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How Pixar’s leadership learned to invent the future

Direct from ICTAM’s stage — The Innovators 2018

He’s the financial executive known for helping steer Pixar from a failing graphics company into the entertainment juggernaut it is today. He worked with Steve Jobs to bring the first digitally animated feature film, Toy Story, to the screen. And then he stepped away from his day-to-day role with the company only five years after its $140-million IPO.

Why would someone at the height of their career just walk away? For this leader, he was in search of a better balance in life — adapting Eastern meditation traditions to our stress-laden contemporary world.

Running a 1980’s Silicon Valley software company

Lawrence Levy, Pixar’s former CFO and executive vice-president, recently brought his unique story to The Innovators stage, an annual event hosted by Manitoba tech and ICT organization, ICTAM.

Taking part in an on-stage conversation with veteran TV journalist Kevin Newman, Levy had the RBC Convention Centre crowd fully engaged as he recounted the tale of how, in the span of only a few years, he went from junior tech lawyer to a leading executive of one of the world’s biggest entertainment companies.

ICTAM The Innovators 2018

Levy’s leadership journey started when he moved from England to the U.S. as a teenager. Interested in the corporate world, he earned an undergraduate business degree before studying law at Harvard. As a young lawyer, Levy dove into intellectual property law and technology transactions, moving west to Silicon Valley in the 1980s.

At the time, the tech crystal ball was still quite murky, and very few people saw such clear potential.

“Nobody wanted to represent a software company,” Levy said. “I realized there was a whole new area of law developing around software and technology.”

After building a West Coast law firm’s technology transactions department, he chose to jump to the tech sector, becoming CFO of Electronics for Imaging, where he caught the attention of one of Apple’s founders in 1994.

A phone call from Steve Jobs changed everything

“On the other end of the phone line I heard, ‘Hi, my name is Steve Jobs. I have a little company I want to tell you about.”

Enter Pixar — a company nobody knew about at the time. Jobs had bought the business directly from George Lucas, and the company was not doing too well.

“[Pixar] had gone through $50 million — just burned it,” Levy said. “Payroll was being paid out of Steve’s personal chequebook.”

However, it only took Jobs three minutes to convince Levy to get on board. That was the duration of Toy Story’s opening clip he was shown in a seedy screening room.

“At one side of it was a screen, on the other a projector and in the middle old couches,” Levy said. “The kind you’d leave at the end of your driveway.” But once he saw what they had created, the emotional connection was forged.

“There’s magic happening somewhere in this building,” Levy remembered his thoughts at that moment. “I fell in love with Pixar right away, but that didn’t mean I thought it could become a business.”

Overhauling Pixar’s mission

However, the journey ahead was not a smooth ride. After being forced out of Apple in 1985, Jobs became Pixar’s majority shareholder, helping to develop the company’s 3D rendering application, RenderMan, used to produce computer-generated imagery (CGI) animation. Yet, there was an intrinsic problem with the company’s self-directed mission — they didn’t quite know who they could be.

“Pixar was stuck in a narrative,” Levy said. “It was a graphics company. It thought like a graphics company, it acted like one. There was nothing about Pixar that was an entertainment company and you would never have hired me to run an entertainment company in 1994. I knew nothing about it.”

Levy saw a company that was working on a movie, commercials and short films — and had developed amazing animation and rendering software.

“I thought we’d scare up all these businesses and we’ll have a diversified company. Slowly I figured out none of that was going to work. There were no scaling opportunities in those products.”

So Levy took the plunge, grabbed a book called Entertainment Industry Economics from the library and started forging a new path. “This is how I learned the entertainment industry — no kidding,” Levy recalled.

In what some would consider a very bold step, Levy moved forward and told Jobs that their only shot was to be an entertainment company. “And it is a terrible shot,” Levy said, explaining that no one had made feature-length animated films work financially. “The one person who gave it a good shot was Walt Disney.”

But the creative culture at Pixar was something Levy knew he could compliment on the business side. There was an opportunity to add significant value.

“These guys are really good, and they don’t do what I do — business strategy, finance,” Levy said. “There was no one there doing that.”

From starving artist to blockbuster success

For Levy, the company’s innovation depended on complementary forces balancing out.

“Pixar essentially had been a starving artist for a long time, but with no discipline,” he said. “If you’re too one-sided in one direction or the other, it becomes a problem. There was a culture of artistry and storytelling that was going to be disrupted… There was no way to preserve Pixar as it was.”

In the end, Jobs, from an engineering background, and Levy, with his legal and business perspective, bet the farm on creativity and story.

“It was a risky bet, but it was the best bet we could take,” Levy said. Toy Story’s unexpected blockbuster status changed the landscape for the company, as did its subsequent $140-million IPO.

Levy told The Innovators crowd that it’s important to think of IPOs as the beginning of a business’s story — not the culmination.

“You just raised a large sum of money and there are a lot of people who expect you to do a lot with it,” Levy said.

Hollywood reality bites

ICTAM The Innovators 2018

Reality hit when Pixar had to figure out how to scale up their business. It had already taken a 250 person team between four to five years to make an animated film for $100 to 150 million — all under Pixar’s original agreement with Disney. Levy described this as “a prison sentence of 15 years, of making no money on [our] films.”

That’s when Levy got a crash course on Tinseltown law.

“Hollywood entertainment law is like its own language,” he said “When I did figure it out…I came home to my wife and said ‘I have made the biggest mistake of my career.’ ”

But Levy also learned that two things really talk in Hollywood: success and money. With Toy Story’s blockbuster status Pixar had the success, and with its IPO, it had cash.

“That means you have leverage,” Levy said. “We went to Disney and said we wanted to renegotiate — and said we’d bring money to the table, extend the agreement and give them some more films.”

After an almost two-year negotiation, Pixar got a better deal…and what it really craved — the ability to build Pixar’s brand.

Stepping out of Walt’s shadow

“Everywhere we went, people would say, ‘Wow! Disney made Toy Story and it’s so great, and you guys did the technology!’ ” Levy recalled. “We’d say, ‘No, we made the whole film!’ So both strategically and emotionally, we ought to get the credit for the work we did.”

Standing their ground, Pixar also held out for equal credit to Disney in all ways — even the size and weight of logo fonts was governed.“Equal branding was spelled out in the contract,” Levy said. This was an important aspect of the company’s brand awareness and growth as a recognizable force in their industry.

The strategy paid off, and there was a significant value in developing the brand. In 2006, Disney bought Pixar for a valuation of $7.4 billion.

Levy said Jobs’ success at Pixar helped make him the man he was when Apple brought him back in the late 1990s.

“It gave him a lot of confidence to take a big risk somewhere else,” Levy said. “He also learned how to be a CEO in creative culture and learned the entertainment industry.” They’re lessons Jobs put to good use as Apple transformed the music marketplace with the iPod and iTunes in the early 2000s.

“You package all that up and it’s a pretty different person who’s going back to Apple in 1997 than the one who left in 1986.”

Leadership lessons: Forever adapt & grow

While it can be easy to fall in love with success, Levy chose to step away from the stresses of the business by 2000. He remained a member of Pixar’s board, but also stepped away from that once Disney acquired the company.

ICTAM The Innovators 2018
Lawrence Levy, former Pixar CFO and EVP, (left) with Ryan Klassen, Vice-President Business Solutions Bell MTS and President of ICTAM’s board of directors

“I had the presence of mind to say it does get better than this,” he said. “Corporate life, startup life, whatever we want to call it, has a certain one-dimensional nature. It’s very much about growth, acquisition and performance at all costs. I began to see there were hidden costs to a performance-only mentality.”

In 2003, Levy’s interest in Eastern philosophy led him to co-found the Juniper Foundation, a non-profit organization that works to bring meditation practices into contemporary life.

“The bedrock philosophy of this system of thought is called the ‘Middle Way,’ ” Levy explained. “But it has nothing to do with compromise or average.”

Think of it as having two people inside: a ‘bureaucrat’ that gets the bills paid, the meals made, the kids to school — and an ‘artist’ or spiritual side focused on living, loving, playing and experiencing joy.

“The Middle Way says if you get stuck in one side or the other, hardship will flow from that,” Levy said, relating this philosophy back to his early Pixar days.

“What we really did at Pixar was take all that artistry and surround it with enough strategy, administration and bureaucracy that it could move forward without killing that spirit.”

 

Bell MTS was presenting sponsor of The Innovators 2018. ICTAM is an industry-focused association representing Manitoba’s information and communication technology sector. Not-for-profit and open to all businesses, ICTAM works to create an environment for innovation, excellence, growth and global recognition in the Manitoba ICT sector by providing leadership, focus and collaboration with industry and government.

Jason Halstead

Jason is a Winnipeg-based journalist and photographer who has been published across Canadian media.

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