Pixar, Bought from Lucasfilm

The Purchase

In January 1986, Steve Jobs acquired the Graphics Group from Lucasfilm for five million dollars — ten million if capital commitments are included — and renamed it Pixar. The transaction came at a specific moment in his life: he had left Apple the previous year following the boardroom confrontation with John Sculley, and he was looking, as he later acknowledged, for somewhere to put his energy and his money. What he said he was buying was a high-end computer hardware business. The Pixar Image Computer, aimed at government agencies and medical imaging clients, was the division’s primary product, and Jobs believed he could sell it.

Ed Catmull and John Lasseter, the two creative principals who came with the acquisition, had a different centre of gravity. Catmull, a computer scientist who had worked in the research division at Lucasfilm, was developing rendering techniques ↗ that would eventually become RenderMan. Lasseter, a former Disney animator whom Lucasfilm had hired in 1984, was making short computer-animated films — not as a sideline but as the central project of his professional life. Luxo Jr., which Lasseter completed in 1986, would screen at SIGGRAPH that year and receive an Academy Award nomination. None of this was what Jobs had said he was buying.

What He Said at the Time

Jobs’s documented public statements about Pixar in its early years are almost entirely about hardware. In a 1986 interview with BusinessWeek, he described the Pixar Image Computer as a scientific workstation competitive with anything on the market, capable of processing imagery at speeds no general-purpose machine could match. Animation, if he mentioned it at all, was framed as a demonstration of the hardware’s power rather than a business in its own right.

His private view was evolving more quickly than his public statements suggested. In Walter Isaacson’s 2011 biography ↗, Jobs recalled being struck almost immediately by what Catmull and Lasseter were building creatively, though he was candid that he had not fully understood it at the point of purchase. "They had a vision for what computer animation could be, and I didn’t immediately see it," he told Isaacson — one of the passages in the biography where Jobs’s retrospective account is essentially the only primary record available, the contemporaneous documentation being thin.

The hardware business failed. By the late 1980s it was clear that the Pixar Image Computer would not generate the volume Jobs needed; the company nearly collapsed ↗ on several occasions, and Jobs later estimated he had invested roughly fifty million dollars of his own money before Toy Story’s 1995 release returned any of it. What kept Pixar alive was its ability to produce short advertising films using its own technology, and, eventually, the development deal it signed with Disney in 1991.

His Role After the Turnaround

As the Disney deal solidified and Toy Story moved toward production, Jobs’s role shifted visibly. He remained the funder and the formal chief executive, but his function became something closer to what he did best: acting as the public voice and the deal-maker. He negotiated the distribution and financing terms with Disney’s Jeffrey Katzenberg. He set the conditions — reportedly difficult ones — under which Pixar would work, and he held the line on the studio retaining creative control and ownership of its characters.

What he did not do was direct or write. Catmull ran the studio’s technical and managerial operations; Lasseter led creative production. The arrangement was unusual — Jobs later described it as unlike anything else he had been involved in, a creative organisation he had to learn to serve rather than lead. When Pixar’s initial public offering followed Toy Story in November 1995, making Jobs a billionaire in a single day, it confirmed a pattern he had not predicted in 1986: the hardware he had bought was gone, and what had replaced it was art.

Jobs’s documented public statements about Pixar in its early years are almost entirely about hardware.