Steve Jobs

Jobs’s sense that his investments in Pixar might actually pay off was reinforced when Disney invited him to attend a gala press preview of scenes from Pocahontas in January 1995 in a tent in Manhattan’s Central Park. At the event, Disney CEO Michael Eisner announced that Pocahontas would have its premiere in front of 100,000 people on eighty-foot-high screens on the Great Lawn of Central Park. Jobs was a master showman who knew how to stage great premieres, but even he was astounded by this plan. Buzz Lightyear’s great exhortation—“To infinity and beyond!”—suddenly seemed worth heeding.

Jobs decided that the release of Toy Story that November would be the occasion to take Pixar public. Even the usually eager investment bankers were dubious and said it couldn’t happen. Pixar had spent five years hemorrhaging money. But Jobs was determined. “I was nervous and argued that we should wait until after our second movie,” Lasseter recalled. “Steve overruled me and said we needed the cash so we could put up half the money for our films and renegotiate the Disney deal.”

To Infinity!

There were two premieres of Toy Story in November 1995. Disney organized one at El Capitan, a grand old theater in Los Angeles, and built a fun house next door featuring the characters. Pixar was given a handful of passes, but the evening and its celebrity guest list was very much a Disney production; Jobs did not even attend. Instead, the next night he rented the Regency, a similar theater in San Francisco, and held his own premiere. Instead of Tom Hanks and Steve Martin, the guests were Silicon Valley celebrities, such as Larry Ellison and Andy Grove. This was clearly Jobs’s show; he, not Lasseter, took the stage to introduce the movie.

The dueling premieres highlighted a festering issue: Was Toy Story a Disney or a Pixar movie? Was Pixar merely an animation contractor helping Disney make movies? Or was Disney merely a distributor and marketer helping Pixar roll out its movies? The answer was somewhere in between. The question would be whether the egos involved, mainly those of Michael Eisner and Steve Jobs, could get to such a partnership.

The stakes were raised when Toy Story opened to blockbuster commercial and critical success. It recouped its cost the first weekend, with a domestic opening of $30 million, and it went on to become the top-grossing film of the year, beating Batman Forever and Apollo 13, with $192 million in receipts domestically and a total of $362 million worldwide. According to the review aggregator Rotten Tomatoes, 100% of the seventy-three critics surveyed gave it a positive review. Time’s Richard Corliss called it “the year’s most inventive comedy,” David Ansen of Newsweek pronounced it a “marvel,” and Janet Maslin of the New York Times recommended it both for children and adults as “a work of incredible cleverness in the best two-tiered Disney tradition.”

The only rub for Jobs was that reviewers such as Maslin wrote of the “Disney tradition,” not the emergence of Pixar. After reading her review, he decided he had to go on the offensive to raise Pixar’s profile. When he and Lasseter went on the Charlie Rose show, Jobs emphasized that Toy Story was a Pixar movie, and he even tried to highlight the historic nature of a new studio being born. “Since Snow White was released, every major studio has tried to break into the animation business, and until now Disney was the only studio that had ever made a feature animated film that was a blockbuster,” he told Rose. “Pixar has now become the second studio to do that.”

Jobs made a point of casting Disney as merely the distributor of a Pixar film. “He kept saying, ‘We at Pixar are the real thing and you Disney guys are shit,’” recalled Michael Eisner. “But we were the ones who made Toy Story work. We helped shape the movie, and we pulled together all of our divisions, from our consumer marketers to the Disney Channel, to make it a hit.” Jobs came to the conclusion that the fundamental issue—Whose movie was it?—would have to be settled contractually rather than by a war of words. “After Toy Story’s success,” he said, “I realized that we needed to cut a new deal with Disney if we were ever to build a studio and not just be a work-for-hire place.” But in order to sit down with Disney on an equal basis, Pixar had to bring money to the table. That required a successful IPO.

The public offering occurred exactly one week after Toy Story’s opening. Jobs had gambled that the movie would be successful, and the risky bet paid off, big-time. As with the Apple IPO, a celebration was planned at the San Francisco office of the lead underwriter at 7 a.m., when the shares were to go on sale. The plan had originally been for the first shares to be offered at about $14, to be sure they would sell. Jobs insisted on pricing them at $22, which would give the company more money if the offering was a success. It was, beyond even his wildest hopes. It exceeded Netscape as the biggest IPO of the year. In the first half hour, the stock shot up to $45, and trading had to be delayed because there were too many buy orders. It then went up even further, to $49, before settling back to close the day at $39.

Earlier that year Jobs had been hoping to find a buyer for Pixar that would let him merely recoup the $50 million he had put in. By the end of the day the shares he had retained—80% of the company—were worth more than twenty times that, an astonishing $1.2 billion. That was about five times what he’d made when Apple went public in 1980. But Jobs told John Markoff of the New York Times that the money did not mean much to him. “There’s no yacht in my future,” he said. “I’ve never done this for the money.”

The successful IPO meant that Pixar would no longer have to be dependent on Disney to finance its movies. That was just the leverage Jobs wanted. “Because we could now fund half the cost of our movies, I could demand half the profits,” he recalled. “But more important, I wanted co-branding. These were to be Pixar as well as Disney movies.”

Jobs flew down to have lunch with Eisner, who was stunned at his audacity. They had a three-picture deal, and Pixar had made only one. Each side had its own nuclear weapons. After an acrimonious split with Eisner, Katzenberg had left Disney and become a cofounder, with Steven Spielberg and David Geffen, of DreamWorks SKG. If Eisner didn’t agree to a new deal with Pixar, Jobs said, then Pixar would go to another studio, such as Katzenberg’s, once the three-picture deal was done. In Eisner’s hand was the threat that Disney could, if that happened, make its own sequels to Toy Story, using Woody and Buzz and all of the characters that Lasseter had created. “That would have been like molesting our children,” Jobs later recalled. “John started crying when he considered that possibility.”