Thursday, March 05, 2009

Pixar's Failure and Success

Pixar was originally an unsuccessful company, but it had a secret weapon. Not many people know that the owner of Pixar (the 3D animation studio behind Toy Story, Finding Nemo, and more) was actually Steve Jobs (the founder of Apple). It does not make a lot of sense why Jobs was the owner until you dig into the origin of the company. Pixar started out of George Lucas’ Industrial Light and Magic as the company that created and owned the hardware and software used for effects. The first animator, John Lassetter, was hired secretly as an interface designer (to hide his true role from George Lucas).

In 1986, Lucas needed to sell Pixar to pay for an expensive divorce, and Steve Jobs bought the company as a hardware and software company. He intended to turn the hardware and software into a sales machine. However, he was never able to get that business going; the demand did not exist. Meanwhile, the company had a lot of success with animated shorts, which led to a movie project (Toy Story). Jobs was about to sell the company to Microsoft when he saw the early tests for Toy Story. He then fought hard to come up with the money to keep the Pixar and continue the Toy Story project. He came up with the money by licensing hardware and software patents to Microsoft and by selling Pixar’s services to make TV commercials (Listerine bottles, Hershey kisses, and dancing Life Savers).

Pixar attempted to build a new industry by releasing software and hardware for the effects and animation industries. However, the companies had their own internal software and hardware, they didn’t see the value of digital effects as early as Lucas and Jobs did, and eventually, similar software was developed for lower costs to be used on a common PC. Although Jobs’ mistake turned out to make him one of the richest men in the world (he sold Pixar to Disney in 2006 for $7.4 billion), he didn’t research the market needs and demand before investing in the market.


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