationship that lost it, but it's
Speaker 1: it started with this kind of dialogue. So we're speaking
Speaker 1: with Lawrence Levy. He was the CFO of Pixar and
Speaker 1: helped bring them public and is the author of a
Speaker 1: new book to Pixar and Beyond. So tell us something
Speaker 1: about Steve Jobs that we probably don't know about him. Well,
Speaker 1: you probably don't know about him that I had a
Speaker 1: I had a nasty accident when I first started broke.
Speaker 1: You broke your ankle. I broke my ankle, a very
Speaker 1: bad break that required surgery, and there was a lot
Speaker 1: of pain involved, titanium rods and all that, and so
Speaker 1: there would be no way to know this. But Steve
Speaker 1: was really really concerned about this, and he was very
Speaker 1: concerned about how much pain I was in, and he
Speaker 1: would come visit me in the hospital and at home
Speaker 1: after it was with his family. And so, you know,
Speaker 1: I think that was a side of Steve that that
Speaker 1: people never don't really see. Did you did you read
Speaker 1: the Walter Isaacson biography? Actually I did not. You didn't
Speaker 1: have you read any of the other body I only recently,
Speaker 1: you know, I when The World's Eyes in some book
Speaker 1: came out so close to Steve's death, you know, and
Speaker 1: I was kind of like, you know, I'm just I
Speaker 1: have my own memories and my own experience, and I'm
Speaker 1: just not really ready, you know, to you know, to
Speaker 1: read something like that. So no, I didn't. I'm curious
Speaker 1: as to somebody who's close to him how accurate of
Speaker 1: a portrayal it is. It comes across as if it's
Speaker 1: very accurate, because Steve is the guy who reached out
Speaker 1: to him and said, I wanna chronicle my life for posterity,
Speaker 1: or at least that the implication it is. And of
Speaker 1: course I'm aware of all the information and content and
Speaker 1: reputation of Steve out there, and you know, my my
Speaker 1: take on that is that it's not for me to judge.
Speaker 1: I mean, people have their own experiences, and I'm writing
Speaker 1: my experience, and so so you are perspective at Pixarar
Speaker 1: sounds like and reads like it was very, very different
Speaker 1: than what other people experienced that Apple. Well, you know
Speaker 1: again it I can't speak to what they experienced, but
Speaker 1: I can speak to my experience at Pixar, and you know,
Speaker 1: I can say it was you know, it's that's something
Speaker 1: I look back and I treasure it. So, so let's
Speaker 1: talk a little bit about the process of the I
Speaker 1: p O. He wants to have Goldman Sacks and Morgan Stanley,
Speaker 1: the two biggest banks for technology. I p O. S
Speaker 1: on the book, and they both look at it, they
Speaker 1: assessed the risks and they passed. And what was his response,
Speaker 1: What was his reaction to that? Well, you know, I
Speaker 1: think that was a blow. Um and uh and so
Speaker 1: you know, but he didn't, you know, he sort of
Speaker 1: goes quiet in a way. You know, it's not like
Speaker 1: there's a big bruja over it. It's just was a blow.
Speaker 1: And you know, and so we had to regroup and
Speaker 1: so and and and that's what happened. So so ultimately
Speaker 1: ends up being Um, Robbie Stevenson, hambriken Quist and Count
Speaker 1: and company are the under utterers on the I p O.
Speaker 1: And he seemed to be pretty comfortable with that. By
Speaker 1: the way, it's usually Goldman or Morgan Stanley just to
Speaker 1: describe Steve jobs. He insisted on both of them, he thought.
Speaker 1: So he said, oh, it'll be you know, a part entertainment,
Speaker 1: part technology. We'll get them both. Was that typical of
Speaker 1: his attitude, Let's do something no one's ever done before
Speaker 1: because we can and it will be great. Yeah, But
Speaker 1: it's not because we can, it's it's out of his
Speaker 1: conviction for sort of the greatness of what we're doing.
Speaker 1: I mean, and so whether Pixel or Apple later. I mean,
Speaker 1: it's a reflection of his belief that this work is
Speaker 1: so it's so stunning, it's so great that these other
Speaker 1: people sort of want to come on board, and so,
Speaker 1: you know, it wasn't like to take advantage. It was
Speaker 1: just came from that place of you know, I really
Speaker 1: believe in this, and so everyone else will. How infectious
Speaker 1: was I mean, we've all heard about his reality distortion field.
Speaker 1: How infectious was his almost preternatural self confidence, almost delusional
Speaker 1: self confidence in the face of incredibly daunting odds. How
Speaker 1: much did that impact everyone around him? Well, it's very
Speaker 1: it's very infectious, and I think the key is there
Speaker 1: working with others that can collaborate at a level to
Speaker 1: sort of make those dreams a reality. But the you know,
Speaker 1: but as a certain contagiousness to sort of the passion
Speaker 1: and intensity that he wrote to what he did. We've
Speaker 1: been speaking with Lawrence Levy. He was the CFO of
Speaker 1: Pixar and is the author of Two Pixar and Beyond.
Speaker 1: If you enjoy this conversation, be sure and stick around
Speaker 1: for the podcast extras, where we keep the tape rolling
Speaker 1: and continue discussing all things computer generated animation. Be sure
Speaker 1: and check out my daily column on Bloomberg View dot
Speaker 1: com and follow me on Twitter at Rid Halts. You
Speaker 1: love your comments and feedback. Be sure to write to
Speaker 1: us at m IB podcast at Bloomberg dot net. I'm
Speaker 1: Barry Ritults. You've been listening to Masters in Business on
Speaker 1: Bloomberg Radio, brought to you by Bank of America Merrill Lynch.
Speaker 1: Seeing what others have seen, but uncovering what others may not.
Speaker 1: Global Research that helps you Harness disruption voted top global
Speaker 1: research firm five years running. Merrill Lynch, Pierce, Fenner and
Speaker 1: Smith Incorporated. Welcome to the podcast extras Um Lawrence than
Speaker 1: is it Lawrence or Larry? When Lawrence justish, I assumed
Speaker 1: it was a British That's my middle name is Lawrence. Um,
Speaker 1: so I just assumed you were also a Lawrence. So
Speaker 1: thank you so much for doing this and being so
Speaker 1: generous with your time. Are welcome. I have to tell
Speaker 1: you I read a lot of books for this. I'm
Speaker 1: literally you can see I'm almost done with it. It's
Speaker 1: a fascinating story that I had no idea about. It's
Speaker 1: a fast re eat and you're actually a very talented storyteller.
Speaker 1: So it's I've really been enjoying it. This is like
Speaker 1: perfect thing for people to take on holiday vacations because
Speaker 1: it's it's characters you know but don't really know in
Speaker 1: great depth. Most people who follow any sort of entertainment
Speaker 1: business or even film at least have an idea of
Speaker 1: who John Lasseter is. They they've heard of Pixar. You
Speaker 1: really tell a fascinating story in a very entertaining way.
Speaker 1: I've really I've really been enjoying it. Um. So we
Speaker 1: were talking about the I p O was so successful
Speaker 1: you obviously, um get a little fun money out of it.
Speaker 1: Since then, you've been running or operating something called the
Speaker 1: Juniper Foundation Foundation. Tell us a little bit about that. Well,
Speaker 1: I had another sort of talise running in me. You know,
Speaker 1: I had a great career and I loved what I did,
Speaker 1: both as a lawyer and as a business executive and
Speaker 1: a Pixar But I also sort of took note that
Speaker 1: there's a sort of a one dimensional quality to corporate
Speaker 1: life in a way. It's it's driven, it's an acquisition
Speaker 1: oriented mentality. It's all about performance. And you know, and
Speaker 1: I thought to myself, you know, there are it produces
Speaker 1: incredible things, great technologies, a lot of prosperity, a lot
Speaker 1: of wealth, but they're a hidden cost to it. That
Speaker 1: performance mentality produces costs in terms of stress and anxiety
Speaker 1: and personal performent and how we feel about ourselves. And
Speaker 1: I wanted to go off and learn more about that
Speaker 1: because I felt that we were sort of missing this dimension.
Speaker 1: Everybody puts the family and themselves second, and very I
Speaker 1: shouldn't say everybody, but many people do. When they just
Speaker 1: get so focused on the rat race, they lose sight
Speaker 1: of what matters. They lose sight of what matters. And
Speaker 1: so I had been very disciplined about that in my career,
Speaker 1: so family, my children, my wife and all of that.
Speaker 1: WAS always tried my best to prioritize it. But I
Speaker 1: really wanted to go on a deep dive in that.
Speaker 1: And so and I was past and always interested in
Speaker 1: religion and philosophy, so I went off to discover how
Speaker 1: one might cultivate that side of life. And I found
Speaker 1: it eventually, and basically, you know two thousand tradition of
Speaker 1: Buddhist philosophy and and and and meditation, which I see
Speaker 1: not as a religious undertaking, but if you look but
Speaker 1: I was looking at these things. I was thinking like wow,
Speaker 1: like this these ideas are basically a technology of inner transformation.
Speaker 1: We're really good at the outer stuff, but the inner
Speaker 1: stuff that you know, you need something for that. And
Speaker 1: here was this sort of whole philosophy. And so that
Speaker 1: Lad myself and my wife Hilary, the teacher that I
Speaker 1: had at the time still do um say Rimpoche, and
Speaker 1: and two other individuals. We we founded the Junior Foundation
Speaker 1: in two thousand and three, and the question that we
Speaker 1: set out to ore and so was what would it
Speaker 1: take to embed right in the middle of contemporary life
Speaker 1: UM a system and methodology that could be used for
Speaker 1: this inner transformation. And that system comes from this sort
Speaker 1: of two thousand year old tradition. So there are two things.
Speaker 1: I don't use the term trendy because it almost as
Speaker 1: a negative connotation, but there are two things, especially on
Speaker 1: Wall Street and finance these days, that have become really popular.
Speaker 1: One is meditation, yes, and the other is mindfulness. UM
Speaker 1: tell us how that fits into the concept of of
Speaker 1: Buddhism and what you're doing with the Junior Profoundation. Well,
Speaker 1: I think it's great, and you know, a meditation and
Speaker 1: mindfulness you know, represent sort of an opening, if you will,
Speaker 1: an awakening, a realization that these things that that impact
Speaker 1: us inwardly are are important. And so I'm sort of
Speaker 1: happy to see all this. H Um. I would say that, um,
Speaker 1: those represent like a one piece of the puzzle. Um,
Speaker 1: you know kind of a thing. And I think if
Speaker 1: people take that space of meditation or that space of mindfulness,
Speaker 1: it's like opening a door to a to a world
Speaker 1: in which there are all these tools and ideas to
Speaker 1: cultivate ourselves endwardly. That the key to it is that, um,
Speaker 1: it takes some effort. We have to pay attention to
Speaker 1: do it, and we tend to want to quick fix.
Speaker 1: We tend to want to be you know, like I'm stressed.
Speaker 1: What's gonna take me out of that? Quickly? A pill?
Speaker 1: Here's a pill, you know, or even you know, I'll
Speaker 1: go to a meditation retreat or something like that. But
Speaker 1: it takes an engagement with this kind of methodology and
Speaker 1: so um and so you know, Juniper presents that because
Speaker 1: we present a whole way of looking at you know,
Speaker 1: balancing emotions, cultivating compassion, developing insight, all using meditation as
Speaker 1: the tool to do those things. So that is just
Speaker 1: a radical break from what you were doing previously. What
Speaker 1: were the in between steps? How did you go from Okay,
Speaker 1: I'm a corporate lawyer, now I'm a CFO. The company's
Speaker 1: public were successful, everything is now running the way we
Speaker 1: wanted to. Let's explore the inner space. How did that
Speaker 1: come about? It came There wasn't much of an in between.
Speaker 1: I I just realized the Pixar was in this incredibly
Speaker 1: good place. The plan that we put in place was
Speaker 1: going to go at least ten years. I was on
Speaker 1: the board of directors, and so I would still be
Speaker 1: able to keep my eye on things. And I realized
Speaker 1: I had an opportunity. I had an opening in my life,
Speaker 1: and I was just like, what do I do? I'm
Speaker 1: really interested about these other things that I do. I
Speaker 1: wait another twenty years? Will I be around it another
Speaker 1: twenty years? You know? Now is the time kind of
Speaker 1: a thing. And so that's the decision I made. I said,
Speaker 1: you know, no, don't don't put it off. You know,
Speaker 1: this is something that is deep and and also in
Speaker 1: the back of my mind, I thought that one day
Speaker 1: maybe it would come back around and I would be
Speaker 1: able to take these new learnings back into that corporate
Speaker 1: world because I think that the I think we haven't
Speaker 1: reached the ultimate or the end of sort of the
Speaker 1: corporate paradigm. I think that it has problems in it,
Speaker 1: and as many has much to evolve, and I think
Speaker 1: it's evolution can come out of these kinds of ideas. So,
Speaker 1: you know, you end up in especially in Silicon Valley,
Speaker 1: with people with kind of you know, on the East
Speaker 1: Coast they would be laughable titles, but on the West
Speaker 1: Coast there's a Chief Happiness Officer, there's a there's a
Speaker 1: Director of Joy, there's a like we've we've seen some
Speaker 1: really you're laughing, and you've spent a lot of time
Speaker 1: out there, so you can imagine what jaded New Yorkers
Speaker 1: think of that. Are we eventually going to see in
Speaker 1: the corporate world the chief um mindfulness officer or a
Speaker 1: director of meditation? Or is that one step too far?
Speaker 1: I think it's a step. I don't think it's the
Speaker 1: ultimate step. I don't even know if it's the best
Speaker 1: step that the you know, it it's not us about
Speaker 1: sort of bringing mindfulness and meditation teachers, you know, because
Speaker 1: that's like putting a band aid on a problem. You know.
Speaker 1: And so it's the question of how that entity is
Speaker 1: going to think and work and whether it um it
Speaker 1: wants to take account for the well being of all
Speaker 1: the people that it affects. Both it's not just employees
Speaker 1: but everyone, it's customers, you know, the environment and these
Speaker 1: kinds of things. Because you know, it's interesting, like you know,
Speaker 1: corporations want to be people and when it comes to
Speaker 1: like you know, First Amendment rights, uh, you know, when
Speaker 1: it comes when it comes to third party externalities, they
Speaker 1: don't want to pay for right, But real people, generally speaking,
Speaker 1: don't have the chance to get away with that right.
Speaker 1: If you start acting on with all the people around you,
Speaker 1: someone's gonna, you know, se say, hey, Berry, what's going on? Right?
Speaker 1: You know, And so it's a way of thinking, you know.
Speaker 1: And when the way of thinking is acquisition at all costs,
Speaker 1: short term profit, that's we care about. You can bring
Speaker 1: mindfulness and meditation in, but it's like putting a band
Speaker 1: aid on the problem, you know, because at the very
Speaker 1: same time you know you're teaching mind when it's a meditation,
Speaker 1: you're also putting enormous pressure on your people to perform.
Speaker 1: So no, nothing wrong with that, but the problem is
Speaker 1: to UM look at it from that broader perspective and
Speaker 1: take responsibility for this. And I think that these kinds
Speaker 1: of ideas can can infiltrate the corporate paradigm in other
Speaker 1: ways too. That that's quite quite interesting and really not
Speaker 1: I don't think a lot of people, UM would have
Speaker 1: expected that from UM, a corporate lawyer, but really your
Speaker 1: path was very different, and uh, what I enjoyed about
Speaker 1: reading the book was your approach to problem solving, which
Speaker 1: is very logical and yet at the same time employed
Speaker 1: a lot of creativity. So maybe it shouldn't be a
Speaker 1: surprise that you're now taking a slightly different focus on
Speaker 1: what you're doing. So I want to go through a
Speaker 1: couple of questions we missed and then jump into our
Speaker 1: favorite question. I promised to get you guys out of
Speaker 1: here on time. I'll see if I can I can
Speaker 1: do that. UM. One of the things you had mentioned
Speaker 1: early in the book is the tension between and this
Speaker 1: is very relevant to what you were just talking about,
Speaker 1: the tension between creative integrity and real world necessity. UM.
Speaker 1: Describe that if you would, well, these things sort of
Speaker 1: pull against each other, so you know, the creative impulse
Speaker 1: is sort of by necessary, but it needs to be
Speaker 1: unbound in a way by um, sort of time or imperatives.
Speaker 1: You like. A way of thinking of it is like
Speaker 1: you can't force the gestation of a story, so you
Speaker 1: can't go to someone's I want a great story in
Speaker 1: a year, right, You may get a great story in
Speaker 1: a weekend. You may get a great story in five years,
Speaker 1: but you can't corse it and and um. And so
Speaker 1: what the business imperative wants is that no, I want
Speaker 1: to know, right, I want to know I want this UM,
Speaker 1: I want everything to be sort of orderly and on
Speaker 1: time and and um, because that's the only way I
Speaker 1: can build this thing. And so those things pull against
Speaker 1: each other. And so the challenge for organizations trying to
Speaker 1: do any kind of creative work, it doesn't have to
Speaker 1: be filmed, it could be engineering, design, anything, is how
Speaker 1: to bring harmony between those two things. And it takes
Speaker 1: a fair amount of courage because business executives kind of
Speaker 1: want to smother creativity sometimes with bureaucracy, and so it's
Speaker 1: not easy to allow it to flourish. So later in
Speaker 1: the book, is you're reminding me of something that Steve
Speaker 1: Jobs said, to you and to some of the bankers
Speaker 1: when you were prepping for the I p O. A
Speaker 1: lot of these technologies that seem to have sprung up
Speaker 1: wholly formed or really the result of many, many years
Speaker 1: of gestation. It takes a long time to become an
Speaker 1: overnight sensation. And and he described you describe in the
Speaker 1: book how uh Pixar was developing hardware, they were developing
Speaker 1: software that we're working on narrative storytelling. And then really
Speaker 1: a lot of this was a decade in the making.
Speaker 1: No one would have set out, all right, here's what
Speaker 1: we're gonna do for the next ten years. Here's a
Speaker 1: new company. We're gonna spend ten years developing hardware and software,
Speaker 1: rethinking the approach to creating narrative, and then we're gonna
Speaker 1: first start putting out a product. So so describe as
Speaker 1: a follow up to that that creative tension. How true
Speaker 1: is that today? Do you still think these things take
Speaker 1: much longer than it appears? With Steve right when he
Speaker 1: said that, and what does this mean for us taking
Speaker 1: all these products for granted that seemed to just appear.
Speaker 1: I think it's as true today as any other time.
Speaker 1: I think great work requires a much longer period of
Speaker 1: gestation than we think. You know. One of my frame
Speaker 1: was one of my favorite science fictional authors, Rob Behindland.
Speaker 1: He's he wrote, he said, when we're ready to railroad,
Speaker 1: we railroad, meaning that until we're ready, no railroads. And
Speaker 1: so you know what it means is it takes a
Speaker 1: long period. A lot of things have to come together.
Speaker 1: You know. I remember Stevie and told me once, you know,
Speaker 1: when he was thinking about tablets that you know, he
Speaker 1: was passionate about tablets for a long time, you know,
Speaker 1: had long long before, but he felt it wasn't ready.
Speaker 1: It wasn't ready right, it wasn't ready to sort of tools.
Speaker 1: You know, I went there, he had kind of his
Speaker 1: pulse on that. It was the same with Pixar. You know,
Speaker 1: it took you know, fifty and twenty years for the
Speaker 1: gestation of everything to come together. And I think it's
Speaker 1: not that there are never overnight sensations, but I think
Speaker 1: they're much more rare than we think. Well, it looks
Speaker 1: like overnight sensations really is the result of a lot
Speaker 1: more time. And African people realize so in corporations today,
Speaker 1: you know, they're trying to sort of force innovation in
Speaker 1: a way and or force creativity. Then, um, it doesn't
Speaker 1: sometimes allow for that for that process. So I have
Speaker 1: to just digress briefly. You're the third guest out of
Speaker 1: the previous four or five who drops a reference to
Speaker 1: science fiction. James Glick, who wrote the book, Um, The
Speaker 1: Information and Time Traveler. We were. We were geeking out
Speaker 1: on science fiction. And then I was surprised to learn
Speaker 1: that Bill McNabb, who's the CEO and chairman of Vanguard,
Speaker 1: is a giant science fiction geek. Um, and you just
Speaker 1: referenced Heinland, who I am always quoting. We're in the
Speaker 1: midst of a horrible election and everybody wants to convince
Speaker 1: the other side that they're right. And I believe it
Speaker 1: was the Notebooks of Lazarus Long as a quote I
Speaker 1: use all the time. Never try and teach a pig
Speaker 1: to sing it waste your time and annoys the pig.
Speaker 1: And that's what the political debate seems to be. You know,
Speaker 1: you're either preaching to the choir or annoying people who
Speaker 1: were never going to change their minds. Don't waste your time.
Speaker 1: It really feels that way amongst the citizenry. The candidates
Speaker 1: have to do what they have to do. But it's
Speaker 1: funny you you went right to uh Hindland was filled
Speaker 1: with wonderful But I haven't um finished listening to the
Speaker 1: Jim Click interview. But if you've read any of his stuff,
Speaker 1: time travel of History is a really interesting So so
Speaker 1: we're gonna we're gonna get to some books soon. That's
Speaker 1: still fresh in my mind because um, I'm I don't
Speaker 1: know if you read multiple books at a time. I'm
Speaker 1: I'm finishing two books that and this. These are the
Speaker 1: two books I'm almost done with. Um. So the run
Speaker 1: of films that picks are it's like Grand Slam after
Speaker 1: Grand Slam. How on earth is that possible that you
Speaker 1: careen from Toy Story to Bugs Life Defining Nemo to
Speaker 1: The Credibles too. Like at a certain point, I remember saying,
Speaker 1: all right, the streak has to come starting to an end,
Speaker 1: but it looks like it could go on. And definitely,
Speaker 1: how is that possible? Well, Pixar is you know, despite
Speaker 1: you sort of see all the animation and the story
Speaker 1: glitz and all of this, but it's a very very
Speaker 1: disciplined company when it comes to creativity, and so um
Speaker 1: it has honed over years and years and years sort
Speaker 1: of systems to um to develop these films, you know.
Speaker 1: And so you know the Pixar brain trust that is
Speaker 1: very famous and has been written about, and the story
Speaker 1: team and the production team. UM. You know. An example
Speaker 1: of this is, you know, when Pixar finishes a film,
Speaker 1: it it goes through a painful, you know, process of
Speaker 1: looking at everything that it did wrong. And there's a
Speaker 1: films like a hit. So The Incredibles comes out like
Speaker 1: it couldn't be better. Well, you know, there's a group
Speaker 1: of people that Pixar that spend weeks just criticizing it,
Speaker 1: picking it apart, picking it apart, you know, what went wrong?
Speaker 1: Where we go better? How can we improve our production processes?
Speaker 1: And so they never let up and and then so
Speaker 1: that's sort of on the technical production side, you know.
Speaker 1: On on on the creative side, the the value of
Speaker 1: what they called the brain trust is is and many
Speaker 1: companies try to duplicate that, but that how to make
Speaker 1: that work is much much harder than than I think
Speaker 1: is known. And even if you've read about it or
Speaker 1: know about it, um, because there's a tension in in
Speaker 1: doing great work and on the one hand, you need
Speaker 1: this passionate, create an intensity to create, and have to
Speaker 1: have the talent to go along with it. That's true
Speaker 1: for a writer, a musician, you know, uh, anything that
Speaker 1: that that is great creative, innovative work. But on the
Speaker 1: other side, you also have to collaborate. You have to
Speaker 1: yield to those voices that can sort of help shape
Speaker 1: what you do. And like if you look back at
Speaker 1: even Steve's career, I think you see an absence of
Speaker 1: that yielding and some of those products that that didn't
Speaker 1: make it. And so because there's a lot of hubris
Speaker 1: in the creative side, and so those tensions pull against
Speaker 1: each other. The very hubrists that you know makes you,
Speaker 1: you know, talented and creative and passionate, and all that
Speaker 1: cuts against the very yielding that you need to to
Speaker 1: um sort of keep things in balance and check and
Speaker 1: um which is really important. So is that the secret
Speaker 1: sauce that Pixar is they've found the right balance between
Speaker 1: what we described earlier, the creative tension in the businesses
Speaker 1: and that it is, and between that creative drive and
Speaker 1: and the collaboration it takes to have all the pieces
Speaker 1: come together. And I think picks our mass at that
Speaker 1: tension and It's really interesting because even when picks are
Speaker 1: slips and it forgets about that tension for whatever reason,
Speaker 1: it'll slip and quickly regroup, you know, to sort of
Speaker 1: you know, come back to that. And so it's it's
Speaker 1: hard to there are a lot of there's a lot
Speaker 1: that goes into that. We could do. We could do
Speaker 1: a whole episode here just on that one. So so
Speaker 1: while I still have you, let's talk about some of
Speaker 1: the Pixar executives you reference in the book um and
Speaker 1: and spend a little bit of time, but really don't
Speaker 1: give us a lot of color on them. They're all
Speaker 1: kind of famous people within the industry, but I would
Speaker 1: imagine the public doesn't know them that well. So let's
Speaker 1: let's go through a few of them quickly. John Lasseter
Speaker 1: tell tell us about well, John, and you know, he's
Speaker 1: probably the most well known I mean John is you know,
Speaker 1: the mozart of his generation. When he comes to animation,
Speaker 1: I mean, storytelling through the medium of animation just courses
Speaker 1: through John like it's like he was born with it
Speaker 1: or something like that. And you know, he's a kind
Speaker 1: of a larger than life charismatic character. He's very warm.
Speaker 1: You you greet you with a with a he's interested
Speaker 1: in you and and he's just endlessly creative. You know,
Speaker 1: there's a little boy in him. He was like a
Speaker 1: little child in him, a twinkle in his eye clear,
Speaker 1: and that is reflected in all the output of films
Speaker 1: he does. You could see there is a child's wonderment
Speaker 1: and joy in everything he seems to touch. Yeah. I mean,
Speaker 1: I think he's office is full of toys. And when
Speaker 1: I went there, his office was was old toys and gadgets,
Speaker 1: and I don't think he ever lost that kind of
Speaker 1: you know, um, that creative inquiry. Brad Bird Well, Brad
Speaker 1: came on later, you know, to to direct The Incredibles,
Speaker 1: you know, and which was so different than the previous films.
Speaker 1: There there was a family relationship. You could sort of see,
Speaker 1: oh this is intellectually similar, but it looked and felt
Speaker 1: so different. Yeah, Brad is a very very disciplined filmmaker.
Speaker 1: And it's you know when when a crew it's like
Speaker 1: a cruise, like fall in love with Brad. You know,
Speaker 1: he has kind of a mesmerizing quality over It's a
Speaker 1: very large crew and and that pushed to do a
Speaker 1: lot of things. And he's a great sort of leader
Speaker 1: and um and and so um so when he comes
Speaker 1: on to do Incredibles and he's done live acting films
Speaker 1: as well, you know, in Mission Impossible. But um so,
Speaker 1: people sort of like take to him that he has
Speaker 1: a natural leadership that complements his his creativity. Tell us
Speaker 1: about Lee, Uh, Lee is. It's funny. You know, when
Speaker 1: I was thought of the Pixar, Lee was an editor.
Speaker 1: He was you know, an editor. But you know, John
Speaker 1: recognized this sort of creative talent in Lee and kept
Speaker 1: trying to, you know, bring that out. So Lee is
Speaker 1: um a little sort of he's sort of more understated,
Speaker 1: a quieter by nature, and but an incredible sort of
Speaker 1: force of filmmaking. He's a guy that sort of like
Speaker 1: knows everything about filmmaking. And there's a list of thirty
Speaker 1: or forty or probably the people I can ask, but
Speaker 1: I would be um remiss if I didn't ask about
Speaker 1: Ed catmull. Well, you know, Ed is my great friend
Speaker 1: and you know, beloved by everyone at Pixars. It's sort
Speaker 1: of a co founder. But Ed is and I think
Speaker 1: it's because you know, Ed is sort of professorial, you know,
Speaker 1: almost by nature. You know, he's and that comes across
Speaker 1: a little bit in your depiction of it. He's a listener,
Speaker 1: you know, he's very very attentive. He's a learner, you
Speaker 1: know what I mean. He's I've never known him to
Speaker 1: be otherwise, and so he learns, he absorbs, he listens,
Speaker 1: he talks. He's always respectful, um, and and then he
Speaker 1: kind of and and and then so and then when
Speaker 1: he does put things together and he says, you know,
Speaker 1: his views about things, you're always kind of like, he's
Speaker 1: not the loud, booming voice in the room. If you
Speaker 1: have heard him speaking, it's a great speaking voice. Uh,
Speaker 1: it's kind of an understated speaking voice. But he's a
Speaker 1: voice that you want to listen to what he has
Speaker 1: to say because he's he's sort of put it together
Speaker 1: in ways that matter a lot. So he's wonderful. It
Speaker 1: sounded like this was just a collection of rock stars.
Speaker 1: Everybody at Pixar was really astonishingly talented, and everybody was
Speaker 1: more or less pulling together in the same direction, which
Speaker 1: is really hard to do with a complicated project like
Speaker 1: like you were undertaking that, It is really hard to do.
Speaker 1: And I think Pixar is a collection of rock stars.
Speaker 1: I think a lot of companies that you know, collections
Speaker 1: of of have a lot of rock stars. But what
Speaker 1: Pixar did was to honor that. And that sometimes is
Speaker 1: is because it doesn't matter. You know, someone could be
Speaker 1: a production assistant or working on the budget of the film.
Speaker 1: It doesn't have to be you know, I'm directing you
Speaker 1: know the film or something like that. Um. And by
Speaker 1: honoring all of that, it matters to the culture. And
Speaker 1: and sometimes that's easy to forget what in companies, you
Speaker 1: know what that means to really respect and honor people.
Speaker 1: You You had written about how important corporate culture is,
Speaker 1: and there was concerned when Pixar was being acquired by
Speaker 1: Disney that that culture sure would get destroyed. So two questions, First,
Speaker 1: what what was done to make sure that transition was okay?
Speaker 1: And second, is the Pixar culture still intact even though
Speaker 1: it's a part of Disney. Yes, I mean it's it's
Speaker 1: funny in an acquisition, but I would say that when
Speaker 1: a lot of money is at stake, right, and that's
Speaker 1: what everyone's talking about. But that was the single most
Speaker 1: important point in that deal, was the preservation of pixows culture.
Speaker 1: And I think that if we hadn't believed Bob Iger's
Speaker 1: sincerity in that UM, then that acquisition would not have happened.
Speaker 1: And so you know, Bob promised that Pixos culture would
Speaker 1: be intact, and in fact, he wanted to sort of
Speaker 1: infect Disney Animation, you know, with with Pixows culture, and
Speaker 1: he completely came through on that. And so I think
Speaker 1: if you visit Pixar today, all the things that I've
Speaker 1: been talking about, and they're working very hard to try
Speaker 1: to keep that in place. So I know I only
Speaker 1: have you for a limited amount of time. Let me
Speaker 1: jump to my favorite podcast questions I asked all my guests.
Speaker 1: We we talked about your background of what you did
Speaker 1: before picks are UM, who are some of your early mentors? Well,
Speaker 1: I always have had mentors, UM. I believe very strongly
Speaker 1: in that this is the whole collaboration pod. I've always
Speaker 1: had sort of what I considered being an inner circle
Speaker 1: of people that I really trust, that have got my back,
Speaker 1: that I listened to. So you know, early on, you know,
Speaker 1: well Larry Soncini, for sure, you described that relationship in
Speaker 1: the book. Yeah, for sure. Efia Razzi, who was giving
Speaker 1: me my first job in electronics for imaging, UM, you know,
Speaker 1: I would go on, I have to include my wife
Speaker 1: Hillary and that in in in that circle, um say, Rimpochet,
Speaker 1: who has been my mentor and teacher on this new
Speaker 1: you know part that that I'm doing now and and
Speaker 1: even in writing the book, I've had incredible mentors to
Speaker 1: sort of help me. So that's so you really accomplished
Speaker 1: a lot of pis are what business people well influenced
Speaker 1: your approach to what you did at Pixar. Well, you
Speaker 1: know at Pixar, the people that I've told him about,
Speaker 1: I mean, and in business, I cut my teeth a
Speaker 1: lot with Fie Rozzi Fie who's who's passed on now.
Speaker 1: But he was a brilliant entrepreneurs from it, I mean
Speaker 1: he was. It's funny. You know, he was known as
Speaker 1: the Steve Jobs of Israel because he created the company
Speaker 1: called side Ticks, which just put them on the map
Speaker 1: from a technology point of view, but um put the
Speaker 1: whole country one. Israel has become known as a hot
Speaker 1: hotbed of high tech. That was the first really big success.
Speaker 1: It was the first really big success and it was
Speaker 1: it was him who did it and um and so
Speaker 1: we you know, we built that first company of electronics
Speaker 1: for imaging together and um, and he was brilliant and
Speaker 1: I learned a lot from him. And I also, you know,
Speaker 1: but I had the advantage because when I was a lawyer,
Speaker 1: I was sort of a business lawyer because I was
Speaker 1: doing these transactions for all these companies, these startups that
Speaker 1: were trying to you know, break cannon, doing deals with
Speaker 1: all these big companies. So I met a whole bunch
Speaker 1: of CEOs, you know Ken Osman, who was a founder,
Speaker 1: old time founder of Rome, and then he was doing
Speaker 1: another company called Echelon, and so I had, you know,
Speaker 1: a lot of interaction with different people in Silicon Valley,
Speaker 1: and so I, you know, started absorbing a lot from them.
Speaker 1: And then and then I met Effie and then of
Speaker 1: course Steve. So that that's quite on Sasani, Effie and
Speaker 1: Steve jobs for pretty pretty good mentors to have. And yeah, no,
Speaker 1: I've been on that front. I've been very fortunate. So
Speaker 1: let's talk about books. So I mentioned I enjoyed this.
Speaker 1: Tell me about some books that that you've enjoyed, fiction,
Speaker 1: non fiction, technology, It doesn't matter what. What sort of
Speaker 1: books have you really read and have resonated with you. Well,
Speaker 1: I'm avid read there so there's a lot. But I
Speaker 1: am by the way, I constantly get emails from from
Speaker 1: listeners who say, what was the book he referenced? I
Speaker 1: couldn't find it, could you. People really want to hear
Speaker 1: book recommendations more than anything else, So feel free to
Speaker 1: go over many books as you like. Well, it's only
Speaker 1: like a lot of Hinden books. I am a bit
Speaker 1: of a science fiction boff. Brandon Santison's UM series that
Speaker 1: that that that he's doing now, The Way of Kings
Speaker 1: is absolutely brilliant. Um I UM. As far as literature
Speaker 1: is concerned, Thomas Munns The Magic Mountain the big influence
Speaker 1: on me. That's a big undertaking. Uh. He also wrote
Speaker 1: Death in Venice, and I thought there's a very powerful
Speaker 1: literary literary books. UM. Joseph Campbell's Hero of a Thousand
Speaker 1: Faces big influence, UM, especially for anyone in in narrative
Speaker 1: storytelling and mythology, pathology. Absolutely brilliant. And I've watched all
Speaker 1: of Joseph Campbell's videos that he did on PBS, UH
Speaker 1: many years ago. UM. And now you know, I'm into
Speaker 1: sort of you know, five year old you know, sort
Speaker 1: of Buddhist philosophy, you know, there's a book, um, the
Speaker 1: Great Stages of the Part by great teacher called jades
Speaker 1: On Copper UM T s O N G k p A.
Speaker 1: That's a very challenging undertaking, but it sort of took
Speaker 1: me years to work my way through that. UM and
Speaker 1: uh so there's uh, there's a few that come to mind.
Speaker 1: UM A recent one, gosh um UM. One of the
Speaker 1: inspirations for this book was the Boys in the Boat, Boys,
Speaker 1: Boys in the Band, Boys in the Boat. Um M,
Speaker 1: that sounds absolutely incredible. It's being absolutely incredible story about
Speaker 1: the US rowing team and um huge bestseller and um
Speaker 1: and going to Germany. Dan Brown. Dan Brown is the
Speaker 1: author of Boys in the Boat and Oh, I don't
Speaker 1: know if you've read Ready Play a one, UM, which
Speaker 1: is a current that's just super fun, just a super
Speaker 1: fun Ready Player one. I think Steven Spielberg is making
Speaker 1: that into a movie. Really that's very interesting. So, um
Speaker 1: so there's a few for you. So aside from um reading,
Speaker 1: what do you do outside of the office, What do
Speaker 1: you do to relax? What do you do to stay fit?
Speaker 1: That's a question I get from readers all the time
Speaker 1: about guests. I've been sort of a bit of a
Speaker 1: fitness buff. And so during you know, when I was
Speaker 1: working really hard, I was I ran, you know, and
Speaker 1: I always just if I could go out and just run,
Speaker 1: like you know, even two or three miles, like you know,
Speaker 1: five or six days a week. I did that all
Speaker 1: the time. And then a few years ago I started
Speaker 1: reading you know, as you get a little bit older,
Speaker 1: its resistance training is good. So I took up to
Speaker 1: the weight training in the gym, and I do that
Speaker 1: you know regularly now. So I find that exercises, um,
Speaker 1: you know, there's huge benefits to it. Um. And then
Speaker 1: of course I I do a lot of meditation and practice.
Speaker 1: So that's an important part of my life. And and
Speaker 1: then you know, you know, my family still left to
Speaker 1: sit around and watch you know, Gilmore Girls and the Voice,
Speaker 1: and so you know, that's what we do for for entertainment.
Speaker 1: So my last two questions, these are my favorite questions.
Speaker 1: If a millennial or a recent college graduate were to
Speaker 1: come up to you and say, I'm interested in a
Speaker 1: career in law or business or entertainment, what sort of
Speaker 1: advice would you give them? I the advice iart with
Speaker 1: give them is that, regardless of what you're interested in,
Speaker 1: get some deep experience in something, in anything. Um. You know,
Speaker 1: what I see a little bit is sort of jumping around. Um.
Speaker 1: You know, and what I think is more important is
Speaker 1: to just go deeply into something for a while. Don't
Speaker 1: just skim the surface. Really learn at least some areas,
Speaker 1: some area, even if it's not what you ultimately want
Speaker 1: to do. UM. I mean I've given this advice, you know,
Speaker 1: to my own children, you know, and and so because
Speaker 1: I think it's in going deeply in something. And this
Speaker 1: also gets us back a little bit to the meditation
Speaker 1: as well, which is that it's the going deeply into
Speaker 1: something that crafts us. You know, it's easier to stay
Speaker 1: on the surface, but it's when things get rough. It's
Speaker 1: when you know you're you're having you know, difficult time
Speaker 1: getting a project down, or a hard time with a boss,
Speaker 1: or this material doesn't make any sense, or you know,
Speaker 1: like meditation is really hard, or I don't understand this
Speaker 1: point of philosophy. Whatever it is, it's that's what shapes us,
Speaker 1: you know. And so you know, I take an analogy
Speaker 1: like to a mountain. If you want to, um, if
Speaker 1: you want to climb a mountain, you have to pick
Speaker 1: a path um and if you're constantly circling around looking
Speaker 1: for the best path, you'll never climb the mountain. And
Speaker 1: so reference that we were just circling. So I say
Speaker 1: to young you know, you know people as well climb
Speaker 1: a mountain. You know, it doesn't have to be the
Speaker 1: ultimate mountain or the only mountain. You know, there a
Speaker 1: lots of mountains to climb, but but at least climb
Speaker 1: a mountain and then go through the rigor of that,
Speaker 1: and then you'll figure out what the next mountain is.
Speaker 1: And and our final question, what is it that you
Speaker 1: know about the entertainment industry and and running a company
Speaker 1: such as picks are that you wish you knew twenty
Speaker 1: five years ago when you started on this endeavor? Oh,
Speaker 1: I don't know. You know, that's a that's a really
Speaker 1: good question. I kind of go into everything with the
Speaker 1: fresh mind, you know. I I just I didn't wouldn't
Speaker 1: even know how to answer that. You know, there's I
Speaker 1: wouldn't change it, Like if I'd known more than I wouldn't,
Speaker 1: the experience wouldn't have been the same. I'm asking a
Speaker 1: Buddhist and I as I was saying the words, I
Speaker 1: know the correct answer is it is the path, not
Speaker 1: the destination. So I as the but I asked everybody that,
Speaker 1: and I knew I was going nowhere as soon as
Speaker 1: the words stumbled out of my mouth. Lawrence, thank you
Speaker 1: so much for for having this conversation with us. It's
Speaker 1: really been fascinating. If you enjoy this conversation, be sure
Speaker 1: and look up an inch or down an inch on
Speaker 1: iTunes and you could see any of the other I
Speaker 1: want to say a hundred and twelve or so conversations
Speaker 1: we've had over the past two years. We love your
Speaker 1: comments and feedback. Be sure right to us at m
Speaker 1: IB podcast at Bloomberg dot net. I would be remiss
Speaker 1: if I did not thank my head of research, Mike
Speaker 1: Patnick and my booker Taylor Riggs for helping out. I'm
Speaker 1: Barry Ritults. You've been listening to Masters in Business on
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