Sunday, July 06, 2008

How Steve Jobs Got Pixar Off the Ground

How Steve Jobs Got Pixar Off the Ground

I once heard an analogy of a fighter jet spiraling out of control. That is literally what it often takes to get a company started. You are dependent on getting your clients to pay and you often start with a major debt. It takes a lot of struggling to get the company profitable.

A great example lies with Steve Jobs. When he was fired from Apple in the 80s (a company he co-founded), he started two other companies. One of those ventures was actually buying a division of George Lucas' ILM (effects studios), Pixar. Jobs bought Pixar from Lucas for 5 million (Lucas was going through a divorce and had to cut something off).

Jobs pushed to sell Pixar's hardware and software, which was the point of the company. Well, even when Jobs bought Pixar, they were employing a young animator, John Lassetter, who was fired from Disney. Lassetter was given the job of using the software to make animations and sell the software and hardware. Well, what ended up happening was that the animations were so popular, that Pixar started making its money off of animation services for commercials. It soon led to movies, and now Steve Jobs is the #1 shareholder of Disney stock (which happened when Disney bought Pixar and made Jobs one of the richest men in the world). (Not to mention that Jobs got hired back by Apple and has led it back to phenominal success.)

Here's the point: Getting Pixar going was a huge struggle for Jobs. He invested millions in it, and he was even at the point where he was shopping it to Microsoft. But he pulled out at the last minute when he started to see some samples of Toy Story come through and he realized that his software and hardware business was a movie studio. He ended up licensing many of his Pixar patents to Microsoft instead, which helped fund Toy Story and keep them afloat.

He was like a jet fighter spiraling out of control. But once he had found a niche and success wit the company, it became a snowball effect in positive direction: positive cashflow.


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