Pixar's Co-Founders Heard 'No' 45 Times Before Steve Jobs Said 'Yes'

When it comes to entering the technology market, 'timing is everything,' says Alvy Ray Smith.
Pixar's Co-Founders Heard 'No' 45 Times Before Steve Jobs Said 'Yes'
Image credit: Andrew H. Walker | Getty Images

With its stunning visuals and storytelling to boot, Disney’s Pixar has been captivating global audiences for decades, helping to transform the way people look at animated feature films. Best known for its use of computer-generated imagery (CGI), Pixar has 17 animated feature films on its record, 12 of which made the list of the 50 highest-grossing animated films of all time. (Disney has even released a film showing that all the Pixar films are connected.)

Pixar knows a thing or two about how to tell a story and now anyone can learn how to capture people’s imagination with a scintillating story. In an initiative called “Pixar in a Box,” which is sponsored by Disney, Pixar has teamed up with the Khan Academy to offer free online classes to anyone with an internet connection and a passion for storytelling.

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Over the years, Pixar has given audiences the likes of the Toy Story trilogy, Monsters, Inc.Finding NemoThe IncrediblesRatatouille and Finding Dory. If its back catalogue isn’t impressive enough, Pixar has now given its fans what is arguably its most sacred creation of all -- the secret of how to tell tales that make people tick.

I interviewed Alvy Ray Smith, one of the company’s co-founders, and he told me about learning animation from a $1.50 “how-to” book, the role that “Moore’s Law” played in guiding him to success with Pixar, his three golden rules of recruitment and working with the late Steve Jobs.

In addition to pursuing computer graphics at the New York Institute of Technology (NYIT), you taught yourself the basics of animation using a $1.50 “how-to” book written by the late Preston Blair, a character animator best known for his work at Disney and Metro-Goldwyn-Mayer (MGM). Where did you get your business savvy from?

Alvy Ray Smith: My co-founder, Edwin Catmull, and I were the academic type. We were computer nerds with PhDs and learned business by the seat of our pants. When George Lucas -- one of our patrons -- lost half his fortune in a divorce, we were forced to start a company to preserve our group. Our first move was to buy four “how-to-start-a-business” books. I also called a former colleague at NYIT, Jim Clark, founder of Silicon Graphics (and later, Netscape) and asked him how to do business. He said, “It’s not hard, Alvy. It’ll take you about a year to learn the basics.” That was the extent of our “formal” training. Then, we went through an intense learning process made necessary by financing Pixar. Thirty-five venture capitalists and 10 large corporations turned us down, but we got lots of training presenting the company and “talking the talk.”

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Describe the impact that Gordon E. Moore -- the founder of Intel -- had on your business philosophy.

In my own words, “Moore’s Law” says, “Everything good about computers gets better by a factor of 10 every five years.” So, in 2015, computers were 10 billion times better than they were in 1965. Catmull and I used this “Law” at several crucial points, including the formation of Pixar. In the final year at Lucasfilm, I ran the numbers for a contract with a Japanese company ready to produce the first digital movie. To my horror, I discovered that computers hadn’t arrived yet -- by a factor of 10. I had to back out of the deal. Hence, we knew that Pixar couldn’t make movies for another five years. At the end of those five fraught years -- right on Moore’s Law schedule -- Disney stepped forward to finance Toy Story, the first digital movie.

What positives did you take away from your association with the late Steve Jobs, who was the main investor in Pixar?

Jobs financed us when 45 other organizations had said “no.” He didn’t create or run Pixar, but he did capitalize us as a manufacturing company for those first five years. We ran out of money several times, and Jobs would always write us another check in exchange for equity. His greatest business move was to take Pixar public on the strength of great critical previews of Toy Story.

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What business principles did you apply when you co-founded Pixar that could be applied by a founder of a startup today?

When hiring people, live by three rules -- hire smarter than yourself, hire the best and give them their space. It’s like being a good parent. You can’t produce creativity, but you can identify it, nourish it and let it grow. Catmull and I aren’t good entrepreneurial models because we failed for five years, staying alive only because of one of our patrons, Steve Jobs. We weren’t successful until we were executing a business that we had truly prepared for, which was making animated movies. What we did have going for us was a clear and clean vision -- that is, to make the first digital movie. It was not to make a financially successful company. Pixar’s example taught us that entrepreneurs aren’t always born (sometimes, they’re made), failure isn’t always final (sometimes, it’s just feedback) and recruitment works best by a “rule of three.”

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