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Ed Catmull (Founder of Pixar)

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The bottom line

Great creative companies last by building the right team, keeping candor high and putting quality ahead of process, not by chasing a single goal or a single hit. Reaching a big goal leaves a leader adrift, so a sustainable culture needs a new mission once the old one is won.

Key takeaways

  • Winning your big goal can leave you empty, so you need a new mission. 29:55
    • Toy Story was a hit and Pixar raised nearly 140 million in the biggest IPO of 1995, yet Ed Catmull felt hollow and adrift. 34:00
    • He gave himself a new job: keep talented people happy and stop the complexity of working together from undoing them. 35:00
  • The right team matters more than the right idea. 36:06
    • A good idea given to a mediocre team gets screwed up, while a mediocre idea given to a brilliant team gets fixed or replaced. 36:06
    • Pixar dropped its development department so it could find and support good people, who then find and own good ideas. 36:54
  • Candor and honest conflict turn bad first drafts into great films. 41:00
    • Every Pixar film starts out bad, and nobody takes offense because the job is to make it suck less. 41:00
    • The Brain Trust gives blunt notes but has no authority, so the director owns the fix. 42:00
  • Quality, not process, is the goal, and limits and problems keep it honest. 46:00
    • Streamlining the process can quietly replace the real goal of making something great. 46:00
    • Deadlines force a ranking of what is truly necessary, and Steve Jobs called a film with no big problems a very dangerous place to be. 43:55
  • Leaders grow, and Steve Jobs became wiser by backing passion and listening. 56:16
    • He sank 54 million of his own money into Pixar before it turned a profit. 27:50
    • He backed down when Bill Cone argued fiercely for widescreen, because passion earned his respect. 59:58

If you give a good idea to a mediocre team they will screw it up. If you give a mediocre idea to a brilliant team they will either fix it or throw it away and come up with something better.

Ed Catmull

Chapter summaries

0:00 Why smart companies do something stupid

Successful startups often fail from forces inside them that their leaders never examine.

  • Catmull saw Silicon Valley companies burn bright and then flame out. 0:33
    • He joined Lucasfilm in 1979 to merge moviemaking with technology, and he studied leaders at Sun Microsystems and Silicon Graphics.
    • The pattern repeated: an idea, funding, smart hires, a hit product, magazine covers, then a decision that was obviously stupid at the time.
    • He did not doubt these leaders thought they were doing right. Something blinded them to the problems that threatened them.
    • They watched the competition closely and never looked inward at other destructive forces.
  • He set out to build a sustainable creative culture, not only a successful company. 2:16
    • He asked whether Pixar would do something stupid too if it ever succeeded.
    • Studying other companies' missteps was meant to make Pixar alert to its own.
    • The book he wrote about this is Creativity, Inc.

3:41 Disney, Einstein and the habit of getting smarter

Catmull's boyhood heroes and his father's example taught him that the answer to any challenge is to learn more.

  • Walt Disney shaped him most because he showed how the magic was made. 3:54
    • Every Sunday before 7 p.m. Catmull sat on the living room floor to watch Disney explain synchronized sound in Steamboat Willie and music in Fantasia.
    • Disney always credited the pioneers whose work he built on. Catmull later did the same in his career and in his book.
    • Disney invented what did not exist. Einstein, his other idol, explained what already was.
    • Catmull could not draw well enough to be an animator, so he needed another way in.
  • When faced with a challenge, you just have to get smarter. 5:48
    • After Sputnik, the US created ARPA to fund university researchers and prevent technological surprise.
    • His father was one of 14 children of an Idaho dirt farmer, put himself through college and built the family house by hand.
    • His father never said it outright, but the children were expected to study hard and go to college.
    • Catmull graduated from the University of Utah in 1969 with degrees in physics and computer science.

8:32 Utah: a light-touch lab to copy

Catmull's graduate lab gave talented people freedom, and he later tried to rebuild that community at Pixar.

  • Trusting bright people with space and computers produced a supportive community. 8:35
    • Ivan Sutherland and Dave Evans ran the department with a light touch and let students pursue whatever turned them on.
    • That trust let Catmull take on complex problems. He slept on the computer room floor to maximize machine time.
    • At 26 he set his goal: animate with a computer, with images beautiful enough for movies.
    • Classmate Jim Clark went on to found Silicon Graphics and Netscape.
    • Utah was one of the first four ARPANET nodes, along with UCLA, UC Santa Barbara and Stanford, so Catmull had a ringside seat at the internet's birth.

11:06 George Lucas and the journey

Lucas bet on himself and built his own island, and he prized the journey over arriving.

  • Lucas pushed technology into film when Hollywood had no interest. 11:37
    • In 1976, high technology in filmmaking was not even on the radar. Star Wars money let Lucas launch a computer division in July 1979.
    • His interest in computers began and ended with what they added to his filmmaking.
    • He based Lucasfilm an hour from Silicon Valley and an hour from Hollywood, on his own island.
    • The Pixar Image Computer was a standalone machine to scan film, combine effects with live action and record the result back onto film.
    • Jobs later bought Pixar from Lucas, and the company dropped the hardware plan to focus on what it loved.
  • Lucas idealized moving toward a destination more than reaching it. 14:37
    • He compared building Skywalker Ranch to a ship cut in half with its captain overboard: just grab the paddles.
    • He compared a company to a wagon train. The pioneers are united by purpose, and once they arrive people come and go.
    • The Skywalker Ranch compound covers 4,700 acres.
    • The Bugatti biography makes a related point: a human life has to be devoted to something or other.

16:33 Lucas bets on himself, and Jobs comes looking

Backing your own vision and telling a clear story are what draw the right partners.

  • Betting on yourself pays more than taking the expected deal. 16:50
    • After American Graffiti, George Lucas was told to demand a higher salary for Star Wars.
    • He asked instead to keep the licensing and merchandising rights.
    • The studio agreed at once, thinking it gave up nothing.
    • Catmull says that choice set the stage for major changes in the industry.
  • A clear story beats visual polish. 18:41
    • Catmull noticed again and again that polish often doesn't matter if the story is right.
    • Don Valentine of Sequoia held that money flows as a function of the story.
    • Pixar had no buyer: over 20 prospects passed.
    • General Motors backed out one week before signing, and Catmull is thankful, since it paved the way for Steve Jobs.

19:34 Jobs arrives with a single purpose

Jobs's blunt, one-line purpose and his fierce loyalty made him an unusual but trustworthy partner.

  • Jobs made himself easy to understand and to help. 20:13
    • At their first meeting in February 1985 he skipped small talk and asked what Pixar wanted and where it was heading.
    • He summed up his aim as insanely great products, which made it easy for others to join him.
    • Catmull felt threatened by his intensity, like the Maxell ad where the sound blows the listener's hair back.
    • Jobs went silent after that meeting, then was removed from Apple, and came back wanting a new challenge.
  • Jobs won the deal by controlling the room. 23:17
    • Asked how he handles disagreement, Jobs said he explains it better until people understand.
    • Lucasfilm's CFO arrived late to look powerful. Jobs started the meeting at 10 a.m. without him.
    • An attorney warned the team to get ready for the Steve Jobs roller coaster.
    • Jobs paid $5 million to spin Pixar out of Lucasfilm and pledged $5 million more.

26:31 Learning on the fly and going all in

Pixar survived by giving ownership to its people and committing to what it loved.

  • Pixar's people were told they never need permission to take responsibility. 26:31
    • Catmull borrowed from W. Edwards Deming, who helped Japanese firms like Toyota and Sony.
    • Anyone who spots a problem should be expected to stop the assembly line.
    • The team had no salespeople, no marketers and no experience running a profit and loss statement.
    • The Pixar Image Computer was the main product and sold poorly.
  • Pixar only turned a corner when it dropped hardware for computer animation. 28:01
    • Computer animation was where the team's true passion lay, and the only option left.
    • The move cost them: they laid off more than a third of their staff.
    • Between 1987 and 1991 Jobs tried three times to sell Pixar and never could part with it.
    • He asked Microsoft for 120 million and was offered 90 million. Catmull read this as a search for outside validation.

30:00 The Disney deal and the push to go public

Jobs protected Pixar's technology and then pushed it to go public to win better terms.

  • Jobs refused to give Disney Pixar's technology. 30:44
    • Pixar's CAPS system for Disney Animation led to the relationship, and Disney also wanted John Lasseter.
    • Katzenberg argued that funding the first film meant Disney should own the tech too. Jobs said Disney was paying for a film, not for trade secrets, and would walk away.
    • The 1991 deal was for three pictures, with Disney financing and distributing.
    • Jobs once said that the early Pixar was the only time he saw a whole company of A players.
  • Jobs wanted to take Pixar public to gain leverage over Disney. 32:21
    • His logic: if Toy Story is a big hit, Eisner will see Pixar as a rival and try to keep it close.
    • That would let Pixar demand a 50/50 split of the film's returns.
    • The existing split was something like 90/10 or 85/15, with Disney taking most of the money.
    • Lasseter and Catmull first reacted with hell no, and Jobs answered that this was their moment.

33:05 The Disney deal and the public offering

Jobs went public because the Disney partnership needed cash, and he timed it to a film he believed in.

  • Jobs bet on a public offering to pay for the Disney deal. 33:22
    • The terms required Pixar to put up half of each production budget, which meant a lot of cash.
    • Jobs set the offering for one week after Toy Story opened, before anyone knew the result.
    • Months later Michael Eisner came back and accepted a 50-50 split.
    • Larry Ellison recalled Jobs making him watch Toy Story about 30 times.
    • Catmull was amazed that Jobs had called the whole sequence exactly right.

35:22 People before ideas, and protecting them

A strong team can rescue a failing story, but the same drive can hurt the people who give it everything.

  • Toy Story 2 showed that talent fixes a story. 35:30
    • The first version was so bad that the director and team were replaced and John Lasseter took over.
    • The fix was painful, slow and expensive.
    • Woody's dilemma of whether to stay or go never changed.
    • One version did not work at all. The other deeply moved audiences.
    • Catmull's lesson: getting the team right comes before getting the idea right.
  • Pushing a team to its limit nearly cost a child's life. 37:15
    • An overworked employee on the Toy Story 2 deadline left his baby in the back seat of the car.
    • The baby almost died, and Catmull saw what kind of place he was building.
    • He vowed never to make a film that way again.
    • He wrote that it is his job to protect people from their willingness to pursue excellence at all costs.
    • Borrowing Lucas's long view, he backs healthy habits and lives outside work.

38:36 Quality and candor

Everything with the name on it must be excellent, and honest feedback on the idea, not the person, gets it there.

  • Quality is the best business plan. 38:45
    • Disney wanted Toy Story 2 to go straight to video because VHS and DVD sales made so much money.
    • Catmull pushed back, since a second-class film would signal that quality was optional.
    • Lasseter coined the phrase, and it made everyone feel like a part owner of the company's greatest asset.
    • Jobs applied the same idea at Apple, where every contact with the company adds to or withdraws from its reputation.
    • That covered everything from using a Mac to calling support to the iTunes bill.
  • Candor works because people are not their ideas. 41:11
    • Critics attack the quality of the work, never the person, and cannot sugarcoat it.
    • The Brain Trust has 5 to 30 people, and its notes point to the true cause of a problem, not a fix.
    • At Pixar candor overrides hierarchy, and Jobs left narrative to Lasseter's story people.
    • The best stories come from inside directors who are burning to make them.
    • A director who cannot find the remedy is the wrong filmmaker.
  • Choosing fast beats hesitating. 42:41
    • Andrew Stanton says to be as wrong as fast as you can.
    • Faced with two hills, pick one, and if it is wrong, turn and attack the other.
    • The only unacceptable move is running between the hills.
    • It follows that a wrong answer found early costs less than a late one.

43:55 Problems, process and conflict

Wrong turns, misleading process and conflict are part of making something great, so they must be expected and used.

  • Wrong turns are the price of finding the story. 44:01
    • Catmull treats meltdowns as an investment, like research and development.
    • Finished films look nothing like their first descriptions, after years of wrong turns.
    • Edwin Land said science teaches how to fail without a sense of guilt.
    • Edison's 10,000 ways that won't work is the same idea.
  • Process becomes a stand-in for the result. 45:34
    • Bezos, in Invent and Wander, calls this managing to proxies, and it happens as companies grow.
    • A junior leader defends a bad outcome with we followed the process.
    • An experienced leader uses the failure to improve the process.
    • Good process serves you so you can serve customers.
    • Catmull says such thinking yields predictable, unoriginal work.
  • Conflict keeps a creative organization alive. 47:44
    • Brad Bird compares it to an ecosystem that needs storms and night as well as sun.
    • A sunny day only means the sun beat the rain, and nothing grows if it never rains.
    • Conflict lets the best ideas be tested and survive.
    • Bird's Ratatouille speech says a critic risks something only when defending the new, because the new needs friends.

49:38 Limits, humility and the sailing metaphor

Constraints and honest self-doubt keep creative work moving, and struggle is the price of the journey.

  • Limits force people to invent smarter ways to work. 49:40
    • Demand for resources is bottomless, and people always justify more with we're just trying to make it a little better.
    • No team can do everything on its list, so it must argue over what is absolutely necessary.
    • Companies do not become exceptional by believing they are exceptional, but by understanding how they are not.
    • Catmull has known many creative geniuses and none could say exactly what their vision was when they started.
  • Hard weather is the game, not a flaw in it. 51:00
    • Andrew Stanton compares building to sailing: you cannot control the elements, so you deal with whatever comes.
    • The goal is to reach the other side, however rough the crossing.
    • Stanton's line: if your goal is to make it easier and simpler, don't get in the boat.
    • Visions are realized over time through dedicated, protracted struggle.

51:41 Disney buys Pixar

Disney bought Pixar because its new CEO admitted openly how much he needed it, and that candor won Steve over.

  • Bob Iger saw that Disney's animation had run dry. 53:30
    • Michael Eisner and Steve Jobs were like oil and water, and talks broke down.
    • Watching a Disney Hong Kong parade, Iger noticed the only characters created in the past decade were Pixar's.
    • He stood next to Eisner and kept quiet, since it was such an indictment of Eisner's stewardship.
    • After The Lion King, Beauty and the Beast and Aladdin came ten years of nothing.
  • Showing his cards first won the deal. 54:04
    • Iger told Steve how badly Disney needed Pixar, against the usual negotiating rules.
    • Steve said he liked Iger at once because he works the same way.
    • The price was roughly 7.4 billion, mostly in Disney stock.
    • The deal made Steve a billionaire through Pixar stock, and Disney's largest individual shareholder.

55:04 The Steve we knew

The popular portrait of a stubborn tyrant misses a man who learned, and whose passion for excellence bonded him to Pixar.

  • Steve changed deeply over 26 years. 56:01
    • Catmull says the stories fixate on his harsh traits and miss his growth into someone fairer, with a deeper sense of partnership.
    • Early on he overreached in negotiations with customers, which created ill will, and he later said he had learned from it.
    • His growth did not weaken his commitment to innovation. It solidified it.
    • Catmull points to Becoming Steve Jobs as the best biography for this transformation.
  • Passion for excellence was the bond that held them together. 58:58
    • Steve respected Pixar's drive to make the first computer-animated feature, even when the path was unclear.
    • They argued and stayed together through discomfort.
    • The summary: excellence is the capacity to take pain.
    • Steve first sided with marketing on widescreen, then never raised it again.

1:01:00 Benefactor, protector, friend

Steve moved from critic to protector, and his Pixar years made him wiser and more empathetic.

  • Harsh feedback from Steve was meant to push the work higher. 1:01:00
    • Steve told Brad Bird that some Incredibles art looked Saturday morning, which Bird took as an insult.
    • Bird came to see that Steve spoke as the ultimate advocate, not as a critic.
    • Bird compared the remark to saying your mama sleeps around.
    • Steve dropped ideas that failed. If you convinced him, he changed his mind at once.
  • Steve's role grew from paying the bills to protecting the studio. 1:02:48
    • He began as benefactor, then became a constructive critic inside and a fierce defender outside.
    • He kept his intensity but learned to listen, with empathy and patience.
    • He said Apple products would end up in landfills, while Pixar movies would live on forever.
    • At their last visit, John Lasseter hugged him and said thank you, I love you. Catmull calls it one hell of a trip.

In the growth library

Ed Catmull, Pixar, co-founder of Pixar. Ed Catmull spent over 20 years chasing the first computer animated feature, then had to build a creative culture that could last once the dream came true. His lessons on talent over ideas, candor, quality and protecting people, plus Steve Jobs's bold deal making, show how to keep a company from doing something stupid.

More from Founders · The whole library, and ask it anything

Transcript1965 lines
0:00

my professional life seemed destined to have one foot in Silicon Valley and the other in Hollywood I first got into the film business in 1979 when flush from the success of Star Wars George Lucas hired me to help him bring high technology into the film industry our offices were located about an hour's drive from Palo Alto the heart of Silicon Valley that proximity gave me a front row seat from which to observe the many emerging hardware and software companies I couldn't have arrived at a more Dynamic and volatile time I watched as many startups burn bright with success and then flamed out my mandate at Lucas film to merge movie making with technology meant that I rub shoulders with the leaders of places like sun Microsystems in Silicon Graphics I watched these guys closely hoping to learn from the trajectories their companies followed gradually a pattern emerged someone had a creative idea

0:54

obtained funding brought on a lot of smart people and developed and sold a product that got a bolt loadad of attention that initial success begat more success luring the best engineers and attracting customers as these companies grew much was written about their Paradigm shifting approaches and their CEOs landed on the cover of magazines but then those companies did something stupid not just stupid and retrospect but obvious at the time stupid I wanted to understand why what was causing smart people to make decisions that sent their companies off the rails I didn't doubt that they believed they were doing the right thing but something was blinding them and keeping them from seeing the problems that threatened to upend them as a result their companies expanded like bubbles and then burst what interested me was that the leaders of these companies seemed so focused on the competition that they never developed

1:48

any deep introspection about other destructive forces that were at work over the years as Pixar struggled to find its way I asked myself if Pixar is ever successful will we do something stupid too can paying careful attention to the missteps of others help us be more alert to our own clearly something was causing a dangerous disconnect at many smart creative companies what exactly was a mystery and one that I was determined to figure out in the difficult year after Toy Story's debut I came to realize that trying to solve this mystery would be my next challenge my desire to protect Pixar from the forces that ruined so many businesses gave me A Renewed Focus I would devote myself to learning how to build not just a successful company but a sustainable creative culture that is an extra from the book that I'm going to talk to about today and one I just reread it is called creativity Inc overcoming the Unseen

2:46

forces that stand in the way of true inspiration and it is written by Ed kmol the co-founder of Pixar and he lays out exactly what this book is about this surprising twist that happened his entire life for over 20 years he was working towards this goal of creating the first computer animated fulllength movie he accomplishes that goal when Toy Story comes out a movie that almost 30 years after it came out I'm still watching it with my kids it was one of the biggest movies of the year a massive success the next week Pixar IPOs I think it's the biggest IPO of that year we'll get to that story later on in the book and yet to Ed surprise was the hollow a drift feeling he felt after he accomplished what he thought he wanted to accomplish and so this book tells the founding story of Pixar tells the story of Ed's life but it also talks about what do you do after you get everything that you thought that you wanted to get

3:41

it is a fascinating look into a Founders psyche want to jump into his childhood and his childhood Heroes and the people that inspired him to want to achieve that goal in the first place this would be Walt Disney and Albert Einstein when I was a kid I used to plunk myself down on the living room floor a few minutes before 700 p.m. every Sunday and I'd wait for Walt Disney I was transfixed by what I saw each week Walt Disney himself opened the broadcast of the wonderful world of Disney standing before me he would demystify the Disney Magic he'd explain the use of synchronized sound in Steamboat willly or talk about the importance of music and Fantasia and he always went out of his way to give credit to his forbearers who had done the pionering work upon which he was building his Empire each week Disney created a madeup world used cutting Ed technology to enable it and then told us how he had done it 40 years later that

4:35

is exactly what Ed cmol was doing did in his career but he was also doing his book he created a madeup world used cuttingedge technology and then told us how he did it while Disney was one of my two Boyhood Idols the other was Albert Einstein Disney was all about inventing the new he brought things into being both artistically and technologically that did not exist before Einstein was a master of explaining that which already was I read every Einstein biography I could get my hands on I've already made one episode on Einstein it was episode 187 if you haven't listened to it I have a bunch of unread Albert Einstein biographies myself I will eventually get to them and make episodes on them as well back to this both Einstein and Disney inspired me but Disney affected me more because of his weekly visits to my family's living room Disney's animators were at the Forefront of Applied technology every time some

5:25

technological breakthrough occurred Walt Disney Incorporated it I wanted to climb through the TV and be part of his world and what's fascinating is when he tries to become an animator Ed realizes oh wait I'm I'm actually not talented I can't do this I can't draw so he has to find another way in which is fascinating and that's obviously through computer animation I'll get there in one second but his first piece of advice uh we come across his first piece of advice that he's going to repeat a few times throughout the book and that is when you are faced with a challenge you just have to get smarter and so he ties that idea back into another uh event that happens in his early childhood and that is when the Soviets launch the first satellite which is Sputnik into Earth's orbit and so the US government's response to this is something that Ed is going to use in his own career it says the United States

6:12

government's response to being bested was to create something called arpa so that's the advanced research project agency the precursor to DARPA their goal was to support scientific researchers in America's universities in the hopes of preventing what they termed quote unquote technological surprise that is a great phrase technological Surprise by sponsoring our best Minds we'd come up with better answers that was what arpa believed I still admire that enlightened reaction to a serious threat we'll just have to get smarter and so ARA's response to Sputnik was one positive example from his childhood his dad his dad's quiet example was actually going to teach him the life-changing power of Education there's just a few lines about this that I think tell the entire story his dad was the son of an Idaho dirt farmer his dad was one of 14 kids five of his dad's siblings died as infants his dad was the

7:05

first person in his family ever to go to college he had to work while he was going to college and pay his own way pay his own College tuition because again he was the son of a Idaho dirt farmer his dad was also incredibly capable he built the house that Ed lived in from the ground up with his own hands and his dad taught his kids without ever saying so explicitly that they were expected to study study hard and to go to college and Ed was a great student he was a great student in high school was a great student in college he winds up graduating from the University of Utah he gets two degrees one in physics and the other one in the emerging field of computer science this is in 1969 and so his original intention because he thought he's like okay well I'll never be able to I'm not talented enough to to be a Disney animator so he's like I have to CH choose a different goal his original goal was

7:54

like okay well what if I can learn how to design computer languages and if you listen to the Paul episode I did a few weeks ago I think it's episode 314 on how to do great work Paul has read a bunch of biographies and he noticed something I want to read from the essay real quick because we're about to see an example of this being true in Ed's own life and so Paul writes when you read biographies of people who've done great work it's remarkable how much luck is involved they discover what to work on as a result of a chance meeting which is about to happen right now or by reading a book they happen to pick up so you need to make yourself a big Target for luck and the way to do that is to be curious try lots of things meets lot meet lots of people read lots of books and ask ask a lot of questions so he's okay well I'm going to design computer languages then I met a man who would encourage me to change course Ivan

8:39

Sutherland southernland and his partner Dave Evans were actually running the University's computer science department this is at U ofu which is the University of Utah the way they ran this department is the way that a decade or two into the future Ed CML is going to run Pixar so this is what he saw southernland and Evans were magnets for bright students they led us with a light touch they gave us workspace and access to computers and then let us pursue whatever turned us on the result was a collaborative supportive community so inspiring that I would see later seek to replicate it at Pixar now this is wild I love so essentially what's happening right now what I'm about to describe to you is like Ed's got a front row seat for the birth of you know the internet software technology uh industry and if you read a bunch of biographies and you listen a bunch of these episodes you see that in the beginning of uh these industries

9:25

like when they're starting to explode all the people wind up knowing each other and so there'd be a ton of examples where you and I have covered biographies of people that went on a degree things and they met some at some point throughout their career and so one of one of Ed's classmates right in this environment put together by southernland and Evans is Jim Clark so one of my classmates Jim Clark would go on to found silicon graphics and Netscape I've done two podcasts on Jim I think the best one is episode number 274 based on Michael Lewis's book about Jim Clark called the new new thing but it's just fascinating to me how this just pops up over and over again that they just wind up knowing each other and coming across uh pass now one of the reasons that he also had a front row uh seat for the internet is because the first four nodes of the arpanet which is the precursor to the internet uh take place at four

10:10

universities It's UCLA UC Santa Barbara Stanford and the U ofu and so he says well he's at you U of you when this is happening so he says I had a ringside seat from which to observe this Grand experiment and it's in this environment at this time where he realizes oh this is going to be my other route end I'm going to make a computer animated film and so he talks about the leadership again that he's going to emulate of from southernland and and Evans that they trusted us to innovate and it says this kind of trust gave me freedom to tackle all sorts of complex problems and then he says he did so with one of my favorite words in the English language and he says I did so with gusto I often slept on the floor of the computer rooms to maximize time on the computer at the age of 26 I set a new goal to develop a way to animate not with a pencil but with a computer and to make the images compelling and beautiful enough that

11:01

they would be used in movies perhaps I could become an animator after all so I want to fast forward into the timeline because I want to get into one of the people that fascinates me the most a long time ago like I don't know six years ago uh I read this fantastic book by this author named Brian J Jones He Brian J Jones has written a bunch of biographies I love but probably my favorite biography that he wrote that I love the most is a biography of George Lucas I think it's episode 35 I'm going to reread it again soon but one of the things if you listen to that episode if you read the biography that that jumps out on you and why I love uh reading about Lucas so much is that he was a rebel and a misfit and he always bet on himself and it is through George Lucas that Ed CML is eventually going to partner with Steve Jobs and create the Pixar that we know today so it says it's hard to imagine now but in 1976 and

11:47

again this is a a great illustration of the fact that George Lucas was capable of independent thought he didn't care what other people in his industry were doing or what they thought was the right way he's like well if I think this is the right way I'll just bet on myself and figure out how to do it it's hard to imagine now but in 1976 the idea of incorporating high technology into Hollywood film making wasn't just a low priority it wasn't even on the radar but one man was about to change that with a movie called Star Wars while no one else in the movie industry had even the slightest desire to invest in such things George resolved in July 1979 to launch a computer division thanks to Luke Skywalker he had the resources to do it right and so Ed is interviewed by George Lucas himself starts working closely with him so we get an insight into George Lucas but also some of the things that Ed learned from him so he

12:32

says I got interviewed by George himself he and I seem pretty similar we worked with a blinders on intensity and had a tendency to talk only when we had something to say George's Rel George had Relentless practicality he wasn't some hobbyist trying to bring technology into film making for the heck of it his interest in computers began and ended with their potential to add value to his film making process Lucas film was based 1 hour north of Silicon Valley by car and 1 hour from Hollywood by plane this was no accident George saw himself first and foremost as a filmmaker so Silicon Valley wasn't for him but he also had no desire to be too close to Los Angeles because he thought there was something a bit unseemly and inbred about it he created his own Island let's pause there the order in which you read things is fascinating to me because the effect that that has think about like who created their own Island if you listen

13:25

to last week's episode number 316 on Bugatti he created his entire world in this like little sliver of contested land uh that Germany and France would constantly fight over his own feudal Barony I think is the term from uh from that book it's exactly what George Lucas is doing with Skywalker Ranch so George Lucas hires Ed CML they're going to make this thing called the Pixar image computer that's where the name comes from when jobs buys the we'll get there but when jobs buys Pixar uh from George Lucas after George Lucas is going through a divorce the idea was like oh they're going to sell high-end Hardware right and then realize over time that like no this is not going to work we need to double down on what we're actually passionate about but anyways this is what they're trying to work on at that time it was a highly specialized Standalone computer that gave you the power to scan film combin special

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effects images with liveaction footage and then record the final result back onto film that is what George Lucas was interested in and so there's a series of people that Ed CML throughout his life will work closely with he'll observe and try to learn everything from he's really interested in management because he doesn't really he knows he's going to have to do that but he doesn't think he's actually qualified he's like is this a skill I can actually like figure out and learn on my own and so he he has an entire part which is fantastic talking about what he's learning from uh working directly under George Lucas I saw that his ways seemed to reflect some of the philosophy that he had put into Yoda just as Yoda said things like do or do not there is no try George had a fondness for folksy analogies that sought to describe neatly the mess of life he would compare the often arduous process of developing his

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4700 acre Skywalker Ranch compound that's incredible to a ship going down river that had been cut in half and whose Captain had been thrown overboard we're still going to get there he would say just grab the paddles and let's keep going another one of his favorite analogies was that building a company was like being on a wagon train headed west on the long journey to the Land of Plenty the Pioneers would be full of purpose and United by the goal of reaching their destination once they arrived he'd say people would come and go and that is as it should be but the process of moving towards something of having not yet and and of having not yet arrived was what he idealized and so on the second or third reading of that sentence it's interesting I'm going to pause there I'm not done with this section but this idea of hey we're moving towards something but we haven't not yet arrived is what is like George's

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like ideal uh scenario that's interesting because Ed arrives at his goal and he finds lot he's like lost and he doesn't use the word depressed but that's definitely the way like if you read between the lines that's what he's like what he's fing and I've talked to a ton of Founders uh you know after they sell their company or whatever the case is they're rich as hell and yet they're like why am I depressed like what is happening it's like oh you need a new Mission there's a great line again going back to the Bugatti uh the Bugatti book maybe my all-time favorite quote in that book says a human life by its very Nature has to be devoted to something or other to a glorious or humble Enterprise an illustrious or obscure Destiny this is a strange but inexorable condition of things and when you lose your mission it doesn't matter how rich you are you're going to feel depressed and a drift just like Ed cill does let's go back to

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George Lucas George thought in terms of a Long View he believed in the future and his ability to shape it and so that line right he believed in the future and his ability to shape it my favorite line in George Lucas's biography that I read is that George Lucas unapologetically invested in what he believed in the most himself this exactly same idea that we see in this book creativity Inc as a young filmmaker in the wake of American Graffiti success he was advised to demand a higher salary on his next movie which would be Star Wars that would be the expected move in Hollywood bump your quote bump your quote not for George though he skipped the Rays altogether and asked instead to retain ownership of Licensing and Merchandising rights to Star Wars the studio that was Distributing the film readily agreed to his request thinking they was not giving up anything George would prove them wrong setting the stage for major

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changes in the industry that he loved he bet on himself and won okay so I want to get into what set the stage for Ed to actually begin his partnership with Steve Jobs now the crazy thing and the end of this podcast is really like a second podcast because first of all you should buy creativity ink uh especially if you're managing a team and I would read like uh each chapter probably like maybe one chapter a week and really think about uh like what he's talking about but even if he didn't do that I would buy just to read the afterward which I think is like 15 pages about his relationship uh with Steve Jobs and why that is so important is because Ed was actually partners he worked with Steve for 26 straight years nobody else worked continuously for Steve for that amount of time so he's a special insight into what I would argue is you know the greatest entrepreneur to ever do it but there's something that Steve said one

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time and I wonder if he learned it from Ed which was that uh the Storyteller is the most powerful person in the world in fact when I got to this section I also thought about uh don Valentine is the founder was the founder of seoa capital and he also invested money into Apple in the early days but he said something something it was fascinating it was very why is that important to you and I because Don Valentine said The Art of Storytelling is incredibly important learning to tell a story is critically important because that's how the money works the money flows as a function of the story and so Ed is making like these little I guess I don't even short films I don't know what you would call them but he he he notices something I just want to pull out and then we'll get into how like where Steve Jobs comes into the story and he says this is a phenomenon that I would notice again and again throughout my career for all the Care

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you put into Artistry visual polish frequently doesn't matter if you are getting the story right so he's going to talk about the story is King over and over again in this book so George this is 1983 George and his wife are splitting up and he's got to do a divorce settlement and that is severely like affecting his cast position at his company he's got to sell a bunch of assets to to fulfill uh this divorce settlement and Pixar is going to be one of those assets here's the problem nobody wants to buy Pixar they were shopped over 20 prospective buyers and none of them bit at the last minute General Motors comes in like okay we'll take it off your hands and then one week before that deal was supposed to be signed they back out and that deal falls apart and this is what Ed cmal says to this day I am thankful that that deal went South because it paved the way for Steve Jobs I first met Steve in February

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of 1985 he was still Steve was still this is really important to to note Steve is still at Apple the first time when he discovers he's like oh these guys are way ahead of everybody else and so he actually tries to get apple before he gets kicked out to buy these guys this is hilarious so this is what meeting this is what a meeting with a young Steve Jobs was like we met in a conference room with a whiteboard and a large table surrounded by chairs not that Steve would stay seated for very long within minutes he was standing at the Whiteboard I remember his assertiveness there was no small talk instead there were questions lots of questions what do you want where are you heading what are your long-term goals he used the phrase insanely great products to explain what he believed and I want to pause there because this has come up a bunch of times where you have a singleness of purpose makes it really

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easy for other people to understand you makes it really easy for other people to interface with you and if they can understand you and they can interface with you makes it easier for them to help you that Steve just summarized his entire approach his North Star what was important to him and it's something he talked about I think he's 30 at at this point in the story something he talked about he used that same phrase when he was in his ear 20s he used it before he was going to die all he cared about was making insanely great products Steve was prioritizing clear communication to make it easy for you to interface with him and to help him you want to make insanely great products come with me and he does it in three words that is genius back to this clearly he was the sort of person who didn't let presentations happen to him and it wasn't long before he was talking about making a deal and this was Ed's initial reaction I was

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very uneasy about Steve he had a forceful personality where I do not and I felt threatened by him for all my talk about the importance of surrounding myself with people smarter than myself his intensity was at such a different level I didn't know how to interpret it it put me in the mind of an ad that Maxwell Cass cassette tape company released around this time featur what be become an iconic image is one of the like well-known ads of all time it's a guy sitting in a chair and his long hair is literally being blown back by the sound from the speaker that's in front of him that is what it was like to be with Steve he was the speaker everyone else was the guy and then something surprising happens after that initial meeting we heard nothing total silence we were perplexed we finally learned why a few months later when it was announced that Scully had persuaded Apple's board of directors to remove Steve when the

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dust settled Steve sought us out again he wanted a new challenge a new mission right the main theme of the book you need a mission a human life by its very Nature has to be devoted to something or another to a glorious or humble Enterprise an illustrious or obscure Destiny this is a strange but inexorable condition of things we're seeing it in a young Steve Jobs life he just lost his life's work he lost his love he's like all right sought him out again he wanted a new challenge and thought maybe we were it and so stepen invites him over to his house I love this description of his house if I didn't have a wife and kids I would live this way myself as well so it says Steve was hard charging Relentless even but a conversation with him took you places you didn't expect several of us drove over to meet Steve at his house in Woodside uh the house was almost empty but for motorcycle a grand piano and two personal chefs and

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so there's this slow process of them getting to know each other seeing okay can we be long-term Partners Steve is not going to try to buy I mean you already know that Steve's not gonna he's not interested in like I'm gonna buy a business and then flip it in like 2 years he's not interested in that at all he wanted to build great products and so this was fascinating because it gives you an insight into a young Steve Jobs I met with Steve and Gally asked him how things got resolved when people disagree with him he seemed unaware that I was really asking him what what I was really asking him was how things would get resolved if we work together and I disagree with them and this is hilarious he said when I don't see eye to eye with somebody I just take the time to explain it better so they understand the way it should be and so again go back to this idea that Steve made it really easy for you to interface with him he was really

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UPF friend about what was important to him so much so that one of Steve's attorneys so they're they're about to close this deal right this this you have to remember this line for later when we get to the afterward I remember one of Steve's attorneys telling us that if we were acquired by his client we had better get ready to get on the Steve Jobs roller coaster the acquisition process was complicated by the fact that the negotiator for Lucas film wasn't good he the Chief Financial Officer underestimated Steve assuming he was just another rich kid in over his head this guy told me that the way to establish L his authority in the room was to arrive last his thinking was which he articulated out loud to me was that this would establish him as quote the most powerful player in the room since he and only he could afford to keep everyone else waiting all it ended up establishing however was that he had

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never met anyone like Steve Jobs the morning of the big negotiating session all of us but the CFO were on time Steve and his attorney me and my team I don't have to list all the people Lucas film's attorneys and an investment banker at precisely 10: a.m. Steve looked around and finding the CFO missing started the meeting without him Steve had not only foiled the cfo's attempt to place himself top the pecking order but he grabbed control of the entire meeting this would be the kind of strategic aggressive play that would define Steve's stewardship of Pixar for years to come once we joined forces he became our protector as Fierce on our behalf as he was on his own Steve paid $5 million to spin Pixar off of Lucas film and agreed to invest another $5 million to fund the company which is hilarious I think he's going to wind up I think he told all in before they wind up making a profit he puts 54

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million of his own money into this company and I think at the time I've heard different estimates but he had somewhere between like 70 and I think 70 and 90 million so a gigantic chunk and this is when he has next so he just not like next successful at all so unbelievable like now was one of maybe the greatest entrepreneur of all time might be the one of the greatest investors who else would do that it's insane but he's just investing a huge chunk of his net worth into this company which he didn't know at the beginning again after we signed our names Steve pulled me and alvie aside put his arms around us and said whatever happens we have to be loyal to each other the feisty little company called Pixar had been born now what's fascinating about this part of the book is you just see how different things can be and how they change and evolve over time this is who Steve's partnering with right this is

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who Steve's going to put almost all of his net worth into and so he says there's nothing quite like ignorant combined with a driving need to succeed to force rapid learning the main business that we chose was to sell the Pixar image computer which is going to fail I think they sell like 100 of them or something like that uh the problem was but we had never manufactured or marketed a high-end machine before we had no sales people we had no marketing people I had never been responsible for a profit and loss statement I knew nothing about how to manage inventory and so this entire time Ed is telling the story of like just having to learn on the Fly and he's observing how all these other leaders leaders bosses he's had in the past from like George Lucas realizing hey I can't really interact uh the way that Steve interacts with people and so he comes across uh the work of w Edward demmings who's an American

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working in Japan actually helping the Japanese like manufacturing industry companies like Toyota and Sony are going to use deming's ideas and so Ed realizes hey I can actually use deming's ideas like I treat them as metaphors I can use them in my work and so he identifies what he feels are the most important ideas the ones that he could use the essence was this the responsibility for finding and fixing problems should be asside assigned to every every employee if anyone at any level spotted a problem Deming believed they should be encouraged and expected to stop the assembly line deming's approach gave ownership of the responsibility for a product products quality to the people who were most involved in its creation my approach to managing Pixar going forward was to be guided by the central tenant you don't have to ask permission to take responsibility and so for many years they don't even know what their

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business is going to be they go through a bunch of different products and business models and so he's talking about this time my memory of that period is that it was one of constant searching for a business model that would put us in the black there was always reason to believe that the next thing we tried would be the thing that finally worked we were just hemorrhaging money and I know I've already said this but it's it's so crazy it's so insane that he did this that it's it's worth repeating Steve had sunk 54 million of his own money into the company a significant chunk of his net worth and more money than any venture capital firm would have considered investing it became clear to us that we needed to abandon selling hardware and really this is the main point that you should what is it like you're intensely in intensely interested in you should have done that first right they they had to go through a bunch of

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different changes and they just like hey this is where our heart is let's bet the company on this the only thing that made this leap easier was that we had decided to go all in on what we yearned to do from the outset computer animation this was where our true passion resided and the only option left was to go after it with everything we had and that doesn't happen without a lot of pain they wind up having to lay off more than a third of their employees there's a bunch of different times where Ed is like oh my God uh Steve is actually giving up he's gonna sell uh the company and then he realized oh wait no that's not what he's doing check this out this was fascinating to me three times between 1987 and 1991 a Fed Up Steve Jobs tried to sell Pixar and yet despite his frustrations he could never quite bring himself to part with us so they get an offer from Microsoft's just one of these companies uh Steve's like hey I want 120

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million for Pixar and you know he just made up the number and Microsoft will'll give you 90 million this is Ed's interpretation of this though with each Suitor Steve started with a high price and was unwilling to budge I came to believe that what he was really looking for was not an exus strategy as much as external validation his reasoning went like this if Microsoft was willing to go to 90 million then we must be worth hanging on to remember this is a company that Steve is going to sell a few years from now to Disney for 7.6 billion so before they go all in on just doing computer animation they had done um they developed some technology for Disney Animation is this uh system called caps which is computer animated animation production systems and so that was like this initial like bridge to this relationship with Disney so they approach Disney and they're going to build out uh they actually tried to um

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initially Disney wanted to recruit John Lasser which was one of the the founding members of Pixar and maybe the greatest animator and Storyteller of all time and since John wouldn't leave Disney Jeffrey kenberg who at this time is the head of Disney's Motion Picture division it's like okay we'll just do a deal with you guys because I I have to work with John no matter what and so for the vast majority of Pixar's existence Steve respects passion he respects talent and he's like well you guys know more about animation and storytelling and I do so he kind of leaves him alone but when it comes to negotiating on their behalf taking care of the money he always leads uh that part and so when it time when it comes time to negotiate with kenberg and Disney this is where Steve jumps in and katzenberg's initial offer is actually hey we want Pixar to make a feature film right you guys make the story you do all

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the work we're going to own it because we're going to distribute it and remember there's a $54 million hole in Steve Jobs pocket when he says this Steve's Steve's rejected Jeff logic that since Disney was investing in Pixar's first movie it deserved it deserved to own our technology as well you're giving us money to make the film Steve said not to buy our Trade Secrets what we brought here was our Technical Innovations and they are not for sale and Steve was willing to walk away on that specific point so Jeffrey gives in 1991 they strike they strike a three picture deal where Disney is going to say okay we're going to provide the financing and they're going to distribute uh the movie but here's the problem they just signed a deal where they're saying hey we're actually embarking on something we know very little about because since we're using computer animation there was no one else else to ask for help because no

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one had ever done this before there's a famous quote that I read in one of the biographies of Steve Jobs where he said the only time he ever saw an entire company of a players was in the early days of Pixar I think they had like 400 can't remember it was like 200 or I want to say 400 people that's the way I remember it they had like 400 uh 400 people and every single one was an All-Star because they're doing something for the first time and the first movie they make is Toy Story and like I said earlier I just rewatched this you know the last like I don't know 12 months ago something like that it is still excellent it's incredible how well that movie holds up so they go through the process of building this right and then Steve throws them a curveball and he says in the in the book that you if you're going to work with Steve he's just going to throw a curveball so like you're going to have to deal realize

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that and so he meets with Steve meets with John and John leer and he had cat he's like okay Toy Story's almost ready uh we're going to go public and they're like what and so like hell no we can't do this and it says Steve disagreed This is Our Moment he said and then he lays out his logic let's assume that Toy Story is a success he said and let's actually assume it's a big success he said when that happens Disney CEO Michael Eisner who's at the time will realize that he has created his own worst nightmare a viable competitor to Disney this is all Steve's logic okay Steve predicted that as soon as Toy Story came out Eisner would try to renegotiate our deal and keep us close as a partner in this scenario Steve said he wanted to be able to negotiate better terms specifically he wanted a 50/50 split with Disney on the financial returns I think at this time it was like 9010 or 8510 something like that so if

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Disney's getting the I mean putting up the money they're Distributing it they're getting the vast majority of the money see he's like we can't run a business that way we got to we got to we need 50% of the profit and to do that we need to be able to put up 50% of the money for the movies in order to fulfill these terms we would have to be able to put up our cash for our put up cash for our half of the production budgets a significant amount of money and to do that we would have to go public he said and this is the crazy thing it's like Babe Ruth calling a shot right we would he says we're going to go public one week after Toy Story opened because he believed he he watched Toy Story in fact when I was reading um I read a bunch of biographies on Larry Ellison years ago and Larry Ellison was best friends with Steve Jobs and he said that Steve was obsessed with Toy Story that he'd make Larry Allison watch it like 30 times it

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was crazy so he's like oh this is this is a hit like this is gonna be a smash to Toy Story drops on I think that Thursday we're going to go public uh the th the Thursday after that if I'm remembering this correctly so he says we would go public one week after Toy Story Steve turned out to be right as our first movie Broke records at the box office all of our dreams seem to be coming true and then our initial public offering raised nearly 140 million for the company the biggest IPO of 1995 and a few months later as if on Q Eisner calls saying that he wants to renegotiate the deal and keep us as a partner he accepted Steve's offer of a 5050 split I was amazed Steve had called this exactly right and so this is when we go into the surprising part it's surprising to anybody that hasn't experienced this firsthand but extremely common that if it happens to a bunch of people and you you might find yourself

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in this position one day and I think reading its book and just knowing this this exists in a bunch of forms is very helpful it's the fact that he got everything he possibly wanted could never expect you know that that his the he created the world's first computer animated movie and it's one of the most successful movies of all time his company is now a 50-50 partner with Disney who he idolized since he was like 12 and yet he feels completely empty and a drift inside and so he has to pick a new Mission so Ed's goal after Toy Story after feeling you know down and depressed how could we enable the talents of these people to keep them happy and not let the inevitable complexities that come with any collaborative Endeavor undo us along the way this was the job that I assigned myself the mission that he assigns himself and the one that still animates me to this day and so that is the main Crux of the book it's like he's got all

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these ideas on how to make a sustainable creative environment so I'm just going to pull out a couple ideas this idea will stick with you it is probably the uh two sentences or the sentence that I remember the most from reading this book five or six years ago so they're talking about they started Toy Story 2 the movie was so bad they had to fire the team the director in the team and give it to I think John ler fixes it right it's extremely painful timec consuming expensive I'm giving you the punch line here though right so it's like remember that the spine of the story that Woody uh his dilemma was to stay or to go was the same before and after that we worked on it one version didn't work at all and the other was deeply emotionally affecting to the audience why talented story tellers had found a way to make viewers care and the evolution of this storyline made it abundantly clear to me this is the maximum this is the

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punchline this is the most important part if you give a good idea to a mediocre team they will screw it up if you give a mediocre idea to a brilliant team they will either fix it or throw it away and come up with something better the takeaway here is worth repeating getting the team right is the necessary precursor to getting the idea right that Insight that is people over everything right go back to Steve job's idea this is the only company's ever seen that has a team full of a players they're betting everything on the talent that they have that idea causes him to completely redo the entire organization structure of the company some points even though they're they're you know creating uh movies and in a in a like a brand new way no one's ever done before they started copying some ways that other like movie studios were set up he's like this doesn't make any sense we had a development department that was charged with seeking

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out and developing ideas to make into films now I saw that this made no sense the new gole find develop and support good people and they in turn will find develop and own good ideas now here's a problem though you go all in on Talent well these super like a players aggressive people people that are completely addicted to their life's work and achieving Excellence right they tend to be Workaholics that can be excessively dangerous in fact when they were going through this because they had a deadline for Toy Story 2 an overworked employee actually drives up Parks the car and I think his wife is working there as well and she goes hell how is the drop off like how like you dropped our baby off at at daycare how was that and he's like oh my God he had left the baby in the back seat and the baby almost died and Ed realizes oh my God what kind of environment am I building here we almost like the direct result of

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pushing everybody to the their absolute limits we almost killed a baby and so this causes him to change the way things are done as well a motivated workaholic Workforce pulling together to make a deadline could destroy itself if it's left unchecked though I was immensely proud of what we had accomplished I vowed we would never make a film that way again it is my job to protect our people from their willingness to pursue Excellence at all costs this is trickier than you might think Pixar's people are ambitious High Achievers who wanted to who want to do their best and then some but if we are in this for the Long Haul remember going back Ed treats the the world like a classroom every single experience he has he learns from it what did he tell us a couple chapters ago George Lucas had this insane Long View of everything and so Ed's grabbing that idea from Lucas and applying it here if we are in this for the Long Haul we have

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to take care of ourselves we have to support healthy habits and we have to encourage our employees to have fulfilling lives outside of work and one of the things you most admire if you read this book about both Ed CML Steve Jobs and John Lasser is that they believe that quality is the best business plan so Disney had originally wanted Toy Story 2 to go straight to video and they did that not because that's going to engender the the highest quality product they did that because they were making so much money selling like VHS and I think DVDs at this time so was a pure money play the problem is it's saying that Toy Story 2 which is not going to play in theaters doesn't have to be as good or as high quality as Toy Story one and so Ed fights back on this and this is F this is really interesting it's going to remind me of something I read in um this fantastic biography of of Steve Jobs called

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becoming Steve Jobs about this phrase that he has called the Apple experience which I'll get to in one second T Story 2 taught us this lesson begun as a direct to video sequel the project proved not only that it was important to everyone that we weren't tolerating second class films but also that everything we did everything associated with our name needed to be good thinking this way was not just about morale it was a signal to everyone at Pixar that they were part owners of the company's greatest asset it's quality John coined a new phrase at this time that quality is the best business plan Ed's advice is that anything associated with your name has to be high quality uh Steve's application of this idea at Apple was the Apple experience I'm going to read from becoming Steve Jobs now Steve understood that every interaction a customer had with apple could increase or decrease his or her respect for the

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company as he put it a corporation could accumulate or withdraw credits from its reputation which is why he works so hard to ensure that every single interaction a customer a customer might have with apple from using a Mac to calling customer support to buying a single from the iTunes store and then getting build for it was excellent same exact idea that Ed is talking about here every single thing associated with our name needs to be excellent quality is the best business plan plan another idea Ed preaches you start with something that sucks right your job what you get paid for is to make it not suck early on all of our movies suck really you'd be surprised how bad the first versions of our films really are I'm not trying to be modest Pixar films are not good at first all the movies we now think of as brilliant were at one time terrible and this is as it should be creativity has to start somewhere there is a basic

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truth people who take on complicated creative projects become lost at some point in the process it is the nature of things and so he talks about you need to develop mechanisms inside your own uh companies to get you back on track and so one thing they use and they repeat a lot uh throughout the book is the importance of cander you attack the quality of the person's idea not the person but you cannot sugarcoat is this up to Pixar level quality or not and because he preaches that hey all of our movies suck at first no one takes offense it is the nature of things they are bad our job is to make them suck less that is what we get paid to do another idea he has the best products emerge from within their creator we believe that the most promising stories are not assigned to filmmakers but emerge from within them our directors make movies that they have conceived of and are burning to make so they have

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this mechanism called The Brain Trust anywhere from like five to like 30 different people they'll meet with a director a filmmaker uh throughout the process they'll review them and they just give like very blunt cander like critiques hey you know could you draw this better is this story is a little weak here whatever the case says now this is the important part the Brain Trust has no Authority the director does not have to follow any of the specific suggestions given the Brain Trust notes are intended to bring the true causes of a problem to the surface not to demand a specific remedy that specific remedy has to come within the filmmaker and if it doesn't you have the wrong filmmaker and so another thing that he preaches and repeats that you are not your idea this is related these are all related there in the same chapter this principle eludes most people but it is CR critical you are not your idea and if you

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identify too close to with your ideas you will take offense when they are challenged and so another great thing about the book is that he's working with all these like first class directors and filmmakers they're like almost like a team of Founders and in of themselves and they say really fascinating things and so I just want to pull out one here uh this is the filmmaker Andrew Stanton Andrew is fond of saying that you need to be as wrong as fast as you can so get to the wrong answer as fast as you can is the way I would summarize what he's about to tell us here in a battle if you're faced with two hills and you're unsure about which one to attack he says the right course of action is to hurry up and choose if you find it's the wrong Hill then turn around and attack the other one in that scenario the only unacceptable course of action is running between the hills you need to get to the wrong answer as fast as you can then he

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has a lesson that he learned from Steve Jobs you need to know what you are best at Steve believed that Jon and the story people knew more about narrative than he did and he left it to them at Apple he had the reputation of being deeply involved in the most minute details of every product but at Pixar he didn't believe that his instincts were better than the people here so he stayed out cander matters at Pixar it overrides hierarchy and so another great thing that he learned from Steve is that business is problems problems are inevitable that's why I think the the maximum that I learned from Henry Kaiser like years ago uh that that problems are just opportunities in work close it's such a fantastic maximum they should be expected and in fact Steve says if you don't have any problems you should be very very worried at one point Steve called me uh to check in on our progress It's really strange I told him we

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haven't had a single big problem on this film many people would have been happy with this news not Steve watch out he said that is a very dangerous place to be and so Ed's takeaway from this is I came to think of our meltdowns or problems as a necessary part of doing our business like investments in research and development and so he keeps hitting on this idea that you should get used like things are going to suck problems are inevitable this is like business's problems like it's never going to go away you have to get accustomed to this and so he's going to talk about the fact that these these final produ products go through these like rapid changes they go from sucking or the story's bad to like you know winning Oscars and and making hundreds of millions of dollars and I get to there's only like two or three sentences on these two pages I want to read to but it's fascinating because he's talking

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about a product and I realize if you read a lot of biographies this is true for people too anyone who's seen the movie knows that the final product Bears no resemblance to that description but what nobody knows is how many wrong turns the story took over a period of years before it found its true north this is true for people too or another way think about accepting the error part of trial and error the principle I'm describing here iterative trial and error has long recognized value in science I read that sentence and I thought of two things both of people have done multiple multiple podcasts on Thomas Edison I have not failed I just found 10,000 ways that won't work and more importantly and I think better more applicable to where we are specifically in this story is Edwin L what did Ed camel just say the principle I'm describing describing here iterative trial and error has long recognized

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value in science why don't we understand that has value in business right edin L said this 50 years ago what the physical sciences teach the social science is how to fail without a sense of guilt and then he points out something that Jeff basos noticed as well that's very common mistake that companies make especially as they grow um you have to know what your actual goal is just doing the process improving the process is not the goal making something great is the goal making the process better easier and cheaper is an important aspiration something we continue to work on but it's not the goal making something great is the goal I see this over and over again in other companies a subversion takes place in which streamlining the process or increasing production supplants the ultimate goal which goes back to what is the ultimate goal making something great is the goal that's the plants the ultimate goal this kind of

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thinking yields to predictable and unoriginal fair what's fascinating is we see Ed CML uh noticing that as they like continue to grow and make more movies in Pixar this is something that Jeff basos also observed in this fantastic book called invent and wander the collected writings of Jeff Bezos it's all of his shareholder letters and uh transcripts of his speech I think I've done two podcasts on it but I'd buy the book and just keep it it's it's excellent and he talks about this he's like well as companies get this is now Jeff Bezos writing as companies get larger and more complex there's a tend a tendency to manage to proxies a common example is process as a proxy which is exactly what Ed catm is describing to us where we are in this book good process serves you so you can serve customers right process is not the he's saying process is not the goal good process serves you so you can serve customers but if you're not

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watchful the process can become the thing this can happen very easily in large organizations the process becomes the proxy for the result you want pause what is the result that Ed C wants making something great is the goal right let's go back to what Jeff bezo says this can happen very easily in large organization the process becomes a proxy for the result you want you stop looking at outcomes and you just make sure you're doing the process right gulp is what Jeff Bezos writes it is not that rare to hear a Junior leader defend a bad outcome with something like well we followed the process a more experienced leader will use it as an opportunity to investigate and improve the process this is Jeff bezos's punchline the process is not the thing let's go back to this idea that the unfair Advantage one of the unfair advantages that Ed CAD is that he's working with all these gifted filmmakers this is like having a team of

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Founders there's another great idea I thought was interesting from this uh filmmaker uh named Brad Bird and he talks about that your organization is an ecosystem you need stress in need stress to survive Brad Bird sees that every creative organization is an ecosystem you need all the seasons he says you need storms it's like an ecology to view lack of conflict as Optimum is like saying a sunny day is Optimum a sunny day is when the sun wins out over the rain there's no conflict you have a clear winner but if every day is sunny and it doesn't rain things don't grow and if it's sunny all the time if in fact we don't ever have night all kinds of things don't happen and the planet dries up the key is to view conflict as essential let's go back over that the key is to view conflict as essential because you know that's how we know the best ideas will be tested and survive you know it can't only be sunlight

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another idea the new needs friends this actually comes from Brad Bird as well but it's Brad Bird as onon ego if you've seen ratat you know what I'm about to read to you Brad Bird wrote this speech that he gives at the towards the end of the movie and so it says the speech rocked me this is Ed camel talking he's like that speech rocked me and to this day it sticks with me as I think about my work and so he's going to quote from the movie in many ways the work of a Critic is e easy we risk very little yet enjoy a position over those who offer up their work and theirselves to our judgment we thrive on negative criticism which is fun to write and to read but the bitter truth we critics must face is that in the grand scheme of things the average piece of junk is probably more meaningful than our criticism designating it so but there are times when a Critic truly risks something and that is in the discovery and the defense

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of the new the world is often unkind to new talent to New Creations the new needs friends he's got an entire section dedicated to what he calls the power of limits he says limits that we impose internally can be a tool to force people to amend the ways they are working and to invent another way we must think of smarter ways to work limit forces us to rethink how we are working and this is why it's so important the demand for resources is literally bottomless unless you impose limits people always justify spending more time and more money by saying we're just trying to make it a little better it is impossible to do everything on your list so you need a set a deadline which enforces a priority based reordering of your list followed by the difficult discussion of what on this list is absolutely necessary another great line again this book is full of them companies like individuals do not become exceptional by

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believing they are exceptional but by understanding the ways in which they aren't exceptional this is another great thought and something that you see in the Arc of a human life through Reading biographies I've known many people I considered to be creative Geniuses yet I can't remember a single one who could articulate exactly what this Vision was that they were striving for when they started it creative people discover and realize their Visions over time and through dedicated protracted struggle going back to another piece of advice from these gifted filmmakers from this team of Founders that he has around them this is one of my favorite metaphors for building a business I have ever read it's stuck with me from years ago and it's from Andrew Stanton if you're sailing across the ocean and your goal is to avoid weather and waves then why the hell are you sailing you have to embrace that sailing means that you

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can't control the elements and that there will be good days and bad days and that whatever comes you will deal with it because your goal is to eventually get to the other side you will not be able to control exactly how you get across that's the game you decided to be in if your goal is to make it easier and simpler then don't get in the boat I added that emphasis by the way that curse word is not in the book but I think it just makes that uh that fantastic metaphor even better there's an entire it goes into this new challenge when Steve decides to sell Pixar to Disney Ed caml and John ler are going to be ahead of Pixar and Disney animation and so this is their you know a new Mission uh to use that example that you know at from the beginning of the book where he had to pick new mission after the Fulfillment of that you know multi-decade long goal now I had written a note to myself about Steve's decision to sell to Disney I'm

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going to read I'm going to put the book down read this note because I think it gives a great overview of what takes place and then I want to pick the book back up and go to this afterward which is almost like a second like a podcast within a podcast because there's just so much good information here about you know their lifelong part 26 year long partnership uh so Steve Jobs and Michael I'm reading notes this note out to myself uh this is from other books that I've read about the sale to Pixar Steve Jobs and Michael Eisner were like oil and water they could not get along a few years later negotiations broke down between them and Pixar started looking for other partners then Michael Eisner gets fired the new CEO of Disney becomes Bo is Bob Iger Bob Iger finds out that he's going to be the next CEO his first phone call is he makes to his daughter so let them know the second person he called was Steve Jobs and he told Steve

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Jobs that he valued Pixar and he wanted to make a deal this is now a direct quote from Bob Iger feel explaining why he felt Disney needed to buy Pixar he says Michael Eisner didn't understand that Disney's problems in animation were as acute as they were they manifested itself in the way he dealt with Pixar he never felt he needed Pixar as much as he really did every negotiation needs to be resolved by compromises neither one of them Eisner or Steve Jobs is a master of compromise but wait a minute how did Bob come to the realization that rightfully so that Disney needed Pixar this was one of the most surprising things he is at a random parade so he's at Disney Hong Kong uh he's watching a parade at Disney Hong Kong this makes him realize how important Pixar was to Disney why because Iger realized that the only characters in the parade that had been created in the past decade were pixars and he's standing next to Michael Eisner

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when this happened so he says this is now direct quote from Bob Iger a light ball went off I'm standing next to Michael but I kept it completely to myself because it was such an indictment of his stewardship of Animation during that period after 10 years of The Lion King Beauty and the Beast and Aladdin there were 10 years of nothing another surprising thing is that Bob begins to negotiate with Steve to buy Pixar and he does something very very unusual he actually does something that anybody negotiating would tell you never do he tells Steve how badly Disney needs Pixar and even more surprising this actually works because this is how Steve reacted so this is what Steve Job said this is why I love Bob Iger he just blurted it out now that's the dumbest thing you could do when you enter negotiation at least according to the traditional rule book he just put his cards out on the table and said we're screwed and I

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immediately like the guy that's why Steve is saying like this is actually not this wasn't dumb on his part I immediately like the guy because that's how I work too let's just immediately put all the cards on the table and see where they fall Disney winds up purchasing Pixar for 7.4 7.6 billion something like that most of that is in Disney stock Steve Jobs was this actually is the first thing that makes Steve Jobs a billionaire he was a billionaire off of Pixar stock not Apple stock Steve Jobs was the single largest shareholder in Pixar and after this deal another interesting fact was that stem made Steve Jobs the single largest individual shareholder in Disney so with that let's go back to the book let's go to the afterward it is called the Steve we knew again I think everybody should have exe if you're managing other people you should have a copy of creativity ink I have the Kindle version the hard cover

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version I think I even may have the paper paperback version somewhere even Ju Just for the afterward I think it's worth the price of admission even though the the other book The the main part of the book is excellent I work closely with Steve J for 26 years to this day for all that has been written about him I don't believe in any of it comes close to capturing the man I knew I've been frustrated that the stories about him tend to focus so narrowly on his extreme traits and the negative difficult aspects of his personality inevitably profiles of Steve describe him as a as stubborn and imperious and a man who held steadfastly who held steadfastly and unwavering to his own ideas refusing to budge or change and who often tried to browbeat others into doing things his way while many of the anecdotes people repeat about his behavior as a young executive are probably accurate the overall portrait is way off the mark

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this is the punchline the reality is Steve changed profoundly in the years that I knew him how could he not over 2 Relentless Learners a Relentless learner that refuses to quit 26 years he knew Ed C of course he's going to change and get better at get better at what he needs to do to accomplish his goals the word genius is used a lot these days too much I think but with Steve it's actually warranted still when I first came to know him he was frequently dismissive and brusk this is the part of Steve that people love to write about I realize that it is difficult to understand people who deviate so radically from the norm like Steve did this narrative misses the most important story and this is why I think the best biography of Steve Jobs ever written was is becoming Steve Jobs because it talks about this transformation that Ed got to witness firsthand in the time I work with Steve he didn't just gain the kind of

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practical experience you would expect to acquire when running two Dynamic successful businesses he also got smarter he became fairer and wiser and his understanding of partnership deepened this shift didn't lead him to abandon his famous commitment to Innovation it solidified it and I think Pixar played a role in that development remember in the late 1980s when Pixar was founded Steve was spending most of his time building next at Pixar none of us including Steve knew what we were doing Steve would overreach in early negotiations with customers and sometimes this backfire Steve had overreached his behavior would create ill will and he later told me that he would that he had learned from this in those early days Steve sens that there was something quite special going on at Pixar but it frustrated him that he couldn't figure it out and he kept losing money in the meantime and so this is something that Steve knew he had an

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expensive group that was ahead of its time could he hang this is something he didn't know could he hang on long enough for that potential to flower especially if he didn't know if it would ever flower what kind of person signs on for that would you that is a one of the most important sentences in entire book because it forces you to stop would you let's say you got $70 million you got next is not a successful business and you dump $54 million into Pixar and literally every month your partner comes up and asks you hey Steve here's the revenue here's expenses you got to write another check to cover a payroll that's insane would you that's he's asking us would you you got to stop and actually pause and think about it it's insane that he did this we tend to think of emotional logic as two distinct mutually EX exclusive domains not Steve from the beginning when making decisions passion was a key part of his calculus at Pixar

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even when we were a long away we were a long ways away from being in the black that aggressiveness was tempered by his acknowledgement that we knew things about graphics and storytelling that he did not he respected our determination to be the first to make a computer animated feature even when we were unsure how to reach our goal our passion was something Steve recognized and value that's what Steve John and I ultimately bonded over passion for excellence a passion so Ardent we were willing to argue and struggle and stay together even when things got extremely uncomfortable Excellence is the capacity to take pain is the summary of that last paragraph We bonded over our passion for excellence the passion was so Ardent we were willing to argue and struggle and be in pain and stay together even when things got extremely uncomfortable and we see that other people within Pixar were willing to push

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back and to again lead with passion I guess is the way to think about this on the movie a bugs life the marketing people were in conflict with the filmmakers The filmmakers Wanted the widescreen format because it led to a better experience in the theater the marketers believing that consumers were less likely to buy a video with black bars on the top and bottom argued that the widescreen format would mean a reduction in our DVD sales Steve agreed with the marketing people I took Steve around then like a few weeks later this this happens I took Steve around the offices so he could see some of the people working on uh a bugs life the production designer was on the film was this guy named Bill con bill was showing some images that happened to be in the widescreen format Steve interjected that it was nuts for us to be making a widescreen movie bill came right back at him explaining why the widescreen format

1:00:18

was absolutely crucial from an artistic standpoint an intense back and forth followed it got it was definitely heated later bill came to see me looking rattled oh my God I was just arguing with Steve Jobs did I blow it on the contrary I told him you won Steve had responded to Bill's passion about the issue the fact that bill was willing to stand up so forcefully and articulate for what he believed in showed Steve that Bill's ideas were worthy of respect Steve never raised the format issue with us again Ed's point with that story is this is in direct conflict which with what was a popular narrative remember this book is written like a couple like two or 3 years after uh Steve Jobs uh died uh upon meeting Steve people generally had to become accustomed to his style Brad Bird the filmmaker remembers a meeting during the making of the movie The Incredibles soon after he joined the studio when Steve hurt his

1:01:10

feelings by saying that some of the Incredibles artwork looked kind of quote Saturday morning a reference to the lowbudget cartoons in my world that's kind of like saying your mama sleeps around Brad said I was seething Brad came to understand though that Steve was speaking not as as a critic but as the ultimate Advocate The Incredibles he was implying had to reach higher he was just saying that we have to show this is something bigger and that epitomized Steve Steve had a remarkable knack for letting go of things that didn't work if you were in an argument with him and you convinced him you were right he would instantly change his mind he didn't hold on to an idea because he had once believed it to be brilliant perspective is so hard to capture I work with Steve for more than a quarter Century longer believe than anyone else and I saw an arc to his life that does not Accord with the one notee

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portraits of Relentless perfectionism that I've read in magazines newspapers and even his own authorized biography Relentless Steve the borish brilliant but emotionally toned deaf guy that we first came to know changed into a different man during the last two decades of his life all of us who knew Steve Well noticed that transformation his experience with Pixar was part of this change Steve aspired to create utilitarian things that also brought Joy it was his way of making the world a better place that was part of why Pixar made him so proud because he felt the world was better for the films we made he used to say regularly that as brilliant as Apple products were eventually they all ended up in landfills Pixar movies on the other hand would live on forever his role evolved during our time together in the early years he was our benefactor the one who paid the bills to keep the lights on later he became our

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protector a constructive critic internally but our fiercest Defender to the outside while he never lost his intensity we watched him develop the ability to listen more and more he could express empathy and caring and patience he became truly wise the change in him was real and it was deep shortly before his death John had visited Steve for the last time we sat for an hour talking about coming projects that he was so interested in I looked at him and I realized this man had given me given us everything that we could ever want I gave him a big hug I kissed him on the cheek and I said thank you I love you Steve the roller coaster came to a stop and a good friend got off but what a ride we had taken together it had been one hell of a trip and that is where I'll leave it for the full story highly recommend you buy the book if you buy the book using the link that's in the show notes on your podcast

1:04:03

player you'll be supporting the podcast at the same time that is 3177 books down 1,000 to go and I'll talk to you again soon I'm glad you made it to the end Founders listeners are not quitters if you have not already signed up for the founders AMA private feed I highly recommend doing that right now I will leave a link down below but it's also always available at founders podcast.com because the insane amount of research that I have done over the last 7even years for this podcast I have a very unique set data set that's available nowhere else there's over 20 thou I've read over 100,000 Pages we're at like 300 what 15 books something like that I have somewhere between like 20 and 21,000 highlights and notes from this project 90% probably over 90% of my highlights and notes never make it onto the podcast yet the information contained in them is excessively valuable so what I what I did is like I'm constantly getting

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questions all the time right and I look at them like their unique prompts to try to get some of this information out of my head and out into the world so it's actually useful to you and one way to do this so everybody benefits is by actually making a private AMA feed so if you become a member you'll be able to ask me questions directly there's a private email address that you get in the confirmation email after you sign up do not share that email address because I read every single one of these emails myself I don't have an assistant doing it I'm the only one that has access to that email so I read every single one myself now the questions that I get from these emails I turn I answer and I turn them into short AMA episodes so that allows other members to learn from the questions of other members you can also add a name and link to your website with your question so that other members can

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check out what you're working on I've already got I've already heard from uh subscribers to the AMA feed that they've actually got new paying customers from people that discovered their business from an AMA question I plan on making several new episodes every week if you are an Enthusiast to Founders podcast I highly recommend that you become a member you can join by using the link that's in the show notes on your podcast player or we going to Founders podcast.com