October 11, 1995: Steve Jobs files the paperwork to float Pixar Animation Studios on the stock market.
A turning point in Jobs’ life, Pixar’s initial public offering turns him into a billionaire. But things very nearly don’t turn out so well.
How Steve Jobs bought Pixar
It may be because I write for a tech site, and therefore the Steve Jobs focus is always on Apple and NeXT. But Pixar often seems underrepresented when people talk about the Apple co-founder’s life. Sometimes written off as a side investment for Jobs, Pixar was evidence of his long-term vision. It also symbolizes his post-Apple struggles as a businessman, and ultimately his astonishing turnaround and reinvention as a CEO.
It was also the start of Jobs’ entertainment industry experience, which made him the single biggest shareholder in the Walt Disney Company and laid the groundwork for relationships he would later draw on for iTunes.
Pixar was founded by Alvy Ray Smith and Ed Catmull. The animation studio emerged out of the computer graphics lab of George Lucas, director of Star Wars. When Lucas went through an expensive divorce, Jobs bought out his share of the company.
Jobs first heard about Pixar’s work through Alan Kay, the legendary Xerox PARC computer scientist who went on to work for Apple.
Jobs talked Lucas down from an initial offer of $15 million for his Pixar stock, and a guarantee of another $15 million in funding for the company. In the end, Jobs paid just $5 million and a guarantee of $5 million in funding for 70 percent of Pixar. The deal was struck on February 3, 1986, shortly after Jobs left Apple.
Although Jobs got a good deal, it was a risk at the time: Pixar needed money to run and Moore’s law meant the company was still a decade away from being able to generate a fully computer-animated movie, which was the dream of Smith and Catmull.
Pixar: Movie studio or computer company?
Coming from a sales background, Jobs thought Pixar could pay its way as a hardware and software company for creatives — basically the same pitch he used at Apple.
Pixar had two main products for sale. These were RenderMan, a 3-D graphics rendering program that still exists today, and the Pixar Image Computer, which was a high-end supercomputer. The Pixar Image Computer proved to be a sales disaster. Throughout its life, the computer sold fewer than 300 units.
The problem was an insanely high sales price. The machine cost $135,000 to buy, but also needed a $35,000 workstation from Sun Microsystems or Silicon Graphics to run. A second-generation version sold for “just” $30,000, which still put it far out of reach of any regular customer.
Hemorrhaging money, the only thing that kept Pixar alive during the late 1980s and very early ’90s was Jobs’ pride. He didn’t want to be seen as a one-hit wonder who founded Apple, then flamed out with NeXT and Pixar.
Fortunately, the company struck a deal with Disney, and Pixar began work on its first feature-length movie, Toy Story. Sensing a big hit, Jobs filed to take Pixar public. The paperwork was filed 22 years ago today, and the IPO itself took place November 29, 1995.
The IPO made Jobs a billionaire at age 40 and set the stage for his astonishing comeback.