Ed Catmull, Co-founder of Pixar

30:22That's what pissed him off. It pissed off Steve. So it was just sitting there and the deal was that if we wouldn't make it, they could. So at some point, a few years later, they started to make their own version of it. Which would kill the morale on your team because they don't think of these people. This is like just the amount of effort and energy they put into the character is almost like your child. It's like saying, now somebody else is raising my child. Yeah. And they're going to do a terrible job. They're not going to do a better job than John Lasseter and Ed Catmull and the talent that you have at Pixar.

31:01It put in that strain between them. Now, our relationship with the studio and with marketing was very good. So that was between Steve and... Did it strain your relationship? Like, how did it change the way you viewed Michael Eisner? Because I know Steve's pissed off, but aren't you as well? Oh, yeah, yeah. Okay. No, no, I was not a fan of his. A war was now brewing between Michael Eisner and Roy Disney, who didn't like what was going on there. And Roy was on the board of Disney. Roy was on the board, but was forced off. Yeah. And when he was forced off, that's when this war took place, because he still had a lot of shares in the company.

31:42And it was very public. There was a book written about it. Yeah, me and Rob, my partner Rob, have been reading the book. Why can't I think of the title? Disney Wars. There you go. There's a war about it. It's called Disney War. And it starts out. I've got the book there. Yeah, it starts out with Roy and something about a Ferrari. They wanted to interview us. And none of us would talk with the writers of the book. And the reason was that we didn't know how this was going to end up, but we didn't know how to skirt the relationship with the other people. None of us said anything. So even the parts of it which are about Pixar are the things about Pixar perceived through the Disney lens of the people who were there.

32:26It wasn't bad. I mean, it just was. So, yeah, in that context, Eisner is fighting multiple wars on multiple fronts because he's also got this war-received job going on at the same time. Well, that's a personal thing. Yeah. From the point of view of Pixar with Disney, there isn't any war going on there. We're basically neutral in this. But what is your reaction to this when they make the decision for Toy Story 3? Is this when Steve says he's breaking off the— because there was a time period where Pixar breaks off the negotiations with Disney completely. Is this the same time? Well, no. What's happening is we're just getting near the end of the contract.

33:01But we're getting close to delivering the last film. and at which point Steve would not have let Pixar stay with Disney. Steve at this point also knew that he had cancer. He was, there was an emotional time once in which, it's actually when he showed us the first iPhone when it was a secret. and we're on this bridge between one building and there's a bridge over that goes between another tall building next to it. And their secret lab is where they're designing it. And he told us that he didn't know how long he was going to live. And he lived several years after that, but he wanted to make sure that his family was taken care of.

34:00He wanted to see his son graduate from high school. And he wanted to make sure that Pixar was in good shape. It was very emotional at that time. Michael Eisner was still the CEO, and he would not have continued with Michael Eisner. So since we were getting into the contract, he started discussions with other studios, which would mean them doing the distribution. In fact, Disney is the best at marketing films including internationally. We started those discussions and then the war over Michael Eisner got really heated up and they voted him out but then they went through this process of who were they going to select.

34:51Bob Iger was in that group. Steve had talked with Bob Iger in the past because at the time he was like the COO because Michael Eisner was busy fighting out this major lawsuit that he was in with Disney and the board and all that. And they finally made a decision. Once he takes the CEO role of Disney, and if I remember correctly, Bob Iger had said, when he knew, the first person he called was his daughters, and the second person he called was Steve Jobs. Yes. So he called Steve at his home on Sunday night and said, tomorrow it's going to be announced that I'm the new CEO, so this needed to be confidential until that time.

35:35He said that he's been to all the parks and he knows that all the new material is coming from Pixar. There's actually an interesting story about that where I think this might have been Bob Iger's book, might have been in yours too, where he's standing next, this is before he's CEO of Disney. It was his book. Okay, he's standing next to Michael Eisner, I think they're at Hong Kong Disney. and Michael's like, let's watch the parade. You know, the parade that happens at the end of every day and all the characters are going by and he realizes every single character that is popular in the parade was created by Pixar and not Disney Animation.

36:11And that's how he knew, no matter what, I cannot let Pixar get away. What happened when he called Steve, he told Steve that, but then he said that he's been to Disney Animation and they say that they've got it almost fixed. Essentially, they've found what the problems are and they're about back on track. And you would have called that bullshit at the time? What Bob says is he did not believe that they were nearly fixed. And you didn't believe that either? Oh, no, I knew it wasn't. Okay. I knew it.

36:48They didn't have a shot at it. But he knew it, and he told Steve that he didn't know how to find anybody and the only ones he knew who knew how to run animation that was Pixar, so can we talk? And Steve says yes, as soon as you're ready. So that was their conversation. Steve was blown away because Bob Iger starts the conversation by saying, I've got a crappy hand, can we talk? And for him, it's like, that's a show of honesty It's unusual. Usually you don't start a negotiation by saying, hey, other party, you have all the leverage here. That's right. Bob just started off by being completely honest, and Steve said, okay, this is somebody I can be a good partner with.

37:38And they formed a very close bond and relationship throughout the rest of Steve's life. And Bob's solution was, we want to buy Pixar. Yes. But that's the first thing he wants to do, and he talks about it in the book, because the board does not want it. But here's what we see is, and I will say incidentally up to this point, we're now almost 15 years since our original signing of that first contract with Disney in 1991. That contract gave them the right to look at everything we did and all of our processes. As we started to become successful, nobody from Disney ever came and said, what are you guys doing?

38:22Now, they're starting to go downhill. I think their last really big hit was Lion King. Then it started to go down from there. We're going up, and we show them the films. We take them down and, you know, get notes from them and so forth. But nobody ever asks what we're doing or what's different. Why is it that Pixar is so different? It's very curious. So now for me, it's just observations like, okay, why aren't they serious? Why aren't they asking? Then we found the contract, the pie picture contract to continue it, which continues that right to see everything that we're doing. Now we're very successful and they're very unsuccessful.

39:13And still nobody ever asked, what are you doing? And there are no secrets. We're not hiding anything. ever. What's going on there? I have a theory. Part of it, I think, that this has to do with you go to your first conclusion and you stop thinking. In this case, they would have thought that this is, the reason Pixar is successful is because they've got some combination of, it's like it's John Lasseter's got it or John and Ed or John and Ed or Steve, some combination of three. We don't have them, and that's the secret to their success. So we can't copy that. Now, that's just a shallow way of thinking.

39:58The real question is, what is it that's being done that's different? Everybody's different, but what are they doing? And there was a logic behind the way we built Pixar and the culture at Pixar, which is unlike anything else in the entertainment industry. There was nothing secretive about it. Nobody cared to know. Bob decided to come up as soon as he was made the CEO. He came up to Pixar, and the idea was to spend a day with us, seeing what we were doing, how we thought about things, and what we had in the works. And when he came, he walked up our walkway to the building alone. No assistant, no entourage.

40:48You know, a driver dropped him off. He came up alone, spent the whole day going around. And the first thing is, like, from the people at Pixar, the fact that he came alone was very impressive, right? No group of people coming around, so very personal. Bob loved what he saw and then he went back and said okay we have to do this and that was his first major battle with the board which he did write in book this was too big of a risk and too much money what did he see that day that made him arrive at that conclusion he just saw the way we worked the interaction, the ideas that we were working on the style

41:36honestly it's the way I look at any film that we're working on is when we're working on a film, and you've got a group trying to solve the problems, and as I've said many times, when you start off, these films aren't done. They're beginning. They have many problems. They suck and all sorts. I think in the book you say embrace that early work will always suck. Yeah, so basically, if that's true, then how do you measure whether or not you should keep doing it? It sucks. Well, let's keep on doing it. So what's your basis for proceeding? And for me, the basis was what's the spirit of the team? Because we all know it doesn't work.

42:24But if they're really working together and they're laughing and then they're angsting and all that together, then that's when you say, okay, we just keep going. We just keep trying to solve it. Along that line, before I left, we completed 21 of the 22 films we started. So this is bizarre in that world. And at Disney, we completed, by the time I left, 10 of the 11 that we started. So it was just a different way of thinking about it. If we're going to fix the problem, and a hard problem is more likely to lead to an interesting film. Say more about that. Well, if it's easy, then essentially it's more derivative.

43:12Like, you know how to write a script. You know what the three-act structure is. You know all these elements of storytelling. And you put together all the pieces, and you've got a story. Is it a great story? Is it emotional? Well, sometimes yes, sometimes no, but the statistics actually aren't terribly good. But it's fairly easy to come up with something which is mediocre. It's cheaper, too. If you take on hard things, then you need to spend more time trying to figure it out. You're trying to figure out how to be different in what you're doing. So if you take on a hard problem and you just keep pushing at it, then the fact that it was hard is what's going to make it different.

43:59So if you're going to make a movie about a rat that wants to cook, that's not a slam dunk. Not only that is, you know, a lot of people want to keep their project secret. This is one where you can tell everybody we're going to make a movie about a rat that's going to cook. Nobody's going to copy it. But what is the measure? Because sometimes things don't go right. So we will change up people. We've changed out some directors. Including on Toy Story 2. Was that the first time you changed directors? Yes. Because the reasoning is that the one thing that the director can't do, they can screw up in all sorts of ways, but they can't lose the team.

44:49That was our guiding line. If the team is together. You mean the team lost faith in the director? In the director, right. So then our phrasing was the director can't lose the team. But we are doing everything we can to help them because sometimes you've got new directors. And sometimes these are really good people. You gave them the position because you believed they could do it. And even though they've been close to it and they've watched it, holding the mantle is a different kind of thing. And it's pretty difficult. It isn't like, let's say, baseball where you can give credit to the starting pitcher and the middle pitchers and the relief pitchers, and they all get credit.

45:39With directors, everything sort of goes to the final name that's up there. The reality is everybody was contributing, even that first person that was there. It's really hard on people to do that. So most of the behind-the-scenes work is to shore them up, help, provide guidance, because you really want everybody to succeed. But if they lose the team, then we have to make a change. But the result is we push things all the way through. And in the case of, I said we completed 21 or 22 films we started. What's the one film we didn't finish? Well, that one, we actually did assign to another director to complete.

46:28And he took a pass at it. And this was Pete Docter. and Pete said, you know, this is, you know, we're getting this film going now. It's such an uphill thing that there's actually an idea that I have that's been rolling around in my head that I think might be better, and it takes place inside the mind of a little girl. And this is inside out. Yes, so we said, you're right. But also, you're relying on the passion. So Pete Doct, who's very well-loved at Pixar, and he wants to tell this rather emotional film, and he says, okay, we're in. So 22nd became one of the other films that was completed. But that's just the process.

47:23There are no real strict rules. We're just trying to get to the quality, and we're trying to get it to work and have those teams work. I found one of my all-time favorite quotes when I was reading the book Zero to One. The quote says, The single most powerful pattern I have noticed is that successful people find value in unexpected places. And they do this by thinking about business from first principles instead of formulas. That is exactly what AppLovin has done with their advertising platform, Axon. Axon connects you with over a billion potential new customers inside mobile games. Axon allows you to capture undivided attention.

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48:41That is axon.ai forward slash Senra. When you do that switchover from Toy Story 2, John Lasseter is put in charge of that movie, if I'm not mistaken. Yes. And that's when you come up with this mantra that you would repeat inside Pixar, which is, I think, comes directly from John Lester, where he said that quality is the best business plan. I like what he says because it's, although it wasn't the mantra for the rest of the studio, but it was like implicit. It was his one. Yeah, part of it is that my own personal belief is we never had a mission statement. And the reason for not having a mission statement, and I don't want to generalize to everybody else, but a mission statement is an answer when typically we should always be asking questions.

49:36What are we doing? and if you immediately say, oh, well, we'll go back to Michigan State and we're doing this, it actually ended up being stronger to have it. So there was always sort of this questioning, are we doing the right thing and are we going in the right direction? We always had that question that was going on. But in terms of quality is the best business plan, It's related to this great book, The Man Who Broke Capitalism, about Jack Welch. Oh, okay. Great book.

50:18I think in the year 2000 is when Forbes magazine had named him as the CEO or manager of the century. Utter disaster. People who were there, because they had this really high compound growth rate for 10 years, something like that. So people who were raised in the system were considered to be the very best. Where's General Electric today? Yeah. It split up into pieces. And it was completely fragile. Not robust because he gutted it, gutted the future research. But the people that were there were hired and considered to be valuable because they'd grown up in that system. Two of them which went on to become leaders of Boeing.

51:11by applying the same principles that learned from Jack Welch at Boeing with the consequences that we now see. So this is the opposite of quality is the best business plan because the reality is that quality in products, whether it's phones or movies or airplanes, the quality is very important. That is inherent in the business plan. but too many was the short-term annual growth rate. Yeah, which is the opposite of what Lasseter is preaching in that statement. That's right. We were not the lowest-cost producers of animated films. That's for sure. We may have been even the highest cost. I want to pick your brain about you had two childhood heroes you write about in the book, one being Albert Einstein, the other one being Walt Disney.

52:05I've read everything I can get my hands on on Walt Disney. I find him fascinating. and him and his brother would fight over this because his brother was one supposed to be charging the money and Walt was the innovator and he's just like how much is this going to cost and they have this argument and he goes we're innovating, I'll tell you when I'm done I don't know what the cost is I'll figure it out at the end, I'm not trying to make the lowest cost product, I'm trying to make the best so what are some of the things that you learned from Walt Disney that you think you applied at Pixar? Initially as a kid watching that, what I'm seeing is the result now as an adult What do you mean you're seeing the result?

52:38In other words, I'm watching the movies and going to Disneyland as a kid. And then also watching, what was the show he was doing for ABC when he's talking about building the first Disneyland? It was The Wonderful World. I think it was The Wonderful World of Color because I think when it first started, it was The Wonderful World of Disney or something like that. But when Color TV became popular, it changed to The Wonderful World. And you were like nine years old or something like that watching in your living room. Yeah, something like that. Incidentally, when Disneyland opened, my wife's father worked as a sound editor for them.

53:17And so she was at Disneyland on opening day. She was always still there for the 50th anniversary later, 50 years later. so the other thing of course was Disneyland itself which was extremely influential in terms of going there and being there and knowing that all this came from the drive of of Walt and his way of thinking now I've thought a lot about this since because his brother was Roy Disney and Roy Disney had a son who's Roy Disney Jr., the one who later was part of the hostile takeover in which Roy Disney with the Bass Brothers did a hostile takeover of Disney, which led to Michael Eisner and Jeffrey Katzenberg coming into Disney.

54:13And we got to know Roy Disney pretty well. But now, if I now think of it in terms of technology, if I go back to Disney, Disney understood better than anybody else at that time that technology was invigorating the studio. And he believed it so much that it also led to Disneyland. He just loved this stuff. But before it was blue screen matting, then it was yellow sodium matting. He would use it in adopting sound. Any new technology that came out, Disney embraced it. He was embracing it. Every single time. He's one of the first people on the frontier. So like when the Xerox machine came out, they worked with Xerox and they built a room that was a Xerox camera.

55:00So I was in that room when I was in college and there's a lens in the wall with a platinum on the other side where the light's there and people could put the cells on it. Wait, Disney partnered with Xerox to build this camera? Yeah, to build a room that was a camera. Okay. So in one side of the room, there's a lens. Then there's a conveyor belt going in one side, another one going at the other. So in the room itself, there's like a red light. And you've got these zinc plates or something like that with carbon would go on it. So these plates would come in the conveyor belt. They're clean. They'd be put up.

55:38And then they would snap the photograph and then put this carbon on it. you know, the little particles, rub it around. So now you've got a copy on there, and then it would go out, and then they'd fuse it with, well, actually, they'd apply acetate to it and transfer the carbon onto it. So now they had a Xerox copy on the acetate, which then could go off and later get painted. Interestingly enough, when I later became president of Disney, I walked by a room there in their building, which had only been built by the time I was only 10 years old. But I walked by a room that said ink and paint. So I stuck my head in and I said, we still have an ink and paint department?

56:33And she said, yes. And I said, can I see it? Because it turns out all this reports to me. I just didn't even know about this. So I went over. The same room was there. It was really cool. It turns out that having technology was in Walt's DNA, but it was not in the DNA of the company. At that point, you know, they were still making films, but the quality's starting to go down. They're moving off in other directions. The thing that actually, in my opinion, that kept Disney together from being broken up was the theme parks itself. That's such a unique phenomenon. It isn't like the filmmaking. Roy, when now he came in, because he's part of the rescue of Disney as this hostile takeover, he's the one who said, we need to bring some technology into the studio because we're stayed.

57:33He's the one that initiated the contact with us at Pixar. There's an interesting story in your book, where you had tried to bring some technology into Disney, what, 15, I think you were in graduate school? I was in graduate school, so 1973. And the people running Disney animation is like, there's like these nine old men. I think there's only a few left at that point. Yeah, I went in the office of Ollie Johnston and Frank Thomas. They're still working at the time. They did not have technology in their DNA. Well, no, actually, it turns out that wasn't, I might've assumed that at the time, but they weren't the ones that we were talking about doing this and you sort of deal with all that utah wanted was i was going to go there as an exchange and they send the animator at to utah they had no interest in that instead they offered me a position to work on the new space mountain ride at disney world and this is a very interesting part of because i love the fact that you're mission oriented so you know we should back up i guess there's context of the people that haven't read your book you knew you wanted to be an animator, you're sitting there watching this when you're like nine years old and you see that, I think it was Donald Duck come to live or whatever.

58:41Then you realize, oh shit, I'm not, like, I don't have the technical skills to be an animator. You also love technology. Then you have this idea, this mission that I'm going to combine my two loves and I'm actually going to make, my mission is going to make the first, you know, feature length computer animated film. Okay. But you're like obsessed with Disney, but you go to Disney, they offer you a job, but it's not, it's in conflict with your mission. And you didn't, I think in the book, it says you didn't think twice. You turned them down immediately. Correct? It wasn't going in the right direction.

59:07Nobody in the industry thinks technology is critical. I mean, they have cameras and they use certain things there, but it's more like if we can buy the product, we'll use it. We're not going to push it. The first person since Walt Disney to believe that technology was going to have an impact was George Lucas. So after Star Wars, and because ILM, which was the high technology at the time in terms of that optical process. Industrial Light & Magic. Industrial Light & Magic. George's company that he started because he couldn't buy the technology he wanted to apply to special effects and filmmaking, correct?

59:44That's right. He got this group together. It's down in LA where they started. And they figured out how to get what he wanted. And one of the things they were able to solve, but this is a subtle thing that most people aren't really aware of. It has to do with motion blur. it turns out with film it was Thomas Edison who discovered that it was easier to show every frame twice on the film before advancing it in order to overcome the flicker frequency of the eye but not use nearly so much film but it had a consequence with the eye in that if something was in perfect focus and you're tracking it like let's say of a broomstick is going to move in front of the camera, then it's flash, flash, frame moves, flash, flash.

1:00:38But your eye is tracking this broomstick across the camera. So it's flash on the back of your eyeball. Your eyeball moves, and it's flash in a different place. So the edge doubles up. The reason you didn't see this with live-action films is that everything moves in the direction that it's moving because the camera's open for a certain length of time. So you've got this natural blur. There's no sharp edge for the eye to cue on. Everything works fine. Doesn't work with animation or stop frame animation or Ray Harryhausen's stop motion animation in these movies because of this artifact. What's the experience of the person viewing this?

1:01:23Do they become nauseous? No, it's just like you just happen to notice that the edges double up. Okay. And they called it strobing. And it's distracting. So what they did at ILM, which was used for Star Wars as the first film, was they would move these little cameras, because they had motion control of the camera, against a blue screen, or later green screen background. and then they would capture the motion blur and then maintain that blur as they went through these different phases of transfer through internegatives and negatives and so forth. And it was very difficult. That's why these guys were like the masters of doing this because the photochemical process is being developed at Technicolor is a nonlinear process.

1:02:22So it's hard to maintain the quality of these broad edges. But they did it. From George's point of view, they were using computers, and they were really good at the optics, and they were very successful. And people were watching this movie, and it didn't have these artificial things that you see typically with special effects of this sort. That was their beginning. George could then look at that and say, oh, I brought in these really smart guys, and there's a lot that's happening in the outside world. And George is not a technologist. He knew that things were changing rapidly and that it's probably going to happen with audio and with video.

1:03:06And he knows enough about it to know that it's changing quickly. So he went out to look, to find somebody who could put this together. This is going to be the beginning of Graphics Group? Yes. Which is going to be where you have a very unique experience because you were inspired by Walt Disney. You worked with Steve Jobs longer consecutive for like 26 consecutive years. I think longer than almost anywhere else. But you also meet a young George Lucas. This is after the first Star Wars when you go to interview with him? That's right. He's still working on Empire Strikes Back. You're both in your early 30s.

1:03:40Yeah. You did something very different. They're recruiting these technologists, right? You're one of them. and the interview process before you get to George, the first question in the interview is, who else should we be talking to? And I want to bring this up because, let's say there's half a dozen other people that are going for the job just like you. You were the only one that started listing off all these names. And you find out later that the rest of them were essentially threatened by competition or maybe insecure, whatever the case is, and they were not as free-flowing with information, which is something that you maintained throughout your entire career.

1:04:11They wanted the job. It was like a plum job. But this instinct, I want to focus on your time and what you learned from George Lucas, but this instinct that to constantly share knowledge. It's something that happened in grad school, and you seem to perpetuate that throughout your entire career, correct? Yes. There was a succession of insights for me just at a personal level. One of them was at grad school, as I was graduating, I can look back and did and just say that this was a fantastic four years. I loved my time. I loved the people. I loved the way the professors worked. I loved the support and the environment.

1:04:54It was invigorating. We all had different interests. and it was like, I said to myself, this is the kind of experience I want to have for the rest of my life. So that became one of the foundational things for me is that way of working is a great way of working. We accomplished a lot. And I went to New York Tech and I had a bunch of theories about how to manage.

1:05:24And what I found as I got into it was that some of my theories were a complete crock. I didn't know what I was doing. I never managed anything in my life. So, and I boxed myself into a corner. At the same time, I also recognized there was something about the position I was in that some of the newer people were treating me a little bit differently, even though I didn't feel I was different. So this was an interesting psychological phenomenon that was going on. which I found interesting because when I went there, I didn't really want to be a manager. I kind of liked the idea of being in charge, but I didn't want to do the hard part of managing.

1:06:07But as we went into this and I was making mistakes and trying to correct them, I found that that part was interesting too, as well as the technology was interesting. And we also published everything. And part of this was the realization that the people that we wanted were the people who wanted to be part of the bigger community. At this time, the computer graphics community called SIGGRAPH was just starting, and they wanted to be able to publish. So publishing everything meant that we could draw in the best people. because Long Island was not a place the computer graphics people were going. It was not a hotbed of computer science at the time.

1:06:55So you basically want to use the culture of your approach as a way of getting the best people together. And that worked very well. Part of it when George was out looking is that we were already doing a lot of things that he wanted to build this group up. So I was hired to go to Lucasfilm, but that was also a point of reflection for me because I can look back on my time at New York Tech and say, well, about half of my theories were right and half were a crock. In managing? In managing. Okay. Deal is how the best founders turn the world into their talent pool. I've been studying how history's greatest founders operate for a decade.

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1:08:21The founder of Eleven Labs has a great description of the value Deal can give your company. He said, we built Eleven Labs to break down language and communication barriers. With Deal enabling us to hire and support exceptional talent anywhere, we can accelerate our innovation and bring more voices, stories, and ideas to every corner of the world. Deal is trusted by over 40 ,000 businesses. Learn how they can help your business today by going to deal.com forward slash Senra. That is deal.com forward slash Senra. I guess we should give some context. Like I've read your book three times. I've been a massive fan of you.

1:08:55I've been making episodes on my first podcast founders like a decade ago about your book. Like I think it's essential reading for anybody trying to build any kind of organization. But the book starts with you explaining this, you know, multi-decade. You had just achieved what you thought was going to of your life's work, 20 years of making mistakes and trying to maneuver and get into a position where you can actually build, make the world's first computer animated film. And then you were shocked, which I think is super important, especially reading the first chapter. I mean, you read the whole book, but not depression.

1:09:26I don't know what you would call it, but almost like I achieved what I worked for two decades. I got it. And now you're kind of like, you may be thrilled for a little bit, but now what's the point of my life? What am I going to do now? The next thing. Yeah. And then it takes you, I think, a while, maybe a year. It was a year. Yeah. To figure out, oh, and you start studying all these other, this is what I love, the first opening of the book, where it's like, yeah, but I've been around. You know, you were working, you were observing Silicon Valley, too. It's like all these people would start a company, do really well.

1:09:58The founder would wind up on the cover of Fortune magazine saying these are the new titans. And then they would do something obviously stupid. And then they would essentially expand and pop like a bubble. And you were like, I want Pixar to outlive me. My new mission is to figure out how to build a culture where this is sustained and we don't make these mistakes. It took me a year to wrestle that down. But before that one, there's one thing I should comment about when I went to Lucasfilm. And that was that in realizing that about half my theories were wrong, that that ratio would probably continue at Lucasfilm and probably for the rest of my life.

1:10:45and the reason I think this is important is in fact I said this to somebody at Disney an executive there I said that ratio would continue of half right half wrong for the rest of my life and he said no actually you have a better record than that but I realized no actually I don't I do think that if I know that I'm wrong half the time that I catch it earlier I spend less time on the wrong decision. So it looks like the ratio is different. But the reality is, I'm just wrong half the time. I think it's important to think that way. And that allows you to say, okay, maybe this is one of those times.

1:11:31I would rather catch it sooner rather than later. And that was important for me going forward. Now, moving forward, when Toy Story came out, because it had been this clear focus point, it was almost like a North Star. Now, in retrospect, I have to say, the real North Star was an implicit one, which I didn't fully understand, because we didn't talk about it. and it has to do with the technology. When Toy Story came out and it was a big success, we read all these reviews, then almost all the reviews only spent one or two sentences saying it was done on the computer and the rest were about the movie.

1:12:25What I loved, I felt proud about, was that the technical people felt like that was their big success, is that people weren't talking about the technology. The implicit North Star was the quality of the long-term goal of making a good film. That was the real North Star. And I didn't even realize that fully at the time. It was more like we achieved the goal, and then I had to figure out what a next goal was while still running the company, because now we're a public company and we're working on the next film. But it isn't just like you want to go into a rinse and repeat cycle. It's like, what is that we're doing here?

1:13:07In which case, it is, what is the culture that we're building that's sustainable and is always changing and has the ability to change? During that year, I also wrestled with another problem. After the movie came out, there was that thing in me which said, since I started down this path a long time ago, how much of this was me? I wrestled with that for a year. What does that mean? How much of this is me? In other words, since I started on this path, you know, then it, you know, this, we wouldn't have gotten on this path if I wouldn't have done this. So how much of this, our success is attributable to me?

1:13:44I, it's a selfish question to ask, which is why I didn't talk to people about it, because I knew it was a selfish question to ask, but I couldn't help but think about it. And, and I, I bring this up because some companies that are successful, then the person who leads to actually believe it's all due to them. Did Steve? No. I think some people think he did, and that was interesting there, but no, he didn't. He was very, we talked about this. He was very clear about it. Like any project, you know when you work on something, there are a lot of people around that are working on it that are helping.

1:14:24They're all part of it. So I can look at people and say they were a critical part of it, And many of them are well-known, so people would know about John or Steve or Andrew. But they typically wouldn't know who the technical people were, who were absolutely critical to doing this. And they were all necessary. But the important thing that I came away with was that asking the question might have been a natural thing to ask. but trying to answer it is an act of separation. That's the problem with it. Because I'm trying to say, how am I separate from others? And really, I never was. It's like none of this would have happened without a lot of things coming together.

1:15:16And the notion of separating or trying to figure that out, it wasn't good for me. It wasn't good for my soul. I've seen people do this. We had, so he made a short film once. And at the end, left because what he said was, he wanted to see if he could do it without the safety net. So he viewed the brain trust as a safety net. It's not a safety net. These were your colleagues trying to do things. And so what he's saying, well, how much can I do on my own? It's not the right question. How much can I do with others? I want to go back to George Lucas. You meet him. You're both in your early 30s at this time.

1:15:56Speak to, like, his interest in technology is not for technology's sake. He's a very practical person, I think is the way you describe him in the book. It's can this technology, his interest in this technology begins and ends with can it help me make the film that I'm trying to make. A little stronger than that. George actually has a very strong sense of wanting to contribute to the entire field. What does that mean? He wants to affect the entire industry. Of filmmaking. Of filmmaking. Because you said in the book it was a really exciting place for you to work because you're in your early 30s and you're developing technology.

1:16:27And then the world's greatest filmmakers are dropping in seeing what you guys are making. Like Spielberg shows up and Scorsese shows up at this time. Is that what you mean? Like he's trying to contribute to not only what he's doing but his friends and even people that he doesn't know? Part of it was he wanted the technology for filmmaking. That's true. But he also wanted to share it. So the fact that we would say this is how we're doing editing or our graphics techniques or audio was what he wanted. He was trying to affect the industry as well as build tools for himself. Why do you think he wanted it to affect the industry?

1:17:02That's interesting. To some extent, the entertainment industry is a different kind of competitive landscape. If you've got a movie out in the theaters, then you would actually like all the other films not to be there because you want everybody. to come to yours. But if you don't have a film out there, then you want people to enjoy going to the movies. That is, people that you might call your competitors are producing things that other people enjoy. You have a vested interest in wanting the rest of the industry to be healthy. I know a few other films like that where, yes, there's competition, but the other is you really want everybody else to do well too.

1:17:48It isn't cutthroat. It isn't like real estate. You know, with realtors or car salesmen, it's a very different kind of structure and mindset or with a lot of companies. It's more positive, Salman. I remember there's this great biography of George Lucas written by Brian J. Jones that I've read a few times. And they talked about, you know, a lot of them, way before they did Star Wars or Steven Spielberg did Jaws, they were friends. Yeah. And they shared and collaborated. They'd watch each other's movies. They would do these like brain, they didn't call it brain trust, it was kind of similar to what you're saying.

1:18:20They'd screen a movie before it came out and they were like, this is shit or this is great. And I think to the point where George talks about this, where I think they were riding around together. I think Spielberg was in his car the day that Star Wars came out. And I think they went to go have lunch and they're like, why are all these people, there's like a line around the block. They didn't even know what was happening. It was all the people were in line to watch Star Wars. And then after that, George is with Spielberg, if I remember correctly, on the day that Jaws comes out. And they both were celebrating each other's success because it's like, well, if you go watch Star Wars today and Jaws tomorrow, no one loses in that situation.

1:18:55That's right. So for George, having a healthy industry is very important. And he just, because of his experience with others, he didn't think about competition in the way that others might. That's a great insight, Ed. I didn't pick up on the fact that he was actually developing technology that makes this entire industry stronger. That's fascinating. Yeah, and he would say that while we were working on it. Wow. We're in a process, and when we actually get there, it's going to be very different than the active traveling. He was using analogies like a prairie wagon is going across. When you actually arrive there, you don't live in the prairie wagon anymore.

1:19:38You're doing something different. Thank you for reminding me that. One of my favorite parts of the book is you talking about, he speaks in like a folksy manner, like almost like a Yoda. He was talking about building a business too. And I think it applies to filmmaking is like, you know, we started on this journey, we're getting in this wagon, you know, we're going to go across the country. We get to the end, the composition of the team is going to be, some people died along the way, some people quit, whatever. But even then, once they get to the destination, there's some people that just like the journey.

1:20:03So they jump off and that's as it should be. So he's talking about the composition of the company and the team constantly changing, which I thought was one of the best metaphors of building a business I've ever heard, too. And that's the way he did it. So for him, when we published everything and we were engaging with others, that's what he wanted to do. People might not know why Pixar, or I guess the precursor of Pixar, the precursor of Pixar, it's called Graphics Group. It's inside of George's company. He goes through a divorce, which now he's in a different financial position. That causes him to look around to, I think, him and his accountants and attorneys to look around to what he can sell, what assets he could sell for this.

1:20:42Graphics Group is one of them, which is you're running at the time, correct? Yes. Okay. Would that have happened if George never got divorced? We probably would have ended up as part of ILM. Would you have left? Because that's still separate from your goal of doing a computer animated movie. George was actually, wanted to go down the process of merging us in there. But I had a meeting with him, and I told him that what I wanted to do was to get to the point where we could make, I didn't say it's a separate group, where we within Luxem could make an animated film. And what was his response? He didn't say anything at the time, but the president of the company the next day said, George doesn't want to make an animated film.

1:21:20So we were going to look to sell you. A lot of people don't know, and this is in a couple of biographies of Steve, is Steve checked out Graphics Group, I think, even before you guys were up for sale. Right? He was still at Apple at this time. Yes. Okay. Then I think maybe a year or two passes, whatever the time frame is, finds out it could be for sale. You guys have this enthusiastic meeting where he is just like, you're the best in the business. I have to do this. And then he kind of ghosted what the kids would call ghosted. Right? And you're like, why didn't we hear from this guy? Like, we had this crazy meeting.

1:21:49He was super passionate. And we didn't hear peep for two months. And then you find out it's because at that exact same time is when Steve got kicked out of Apple. So the one who brought him up for that enthusiastic meeting was Alan Kay. Because Alan Kay worked there. And when Alan came up in the car, because at that point, this is like young Steve who, you know, had not developed a skill to develop later. You know, he went through an arc in his life. And this was early in the arc. The characterization of him, especially in his last few biographies when he died, was he was this jerk, he was this asshole, he was this tyrant.

1:22:26And you tell a much more complete story about how much he changed from the Steve you met at 30 to the person that you worked with for the next quarter century. Yeah, and the problem was when the authorized biography was written, and Isaacson, who was a very good writer, but he interviewed all these people, what people didn't understand, or an Isingston didn't know, was that years of 91 to 95 was when Steve made this major transformation. As I mentioned, in 91, he got married. His son Reed was born. We signed the contract with Disney. Terminator 2 came out. Why did that matter? Well, it mattered for the film industry.

1:23:07The film industry in the 91 to 95 went through a major transformation. Steve went through a major transformation. Pixar went through this major transformation. And the whole industry did. So it was just like 91, these events happened, signed the contract, Beauty and the Beast came out, Terminator 2, Steve, and so forth. 93, Jurassic Park came out, and the dinosaurs made with CG were so electrifying that everybody just recognized that the world is changing. 95, Toy Story came out, first computer graphics film, huge success, and we went public. So boom, in this period of time, all this stuff falls into place.

1:24:04And now we're in a different world. At that point in the world, that's when I've got some personal questions to answer as we transform the company from one head trying to figure out how to do it at all, to how to do it in a sustainable and ongoing creative way. The other one was we now came up with the next person with credibility in the film industry after George Lucas to believe technology mattered. And this was Roy Disney Jr., Walt's nephew. The reason Disney entered into the contract with us was because Roy knew that what Walt did was he adopted new technology. he was the one that pushed on getting the contract with with Pixar which started that relationship so all these things are sort of intertwining and coming together and with each of us with a different viewpoint but trying to pull all this together to make something very different happen when Pixar started that with the exception of John everybody else was technical and when I visited a lot of companies while at Lucasfilm the one thing I noticed was there was a weird sort of first class, second class it's not a terminology that people would use because people wouldn't say that they're first class but sometimes we will say they felt like they're second class but it's true in a lot of companies unless you're in that sort of pivotal rung of people who have this visible, make a visible difference to the company, then you can have this feeling of being second class within the company.

1:25:53We were determined that we did not want this to happen to us. So as we brought in the animators and the artists, Andrew Stanton and Pete Docter, then it was extremely important that they come in and that we were all peers with each other. and that's still true to this day is it isn't like the technical people there are in service of the filmmakers. The filmmakers are there just to show out the technology is we're all on this to make really great movies. And that culture was very strong, I believe, because we worked so hard to make sure there wasn't this distinction. Didn't mean everybody was the same even within the different fields, but as a group, it felt like, oh, I'm working with world-class people in art or in production or in sound.

1:26:47Like, they're all world-class. And if you feel that way about everybody, then it actually changed the dynamic within the group. And it's very important for us to do this. And I think we paid more attention to it. It was one of the things I don't think any of the studios understood was that real relationship about this balance. It's too subtle. I can describe it. Everybody would nod their heads that that's rather what they do, but they don't. Say more about what they don't understand. Well, I mean, if I take the entertainment industry, you know, the actually experienced people don't report directly to the CEO.

1:27:27They might have a chief technology officer, but the mindset of the people on the top isn't the same as actually having in that group, and like in that brain trust, the real expertise. Instead, they're the financial, they're the quote strategic people and so forth. But it's not really - So you just remove the silos in Pixar? I don't know if I'm understanding. The idea was to remove the silos. I say that because there were three times in the history of Pixar in which a group arose that felt like they were second class, and we missed it, and we were looking for it. So this is really hard and it's very subtle.

1:28:07As an example, after we're successful, we bring in some young people, and they hear the early stories, because in the early stories, you know, we're making Toy Story, people spending a lot of time there in the building, and there's a lot of clowning around, and these little hand scooter races around the building, and funny things like that, all sorts of gags and so forth. So you hear those stories. But now for somebody new in the building, what they see, because it's a few years later, is these people who had a lot of fun and were pretty irreverent were now married and had kids, and at night they went home to their kids.

1:28:55So regardless of what you say, they don't want to look like they're out of place where these people they respect because they're very successful. It doesn't matter what you say. They're emulating the behaviors that they see. And what they see are people who are going home at night.

1:29:12Meanwhile, the people that are going home at night to their families are saying to each other, what's wrong with these new people we're hiring? They don't have any sense of fun. They're not doing what we're doing. They're very different. But they don't say anything. Neither group talks about the problem. So this is like Febster's for a while. And he finally realized, oh, I see. They've got these fillings, but they're not saying them because it seems inappropriate. You don't want to sort of stand out. You don't want to look bad. So you don't say anything. Once I realized that, then the question is, okay, how do we get this sense of fun in there?

1:29:50But sense of fun isn't something that you organize top down. Yeah, it's 3 p.m., guys. Come on. Let's go take an hour to have fun. I know. We do have company parties or big events. I mean, they're organized, but the best things happen from bottom up or the managers in their group, they decide to do something. So in that case, what we would do is I went to some people who were instigators. And he said, you know, if you just sort of make something happen. and they would go off and they would do something. But there'd be nothing that was official from the corporate, just like to tell those people who are instigators to get things to happen.

1:30:36So it's like a signal. So when people start doing something which is sort of irreverent or even closer to the edge, but what they see is okay, then it frees people up to do more things like that. And so we had a lot of activities that were just, they were self-organized. So my understanding of what you're saying is like, these problems are very subtle. They're hard to notice. If left unchecked, they fester. And the solutions can also be subtle. It's recognizing the value of signals, both signals that you're looking for, because they're not saying them. So you have to look for subtle signals. But in order to make it safe is you have to, in turn, make sure there are signals given back.

1:31:24And it wouldn't work if it's just this top-down edict. Yeah, if you get in front of a company meeting and say, okay, everybody, lighten up, have some fun. Okay. And they'll nod, okay. It doesn't mean anything. They actually need genuine things. So we have a few people who did things which were a little too far out there that would have gotten them fired in other studios. People know that that happens, and what you're doing is you're saying, the tent is wide. A lot of things can happen there, and you want them to happen. And so I don't like to have a lot of rules. If somebody violates a rule of common sense, people do once in a while, you call them on the carpet, you tell them you can't do it, but you don't make a rule so that nobody else makes the same mistake.

1:32:18Because as soon as you make more rules, then people are worried about what are all these rules? Who do I have to ask for permission? So what we wanted was that people would do things without feeling they need to ask permission for everything. There was one thing, I think I mentioned this in the book, but the animation group over a weekend disassembled a truck, brought it into the building. It's still there. I was just there a couple of weeks ago. So we show up all of a sudden, there's a truck in the middle of the area. And like with their office, because everybody would custom, you talk about in the book, you would encourage them to custom design their workspaces.

1:33:01Is this in their workspace, this truck now? Yeah, it's in their workspace. I hadn't been there for a while because once I retired, what it means is if I go there and somebody doesn't like something, I do not want to be a back channel. That would not be healthy. So I would go there on occasion, but I went there maybe a week ago. We went through the animation and it had radically changed in terms of its design, which I thought was so damn cool. because they're still doing it. In other words, they're still redecorating. Like they keep remodeling everything and redecorating and making it their own spaces.

1:33:45And that's a sign of help. They feel like that's part of their legacy and their heritage is to keep making that place look different. Yeah, too many rules stifle the creativity that's the engine of the entire company. Yeah. Ed, that's a perfect place to end. And really appreciate you welcoming me into your home and taking the time to have this conversation today. I really enjoyed it. My pleasure. I have 50 years of rabbit holes to go down. Maybe we'll do this again soon. Thanks for your time. Not a fan. Well, thank you. I hope you enjoyed this episode. Please remember to subscribe wherever you're listening and leave a review.

1:34:19And make sure you listen to my other podcast founders. For almost a decade, I've obsessively read over 400 biographies of history's greatest entrepreneurs searching for ideas that you can use in your work. Most of the guests you hear on this show first found me through Founders.