Ed Catmull, President of Pixar Animation Studios on Keeping Your Crises Small…
Event took place on January 31, 2007
Ed Catmull – President, Pixar Animation Studios
Well, I have a fun job, but I’m not going to talk about the fun parts. I’m going to talk about the problems that we’ve had – about the hard parts.
I want to start with two questions.
The first question is, Why do successful companies fail?
Now, I grew up around this whole industry of computers, and as it went through this remarkable revolution — and saw a lot of companies come and go. But there were two that stand out in my mind. One was Evans & Sutherland, which is located in Salt Lake. This was one of the pioneering companies in computer graphics, and they had the lead. They had more knowledge and expertise than anybody else. And they were in the best position to take that knowledge and go to the next level as a company.
But they made some decisions in which they lost that lead. And a new company leapt to the front and that was Silicon Graphics, founded by Jim Clark who incidentally used to work for Evans & Sutherland.
And SGI had this remarkable run. They built the graphics machines that was used throughout the world for a variety of visualization and graphics techniques. A lot of software was built on it. The revolution in computer graphics in the entertainment industry was built on their machines. They had everything. But they made two serious mistakes. And the things about these serious mistakes was, there were several people on the outside that took a look at that and say, “That’s a really bad idea. You shouldn’t do that.”
Nevertheless, they did it, and they lost the lead. They lost the lead to Nvidia, incidentally, made up of former SGI employees. And they did some remarkable things. And they, with ATA, are still out in the lead. But the company that had that lead was SGI and all the knowledge.
Now, the people had said they’re making the wrong decision. In some ways, they’re like Cassandra, where you’re telling the truth, but the people don’t listen. And Cassandra was cursed with being able to see the future, but not having people believe her. And it felt like that kind of situation here.
The reason I start with this question was, at that time, while all this is going on, I’m with this struggling company, and we’re trying to figure out how to make things work. And we start off with a company. It’s just hard. And it was pretty — a very difficult task.
But I’m thinking, “If we’re ever successful, how do I keep from falling into the trap that these companies are falling into? And it’s not like they get blindsided by something which catches them totally off-guard. This stuff is really pretty obvious. They’re missing the obvious.
The second question relates to a dinner that I had with a studio executive — the head of a studio — a couple years ago. And he said at that — actually, it was a lunch — he said at that lunch, “Our central problem is not finding good people. It’s finding good ideas.”
So that was an interesting expression. So as I gave talks for the next while after that, I would pose that question to the audience and ask them whether or not they agreed with him.
And what I found was that, in every case, the audience was split 50:50. It’s really pretty astonishing. Didn’t matter whether they were students, experienced business executives, artists, high school teachers – they all split. Some thought it was right; half thought it was wrong.
Well, let me come back to that second question later.
Pixar Story – Toy Story
So now, let me step into the story, which is, in ’91, when our company was about five years old and went through the various hells you go through when you’re starting a company. We finally got our chance, and we entered into a relationship with Disney to make the first computer-animated film, “Toy Story.”
And at that time, we got a few things right. We did have a culture where the artists and the technical people were peers with each other. They socialized with each other. They each thought the other was world class. The compensation structure was the same. They were allowed to intermarry.
If there are problems — and there were always problems — people felt comfortable about coming in and expressing their problems. You couldn’t fix every problem, but it’s important to hear them.
The other thing we had was something which we called the “Brain Trust.” We had a certain group of people who were very remarkable at telling stories. And part of being remarkable was, not only that they were funny and focused and good at storytelling, but they had complete trust in each other. And they were very often — what you might call ‘brutally honest’ — except for them, they didn’t think of it as ‘brutally honest’. They thought of it as ‘necessarily honest,’ and it was always taken that way. It was never a matter of ego or putting somebody down. It was always about the story. And therefore, you could say something hard, and it was taken in the right spirit.
And given that kind of camaraderie in the key group of people, it is just gold. And it’s an amazing group. And to this day, it’s an amazing group of people. So we got that right.
We had a review process that was actually a combination of some things that John learned from Disney, along with things that were at ILM at Lucasfilm. But it was unique because of that combination. But what it amounted to was that, in the process of making the film, we reviewed the material every day.
Now, this is counterintuitive for a lot of people. Most people — if you can imagine this — you can’t draw very well, but even if you can draw very well, suppose you come in, and you’ve got to put together animation or drawings and show it to a famous, world-class animator. Well, you don’t want to show something which is weak or poor. So you want to hold off until you get it to be right.
And the trick is, actually, to stop that behavior. We show it every day when it’s incomplete. If everybody does it every day, then you get over the embarrassment. And when you get over the embarrassment, you’re more creative. And that’s — as I say — it’s not obvious to people, but starting down that path helped everything that we did. Show it in its incomplete form.
There’s another advantage to doing that, and that is, when you’re done, you’re done. Now, that might seem silly, except that a lot of people — they work on something. And they want to hold it, and they want to show it, let’s say, two weeks later to get done — only, it’s never ‘right’. So they’re not done. So you need to go through this iterative process. And the trick was to do it more frequently to change the dynamics.
Also, as we started up in making this film, we brought in a new group of people, because we had artists, we had technical people, but we never made a movie before. So we didn’t have a group of people who were really production managers. They were the ones keeping track of things, making sure that the material went from place to place. You got, literally, millions of things that are going on. There’s a lot to manage, a lot to take care of.
So you needed people who thought that way and were experienced with it. So this is this new group coming in from Los Angeles.
So, we finished the film, and the film was a big success. It went way beyond what anybody thought. It was a great start to this new field of computer animation. And we were building company. We went public at that time. We went public one week after the film opened. And it was the biggest IPO of the year, in fact. And we wanted people to see our product before they invested. And it just went well; it was a great, whirling event.
But at that time, or just prior to going public, we had to start on the next film. Because you can’t just have one product, and that’s it. You’ve got to keep coming out with them. And we’re very aware there’s a second-product syndrome where you kind of overdo it in the second one, and you blow it.