Steve Jobs sat in his office, nearly 15 days after the conversation with the young boy who stubbornly wanted to buy Pixar Studios. It was a company he had built from scratch, and without him, Pixar might have gone bankrupt in its early years. But the boy was right about something. Maybe he already knew it, or perhaps he wouldn't have invested $10 million in creating his new computer company.
From the words he had heard, Steve felt like he was wasting his time every time he tried to do business at Pixar. Their advertising campaigns consumed almost all the money paid or given by companies. Even now, he only saw the possibility of making serious staff cuts and making do with what they had.
But the great minds at Pixar wanted to use their skills to make movies, and they weren't willing to participate with a minimum investment of $25 million. Steve knew he would always come out on top, which is why he contacted major Hollywood companies directly. Viacom outright rejected his offer, but Disney extended an olive branch for him to hold onto.
What's different about this story? Disney is even more convinced that digital 3D technology cannot compete with Pixar. However, due to Roy Disney's insistence, the fateful meeting took place. Steve Jobs was the most eager of all because it was his way out, and everything depended on the forum.
What were the differences that were affected by the butterfly effect? Firstly, Disney's CEO is not Roy Disney, and secondly, Steve Jobs is only part of a board of directors that holds a strong stigma against Pixar's works, which hasn't diminished. In a year, many of those old-timers would retire, making room for fresh blood that would be more open to negotiations with Pixar in different ways.
John Lasseter and Ed Catmull were feeling a bit discouraged for two reasons. In this era, they had a second option: Billy Carson, who proposed initiating two investments of $15 million and $10 million over four years to create a film—the first-ever digital 3D animated movie. He even promised bonuses if the film reached breakeven and recovered all the money, as an investment to make more movies if the film was successful. The young man was undoubtedly a better prospect than Steve Jobs' proposal. He understood creative design, and they had been exchanging some design ideas for the potential film.
Roy Disney entered the room, with the ambiguous character that all the Disneys seemed to possess, a complex of inferiority due to their inability to follow in the footsteps of the founder. Jeffrey Katzenberg followed him, with some issues regarding his relationship with John, after being unjustly dismissed a long time ago. It was a hard blow, but not everything comes with losses. He founded Pixar and, with the help of capital, managed to pursue what he had once been interested in and generated a passion for.
-Gentlemen, it's an excellent time to negotiate, - Roy Disney said with a smile.
He saw Jeffrey Katzenberg smiling, his glasses frames accentuating his expressions. He's a genius at Disney, one of the people rumored to be the next director of the company. This surpasses his attitude, which aims to be strong among his employees and related connections.
-Of course, there's no better time to negotiate, - Steve Jobs said.
-We have a proposed contract that can be beneficial for both parties, - Roy Disney said. - This contract is already 100% approved, and if you sign it, it will be easy for us to proceed with the budget outlined here. -
-Well, let's read the terms you propose. If they are acceptable, we are willing to accept, -Steve Jobs said, receiving a portion of the contract in his hands.
-Well, I will read the document aloud," Roy Disney said from his chair.
The heavy atmosphere in the room was evident.
>>It says...as the Disney business group, we are offering a total of $17 million as an initial budget to Pixar for the creation of three digital 3D films. As a starting point, Disney must have oversight to ensure that a good movie is being made. Therefore, Jeffrey Katzenberg is responsible for supervising the progress of the film and giving his approval... if Pixar is unable to deliver a good movie, Disney has the right to take over the complete production of the film. -
>>The values stated here, under the agreement for Disney to finance the film, will be met with 84% of the commercial box office profits, as well as all the merchandising rights for toys. Pixar will be obligated to meet all the specified requirements within an estimated timeframe of 10 years. Failure to comply with this contract will result in a penalty of $30 million, - Roy Disney read aloud with a hint of hesitation.
It was quite a harsh, rigid, and inconceivable contract. They were being blatantly robbed. Well, they were being limited in a way that it would be impossible for them to recover.
-Gentlemen, I believe this contract is highly one-sided. The investment is insufficient. With $17 million, you cannot make one movie, let alone three. You made a movie last year, and your investment was greater than what is stated in this contract, - Steve Jobs said.
-What's wrong? The contract is perfect! - Roy Disney exclaimed. - Don't you think it's excessive, Jeffrey? -
-Not at all, it's completely fair. The investment is a gift to our former Disney employees. It's a gamble. No one would bet on digital 3D animation. Only a fool would bet on an untested method, - Jeffrey Katzenberg said.
-Only a fool would bet on this business, - Steve Jobs murmured. - Explain yourself. -
Once someone told him that only a fool would dedicate themselves to selling computer modems. The reason is that people fail to see what's right in front of their eyes, even if you show it to them. Young Billy may be right. He has a feeling that the company can succeed, but he doesn't know how to make it happen.
-Well, it's a new and disruptive technology. The investment of time and resources to make a film is challenging. Films are unpredictable, and this can lead to a high probability of failure. For example, if there's a single factor that makes the audience uncomfortable, box office sales could drop by 20%, and the budget won't be met. Now, a film that uses a new model with high costs is a loss, - Jeffrey Katzenberg said.
-Sir, I believe you're completely mistaken. The medium has been proven in our numerous commercials and shorts. In 1983, I was fired without a second thought, and now you're investing in Pixar. The mistake is yours, and it's clear that you know how wonderful it is, - John Lasseter said, feeling a bit disappointed. "We just want to make movies!"
He shifted uncomfortably in his seat after his outburst, feeling the silent support from everyone at the table. It was obvious that Steve Jobs was not just part of Pixar. He was merely the businessman who provided the money. Everything that Billy Carson had mentioned about the lack of investment in the company, the lack of faith, and the questionable agreements with other companies—it all resonated.
As Steve became aware of the tense atmosphere, he decided to bring the conversation to a close.
-It's been a pleasure. We'll take the list of agreements with us, - Jobs said. -I need to discuss these points with my colleagues. -
-Very well, we'll await your call, Mr. Jobs,- Roy Disney said.
-You can stay if you like. I don't think we'll be much longer, - Jobs replied.
-Don't bother. We have other appointments. Have a good day, - they left like a whirlwind, leaving behind a lingering sense of doubt among those present.
For Jobs, it was almost a missed opportunity, but if they wanted to negotiate, he could wait. For now, he believed that the best course of action for the company was to accept the money and move forward as they always had.
-I intend to sign this agreement, - Steve said after a few moments of silence.
-We don't agree. How will we make money for the upcoming films? How will we even have enough money to finish producing a single film? - Alvy Ray Smith said.
-I'm considering making staff cuts. If we tighten our belts, we can continue working on some commercials and fund the rest of the production. It will take time, but hard work will yield results, - Jobs said.
-We're not willing to accept this work, - John Lasseter said. -I don't see sincerity from Disney, and I'm familiar with the suffocation tactic. When a contract is breached, they usually tear the company apart with a team of giant lawyers and leave it bankrupt. They buy it up piece by piece and keep only what they need. -
The criticism from Lasseter was more palpable than that from Ray Smith.
-So, you don't want to accept this contract? It's the lifeline we desperately need, - Steve said.
-Sir, with all honesty, we still have a more attractive proposal, - Ed Catmull said.
-I agree, I have better feelings about Billy, - John Lasseter said.
Steve thought about the moment he was ousted from Apple. It felt the same now—they wanted to oust him from Pixar because they felt he was no longer useful. But he didn't do it for the money; he had never done anything for money.
-Pixar is mine, and it will be done my way. If you don't want to row the boat, then don't row. I can make this company grow. I will sign, and it's my final decision, - Jobs said, filled with anger.
-And you, with all your good vibes, are fired, - Jobs said, pointing his finger at John Lasseter.
The exclamation was like a groan. The entire room, now in complete silence, understood that the boss's ego had been bruised.
-Steve, you better regain your composure, - Ed Catmull said. "Pixar may be yours, but you should know when you're being deceived right to your face. Year after year, we have lowered our salaries to do what we love. If you believe Pixar is yours, then go ahead, fire us all, and make three 3D animated films with a team of rookies. Face Disney's lawyers on your own. I don't have the energy to work another ten years with the salary you pay me.
-The majority of this company's team works out of love for our work. If you want to build a similar group, you better tighten your belt and stop playing with your computer company. Because if John goes, I go, and my team goes... I won't tolerate such abuse, - Ed Catmull said, breaking his usual calmness. They had never seen him speak so many words in such a short time.
-I think it's best if we all take some time to think about this conversation. I need to take a walk, - Steve said.
He slammed the door shut. He knew that if he continued this conversation, things could happen that he would later regret.
-Now all we can do is wait for a deal. Even if Steve doesn't decide to go with Billy, we now know that there are people who can trust us. If we keep working hard, we could make money on our own, - Ray Smith said.
-I agree. Even if we must make commercials for every company in North America, we'll make the movie without Disney's intervention, - Ed said.
The only clause that bothered Pixar was the fact that Jeffrey Katzenberg would be directing the project, and eventually taking control of the company with his employees.
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