- The lead up to Pixar’s hugely oversubscribed IPO was marked by great change
- In this book, Lawrence Levy – then finance director – describes how he and Steve Jobs changed the direction of the company forever
Steve Jobs had a knack for choosing great deputies. At Apple (US: AAPL) he picked Tim Cook as his chief operating officer, who provided the focus and discipline to turn Mr Jobs’ endless imagination into the world’s biggest company. And he made Lawrence Levy the finance boss at Pixar, then a fledgling animation and computing company which Mr Jobs had acquired eight years previously.
Mr Levy’s appointment – made to “stem the tide of red ink” which was cutting fiercely into Mr Jobs’ personal wealth – resulted in a hugely oversubscribed initial public offering (IPO), the highest grossing animated film of all time and a 50:50 partnership with the world’s biggest media company, Walt Disney (US: DIS); all of which are chronicled in Mr Levy’s uplifting book, To Pixar and Beyond.
The corporate success brought on by the Jobs/Levy partnership made both very wealthy men, but financial matters are second billing in this book: this is the story of a company with a soul.
Pixar might have been heavily loss-making, with little business acumen or focus, when Mr Levy got his hands on the books in 1994, but it had a strong culture and identity that endured throughout the company’s time on the stock market and long after it was acquired by Disney. The author recalls remarking to his wife soon after joining the company that he had never “seen so much talent under one roof”.
Keeping hold of that talent, nurturing and rewarding it proved vital to the company’s achievements. When Pixar joined Nasdaq, the entire staff were offered options which allowed them to share in the storming success of the IPO and subsequent share price growth. Pixar listed at $22 on 29 November 1995 and by the end of its first day of trading, the shares were worth $39, giving the company a market capitalisation of $1.5bn. By the time it was acquired by Disney just over a decade later it was worth $7.4bn.
Importantly, that meant that through the years of change and growth Pixar was able to hold on to its innovators, creative directors and senior management. Founder Ed Catmull retired from his position as president of Walt Disney and Pixar in 2018 and creative director John Lasseter left in the same year. Many of the creative staff and film directors now hold senior management roles within Disney.
The culture also proved crucial for business dealings. Mr Levy talks of his pride in walking away from a production deal with Disney which included a joint share of the profits but failed to give Pixar equal brand value. The deal would have secured the financing for Pixar’s upcoming film roster and quadrupled its share of the profits, but according to Mr Levy, “there are moments when principle matters. There was no way we were going to feel great if we ceded to Disney on the branding issue”.
A few months after Pixar walked away from negotiations, Michael Eisner, then chief executive of Disney, reopened discussions and agreed to give the Pixar brand equal billing on all collaborations in exchange for a share in the company. Disney would provide the corporate firepower, Pixar would provide the creativity and all films would be published as Disney-Pixar productions. The mighty Walt Disney – the only media company in history to successfully build a multi-generation animation brand and profit from cartoons – had agreed to a 50:50 collaboration with a small creative group which was being financed out of the pocket of its largest shareholder. “For a long time afterwards, whenever Steve and I passed a Disney store we would run in to examine the Buzz and Woody dolls,” says Mr Levy, “we would look at the tags so we could see the Disney and Pixar logos equally displayed on the back. I am quite certain there were no others in the store who were smiling so gleefully.”
To Pixar and Beyond provides entertaining anecdotes of the corporate wrangling involved in the lead up to an IPO and delves into the challenges posed by a fast-changing media landscape. But more than that, it offers unrivalled insight into the mind of one of America’s greatest business leaders. “Time and again, I saw how Steve preferred that we come to a mutual resolution, marching forward together, rather than acting on an outcome that he imposed.” In the quest for better governance, chief executives and finance directors should seek to follow the example set by Messrs Jobs and Levy.