Pixar and Beyond

Chapter 1 - Why would you do that

- Lawrence meets Jobs
- Jobs pushed out of Apple in 1985. He was looking for a comeback with Pixar 1986
- Levy comes in 1994 when Jobs asks him to be CFO of his money losing venture
- Levy and Jobs had no experience in film business

Chapter 2 - Good soldiers

- Levy goes to visit Pixar. Consults family, mentor and against better judgement, accepts job offer
- Feb 1995, Levy starts, months before Toy Story release

Chapter 3 - Planet Pixar

- Levy noticed two things
- Levy discovered four money losers
- Became clear to Levy and Jobs that the only way to make money at Pixar would be in feature animation film production

What were the two things that Levy noticed when joining Pixar?

- Nobody was excited about him, there was distrust
- Pixar has no prospects for profit, they had lost millions of Jobs' money

What were the four Pixar money-losers?

1. Hardware - the Pixar Image Computer
2. RenderMan
3. Award-winning short films don't make enough money
4. Animated commercials won't pay back 50MM investment

Chapter 4 - Starving artist

Outlines a deal with Disney, Levy is perplexed by Jobs' poor choice

Chapter 5 - My Big Break

- Levy details challenges of getting Toy Story made
- Toy Story was like climbing mount Everest or landing on the moon for the first time
- Animation was key challenge (skin and hair)

Chapter 6 - What's an Entertainment Company

- Jobs and Levy has no experience in the entertainment world
- Talking to Disney exec, Levy learns the standard business model
- Levy gets constant pressure from Jobs about going public

What is the standard business model in entertainment?

Make enough money on the ones that do work for the ones that don't perform. This switched Pixar's focus from hardware/software to entertainment

Chapter 7 - Stock option problem

- Leading up to Toy Story's release Levy dealt with conflicting forces of employees wanting their stock options and Jobs pushing for the IPO
- For the first 10 years of Pixar Jobs owned all stock and usually the longer you wait, the higher employee stock will be
- Jobs wanted to skimp on employee stock options (15%)

Chapter 8 - The Four Pillars

- Levy figured out Pixar's strengths over Disney and devised a Four Pillar Plan

What are Pixar's strengths over Disney?

- Disney does not know how to market to whole family (co-viewing)
- Toy Story had to out perform Aladdin

What is the Four Pillar Plan?

- Quadruple profit share
- IPO raise at least 75MM
- Increase rate of production
- Make Pixar a worldwide brand

Chapter 9 - IPO dreaming

- Levy viewed IPO as having a lot of explaining to do
- Jobs viewed IPO as the biggest ever
- Tech meets Toy Story, Silicon Valley meets Hollywood

Chapter 10 - On Board

Levy manager to pull a BoD together despite Jobs' pickiness because he didn't want it to be big and Hollywood

Chapter 11 - The Gatekeepers

- Pixar needed investment bank
- Jobs expects most prestigious firms
- Pixar is shaky to investment firms

Chapter 12 - Speechless

- Jobs stunned after being turned down by Goldman Sachs and Morgan Stanley
- LOW POINT OF BOOK

Chapter 13 - West Coast Swagger

- Need investment bank for IPO in 1995
- Levy pitches to Robertson Stevens and gets them regardless of Jobs' skepticism

Chapter 14 - Hollywood Cred

- Needs two more investment firms
- Asks Hal Vogel to be Hollywood cred to help get more investment banks
- Hal Vogel is fairy godmother
- Landed Cowen and Co and CEO agrees to do "dog and pony show with Jobs"

What chapters in this book are Act 1?

Ch 1-11

What chapters in this book are Act 2?

Ch 12-17

What chapters in this book are Act 3?

Ch 18-24

Why did Levy ask Hal Vogel?

Because he wrote the book about a crash course in the film business

What were the three investment firms that Pixar landed?

- Robertson Stevens
- Cowen and Co
- Hambrecht and Quist

What is the "dog and pony show"?

Do big tour, meet potential investors and try to impress everyone in the community so that when your stock comes up everybody wants to buy it

When did Toy Story premier?

Thanksgiving weekend, Friday November 22 1995

Chapter 15 - Two Numbers

Two numbers in question:
- IPO stock price ($22)
-Opening weekend box office (predicted 10-15MM with 75MM goal)

Chapter 17 - PIXR

- PIXR offered at $22 but started trading at $47 and ended day at $39
- Jobs became billionaire based on stock value

Chapter 18 - From the heart

- Pixar had leverage with money raised from IPO
- Achieved one pillar
- Needed to increase production, release every 18 months

How much money did Pixar raise with IPO?

140 million

What did Pixar do to increase production

- Triple staff
- Find new talent
- Train in Pixar university

Chapter 19 - The anatomy of a deal

- Levy and jobs offer Disney a deal

What was the deal that Levy and Jobs proposed to Disney?

- Creative control
- Favourable release windows
- True 50/50 profit share
- Pixar band (Disney Pixar)

Chapter 20 - Poker time

Michael Eisner (Disney) was open to the new deal but didn't follow up for about 6 months despite Jobs and Levy's efforts

Why did Pixar need to renegotiate a deal?

Pixar wouldn't be able to live up to the part of the deal with Disney that states they need to create three original films as creating Toy Story 2 doesn't count as an original film

Chapter 21 - The last twenty percent

- Disney finally called back and agreed to deal
- Pixar managed creative control: any film with a budget over $100 million had to be directed by Lasseter or someone who co-directed with Lasseter in order for that director/Pixar to retain creative control and not have Disney meddle in

When did Disney sign the 10 year five picture deal?

1997

Chapter 22 - A little credit

- Levy fought hard to get ALL employees at Pixar in the credits. Tradition has it that those who work in the production office, don't get a credit- this includes people working in finance and human resource, among others.
- Levy got them listed in the Thank You section of Bug's Life, but as an Executive at Pixar, he couldn't be thanked.

Chapter 23

- Apple buys Jobs another computer business
- Jobs returns to Apple as a non-salaried consultant poised to change the way we communicate

Chapter 24

- Levy realized Pixar had risen so high after long string of hits
- Levy saw two options to avoid fall in stock
- Disney acquires Pixar in 2006

When was Pixar stock the highest?

2005

What were Levy's two options for avoiding a stock price fall?

- Diversify, open parks and merchandise
- Sell to Disney

What did the banks suggest the IPO price be?

$12-$14

What did Jobs predict IPO weekend profit would be?

10-15MM

What did Levy predict IPO weekend profit would be?

8-10MM