Octavian Report: To what do you attribute Pixar’s amazing success — an agglomeration of top talent, company culture, or both?
Lawrence Levy: Definitely both. Pixar had extraordinary talent but also depended on a culture that allowed for competing tensions to work themselves out. In organizations trying to innovate at high levels, there are tensions between creative, technical and business forces. They’re pulling in different directions. The creative talent wants to do things that the technology isn’t ready for. Business needs drive the organization to create more, do more, and work faster. Pixar’s culture was optimized to harmonize those forces.
OR: How difficult is it to maintain that kind of culture?
Levy: It’s very challenging. You never get to rest on your laurels and think that just because you’ve done it before you can do it again. In Pixar’s case, every time it embarks on another project, the same rigor has to be there. That’s hard because when you have some success, it’s easy to become insecure or defensive and then you’re in danger of losing the pulse that enabled you to do great work in the first place.
OR: Was there something in particular that allowed the harmonization you describe to take place?
Levy: I would say the people at Pixar — Ed Catmull, John Lasseter, me and others throughout the company — understood the importance of that harmony. It was valued. It was out in the open. Pixar was never a top-down company. It was a talking company. If you wanted to get anything done you had to talk to 20 people. While there is some inefficiency in that, there’s also a payoff in terms of the kind of culture and collaboration it allows. There’s often some trade-off between efficiency and collaboration. It’s really efficient if one person is calling all the shots, but you might miss the power of collaboration. Pixar understood that.
OR: What can you tell us about John Lasseter and Ed Catmull?
Levy: John is the Walt Disney of our generation. When it comes to telling stories through the medium of computer animation, there’s almost no one like him. In addition to that, and maybe just as important, he had a real knack for picking and grooming others who could also make great films: Pete Docter, Andrew Stanton, and Lee Unkrich, for example. He had that ability to recognize in them what they could do. That’s pretty rare, to have both of those things.
Ed is one of the fathers on the technical side of the industry. He and others at Pixar invented many of the early technologies that allowed computer animation to happen. Ed also played a huge role in oiling the Pixar machine, always making sure that the parts were working together.
OR: How much of a role do you think luck plays in the success of films?
Levy: I’m someone who came to the conclusion that success in entertainment, or any field for that matter, doesn’t involve as much luck as we think. Those doing great work generally have something about them that enables them to do it. That said, I also believe that we often give too little credit to the sheer number of conditions innovation requires.
If you look at Pixar, there was a coming together of forces. Ten years before Toy Story, the film would have been impossible because of the technological limits. I think that’s true for iPhones and social media and all of these things. There’s a confluence of forces that have to gel before these things take off. Then the people that are able to ride that wave are those who, generally speaking, have the skill to do it.
OR: You were one of the key players in Pixar’s IPO and eventual sale to Disney — can you take us through the history of that relationship and negotiation?
Levy: Pixar’s original relationship with Disney began in 1991, before I joined Pixar. Although I didn’t realize it when I went into Pixar, it was the custom of the big Hollywood studios to tie up their talent. Pixar was under a contract which tied its hands almost completely. We had no room to move anywhere in terms of animated entertainment. We could only work on projects for Disney. For Pixar to have any chance, this relationship had to be completely renegotiated.
OR: Why was that renegotiation so important to Pixar’s business plan?
Levy: We were struggling with how to build a film business when all the odds seemed stacked against us. Nobody had really succeeded in building an independent animated feature film studio. Even Walt Disney had struggled with it. In 1937, Disney released the first animated feature film, Snow White and the Seven Dwarfs, and then other great films like Bambi and Dumbo, but Walt Disney had a hard time keeping that animation unit going independently. Eventually, he diversified to try to mitigate those risks. Other studios had tried to make it in animation too but none had really stuck.
Understanding that gave us a tremendous amount of resolve. When we finally entered our renegotiation with Disney, we thought, “If we don’t get the things we need then this won’t be worth it. We won’t be able to build a company.” If your situation is so desperate that there’s only one path to get you where you need to go, you’ve got to take that path, no matter the risks.
OR: When you discuss the Disney deal in your book, you mention four ironclad deal points Steve and you wrote on a whiteboard in Pixar’s offices: you wanted creative control, favorable release windows for the films you made, true profit sharing with Disney and — perhaps most important — that Pixar’s brand get its fully deserved billing. Can you tell us a bit more about that?
Levy: Those four deal points came out of a lot of background processing. By the time we got to that whiteboard, we’d left no stone unturned. We understood the market that we were going into, we understood the company that we were negotiating with, we’d talked to lots of people about what the possibilities were, we’d understood the economics of the film business and the unique economics of the animation business. We’d done our homework.
One example was the last point where we insisted Pixar get full branding recognition for its films. This was, first of all, a matter of fairness. People don’t think of this today, but in my first two or three years at Pixar, nobody understood that Pixar was making its films. We would go places and hear, “Wow! Toy Story, that was amazing! Your technology is amazing.” We would say, “Wait a minute — we made the whole film, not just the technology. We came up with the characters; it’s our story.” People didn’t realize that at the time. They thought it was Disney.
The credit issue was also important strategically. We felt that in order to build Pixar as an independent business it needed to have its own brand. Its name needed to be associated with the next generation of animated feature films.
OR: How did you and Steve approach negotiation, including with Disney?
Levy: There are all kinds of theories on negotiation, and I don’t think there is one that is necessarily right for every situation. Steve and I were not fans of what might be called positional bargaining, where you ask for more than you want because you know you’re willing to give up some of it. We didn’t like to have a backup position. There’s a certain strength in that because if you go into a negotiation with a backup position then, before you know it, you’re negotiating with yourself to fall back to that position. If you go into a negotiation without a backup position, then you have a lot more resolve.
Of course, there’s risk in that. You might walk away from something that could have been a good deal if only you’d been willing to yield a bit more. I think that Steve was someone who would walk away from things if he didn’t get to what he thought the right position was. That was the attitude that we took. It’s not that we never compromised, but compromise was painful for us.
OR: Can you describe how the Disney renegotiation talks broke down and how they were resuscitated and concluded?
Levy: I think there were two things that led to the breakdown. First, it appeared as though Michael Eisner, Disney’s CEO at the time, was dragging his feet. There would be a phone call and that would go well and we would think, “Wow, okay. This negotiation is going to begin tomorrow.” Then weeks would go by and nothing would happen. That became really frustrating, especially for Steve. I don’t know that it was personal or intentional or whether it was a reflection of just a lot of other stuff going on at Disney, but it certainly created a lot of tension in the negotiation.
The straw that broke the camel’s back was when Eisner decided he couldn’t give Pixar the branding credit we wanted. That was one of our ironclad points. We had no backup position for it. In the end, we decided to walk away. That was the first time I felt the relationship between Pixar and Disney was over.
OR: Why do you think Disney, in the end, came back to the table and agreed to all of your bottom-line positions?
Levy: It’s a great question. Disney was, at the time, in danger of losing the mantle of animation. They had for two generations been the complete, dominant player in animated family entertainment. Then, in the course of four or five years, Pixar comes along and starts to have hit films in this new medium called computer animation. Then, to make matter worse, Jeffrey Katzenberg has a blow-up with Eisner and leaves Disney to start a competing studio that included animation — Dreamworks — and he begins to have some success there. Disney was looking at going from the absolute dominant player for 50 years to number three. I think this put quite a bit of pressure on them.
OR: What was your view of Eisner as a CEO and negotiator?
Levy: It’s interesting. Everybody had opinions on him. A lot of them weren’t good. You would talk to people and he had this reputation for being very mercurial, for playing things very close to the vest, for being very difficult to understand. He and Steve had a bit of a rocky relationship. Personally I felt that I understood where he was coming from and I wasn’t bothered by any of that. The deal that he eventually agreed to was a great deal for Pixar and for Disney. If the ends justify the means, then Eisner ended up agreeing to a deal that worked magnificently for both companies.
OR: What was Steve Jobs like? What do you think made him so successful?
Levy: My experience with Steve was very collaborative. He had an intensity about him, no question about it. But he was driven to do amazing work. That’s what inspired him. He wanted to do the greatest work possible, whether it be animated feature films or building the next great consumer electronics computer company.
Steve would go to any lengths to understand what was possible. Some of his ideas were really genius, others were a little crazy. But it’s that process of collaboration that allows you to sort those out and have checks and balances. My experience working with him was rather like an ongoing debate where the goal was not to be right but to get to the best answer. It was never personal. We’d just take different sides of the argument until we got there. I found that very rich and invigorating.
OR: Do you think Pixar was such a success because Jobs did not think of himself as a filmmaker and thus was able to have some personal distance from it?
Levy: I don’t think it was about distance per se. I think Steve was open to evolving Pixar, and this is one of the reasons he hired me. He had gone through a long and difficult road with Pixar. There had been times when he was ready to give up on it, and even when I joined he was paying payroll shortfalls out of his personal checkbook. That wasn’t much fun for him. I believe he was ready to adapt to whatever Pixar could be.
Looking back, it seems funny to recall the days when I was scratching my head and thinking, “You know, I think this is going to have to be an entertainment company. I don’t see any other option here.” That seems so obvious now, but at the time it wasn’t.
OR: Why do you think that both Jobs and George Lucas had difficulty seeing what the company should be?
Levy: Like a lot of companies, especially startups, it’s not always an easy road to understand what it is you’re meant to be. Pixar started out as the computer graphics division of Lucasfilm. Its DNA was to do high-end computer graphics for special effects. That became really expensive and George Lucas didn’t want to carry that, and so Steve bought it from him in hopes of creating an amazing imaging computer. It was all about graphics and technology.
They hired some animators in order to test out the graphics and those animators started to make short films. Even then Pixar did not see itself as a film company. It was a slow process of morphing. It can take a lot of courage to move away from a company’s original direction because you hold on to what you originally wanted it to be.
OR: To what extent is it important for people who are creative to do something creative? How does it play into the teachings of the Middle Way you mention toward the end of your book?
Levy: Now we’re getting into one of my favorite topics. Perhaps let me set a little background for answering that question. As I describe in the book, I left Pixar because I was very interested in Eastern thought and meditation, and I wanted to explore what they might offer us today. I felt that there was something missing in our modern paradigm of relentless emphasis on acquisition and performance. It seemed too one dimensional, and ran the danger of robbing life of elements that might have more depth and meaning. I thought I might find some answers to that in Eastern ways of thinking.
OR: Did you?
Levy: I would say so. I took a deep dive into the teachings of a 2,500-year old meditation tradition and the teachings of its masters, including the Buddha, Nagarjuna, and many others. I came to conclude that they were really onto something. They held that we have tremendous potential as human beings — for beauty, harmony, creativity, joy, and so on — but that potential is often quashed by out-of-control cravings and patterns of behavior that keep us stuck.
One of those philosophies, as you mentioned, is the Middle Way, which I introduced in the book using Pixar as a metaphor to illustrate its ideas. The Middle Way is a philosophy that says the most fulfilling outcomes come from pushing away from extreme ways of thinking and harmonizing the conflicting tensions within and around us.
OR: What is it a Middle Way between?
Levy: Between two extreme points of view. One extreme says that my experience, my way of being, my way of understanding the world is the way, the only way, the best way. It takes our personal perception of things as reality itself. An example might be the performance culture we live in today. I recently gave a talk at Juniper Foundation, an organization I cofounded to help us access these ideas, called “Shine On.” That talk asks the question, “How can we feel good about ourselves in a performance obsessed culture?” If everything is a competition — school, athletics, wealth, fame, popularity — how can we ever win? I pose the question whether this focus on over-achievement is the incontrovertible way we have to be or is it a cultural paradigm. If it is the only way, then we’re stuck with it. If it is a paradigm, we can go beyond it.
OR: And the other extreme?
Levy: The other extreme would be believing that there is nothing beyond my own way of being—literally no other way to be. In the example of over-achievement, it would be like saying there is no other way to live other than to measure ourselves constantly. This line of thinking makes us very resistant to change. But of course it is not true. We could live our lives doing things that are intrinsically rewarding and potentially have more fulfillment, but it is hard to find that space if we don’t perceive it as possible.
In many aspects of life, not just performance, by shining light on how we become stuck in a particular way of thinking, we can open the door to a new way of being that feels more expansive. It is about letting go of the things that are making us miserable without falling into the despair that there’ll be nothing for us on the other side. The examples of how this applies are virtually infinite.
To get back to your original question, I think it is very important for those who are creative to do something creative. I would go further and say it is not about being creative per se; it is about giving expression to whatever our talents and capacities are, to feel we are fully alive and participating the best we can. To do that, sometimes we have to clear out inner narratives that stand in the way. That’s where the Middle Way and meditation can help.
OR: How is your work today helping with this?
Levy: My work now is about bringing these ideas to life. I fear we live in a culture that has, in large measure, forgotten what it means to nurture the mind and develop ourselves inwardly. We’re great about the performance stuff — doing, making, building, having — but what about the being stuff — sharing, caring, loving, harmonizing, connecting? It’s not about giving up one for the other but about integrating both. We’re struggling a little bit with how to do that. Meditation and mindfulness have become huge buzzwords, and it’s a good start. But it’s only a start. We’re still figuring out how to do this.
OR: In your book you talk about the difference between citing the adage “Story is King” and actually living by it, as people at Pixar did. What does it take to make an all-in bet on creativity?
Levy: It’s not easy to do. In business, it’s very tempting to not want to take the risks necessary for doing great creative work, or great work of any kind for that matter. Great work almost always takes longer than you think, costs more than you have budgeted, and runs into trouble along the way. I don’t think Pixar did any film or any project that didn’t have a crisis point at which it looked like it was never going to come together.
When you hit these crisis points, the inclination of the business side is to pull back on the risk, to say, “Enough is enough, we have to rein this in.” It takes a lot of faith and courage to let the creative process happen, and it’s legitimately risky because it may not work. Living by the adage “Story is king” means, at the moment when it is the very hardest, finding the courage to take the risk and push on.
Lawrence Levy is the former CFO of Pixar and the author of To Pixar and Beyond: My Unlikely Journey with Steve Jobs to Make Entertainment History.