AN EXCERPT FROM

INTRODUCTION: LOST AND FOUND

…The making of Toy Story—the first feature film to be animated entirely on a computer—
had required every ounce of our tenacity, artistry, technical wizardry, and endurance. The
hundred or so men and women who produced it had weathered countless ups and downs as
well as the ever-present, hair-raising knowledge that our survival depended on this 80-
minute experiment. For five straight years, we’d fought to do Toy Story our way. We’d
resisted the advice of Disney executives who believed that since they’d had such success
with musicals, we too should fill our movie with songs. We’d rebooted the story
completely, more than once, to make sure it rang true. We’d worked nights, weekends, and
holidays—mostly with- out complaint. Despite being novice filmmakers at a fledgling
studio in dire financial straits, we had put our faith in a simple idea: If we made something
that we wanted to see, others would want to see it, too. For so long, it felt like we had been
pushing that rock up the hill, trying to do the impossible. There were plenty of moments
when the future of Pixar was in doubt. Now, we were suddenly being held up as an
example of what could happen when artists trusted their guts.

Toy Story went on to become the top-grossing film of the year and would earn $358 million
worldwide. But it wasn’t just the numbers that made us proud; money, after all, is just one
measure of a thriving company and usually not the most meaningful one. No, what I found
gratifying was what we’d created. Review after review focused on the film’s moving
plotline and its rich, three-dimensional characters—only briefly mentioning, almost as an
aside, that it had been made on a computer. While there was much innovation that enabled
our work, we had not let the technology overwhelm our real purpose: making a great film.

On a personal level, Toy Story represented the fulfillment of a goal I had pursued for more
than two decades and had dreamed about since I was a boy. Growing up in the 1950s, I had
yearned to be a Disney animator but had no idea how to go about it. Instinctively, I realize
now, I embraced computer graphics—then a new field—as a means of pursuing that
dream. If I couldn’t animate by hand, there had to be another way. In graduate school, I’d
quietly set a goal of making the first computer-animated feature film, and I’d worked
tirelessly for twenty years to accomplish it.

Now, the goal that had been a driving force in my life had been reached, and there was an
enormous sense of relief and exhilaration—at least at first. In the wake of Toy Story’s
release, we took the company public, raising the kind of money that would ensure our
future as an independent production house, and began work on two new feature-length
projects, A Bug’s Life and Toy Story 2. Everything was going our way, and yet I felt adrift.
In fulfilling a goal, I had lost some essential framework. Is this really what I want to do? I
began asking myself. The doubts surprised and confused me, and I kept them to myself. I
had served as Pixar’s president for most of the company’s existence. I loved the place and
everything that it stood for. Still, I couldn’t deny that achieving the goal that had defined
my professional life had left me without one. Is this all there is? I wondered. Is it time for a
new challenge?
It wasn’t that I thought Pixar had “arrived” or that my work was done. I knew there were
major obstacles in front of us. The company was growing quickly, with lots of shareholders
to please, and we were racing to put two new films into production. There was, in short,
plenty to occupy my working hours. But my internal sense of purpose—the thing that had
led me to sleep on the floor of the computer lab in graduate school just to get more hours
on the mainframe, that kept me awake at night, as a kid, solving puzzles in my head, that
fueled my every workday—had gone missing. I’d spent two decades building a train and
laying its track. Now, the thought of merely driving it struck me as a far less interesting
task. Was making one film after another enough to engage me? I wondered. What would be
my organizing principle now?

It would take a full year for the answer to emerge.

From the start, my professional life seemed destined to have one foot in Silicon Valley and
the other in Hollywood. I first got into the film business in 1979 when, flush from the
success of Star Wars, George Lucas hired me to help him bring high technology into the
film industry. But he wasn’t based in Los Angeles. Instead, he’d founded his company,
Lucasfilm, at the north end of the San Francisco Bay. Our offices were located in San
Rafael, about an hour’s drive from Palo Alto, the heart of Silicon Valley—a moniker that
was just gaining traction then, as the semiconductor and computer industries took off.
That proximity gave me a front-row seat from which to observe the many emerging
hardware and software companies—not to mention the growing venture capital industry—
that, in the course of a few years, would come to dominate Silicon Valley from its perch on
Sand Hill Road.

I couldn’t have arrived at a more dynamic and volatile time. I watched as many startups
burned bright with success—and then flamed out. My mandate at Lucasfilm—to merge
moviemaking with technology—meant that I rubbed shoulders with the leaders of places
like Sun Microsystems and Silicon Graphics and Cray Computer, several of whom I came
to know well. I was first and foremost a scientist then, not a manager, so I watched these
guys closely, hoping to learn from the trajectories their companies followed. Gradually, a
pattern began to emerge: Someone had a creative idea, obtained funding, brought on a lot
of smart people, and developed and sold a product that got a boatload of attention. That
initial success begat more success, luring the best engineers and attracting customers who
had interesting and high-profile problems to solve. As these companies grew, much was
written about their paradigm-shifting approaches, and when their CEOs inevitably landed
on the cover of Fortune magazine, they were heralded as “Titans of the New.” I especially
remember the confidence. The leaders of these companies radiated supreme confidence.
Surely, they could only have reached this apex by being very, very good.
But then those companies did something stupid—not just stupid-in-retrospect, but
obvious-at-the-time stupid. I wanted to understand why. What was causing smart people
to make decisions that sent their companies off the rails? I didn’t doubt that they believed
they were doing the right thing, but something was blinding them—and keeping them from
seeing the problems that threatened to upend them. As a result, their companies expanded
like bubbles, then burst. What interested me was not that companies rose and fell or that
the landscape continually shifted as technology changed but that the leaders of these
companies seemed so focused on the competition that they never developed any deep
introspection about other destructive forces that were at work.

Over the years, as Pixar struggled to find its way—first selling hardware, then software,
then making animated short films and advertisements—I asked myself: If Pixar is ever
successful, will we do something stupid, too? Can paying careful attention to the missteps
of others help us be more alert to our own? Or is there something about becoming a leader
that makes you blind to the things that threaten the well-being of your enterprise? Clearly,
something was causing a dangerous disconnect at many smart, creative companies. What,
exactly, was a mystery—and one I was determined to figure out.

In the difficult year after Toy Story’s debut, I came to realize that trying to solve this
mystery would be my next challenge. My desire to protect Pixar from the forces that ruin
so many businesses gave me renewed focus. I began to see my role as a leader more
clearly. I would devote myself to learning how to build not just a successful company but a
sustainable creative culture. As I turned my attention from solving technical problems to
engaging with the philosophy of sound management, I was excited once again—and sure
that our second act could be as exhilarating as our first.