Kyle’s Rating: 9/10
This is a standalone briefing on the Pixar story from Acquired’s Disney Part II episode, where Ben and David take a second pass at the company they covered in their very first episode. The retelling is much richer this time, built on a day inside Pixar and conversations with Ed Catmull, Pete Docter and Bob Iger. Their explanation of how a Pixar film gets made and their answer to why Pixar sold are the best parts.
Key Takeaways
Pixar came together through a string of unlikely events. It took a Disney animator fired for pitching computer animation, a Utah graphics researcher, George Lucas’s need for cash in a divorce, and Steve Jobs’s exile from Apple.
Story comes first, and it’s tested cheaply. Pixar builds each film as rough sketches with temporary audio and revises it about eight times before spending money on animation.
Jobs timed the IPO to Toy Story on purpose. Going public one week after the film opened gave Pixar cash to fund its own films, which gave it leverage over Disney.
Michael Eisner pushed Pixar away, and Bob Iger won it back. Iger bought Pixar in 2006 and put its leaders in charge of Disney Animation, which revived both studios.
Pixar couldn’t have stayed independent without Jobs. The hosts conclude that nobody else at Pixar wanted to build a Disney competitor, and Jobs knew his cancer had returned.
Company Overview
Company: Pixar Animation Studios
Founded: 1986, when Steve Jobs bought Lucasfilm’s computer graphics group (formed in 1979) and made it an independent company
Headquarters: Emeryville, California
Owner: The Walt Disney Company, since 2006
Leadership today: Pete Docter, chief creative officer
What it does: Pixar makes computer-animated feature films, including Toy Story, Finding Nemo, WALL-E, Up and Inside Out, and created RenderMan, still an industry-standard rendering software. The hosts call it the spiritual successor to Walt Disney’s vision for animation.
Narrative
Two paths to computer animation (1963–1983)
Ed Catmull wanted to be an animator but doubted his drawing skills, so he studied computer graphics at the University of Utah. There he made one of the first computer-graphics films ever, a rotating wireframe of his own hand, alongside classmates like Alan Kay, Jim Clark and John Warnock. He went on to build a computer graphics program at the New York Institute of Technology.
John Lasseter worked the Jungle Cruise at Disneyland, studied under Walt’s veteran animators at CalArts, and got his dream job at Disney Animation during its low point. When he pitched making The Brave Little Toaster with computer animation and admitted it would be neither faster nor cheaper, only better for storytelling, Disney turned it down and fired him the same day.
Inside Lucasfilm (1979–1985)
In 1979, George Lucas, between Star Wars and The Empire Strikes Back, hired Catmull and Alvy Ray Smith to start a computer graphics group at Lucasfilm. Ben explains the logic: filmmakers want the whole industry to improve, because good films keep audiences in the habit of going to the movies. The group’s first big success was a planet sequence in Star Trek II: The Wrath of Khan.
Catmull met Lasseter at a conference on the Queen Mary and brought him north to add storytelling to the group’s short films. The team built the Pixar Image Computer and sold it for uses like medical scans and satellite imagery. Then Lucas, going through a divorce and unwilling to give up any Lucasfilm equity, decided to sell the group to raise cash.
Steve Jobs buys in (1986–1990)
Alan Kay introduced the group to Steve Jobs, who went quiet while he was being pushed out of Apple. Jobs first wanted to turn the team into a computer company to compete with Apple, but they declined, and he started NeXT separately. In 1986 he paid Lucas $5M and put another $5M into the new company, named Pixar, which was 70% owned by Jobs and 30% by employees.
Pixar’s first customer was Disney, which hired it to build CAPS, the computer system behind Disney’s hand-drawn Renaissance films. Pixar’s short Luxo Jr. stunned conference audiences, and its RenderMan software was used on Jurassic Park and Terminator 2. But the business struggled: Pixar sold only about 300 of its expensive computers and made commercials to pay the bills.
Toy Story (1991–1995)
Around 1991, Disney tried to hire Lasseter back as a director, and he turned down multiple offers. He pitched a 30-minute Christmas special instead, and Disney’s Peter Schneider countered with a full feature. On January 19, 1993, Disney greenlit Toy Story. It paid for production (about $30M, against a $17M budget) and marketing, and kept the characters and sequel rights. Pixar got less than 10% of the profits.
Partly because of notes from Jeffrey Katzenberg asking for an edgier film, and partly because Pixar was still unsure of its storytelling, Woody came out outright mean. After a December 1993 screening, Disney stopped production. Pixar asked for two to three weeks, rewrote the story its own way, and got the green light again. Rendering was slow: each frame took an hour or two on a cluster of 117 Sun computers, producing about three and a half minutes of film a week.
The IPO bet (1995)
Jobs expected that a hit would make Disney want to renegotiate, and Pixar would need its own money to co-fund films as an equal partner. So he planned the IPO for one week after the film’s release. Toy Story opened November 22, 1995 with $29M, grossed nearly $400M, and was the year’s top film.
Pixar went public November 29, raised $140M, more than Netscape, and closed its first day worth $1.5B. Jobs had put $54M into Pixar over nine years and owned 78%, which made him a billionaire. The hosts point out that the film, the IPO and the renegotiation all had to work for any of it to work.
Hits, and the fight with Eisner (1996–2004)
Disney agreed to split costs and profits 50/50 on a new five-picture deal, though distribution fees brought Disney’s share closer to 65%. A Bug’s Life grossed $360M. Disney planned Toy Story 2 as a direct-to-video sequel, then moved it to theaters in February 1998, but refused to count it toward the five films. It grossed nearly $500M.
The relationship soured. In 2002, Eisner testified to Congress against Apple’s “Rip, Mix, Burn” campaign. He also wrote a memo to Disney’s board, which leaked, predicting that Finding Nemo would flop and give Disney leverage. Nemo grossed $871M. Jobs then demanded 100% of profits, with Disney getting only a distribution fee and giving up its share of past films. Eisner refused, and in January 2004 Pixar announced it was done with Disney. Disney set up Circle 7 Animation to make Pixar sequels without Pixar.
Coming home to Disney (2005–2006)
At the 2005 opening parade for Hong Kong Disneyland, Iger noticed that none of the floats featured Disney characters from the previous decade, while Pixar characters were everywhere. On the day he learned he would be CEO, he called Jobs. Disney’s board thought a deal was so unlikely that it didn’t bother to say no.
Iger’s offer: Pixar would stay independent in Emeryville, and Lasseter and Catmull would also run Disney Animation. He even told them they could shut Disney Animation down if they thought it couldn’t be saved. They chose to fix it. In January 2006, Disney bought Pixar for $7.4B in stock, making Jobs Disney’s largest shareholder at about 7%. That morning, Jobs told Iger privately that his cancer had returned and offered to let him back out. Iger went ahead.
After the deal (2006–today)
Pixar kept producing hits: Cars, Ratatouille, WALL-E, Up, Toy Story 3, Brave and Inside Out. Disney Animation, now run the Pixar way, followed with The Princess and the Frog, Tangled, Frozen, Big Hero 6, Zootopia and Moana. Kristen Bell, the voice of Anna in Frozen, confirmed that Disney Animation still works from Pixar’s collaborative, rebuild-if-it’s-not-working process.
By mid-2019, Lasseter had been pushed out and Catmull had retired. Ben notes that Pixar’s newer original films have earned $200M to $400M each, while its record-setters are now sequels. He attributes that to changing moviegoing habits, not weaker films. Shortly before he died, Jobs raised a toast to Iger: “Look what we did. We saved two companies.”
Deep Dive: How a Pixar Film Gets Made
Ben and David spent a day at Pixar, and they walk through the seven steps printed inside the cover of Pixar’s IPO prospectus. David sums it up: 2D animation is like painting a picture, while Pixar builds an entire universe and calculates every detail of it.
1. Storyboards. Over 4,000 drawings are assembled into a “story reel” with temporary dialogue, so the team can watch a rough version of the film. Pixar usually revises it about eight times. Jobs described this as beta-testing a film before making it.
2. Models. Pixar’s software, Marionette, builds 3D models of every character, prop and set.
3. Layout. The models are placed in a virtual scene and the action is blocked out. At this stage the characters are stiff, like 3D stick figures.
4. Animation. Characters are “rigged” with controls for every joint. Animators pose the body first and the face last, because the body has to carry the emotion on its own. They also film themselves acting out scenes for reference.
5. Shading. Software defines what each surface is made of: wood, metal, fabric, glass, hair or skin.
6. Lighting. Scenes are lit with virtual lights, much like a stage. This is where flat scenes become beautiful and emotional.
7. Rendering. RenderMan calculates every pixel of every frame from all the information above, a huge computing job.
David’s point is that every step is also a story step. The story isn’t finished and handed to the technical team. It keeps improving all the way through.
By the Numbers
$5M + $5M: What Jobs paid Lucas for the graphics group in 1986, plus what he put into the new company
70 / 30: Pixar’s original ownership split between Jobs and employees
~300: Pixar Image Computers sold in total
$30M: Toy Story‘s final production cost, against a $17M budget, all paid by Disney
Less than 10%: Pixar’s share of Toy Story‘s profits under the original deal
117: Sun computers in the Toy Story render farm
3.5 minutes: Finished footage the render farm produced per week
$29M / ~$400M: Toy Story‘s opening weekend and worldwide gross
$140M: Raised in Pixar’s IPO, the largest of 1995
$1.5B: Pixar’s market cap after its first day of trading
$54M / 78%: What Jobs put into Pixar over nine years, and his stake at the IPO
$871M: Finding Nemo‘s box office, second only to The Return of the King in 2003
65M: Finding Nemo DVDs sold, according to the hosts’ research, roughly $2B in sales
$7.4B: Disney’s price for Pixar in 2006 (about $6.4B after Pixar’s $1B in cash)
~7%: Jobs’s resulting stake in Disney
$4B+ / $30B: Toy Story franchise box office and lifetime retail merchandise sales. The hosts estimate at least $3.5B came back to Disney from those two alone, covering half to two-thirds of the purchase price.
One Big Question: Could Pixar have stayed independent?
Ben and David asked everyone they interviewed whether Pixar could have become a full Disney competitor on its own. On paper it had everything: beloved IP, hit films, and, once the Disney deal ended, control of its own sequels and merchandise.
The answer was no. Everyone told them Pixar never would have done what it takes to become another Disney.
Pixar is Walt’s ideal studio. David argues Pixar is what Walt wanted the Burbank campus to be in 1940: a creative paradise with no suits. Becoming a full entertainment company would have meant becoming a business like Disney.
Only Jobs could have done it. He handled everything that wasn’t creative. David thinks that if Jobs had lived and had the energy alongside Apple, he could have built a Disney competitor. But he knew he was dying, and nobody else at Pixar wanted the job.
Being acquired kept Pixar as it was. The business side stayed in Burbank, and Emeryville got to stay purely creative. That’s why Jobs’s toast said the deal saved two companies.
Best Lines
“Just think, someday this park is going to be filled with the characters that you guys are going to create.” John Lasseter’s girlfriend, on a CalArts trip to Disneyland in the late 1970s
“If it’s not working in story reels, the animation won’t save it.” John Lasseter, on Pixar’s process
“It lets us beta-test and iterate on our films before we actually make it.” Steve Jobs, on story reels
“It’s a shame that Disney won’t be participating in Pixar’s future successes.” Pixar’s January 2004 press release ending talks with Disney
“Look what we did. We saved two companies.” Steve Jobs, in a toast to Bob Iger shortly before he died
Water Cooler Material
Classroom A113. Lasseter, Brad Bird, Andrew Stanton, Brenda Chapman and Pete Docter all came through the same CalArts classroom, at the school Walt Disney endowed with about half his estate.
Fired on the spot. Lasseter’s pitch for a computer-animated film ended his Disney career that day, since without a project he had no reason to be there.
Pixar began as a Disney vendor. The software behind Disney’s Renaissance films came from Pixar. The ballroom scene in Beauty and the Beast used a 3D background rendered with Pixar software, the first 3D animation in a Disney film.
A divorce made Pixar possible. Lucas sold the graphics group because he needed cash for his divorce and wouldn’t give up Lucasfilm equity.
Jobs’s first billion came from Pixar, not Apple.
Ski boots on a plank. To animate Toy Story‘s army men, animators taped ski boots to a board and hopped around to see how a person moves with their feet stuck together.
Disney started on Pixar sequels without Pixar. Its Circle 7 studio was set up to make Toy Story 3, Monsters, Inc. 2 and Finding Nemo 2.
The board forgot to say no. Disney’s board thought Iger’s idea to call Jobs was so unlikely to work that it didn’t object.
A secret on a bench. Shortly before the deal was announced, Jobs walked Iger to a bench on the Pixar campus, told him his cancer had returned, asked him to keep it secret, and offered him the chance to back out.
A movie about rats making food. When word got out before the acquisition that Pixar was making Ratatouille, David jokes, it sounded like a terrible idea.
Carveouts
Michael Arndt’s Toy Story 3 story presentation: David’s pick from the episode, an 80-minute lecture from the Toy Story 3 screenwriter on how story works at Pixar, including early story reels shown before Pixar’s creative team gave notes.
Additional Notes
Episode Metadata
Title: Disney: The Renaissance and the Empire (the Pixar story is told within this episode)
Season / Episode: Fall 2026, Episode 1
Release Date: August 9, 2026
Length: 4:32:56
Links
While most analyze Pixar's art, the real masterclass was Steve Jobs's structural leverage: syncing the IPO to turn creative risk into absolute independence.