Reblog: Avoiding a Single Point of Financial Failure
In 1995, Pixar was on a rocket ship growth trajectory.
Toy Story came out in November of that year to rave reviews and made more money than almost anyone thought was imaginable. It was the first full-length animated film done entirely using CGI and ended up grossing over $360 million worldwide.
The team at Pixar was feeling pretty good about themselves, but Steve Jobs was already planning on the company’s first failure. He convinced the company’s co-founder Ed Catmull that eventually they would make a film that flopped at the box office. To prepare themselves for this eventuality, Jobs pushed the private company to go public to secure funding that could prepare Pixar for a dud at the box office.
Jobs made the case that increasing the capital base would allow the firm to fund their own projects to give them more of a say in how they moved forward creatively. But it would also prepare them financially for a future failure. He argued it made no sense to depend solely on the performance of each new release to keep the ship afloat.
Catmull described his feelings about this idea in his excellent book, Creativity Inc.: