To Pixar and Beyond | Lawrence Levy

Summary of: To Pixar and Beyond: My Unlikely Journey with Steve Jobs to Make Entertainment History
By: Lawrence Levy

Introduction

Embark on an epic journey with ‘To Pixar and Beyond,’ where Lawrence Levy recounts his daring adventure in partnering with Steve Jobs to transform the struggling Pixar Animation Studios into a revolutionary powerhouse breaking box office records. Through intricate storytelling and an intimate look into the world of Pixar, dive deep into the challenges, dreams, and life-changing decisions that shaped Pixar’s fate. Gain invaluable insights into the foundational four-pillar business strategy, negotiations with Disney, and the power of creative freedom. Set foot into an unlikely tale that ultimately leads to the mastery in balancing structure, practicality, and fluidity, leading Pixar to make entertainment history.

A Journey to Pixar

Lawrence Levy’s journey to Pixar, despite its uncertain future, was fueled by an inspiring environment that lured him in. Steve Jobs saw the potential in the small software company and wanted Levy’s help to run and develop the business. A tour of the facilities and a glimpse into the creation of Toy Story convinced Levy to take a risk and accept the role of executive vice president and chief financial officer at Pixar.

Pixar’s Rocky Start

When Lawrence Levy joined Pixar, he discovered the employees were distant due to Steve Jobs’ unfulfilled promises. With their distrust lingering, Levy took the opportunity to understand the company’s work. Pixar’s projects were not generating substantial profits except for the software program called RenderMan. Leveraging Pixar’s Patent to motion blur, the company signed licensing agreements with Microsoft and Silicon Graphics, which was a short-term win. Other projects such as animated commercials, short films and Toy Story were less profitable. The company’s contract with Disney allowed them to make only three movies with Disney’s limited share of annual profits to around $4 million, an amount which was not enough to grow the business. Pixar desperately needed to make more money, but it seemed impossible.

Pixar’s Quest for Profit

Pixar’s hope of becoming profitable lied in the entertainment industry. After realizing the profitability of home videos, Pixar decided to dedicate itself to becoming a successful animated film studio. However, going all-in on animation was a gamble since it would be hard to diversify offerings without the safety net of a theme park or distribution deal. Pixar also faced the challenge of having a successful Initial Public Offering since no modern animation company had achieved this in the past. With this in mind, Pixar needed a solid business plan to generate the kind of profit growth investors preferred.

Pixar’s Four-Pillar Business Plan

Pixar’s success hinged on a solid business plan consisting of four pillars. The first pillar involved negotiating for a larger share of film profits from Disney, while the second entailed raising funds for production costs through an IPO. The third pillar centered around growing the company’s capacity to develop multiple films, while the fourth emphasized the need to establish the Pixar name as a reputable animation company. These pillars formed the foundation for Pixar’s viability and eventual success.

The IPO Journey of Pixar

Pixar faced rejections from industry leaders Goldman Sachs and Morgan Stanley when it came to raising money through an IPO. However, it successfully rallied a team of three investment banks to support the cause. With Toy Story’s release approaching, it was the ideal time for Pixar to bring the banks on board as it wouldn’t have another film for release for several years. Three investment banks, Robertson Stephens, Cowen and Company, and Hambrecht and Quist, backed Pixar and predicted a $700 million valuation. However, Toy Story exceeded expectations at the box office, collecting $190 million and leading to a whopping $1.5 billion valuation on the day of its IPO. The success created a billionaire in Steve Jobs.

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