#34 Creativity Inc: The Autobiography of the founder of Pixar

What I learned from reading Creativity Inc: Overcoming The Unseen Forces That Stand In The Way of True Inspiration by Ed Catmull. --- Lead with a light touch (18:59) Anchor yourself with your why (23:35) Bet on yourself (39:54) Decentralize problem-solving (52:56) People are more important than ideas (1:00:45) Analyze ways to improve your process after a project is complete (1:24:10) Keep a startup mentality (1:26:36) ---- Founders Notes gives you the ability to tap into the collective knowledge of history's greatest entrepreneurs on demand. Use it to supplement the decisions you make in your work. Get access to Founders Notes here. ---- “I have listened to every episode released and look forward to every episode that comes out. The only criticism I would have is that after each podcast I usually want to buy the book because I am interested so my poor wallet suffers. ” — Gareth Be like Gareth. Buy a book: All the books featured on Founders Podcast

Speaker names marked ? are inferred from speaking time and the show’s known hosts — they are not voice-verified.

• 0:00David Senra?

  I've said it before, but it bears repeating. Things change constantly, as they should. And with change comes the need for adaptation, for fresh thinking, and sometimes for even a total reboot of your project, your department, your division, or your company as a whole. In times of change, we need support from our families and our colleagues. I'm reminded here of a letter written by one of our animators, Austin Madison, which I found particularly uplifting. "To whom it may inspire," Austin wrote, "I, like many of you artists out there, constantly shift between two states. The first, and far more preferable of the two, is white-hot, in-the-zone, seat-of-the-pants,

• 0:44David Senra?

  firing-on-all-cylinders creative mode. This is when you lay your pen down and the ideas pour out of you like wine from a royal chalice. This happens about 3% of the time. The other 97% of the time, I am in the frustrated, struggling, office-corner-full-of-crumpled-up-paper mode. The important thing is to slog diligently through this quagmire of discouragement and despair. Put on some audio commentary and listen to the stories of professionals who have been making films for decades going through the same slings and arrows of outrageous production problems. In a word, persist. Persist on telling your story, persist on reaching your audience, persist on staying

• 1:28David Senra?

  true to your vision." I couldn't have put it any better. My goal has never been to tell people how Pixar and Disney figured it all out, but rather to show how we continue to figure it out, every hour of every day. How we persist. The future is not a destination, it is a direction. The truth is, as challenges emerge, mistakes will always be made, and our work is never done. We will have problems, many of which are hidden from our view. We must work to uncover them and assess our own role in them, even if doing so means making ourselves uncomfortable.

• 2:09David Senra?

  When we come across a problem, we must marshal all of our energies to solve it. If those assertions sound familiar, that's because I used them to kick off this book. There's something else that bears repeating here. Unleashing creativity requires that we loosen the controls, accept risk, trust our colleagues, work to clear the path for them, and pay attention to anything that creates fear. Doing all of these things won't necessarily make the job of managing a creative culture easier, but ease isn't the goal. Excellence is.

• 2:46David Senra?

  Okay, so that was from the end of the book that I want to talk to you about. And that is Creativity, Inc., Overcoming the Unseen Forces That Stand in the Way of True Inspiration. And it's written by one of the co-founders of the company Pixar. So I'm going to go back to the beginning of the book and move through in a chronological order, as always, hitting the highlights and the ideas that stuck out to me. And hopefully you find these ideas useful in your day to day as well. So I want to first talk, so I guess I should start here. Most of you know, especially if you've listened to all of my past podcasts, that Steve Jobs was one of the co-founders of Pixar.

• 3:31David Senra?

  And as such, Ed learned a lot from Steve. And you're going to hear, we're going to cover a lot of the lessons that Ed picked up on from Steve. I've read Steve Jobs by Walter Isaacson, and I also read Becoming Steve Jobs. And there's a few more books that I'll eventually, that talk about the life of Steve Jobs that I'll cover in future Founder's Episodes. But I have to say, even after reading those other two books, there's a lot of Steve Jobs stories in here that I haven't heard anywhere else. Okay, so this is from the introduction of the book. "This is the working environment at Pixar and what Ed thinks makes Pixar successful. I am struck by the unique culture that defines this place.

• 4:15David Senra?

  Although I've made this walk thousands of times, it never gets old." Pixar's 15-acre campus was designed, inside and out, by Steve Jobs. It has well-thought-out patterns of entry and egress that encourage people to mingle, meet, and communicate. Steve wanted the building to support our work by enhancing our ability to collaborate. The animators who work here are encouraged to decorate their workspaces in whatever style they wish. They spend their days inside pink dollhouses whose ceilings are hung with miniature chandeliers, tiki huts made of real bamboo, and castles whose meticulously painted 15-high styrofoam turrets appear to be carved from stone.

• 5:00David Senra?

  The point is, we value self-expression here. This tends to make a big impression on visitors, who often tell me that the experience of walking into Pixar leaves them feeling a little wistful, like something is missing in their work lives. A palpable energy, a feeling of collaboration and unfettered creativity, a sense, not to be corny, of possibility. And I think by reading this book, we may never visit Pixar, but we're gonna be able to learn a lot of the ideas from this book that maybe can apply to things that we feel is missing in our own work environment. But Ed's getting to his point here. But that's not what makes Pixar special.

• 5:41David Senra?

  What makes Pixar special is that we acknowledge we will always have problems, many of them hidden from our view, that we work hard to uncover these problems, even if doing so means making ourselves uncomfortable, and that, when we come across a problem, we marshal all of our energies to solve it. So, at the very introduction to this podcast, you kinda heard a mirror of that, something that's very important to him. And what I like about Ed is, he'll repeat ideas over and over again. And he's not, it's not monotonous in any way. He's trying to, in my opinion, like, hit home why it's important from many different angles.

• 6:24David Senra?

  So I think after reading the book in full, you have a much better understanding of why that's expected. Or why that's important to him, rather. So, a few pages later, the next note I have is the unexpected melancholy of reaching a goal. So, what we're gonna do here is we're in the introduction. It's taking place arguably in present day, and then we're gonna go through flashbacks. But, the whole point of writing this book is because of this melancholy, the unexpected melancholy, of reaching one of his lifetime goals. So, I wanna explain that to you because it's fascinating and I think all of us, it's like, all of us, it's like part of human nature, I think all of us can experience this. So, even though our goals might be different, the feelings are probably very similar.

• 7:05David Senra?

  "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 fought to do Toy Story our way. We resisted the advice of Disney executives who believed that since they had such success with musicals, we should fill our movie with songs. We rebooted the story completely, more than once, to make sure it rang true.

• 7:49David Senra?

  Despite being novice filmmakers at a fledgling studio in dire financial straits, we had put our faith in a simple idea," and I love this part, "if we made something that we wanted to see, others would want to see it too.

• 8:04David Senra?

  For so long, it felt like we had been pushing that rock up the hill, trying to do the impossible." Skipping ahead a little bit, 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, what we found gratifying was that was what we had created. Review after review focused on the film's moving plotline and its rich three-dimensional characters, only briefly mentioning that it had been made on a computer.

• 8:45David Senra?

  While there was so much innovation that enabled our work, we had not let the technology overwhelm our real purpose, making a great film. And now here's, he's getting to, to, to, uh, why, well, there's a kind of a paradox inherent in all this. "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 little boy. Growing up in the 1950s, I had yearned to be a Disney animator, but had no idea how to go about it. Intrinsically, I realize now, I embrace computer graphics, then a new field, as a means of pursuing that dream.

• 9:27David Senra?

  If I couldn't animate by hand, there had to be another way. In graduate school, I had quietly set a goal of making the first computer-animated feature film, and I worked tirelessly for 20 years to accomplish it. Now that the goal that had been a driving force in my life had been, had been reached, there was an enormous sense of relief and exhilaration, at least at first. 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.

• 10:10David Senra?

  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?' There was 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 a few more hours on the mainframe, that kept me awake at night as a kid solving puzzles, had gone missing. I had 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

• 10:54David Senra?

  enough to engage me, I wondered? What would be my organizing principle now? I'm gonna continue, but this whole idea, I love the way he puts it. The idea of having an organizing principle around your life. And like I said, I do believe that is fundamental to human nature. I believe that that's why most of us, if we just sit around and do nothing, are deeply, deeply unhappy. I think the human species is one of builders. And I think we need a purpose, which is why I think it's so important to invest in your work, because it's gonna take up so much of your life. So, he finishes this paragraph right here. He says, "I would take a full year for the answer to emerge." So, we're gonna get to his answer in a minute. But there's something that happens in the book

• 11:37David Senra?

  that I want to... that I want to first talk about. And then, we'll get his answer. And the entire reason he wrote this book. So, this is an intro to George Lucas and finding and how Ed finds his next challenge. As I think everybody knows, George Lucas is the creator of Star Wars. And Ed worked at... worked for him at one time. So, and we're gonna talk a lot about George in this podcast, actually. "I couldn't have arrived at a more dynamic and volatile time." So, he's talking about, again, we're talking present day. He's reflecting, but we're gonna... the timeline's gonna jump around. So, at this point, he is...

• 12:20David Senra?

  George hires him to work for him in 1979. And he's talking about...

• 12:26David Senra?

  How dynamic this Northern California region is at the time. And it says, "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 movie making with technology meant that I rubbed shoulders with the leaders of places like Sun Microsystems and Silicon Graphics, several of whom I came to know. I was first and foremost a scientist then, not a manager. So I watched these guys closely, hoping to learn from their trajectories, oh, excuse me, from the trajectories their companies followed. Gradually, a pattern began to emerge." He's going to describe the innovator's dilemma. "Someone had a creative idea, obtained funding,

• 13:12David Senra?

  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 the 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.

• 13:50David Senra?

  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.

• 14:10David Senra?

  Something was 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 the 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?"

• 14:56David Senra?

  Or is there something about becoming a leader that makes you blind to the things that threaten the well-being of your enterprise? "In the difficult year after Toy Story's debut, this is where he's gonna find his challenge, I came to realize that trying to solve this mystery would be my next challenge. My desire to protect Pixar from the forces that ruined 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." Hence the title of the book, Creativity, Inc. Okay, so now, as with every biography, I want to spend a little bit of time talking

• 15:41David Senra?

  about their youth, and not into too much detail, but this is what strikes me is almost every single one of these stories, that you see examples of them being inspired by people that came before them, and I would call this like the importance of having idols. So says, this is now Ed talking, "Walt Disney was one of my two boyhood idols. The other was Albert Einstein. To me, even at a young age, they represented the two poles of creativity. Disney was all about inventing the new. He brought things into being, both artistically and technologically, that did not exist before. Einstein, by contrast, was a master of explaining that which already was.

• 16:22David Senra?

  I read every Einstein biography I could get my hands on, as well as the little book he wrote on his theory of relativity. I loved how the concepts he developed forced people to change their approach to physics and matter, to view the universe from a different perspective. Wild-haired and iconic, Einstein dared to bend the implications of what we thought we knew. He solved the biggest puzzles of all, and in doing so, changed our understanding of reality. Both Einstein and Disney inspired me, but Disney infected me more because of his weekly visits to my family's living room."

• 16:59David Senra?

  So they're talking about this show that Disney used to host, which I actually don't remember the name of. But I guess it's not important, but here's the lesson, I guess is the more important thing to focus on. "Watching Disney one Sunday evening in April of 1956, I experienced something that would define my professional life. What exactly was it, or what exactly it was is difficult to describe, except to say that I felt something fall into place inside my head. That night's episode was called, 'Where Do the Stories Come From?' And Disney kicked it off by praising his animator's knack for turning everyday occurrences into cartoons. That night, though, it wasn't Disney's explanation that pulled me in,

• 17:43David Senra?

  but what was happening on the screen as he spoke? An artist was drawing Donald Duck. As the artist's pencil moved around the page, Donald came to life, putting up his dukes to square off with the pencil lead, then raising his chin to allow the artist to give him a bowtie. The definition of superb animation is that each character on the screen makes you believe it is a thinking being. Whether it's a T-Rex, or a slinky dog, or a desk lamp, if viewers sense not just movement but intention, or put another way, emotion, then the animator has done his or her job. This is what I experienced that night for the first time as I watched Donald leap off the page.

• 18:24David Senra?

  The transformation from a static line drawing to a fully dimensional animated image was a sleight of hand, nothing more. But the mystery of how it was done, not just the technical process, but the way the art had imbued with such emotion, was the most interesting problem I'd ever considered. I wanted to climb through the TV screen and be part of this world." Okay, so it's right then and there that he says, "Hey, I'm gonna become an animator, I wanna do this." So, um... That's when he was a young boy. Later on, he tries to draw. He realizes he's not very good at it. So he winds up going to college. He gets two degrees, one in computer science and one in physics.

• 19:05David Senra?

  And he initially said, okay, maybe I'll just learn how to design computer languages. But he goes to graduate school at the University of Utah. And he winds up being a student of one of the pioneers of interactive computer graphics, this guy named Ivan Sutherland. And on the very next page, he's describing the environment. And so when I was highlighting this, it just made me think of something I kind of say a lot. It's like, listen, collecting ideas is useful because you never know when you might use them. And he's going to experience things and ideas in grad school that he winds up applying in his career almost 20 years later. So he's talking about the people that are running the department.

• 19:48David Senra?

  And Sutherland and this guy named Dave Evidence, who was the chair of the university's computer science department, they were magnets for bright students with diverse interests. And they led us with a light touch. This is actually extremely important, this idea of a light touch. Basically, they welcomed us to the program, gave us workspace and access to the computers, and then let us pursue whatever turned us on. The result was a collaborative, supportive community, so inspiring that would later seek to replicate it at Pixar. One of my classmates, Jim Clark, would go on to found Silicon Graphics and Netscape. So you guys probably know who that is because I did a podcast on him, based on Michael Lewis's great book about him, The New New Thing. But if not, I would definitely recommend listening to the podcast and reading the book because he's a giant personality and very interesting.

• 20:33David Senra?

  Another, John Warnock, would co-found Adobe. Skipping ahead, Alan Kay would lead to a number, would lead on a number of fronts, from object-oriented programming to windowing graphical user interfaces. In many respects, my fellow students were the most inspirational part of my university experience. This collegial collaborative environment was vital not just to my enjoyment of the program, but also to the quality of the work I did. This tension between the individual's personal creative contribution and the leverage of the group is a dynamic that exists in all creative environments. And creative environment, I would just substitute the word "company" there. But this would be my first taste of it. On one end of the spectrum, I noticed, we had the genius who seemed to do amazing work

• 21:17David Senra?

  on his or her own, and on the other end, we had the group that excelled precisely because of the multiplicity of views. How then should we balance these two extremes, I wondered? I didn't yet have a good mental model that would help me answer that, but I was developing a fierce desire to find one. And what's interesting at this point, I'm gonna skip ahead, but I just wanna give you a little summary here. So, I think, well, just in case you don't know, I think a lot of you guys probably already know this, but the beginning of the internet was something called the ARPANET, which was started by ARPA, which is now DARPA. So, one of the first four nodes on the ARPANET actually was located at the school he's at

• 22:00David Senra?

  at this time, the University of Utah. And so, he's talking about being able to see the birth of the internet up close, and the lesson that he took away with it was that you need to trust your team to innovate. And he said, "I had a ringside seat from which to observe this grand experiment, and what I saw influenced me profoundly. ARPA's mandate to support smart people in a variety of areas was carried out based on the unwavering presumption that researchers would try to do the right thing, and in ARPA's view, over-managing them was counterproductive." I wanna read that again, cuz I think that's so huge. If you have a group of smart people, or if you're one of them yourself, which you probably

• 22:40David Senra?

  are if you're listening to this, then you'll, you know this. Maybe you don't, maybe "know" is the wrong word. You feel this. I think that's the best way. "But over-managing them was counterproductive. ARPA's administrators did not hover over the shoulders of those of us working on the projects they funded, nor did they demand that our work have direct military applications. They simply trusted us to innovate." And then, what's the result when you, when you do so? "That kind of trust gave me freedom to tackle all sorts of complex problems, and I did so with gusto."

• 23:20David Senra?

  Okay, so the people he's working at in graduate school with, as you've heard, they were inventing all this new technology. He starts working with the idea, hey, maybe this is where that kernel comes from. Hey, I can't draw with my hand, but maybe I can develop new technology with computers and animate there. This is where he comes up with the idea of, hey, I'm just gonna make, my goal in life is to make the first computer-generated animated movie. So they develop some technology and they wanna see if it can be used in the real world. So he starts having meetings with other production houses and movie companies to see if they'll like use the technology. And, well, Disney's gonna be one of the places he goes, obviously.

• 24:02David Senra?

  And the note I left myself was, you need to anchor yourself with why, with your why, and then focus. So really understand, I think what Ed had, had the benefit of having at a relatively young age, he knew his why. He knew what he wanted to do. And so we're gonna see something surprising here that he does. But later in the podcast, this comes up again and again, where he has an opportunity, might sound good on the surface, but he's like, this is not in alignment with what I wanna do, my why. So he declined. So he's at a meeting with Disney and they're just really dismissive, this is in the 70s, of using, you know, using computers for animation. They think the idea's ridiculous. And of course, it's easy for them to arrive at that conclusion

• 24:44David Senra?

  because they've had great success for years drawing things by hand. So he said, they're like, listen, until computer animation can do this, then it has not arrived, they're not gonna use it, etc. So he said, instead, they tried to tempt me into taking a job with what is now called Disney Imagineering, the division that designs the theme parks. Remember the context, a few minutes ago, we talked about how he idolized Walt Disney. He was obsessed with the Disney company. So now, they're like, they're offering him a job. "It may sound odd, given how large Walt Disney had always loomed in my life, but I turned the offer down without hesitation. The theme park job felt like a diversion that would lead me down a path I didn't wanna be on.

• 25:27David Senra?

  I didn't want to design rides for a living. I wanted to animate with a computer." So his time at the University of Utah comes to an end. And this is him reflecting on the lessons he learned. And so the note I have here is "People is greater than ideas," which means people are more important to ideas. It's just my shorthand for saying that. Therefore, the environment must be healthy. So this whole idea that people trumps ideas is something that Ed harps on in the book a lot and will appear in the podcast and other forms moving forward. But this is one of the first ways that he realizes that. And the reason he realizes it is because he credits the environment that Sutherland created

• 26:12David Senra?

  at the University of Utah with being the, I guess, the genesis that led good people to have great ideas. So it says, "Like my classmates, the work I champion had taken hold largely because of the protective, eclectic, intensely challenging environment I'd been in. The leaders of my department understood that to create a fertile laboratory, they had to assemble different kinds of thinkers and then encourage their autonomy." This whole thing about leaving them alone, don't over-manage and leaving them autonomous is something he constantly does as Pixar. "They had to offer feedback when needed, but also had to be willing to stand back and give us room.

• 26:54David Senra?

  I felt instinctively that this kind of environment was rare and worth reaching for." Okay, so now we're getting into his start of his career. And he has the good fortune to work with what he calls "Working for three iconoclastic men with very different styles." Let me just read this part and then I'll explain why I include it. "So, 'Working for three iconoclastic men with very different styles would provide me with a crash course in leadership. In the next decade, I would learn much about what managers should and shouldn't do, about vision and delusion, about confidence and arrogance, and about what encourages creativity and what snuffs it out." So he kind of, it's kind of like what we're doing here.

• 27:36David Senra?

  What we're trying to do here is, in a way, that we're trying to learn from not only what you should do. There's a lot of examples of that in all the books that we cover, but also what you shouldn't do. So in his case, he works for, the first guy's named Alex, and...

• 27:52David Senra?

  Alex Schur, I think is his last name. The second person, the second iconoclast that he works for is George Lucas. And then, of course, the third is when he partners with Steve Jobs. So this, he's talking about, again, you're going to see a lot of these themes that he just keeps learning over and over again. The importance of granting autonomy, hiring people that's smarter than you, and then the flat, and then having a relatively flat structure. So he goes to work for this guy, Alex, who's a multimillionaire and kind of a weirdo. And, well, let's just get in there. This is a little background about Alex. Alex, a former college chancellor, had zero expertise in the field of computer science. At that time, that wasn't unusual, but Alex himself certainly was.

• 28:37David Senra?

  He naively thought that computers would soon replace people, and leading that charge was what excited him. We knew this was a misconception, if a common one at that point, but we were grateful for his eagerness to fund our work. He had a bizarre way of speaking that mixed bluster, non sequiturs, and even snippets of rhyming verse into a sort of Mad Hatter patois, or word salad, as one of my colleagues called it. This is, this is, this is an example here. This is Alex. "Our vision will speed up time, eventually deleting it." I don't know what that means either. "Those of us who worked with him often had trouble understanding what he meant. Deluded, though as he may have been about his own skills, Alex was a visionary.

• 29:19David Senra?

  He was incredibly prescient about the role computers would someday play in animation, and he was willing to spend a lot of his own money to push that vision forward. His unwavering commitment to what many labeled a pipe dream, the melding of technology and this hand-drawn art form, enabled much groundbreaking work to be done." So that's what Alex is hiring Ed to do. He's like, "Hey, I want you to start this department. I want to use computers to do animation, and I want you to basically run it." So he goes, "Once Alex brought me in, he left it to me to assemble a team. I have to give that to him. He had total confidence in the people he hired. This was something I admired and later sought to do myself." See, this, this whole theme keeps coming up and up.

• 30:04David Senra?

  Ed clearly does not waste his experience. He really tries to learn from everything. I, um, so he, he wanted, one of the first people he hires is this, this really brilliant guy named Alvy Ray Smith, who winds up following him to Pixar. But the important part in the why I'm including the podcast is because I think it's, this lesson here is important. "I had conflicting feelings when I met Alvy because frankly, he seemed more qualified to lead the lab than I was. I can still remember the uneasiness in my gut, that instinctual twinge spurred by a potential threat. This, I thought, could be the guy who takes my job one day. I hired him anyway. To ensure that it succeeded, I needed to attract the sharpest minds.

• 30:49David Senra?

  To attract the sharpest minds, I needed to put my own insecurities away. The lessons of ARPA had lodged in my brain. When faced with a challenge, get smarter." What he's talking about there is the, when the Soviets beat the Americans to get to space first, there was certainly a sense of urgency, but there wasn't a sense of despair. They're just like, "Okay, well, we just gotta get smarter and we'll solve this problem too." So now, he's talking about, he's creating his first division in this company. He says, "I put together a hierarchical structure, assigning a bunch of managers to report to me. Or, excuse me, if I had put.

• 31:31David Senra?

  I would have to spend too much time managing and not enough time on my own work. This structure, in which I entrusted everybody to drive their own projects forward at their own pace, had its limits. But the fact is, giving a ton of freedom to highly self-motivated people enabled us to make some significant technological leaps in a short amount of time." Skipping ahead, this is gonna be the transition to the iconoclast number two. And he realizes the limits. So again, he's really angered by his why. And I would also say, the experience he has here reminds me of what we learned in the podcast on Peter Thiel, that all of today's conventional wisdom used to be a secret.

• 32:16David Senra?

  So, the paragraph I'm gonna read you in a minute is kinda crazy when we think about it today, but this is happening in the, in 19, the end of the 70s. "So, for all the good work we were doing, however, I found myself in a quandary. Thanks to Alex, we were fortunate to have the funds to buy the equipment and hire the people necessary to innovate in the world of computer animation, but we didn't have anyone who knew anything about filmmaking."

• 32:42David Senra?

  What he's discovering there is, yeah, they can animate stuff, but just animating without the benefit of storytelling falls flat. So, he said, "We began making quiet overtures to Disney and other studios, trying to gauge their interest in investing in our tools. If we had found an interested suitor, Alvy and I were prepared to leave and move our team to Los Angeles to partner with proven filmmakers and storytellers." So, instead of being filmmakers and storytellers themselves, they're like, "Okay, we'll have the technology, we'll join up with some people that already do storyteller, you know, peanut butter jelly, it's gonna work." And, but this is what happens. "But it was not to be. One by one, they demurred. It's hard to imagine now, but in 1976, the idea of incorporating high technology into

• 33:27David Senra?

  Hollywood filmmaking wasn't just a low priority, it wasn't even on the radar. But one man was about to change that with a movie called Star Wars." So, now we're transitioning, he's gonna meet George Lucas, and we're gonna pick up some lessons on running companies from him. This part is about Lucas being relentlessly practical. And he's, uh, this is when he meets George. He goes, "He and I seemed pretty similar, skinny and bearded in our early 30s. We both wore glasses, worked with a blinders-on intensity, and had a tendency to talk only when we had something to say. But what struck me immediately was George's relentless practicality. He wasn't some hobbyist trying to bring technology into filmmaking for the heck of it.

• 34:12David Senra?

  His interest in computers began and ended with their potential to add value to the filmmaking process." And, he's gonna describe, uh, the physical environment that he's working in. And, all I could think about is, you know the animals that have evolved in strange ways in relative isolation in the Galapagos Islands? I feel George kinda had some of that going on. George had his own version of the Galapagos Islands. And, it says, "Lucas' film was based in Marin County, one hour north of Silicon Valley by car and one hour from Hollywood by plane. This was no accident. George saw himself first and foremost as a filmmaker, so Silicon Valley wasn't for him." He also had no desire to be close to Los Angeles because he thought there was something

• 34:56David Senra?

  a bit unseemly and inbred about it. Thus, he created his own island, a community that embraced films and computers, but pledged allegiance to neither of the prevailing cultures that defined those businesses. The resulting environment felt as protected as an academic institution, an idea that would stay with me and help shape what I would later try to build at Pixar. Experimentation was highly valued, but with the urgency of a for-profit enterprise was definitely in the air. In other words, we felt like we were solving problems for a reason. So many good stories about George in this book. You know how I always say that saying that I picked up somewhere, it's like, "Books are

• 35:40David Senra?

  the original links, lead you from one idea to the other, just like the modern web does today." It caused me to find and start reading a biography on George Lucas. So this book is actually leading me to my next podcast, so next week's podcast will be about George Lucas. Okay, so now we're going to get to the first iteration of Pixar. There's multiple ones. So this is the very first product they make. Alvy's team set out to design a highly... They get hired by George Lucas, and this is what he's hiring them to do. "Alvy's team set out to design a highly specialized standalone computer that had the resolution and processing power to scan film, combine special effects images with live-action footage, and then record the final result back onto film.

• 36:20David Senra?

  It took us roughly four years, but our engineers built just a device, which we named the Pixar Image Computer." So they search for making all these great tools that Lucasfilm can make, and they run into an extremely important lesson for entrepreneurs, that is, when designing products and services, you have to understand humans' resistance to change. So it says, "But as challenging as that problem proved to be, it paled in comparison to the bigger and eternal impediment of our progress: the humans' resistance to change. While George wanted this new video editing system in place, the film editors at Lucasfilm did not. They were perfectly happy with the system they had already mastered, which involved

• 37:03David Senra?

  actually cutting film into snippets with razor blades and then pasting them back together. They couldn't have been less interested in making changes that would slow them down in the short term. They took comfort in their familiar ways, and change meant being uncomfortable."

• 37:22David Senra?

  So this is now what I love because I think George is fundamentally an entrepreneur because this is some of the lessons that Ed learns from George and then George's analogies for building companies. But the reason I say that at a fundamental level, George is a filmmaker, but he's an entrepreneur because he bets on himself. And I think that's what every entrepreneur does. If not, you would just go get a job. Explicit in your desire to start a company is the idea that the market for your skills is fundamentally mispriced.

• 38:06David Senra?

  Because if you thought that you were better, like if you thought your talents and skills could be rewarded in a company, instead of needing to start your own company, then you just go work for somebody else. Entrepreneurs just basically reject that. They're like, "Nope, I know what I want to do and I'm gonna go do it myself." So this is Ed talking. "I remember going home late at night, exhausted, feeling like I was balancing on the backs of a herd of horses. Only some of the horses were thoroughbred, some were completely wild, and some were ponies who were struggling to keep up. I found it hard enough to hold on, let alone steer. Simply put, managing was hard. No one took me aside to give me tips. The books I'd read that promised insight on the topic were mostly devoid of content."

• 38:49David Senra?

  So he just starts picking up managing and general business books and realizes that they're essentially paperweights. "So I looked at George to see how he did it. I saw that his way seemed to reflect some of the philosophy he had put into Yoda. Just as Yoda said things like, 'Do or do not, there is no try,' George had a fondness for folksy analogies that sought to describe neatly the mess of life. He would compare the often arduous process of developing his 4,700-acre Skywalker Ranch compound to a ship going down river that had been cut in half and whose captain had been thrown overboard. 'We're still going to get there,' he would say. 'Grab the paddles and let's keep going.'" Another of his favorite analogies was that building a company was like being on a wagon

• 39:34David Senra?

  train headed west. On the long journey to the land of plenty, the pioneers would be full of purpose and united by the goal of reaching their destination. But, once they arrived, he'd say, "People would come and go, and that was as it should be." But, the process of moving towards something, of having not yet arrived, was what he idealized. Whether evoking wagons or ships, George thought in terms of a long view, this is so important. He believed in the future and his ability to shape it. The story had been told and retold about how, as a young filmmaker, in the wake of American Graffiti's success, this is a film he worked on before Star Wars, he was advised to demand a higher salary on his next movie, Star Wars.

• 40:19David Senra?

  That would be the expected move in Hollywood, bump up your quote. Not for George, though. He skipped the raise altogether and asked instead to retain ownership of licensing and merchandising rights to Star Wars. The studio that was distributing the film, 20th Century Fox, readily agreed to his request, thinking it was not giving up much. George would prove them wrong, setting the stage for major changes in the industry he loved. He bet on himself and won. So, a few pages later, we're introduced to another character in the story named John

• 41:03David Senra?

  Lasseter, who comes extremely important. He's the trilogy in Pixar, so it's Steve Jobs, John Lasseter, and Ed that are basically running it. So, let's just touch on John a little bit. It says, "John was a born dreamer. As a boy, he lived mostly in his head, and in the treehouses and tunnels and spaceships he drew in his sketchbook." And this is another example of the importance of idols. "Like me, John remembered discovering that there were people who made animation for a living, and thinking he had found his place in the world. For him, as me, that realization was Disney-related. It came when he stumbled upon a well-worn copy of The Art of Animation, Bob Thomas's history of the Disney studios in his high school library."

• 41:48David Senra?

  Bob Thomas also wrote a biography on Walt Disney that I have sitting on my nightstand and will eventually be a future episode of Founders. Okay, so now we need to transition to iconoclast number three. And George Lucas in the early 80s is going through a divorce. So he's got to sell Pixar. George hadn't lost an ounce of his ambition, but the new financial realities meant that he had to streamline his business. At the same time, I was coming to the realization that while we in the computer division wanted more than anything to make an animated feature film, George didn't share our dream. Remember, he's holding on to this Y very tightly.

• 42:32David Senra?

  He had always been most interested in what computers could do to enhance live-action films. For a while, our goals, though disparate, had overlapped and pushed each other forward. But now, under pressure to consolidate his investments, George decided to sell us. So I want to talk a little bit about the numbers that, anytime I find them in books that I think are pertinent to these ideas, I want to include the numbers because it's all things that we all want to do, but it's all centered in the financial reality that businesses have to make a profit or they'll cease to exist. So Lucasfilm wanted to walk away from the deal, meaning the sale of Pixar, with $15 million in cash. But there was a hitch.

• 43:15David Senra?

  Our computer division came with a business plan that required an additional infusion of $15 million to take us from prototype to product and ensure that we'd be able to stand on our own. So they need $30 million, really. This structure did not sit well with the venture capitalists they hoped would buy us, who didn't typically make such significant cash commitments when they acquired companies. We were shot to 20 prospective buyers, none of whom bit. So in February of 1985, Steve Jobs comes calling, and this is the account of their first meeting with Steve, and one of many just freaking hilarious Steve Jobs stories that are in this book, and I'm going to include a lot of them. So.

• 43:57David Senra?

  We met in a conference room with a whiteboard and a large table surrounded by chairs. Not that Steve stayed seated for very long. Within minutes, he was standing at a whiteboard, drawing us a chart of Apple's revenues. I remember his assertiveness. There was no small talk. Instead, there were questions, lots of questions. "What do you want?" Steve asked. "Where are you heading?" "What are your long-term goals?" He used the phrase "insanely great products" to explain what he believed in. Clearly, he was the sort of person who didn't let presentations happen to him, and it wasn't long before he was talking about making a deal. To be honest, I was uneasy about Steve. He had a forceful personality, whereas I do not,

• 44:41David Senra?

  and I felt threatened by him. For all of my talk about the importance of surrounding myself with people smarter than myself, his intensity was at such a different level, I didn't know how to interpret it. This is a great illustration. It put me in the mind of an ad campaign that the Maxell cassette tape company released around this time, featuring what would become an iconic image. A guy sitting low in a leather chair, his long hair being literally blown back by the sound from the stereophonic speaker in front of him. That's what it was like to be with Steve. He was the speaker. Everyone else was the guy. So Steve talks about making a deal.

• 45:25David Senra?

  He said, "For nearly two months after that initial meeting, we had heard nothing. Total silence." So I'm gonna... The reason, they realize what happens in the interim, and Steve's forced out of Apple. He tried to do a coup to overthrow John Sculley, and they remove him. So he disappears. And then, he comes back into... A few months later, he comes back, and he's visiting Lucasfilm now. "He came to Lucasfilm one afternoon for a tour of our hardware lab again. He pushed and prodded and poked. What can the Pixar Image Computer do that other machines on the market can't? Who do you envision using it? What's your long-term plan?" His aim didn't seem to be to absorb the intricacies of our technology

• 46:10David Senra?

  as much as to hone his own argument. To temper it by sparring with us. Steve's domineering nature could take one's breath away. At one point, he turned to me and calmly explained that he wanted my job. This is hilarious.

• 46:25David Senra?

  At one point, he turned to me and calmly explained that he wanted my job. "Once he took my place at the helm," he said, "I would learn so much from him that in just two years, I would be able to run the enterprise by myself." I was, of course, already running the enterprise by myself, but I marveled at his chutzpah. He had, he not only planned to displace me in the day-to-day management of the company, he expected me to think it was a great idea. I love that. "Steve was hard-charging, relentless, but a conversation with him," this is really important, "but a conversation with him took you places you didn't expect. It forced you not just to defend, but also to engage. And that in and of itself, I came to believe, had value."

• 47:09David Senra?

  Now, here's another, Ed Knows His Why. As he spoke, so the next day, they drive to Steve's house, and Steve's giving him another pitch. And this is when Ed's gonna turn him down, because it's in direct conflict with Ed's why. "As he spoke, it became clear to us that his goal was not to build an animation studio. His goal was to build the next generation of home computers to compete with Apple. This wasn't merely a deviation from our vision. It was a total abandonment of it. So we politely declined. We returned to the task of trying to find a buyer. Time was running out." A few months later, Pixar gets a booth at this trade show, and it says, "We had a booth

• 47:54David Senra?

  on the trade show floor where we showcased our Pixar Image Computer. Steve Jobs dropped by on the first afternoon. Immediately, I had sensed a change. Steve had founded a personal computer company next. I think that gave him the ability to approach us with a different mindset. He had less to prove. Now he looked around our booth and proclaimed our machine as the most interesting thing in the room. Let's go for a walk." Now, I want to deviate from this for a little bit. Because there's this really funny Steve story and I just have to include all the funny Steve stories. Um, let's see. And well, there's also a lesson here that we can be blind to our own flaws and all of us are.

• 48:37David Senra?

  As we talked, we came upon, so they're walking around the, the trade show floor and they're just talking about Pixar. And it says, as we talk, we came upon Bill Joy, one of the founders of Sun Computer. Bill, like Steve, is an extraordinary bright, competitive, articulate and opinionated person. I don't remember what they talked about as we stood there, but I'll never forget the way they talked. Standing nose to nose, their arms behind their backs, swaying from side to side in perfect sync. Completely oblivious to anything going on around them. This went on for quite a while until Steve had to break off to go meet someone. After Steve left, Bill turned to me and said, "Boy, is he arrogant." When Steve came by our booth again later, he walked up to me and said of Bill, "Boy, is he arrogant."

• 49:22David Senra?

  I remember being struck by this Clash of the Titans moment. I was amused by the fact that each man could see ego in the other, but not in himself. They're gonna make a deal and there's three things that are interesting here. Uh, we learn how Steve resolves, uh, resolves issues with people he disagrees with. We hear a hilarious, hilarious, rather, um, negotiation story. And then Steve's opinion on loyalty. At one point in this period, I met with Steve and gently asked him how things got resolved when people disagreed with him. He seemed unaware that what I was really asking him was how things would get resolved if we worked together and I disagree with him. For he gave a more general answer.

• 50:03David Senra?

  He said, "When I don't see eye to eye with somebody, I just take the time to explain it better so they understand the way it should be." There's just a different level of arrogance with this. Um, and you know, it works out. Apple, he winds up creating the environment which produces the world's most successful consumer product of all time. So, you know, we're gonna label him a genius, but if it didn't, you know, they, they call that arrogance. So it's just interesting to me.

• 50:33David Senra?

  Later when I relayed this to my colleagues at Lucasfilm, they laughed nervously. I remember one of Steve's attorneys telling us that if we were acquired by his client, we had better be ready to get on the Steve Jobs roller coaster. Given our dire straits, this was a ride Alvy and I were ready to board. The acquisition process was complicated by the fact that negotiators for Lucasfilm weren't any good. We're going to see this here. The chief financial officer in particular underestimated Steve, assuming he was just another rich kid in over his head. This CFO told me that the way to establish his authority in the room was to arrive last.

• 51:16David Senra?

  His thinking, which he articulated out loud to me, was that this would establish him as the most powerful player, since he and only he could afford to keep everyone else waiting. All that it ended up establishing however, was that he had never met anyone like Steve Jobs. The morning of the big negotiating session, all of us but the CFO were on time. So Steve's all there, all these other people that are pertinent to the negotiations. And at precisely 10 a.m., Steve looked around and finding the CFO missing, started the meeting without him. In one swift move, Steve had not only foiled the CFO's attempt to place himself atop the pecking order, but he had grabbed control of the meeting.

• 51:58David Senra?

  This would be the kind of strategic aggressive play that would define Steve's stewardship of Pixar for years to come. Once we had joined forces, he'd became our protector, as fierce on our behalf as he was on his own. In the end, Steve paid $5 million to spin Pixar off of Lucasfilm, and then after the sale, agreed to pay another $5 million to fund the company. After we signed our names, Steve pulled Alvy and me aside, put his arms around us, and said, "Whatever happens, we have to be loyal to each other." I took that as an expression of his still bruised feelings in the wake of his ouster from Apple, but I never forgot it. The gestation had been trying, but the feisty little company called Pixar had been born.

• 52:44David Senra?

  There's just so many good things in this book. I could do a four-hour podcast on it. But, you know, the book's only a six-hour read, so there's just so many good ideas. So I gotta skip over a bunch of stuff. I'm gonna hit some ideas now. This is how he learns, Ed learns from Japanese manufacturing history, which I found interesting. So he says, "At the time Pixar was a computer manufacturing company, so we had to learn very quickly what it meant to produce computers. It was at this time that I happened upon one of the most valuable lessons from the early days of Pixar, and that lesson came from an unexpected source: the history of Japanese manufacturing. In 1947, an American working in Japan turned that thinking on its head.

• 53:25David Senra?

  His name was Edward Deming, and he was a statistician who was known for his expertise in quality control." So it talks about, let me skip over that part. Let me just get to his idea. So, in essence, this was his idea, and Pixar copies this approach. "The responsibility for finding and fixing problems," so they're talking about, the background is they're talking about how to, like, optimize, like, car manufacturing. And so, it's a way to decentralize decision-making. So it's, "The essence was this: The responsibility for finding and fixing problems should be assigned to every employee, from the most senior manager to the lowliest person on the production line.

• 54:08David Senra?

  If anyone at any level spotted a problem in the manufacturing process, Deming believed they should be encouraged and expected to stop the assembly line." This was the exact opposite of what the Americans were doing at the time. Deming's approach, and this is why it's important, "Deming's approach gave ownership and responsibility for a product's quality to the people who were most involved in its creation. Instead of merely repeating an action, workers could suggest changes, call out problems, and this next element seemed particularly important to me: feel the pride that came when they helped fix what was broken. This resulted in continuous improvement, driving out flaws and improving quality."

• 54:51David Senra?

  Okay, so a couple pages later, they're still struggling. You know, they're trying to, the computer they're making, they're trying to sell, I think, for like $120,000. They only sell like a couple hundred of them. And this is how Pixar's lowest point leads to its solution. And another iteration. "At Pixar's lowest point, as we floundered and failed to make a profit, Steve had sunk 54 million of his own money into the company. A significant chunk of his net worth. As the losses mounted, it became clear that there was only one path forward. We needed to abandon selling hardware. Of course, we had no way of knowing whether where we landed next would support our weight.

• 55:32David Senra?

  The only thing that made this leap easier was that they had, we had decided to go all in on what we had yearned to do from the outset, this is so important. Computer animation. This was where our true passion resided. And the only option left was to go after it with everything we had." On the very next page, there's this story about how Steve is figuring out Pixar's value. Because we've just been told, hey, he's jumped, he dumped, he agreed initially we'd dump 5 million into this company. He dumps 54 million after that. "Three times, between 1987 and 1991, a fed-up Steve Jobs tried to sell Pixar. And yet, despite his frustrations, he could never quite bring himself to part with us.

• 56:18David Senra?

  When Microsoft offered 90 million dollars for us, he walked away. Steve wanted 120 million and felt their offer was not just insulting, but proof that they weren't worthy of us. Steve started with a high price and was unwilling to budge. I came to believe that what he was really looking for was not an exit strategy as much as external validation. His reasoning went like this. If Microsoft was willing to go to 90 million, then we must be worth hanging on to." A big, big thing Ed talks about in the book is that he knows Pixar would have never survived without Steve, but there was times when he wasn't sure it would survive with him. And...

• 57:04David Senra?

  Through the process, Ed talks about, "Hey, listen, I worked with Steve Jobs for 26 years." So, longer than anybody else did continuously. And he talks about how the common misconception that Steve was just some kind of asshole is just not true. Like, when he was younger, it was really hard to deal with, but he's saying over 26 years, he grew to be really wise. And even now, they're about seven years into the relationship, he starts to see the benefits besides Steve's money of like his logic and strategy here. So, let's learn a little bit about his logic and strategy. And this is how they first start to finally get traction. Steve negotiates a three-picture deal with Disney. And it says, "In 1999, we struck a three-picture deal with Disney, which would provide majority

• 57:48David Senra?

  financing for Pixar movies, which then Disney would distribute and own. It felt like it had taken a lifetime to get to this point, and in a sense, it had. While Pixar, the company, was just five years old, my dream of making a computer-animated feature film was pushing 20. Once again, we were embarking on something we knew very little about. None of us had ever made a movie before, at least not one longer than five minutes. And since we were using computer animation, there was no one to ask for help." So, that first movie we know is Toy Story. And it's not yet released, it's about to be released. We know that it goes on to be a huge financial success, right?

• 58:31David Senra?

  But then, this is another strategy where Steve just saw things way before anybody else. So, this is Steve's idea to gain leverage with Disney. Okay, so it says, "Of course, one thing we could always count on was that at some point, Steve would throw us a curveball. As we approached Toy Story's release, it was becoming clear that Steve had something much bigger in mind. This wasn't just about a movie. This film, he believed, was going to change the field of animation. And before that happened, he wanted to take us public. 'Bad idea,' John and I told Steve. 'Let's get a couple films under our belt, we'll only increase our value that way.' Steve disagreed. 'This is our moment,' he said." He went on to lay out his logic. Let's assume that Toy Story is a success, he said.

• 59:16David Senra?

  Not only that, let's assume it is a big success. When that happens, Disney CEO Michael Eisner will realize that he has created his own worst nightmare. A viable competitor to Disney. We only owe his studio two more films under our contract. Then we could go out on our own. Steve predicted that as soon as Toy Story came out, Eisner would try to renegotiate our deal and keep us close as a partner. In this scenario, Steve said, he wanted to be able to negotiate better terms. Specifically, he wanted a 50/50 split with Disney on returns. Meaning the revenue, the profit, rather. A demand, he pointed out, that also happened to be the moral high ground.

• 1:00:00David Senra?

  In order to fulfill these terms, however, we would have to be able to put up the cash for our half of the production budgets. A significant amount of money. And to do that, we would have to go public. His logic, as it often did, won the day. Steve turned out to be right. As our first movie broke records at the box office and all of our dreams seemed to be coming true, our initial public offering raised nearly $140 million for the company. The biggest IPO of 1995. And a few months later, as if on cue, Eisner called, saying that he wanted to renegotiate the deal and keep us as a partner. He accepted Steve's offer of a 50/50 split.

• 1:00:45David Senra?

  I was amazed. Steve had called this exactly right. His clarity and execution were stunning. Okay, so I'm skipping way ahead. Because I love this idea. This is him, this is now the explicit elaboration on his idea that people's, people are way more important than ideas. So he says, "The gestation of Toy Story 2 offers a number of lessons that were vital to Pixar's evolution. Remember that the spine of the story, Woody's dilemma, to stay or to go, was the same before and after the brain trust worked on it." This will make more sense to you in a little bit. But don't worry about what the brain trust is and don't, for now, don't worry about the central theme of Toy Story 2. It's, he's gonna explain.

• 1:01:32David Senra?

  The main point here. "One version didn't work at all and the other was deeply affecting." Why? This is what I want you to focus on. "Talented storytellers had found a way to make viewers care, and the evolution of this storyline made it abundantly clear to me." This is one of the most highlighted passages in the book, because I own both the hardcover version and the Kindle. And on Kindle, you can look up what the most popular highlights are. And I think it's a great idea. "If you give a good idea to a mediocre team, they will screw it up. If you give a mediocre idea to a brilliant team, they will either fix it, or throw it away and come up with something better." The takeaway here is worth repeating.

• 1:02:13David Senra?

  Getting the team right is the necessary precursor to getting the ideas right. It is easy to say you want talented people, and you do. But the way those people interact with one another is the real key. Even the smartest people can form an ineffective team if they are mismatched. That means it's better to focus on how a team is performing, not the talents of the individuals within it. There is an important principle here that may seem obvious, yet in my experience is not obvious at all. Getting the right people and the right chemistry is more important than getting the idea right.

• 1:02:52David Senra?

  I made a habit when giving talks of posing the question to my audience. Which is more valuable? Good ideas are good people. People think so little about this that in all the years, only one person in an audience has ever pointed out the false dichotomy. To me, the answer should be obvious. Ideas come from people. Therefore, people are more important than ideas. Okay, so now we're going to get into one of his ideas about changing the word honesty and changing it to candor. If you're building a company in a creative environment.

• 1:03:35David Senra?

  So he says candor could not be more crucial to our creative process. Why? Because early on, all of our movies suck. That's a blunt assessment, I know. But I make a point of repeating it often. And I choose the phrasing because saying in a softer way fails to convey how bad the first versions of our films really are. I'm not trying to be modest or self-effacing here. Pixar films are not good at first. Our job is to make them go from suck to not suck. This idea that all movies we now think of as brilliant were at one time terrible is a hard concept for many to grasp. And this is why I love reading these books because, you know, we see the end result. Oh, Pixar is hugely successful, but you don't see all the 20 years that he put in before that.

• 1:04:20David Senra?

  And it's really just a same metaphor of what he's saying here. Instead of, uh, uh, all movies suck at the beginning, almost all companies and products suck at the beginning. And, and, and this is as it should be, is what he says. And this is as it should be. Creativity has to start somewhere. And we are true believers in the power of bracing, candid feedback and the iterative iterative process. Reworking, reworking, and then reworking again until a flawed story finds its through line or a hollow character finds its soul. A new version of the movie is generated every three to six months and the process repeats itself.

• 1:04:57David Senra?

  In general, the movie steadily improves with each iteration, although sometimes a director becomes stuck, unable to address the feedback he or she is given. Luckily, another brain trust meeting is usually around the corner. So that's the second time I've said brain trust. What brain trust is, is a mechanism, a mechanism for their company to deliver candor. Okay. So that's a good way to think about it. And I'm just going to read this paragraph. So it says, "To understand what the, what the brain trust does and why it's so central to Pixar, you have to start with a basic truth. People who take on complicated creative projects become lost at some point in the process." Every single entrepreneur feels that, knows that feeling. At some point, you're not going to create a company or a product that works, just takes off immediately and always works.

• 1:05:40David Senra?

  Like you've got to iterate and iterate and there's going to be valleys and peaks. It is the name. Nature of things, in order to create, you must internalize and almost become the project for a while, and that near-fusing with the project is an essential part of its emergence. But it is also confusing, there's a paradox, when once a movie, where, excuse me, where once a movie's writer-director had perspective, he or she loses it. Where once he or she could see a forest, now there are only trees. The details converge to obscure the whole, and that makes it difficult to move forward substantially in any one direction. The experience is overwhelming. And they talk about how directors, you know, it doesn't matter, you can be the best director

• 1:06:23David Senra?

  in the world, you're gonna get lost. And the important part is, is separating your idea from yourself. This is, maybe he doesn't realize that much of what he thinks is visible on the screen, which in fact is only visible in his own head, this is what the brain trust reveals. Or maybe the ideas presented in the reels don't work out and won't ever work, and the only path forward is to blow something up and start over. No matter what, the process of coming to clarity takes patience and candor. So just think about, you need candor as a guiding principle, and brain trust, the mechanism that Pixar uses, is the way to get there. And all the brain trust is, is a meeting where people can speak honestly, they separate the director's idea from the director themselves, and then one important part of it is that

• 1:07:05David Senra?

  they're, like, let's say there's 25 people in a brain trust, the director's still in charge. So he's listening to ideas about ways to improve his film, but there's no, there's no authority to the ideas. He has to take them on himself. And the reason being is something that he talks about in a few pages later, which I really love. And it says, "We believe that the most promising stories are not assigned to filmmakers, but emerge from within them." Think about that in your own life. Like, do you think if somebody said, "Hey, just go do this business"? No, you gotta figure out what you wanna do. Like, it's your idea, it comes from you. It would never work if entrepreneurs were assigned their tasks by other people, the business they wanna create by other people. "With few exceptions, our directors make movies that they have conceived of and are burning to make."

• 1:07:50David Senra?

  So it says, "How is the brain trust different from any other feedback mechanism?" There are two key differences. The first is the brain trust is made up of people with a deep understanding of storytelling, and usually, people have been through the process themselves. While the director welcomes critiques from many sources along the way, they particularly prize feedback from fellow directors and storytellers. The second difference is that the brain trust has no authority. This is what I was just talking about. This is crucial. The director does not have to follow any of the specific suggestions given him. After a brain trust meeting, it is up to him or her to figure out how to address the feedback. Brain trust meetings are not top-down, do-this-or-else affairs. By removing from the brain trust the power to mandate solutions,

• 1:08:33David Senra?

  we affect the dynamics of the groups in ways that I believe are essential. We believe that ideas, and thus films, only become great when they are challenged and tested. Skipping over, but he continues, "To set up a healthy feedback system, you must remove power dynamics from the equation. You must enable yourself, in other words, to focus on the problem, not the person." They also talk about that candor overrules hierarchy. And one of the reasons the brain trust, they realized, like, you can't have too powerful of a personality. They wouldn't let Steve Jobs go to brain trust meetings, because at the time, he was already super famous, and people wouldn't allow themselves to engage in candor in front of him. Not many people would.

• 1:09:17David Senra?

  So he would still give notes to directors, but he'd do it one-on-one. And I love this idea he has. A few chapters later, it says, "How to tell if your company will be innovative or derivative." There's a quick definition, and it has to do with if you have a negative or positive definition of failure. There's a quick way to determine if your company has embraced the negative definition of failure. Ask yourself what happens when an error is discovered. Do people shut down and turn inward, instead of coming together to untangle the causes of problems that might be avoided going forward? Is the question being asked, whose fault was this? If so, your culture is one that vilifies failure. Failure is difficult enough without it being compounded by the search for a scapegoat.

• 1:10:01David Senra?

  That's a really, really interesting idea. In a fear-based, failure-averse culture, people will consciously or unconsciously avoid risk. They will seek instead to repeat something safe that has been good enough in the past. Their work will be derivative, not innovative.

• 1:10:25David Senra?

  So Ed is a really good storyteller because he explains his ideas, but he makes them a narrative. So, there's an entire chapter called "The Hungry Beast and the Ugly Baby." So I'm just gonna share two paragraphs from it, but it's worth reading. Ugly babies do not mesh well with hungry beasts, right? So what an ugly baby is, is like a brand-new idea. So fragile, right? But a hungry beast is what he noticed at Disney while they eventually had to buy Pixar because they had a little bit of success in animation in the 90s after like a long drought. And then they built this huge infrastructure that needed people doing things, like animation offices in like four different countries and all these people. And instead of it being a creative endeavor, it turned out to be like a manufacturer.

• 1:11:09David Senra?

  And what they were manufacturing was really bad stories. So he talks about, he goes, "To be clear, this happens at many companies, not just in Hollywood. And its unintended effects is always the same." So it's talking about the hungry beast is the pressure to create and create quickly. And it says, "The unintended effect is always the same. It lessens the quality across the board." And this is how it compares to an ugly baby. Originality is fragile. And in its first moments, it's often far from pretty. This is why I call early mock-ups of our films ugly babies. They are not beautiful. They are not beautiful miniature versions of the adults they will grow up to be. They are truly ugly, awkward and unformed, vulnerable and incomplete.

• 1:11:54David Senra?

  They need nurturing, in the form of time and patience in order to grow. What this means is that they have a hard time coexisting with the beast. The ugly baby idea is not easy to accept. Having seen and enjoyed Pixar movies, many people assume that they popped into the world already striking, resonant, and meaningful, fully grown. See, see what he's doing here? He's repeating another idea that we just covered a little while ago, but this is, you know, a couple of chapters.

• 1:12:21David Senra?

  In fact, getting them to the point, to that point involved months, if not years of work. If you sat down and watched the early reels of any of our films, the ugliness would be painfully clear. But the natural impulse is to compare the ugly reels of our films to finished films. Again, I just want to interject here. This is the same thing people do with businesses, like your business, everything starts out, you know, using the Jeff Bezos quote, uh, every oak tree started from an acorn. So you can't compare the two. But the natural impulse is to compare the early reels of our films to finished films, by which I mean to hold the new to standards only the mature can meet. Our job is to protect our babies from being judged too quickly. Our job is to protect the new.

• 1:13:04David Senra?

  And this, he's describing now, um, a few pages later, uh, what, what a lot of companies do, and I, I call this a real problem to a fake solution.

• 1:13:14David Senra?

  I mean, a real problem and a fake solution. If inefficiencies result in anyone waiting too long, if the majority of your people aren't engaged in the work that drives your revenue most of the time, you risk being devoured from the inside out. The solution, of course, is to feed the beast, to occupy its time and attention, putting its talent to use. Even when you do that, though, the beast cannot be satiated. It is one of life's cruel ironies, that when it comes to feeding the beast, success only creates more pressure to hurry up and succeed again. Which is why at too many companies, the schedule, that is the need for product, drives the output, not the strength of the ideas at the front end. So that's the mistake they're making. A suggested solution to that problem and it's achieving balance.

• 1:14:00David Senra?

  And it says, "Imagine a balance board, one of those planks of wood that rests at its midsection on a cylinder. The trick is to place one foot on each end of the board, then shift your weight in order to achieve equilibrium as the cylinder rolls beneath you." He's talking about balancing between the beast and the ugly baby. "If there's a better example of balance than the ability to manage two competing forces, I can't think of one." But, and this is really important, "But while I can try to explain to you how to do it, show you videos and suggest different methods for getting started, I can never fully explain how to achieve balance. That you learn only by doing, by allowing your conscious and subconscious mind to figure it out while in motion. With certain jobs, there isn't any other way to learn than by doing,

• 1:14:43David Senra?

  by putting yourself in the unstable place and then feeling your way out."

• 1:14:50David Senra?

  And now he's gonna quote something. Uh, it's from one of his characters in the movie Ratatouille. There's a, um, the restaurant critic is called Anton Ego. And he talks, so, well, let me just read it. And it's, this is what I always talk about, is like why I choose to be an evangelist of ideas I like instead of a critic of ideas I don't. Cause I think we need to evangelize the new. He uses the word, "The new needs friends," which is one way to put it. So he's talking about a speech that the director, I think Brad Bird, wrote, that was delivered by the character Anton Ego. "His speech similarly rocked me and to this day sticks with me as I think about my work.

• 1:15:35David Senra?

  In many ways, the work of a critic is easy," Ego says. "We risk very little, yet enjoy a position over those who offer up their work and themselves to our judgment. We thrive on negative criticism, which is fun to write and to read. But the bitter truth we critics must face is that in the grand scheme of things, the average piece of junk is probably more meaningful than our criticism designating it so. But there are times when a critic truly risks something, and that is in the discovery and the defense of the new." The world is often unkind to new talent, to new creations. The new needs friends. Ahead, towards the end, he just has a lot of practical advice.

• 1:16:18David Senra?

  And unfortunately, I'm not going to be able to include everything here, but I want to hit some highlights that are interesting. He has this idea of the hidden. He's like, "You need to always look for the hidden or the unknown problem." So here's an example of that. "In 1995, when Steve Jobs was trying to convince us that we should go public, one of his key arguments was that we could eventually make a film that failed at the box office, and we needed to be prepared financially for that day. Going public would give us the capital to fund our own projects, and thus, to have more say about where we were headed. Steve's feeling wasn't that Pixar's survival could not depend solely on the performance of each and every movie. The underlying logic of his reasoning shook me. We were going to screw up.

• 1:17:02David Senra?

  It was inevitable. And we didn't know when or how. We had to prepare then for an unknown problem, a hidden problem. From that day on, I resolved to bring as many hidden problems as possible to light, a process that would require what might seem like an uncommon commitment to self-assessments. Having a financial cushion could help us recover from failure, and Steve was right to secure one. But the more important goal for me was to try to remain vigilant, to always be on the lookout for signs that we were screwing up, without knowing, of course, when that would occur." And that he goes, which brings, this is the important summary here, "Which brings us to one of my core management beliefs.

• 1:17:44David Senra?

  If you don't try to uncover what is unseen and understand its nature, you will be ill-prepared to lead." So this is one example of how they found a hidden problem and one solution they found.

• 1:17:59David Senra?

  So take this example which occurred at Pixar during what's called an executive check. A meeting to approve budgets and schedules on the production of the movie Up. A visual effects producer named Denise Ream was in the meeting and she spoke up with a fairly radical suggestion. "Production would be cheaper and take fewer person weeks." Person weeks is how they measure the amount of work like a single person could accomplish in a week's time. And then they use that as a multiple to calculate like the budgets they need for the movie. So it says, "Production would be cheaper and take fewer person weeks if we did something that sounded completely counter to the goal. Delay when the animators started on their work." Denise, who had the benefit of a broader perspective because before joining Pixar she'd worked for years at Industrial Light and Magic,

• 1:18:41David Senra?

  was addressing a reality that she saw more clearly than any of us did, which was basically meaning it was hidden to them. "The eagerness to get going, which gave the impression of efficiency, was ultimately counterproductive because animators often had to redo their work as changes were made." So they made changes to the storyline, which means they had to basically scrap out a bunch of work they used. "From her vantage point, it seemed obvious that we would use fewer person weeks if we gave animators bigger, more fully-realized chunks to work on later in the process." Later in the process meaning when it's less likely to change. This is Denise talking. "I believe that animators will work faster than you're giving them credit for

• 1:19:24David Senra?

  if they have all the pieces they need when they begin." Boy, was she right. "Even with all the usual snafus, endless story adjustments and last-minute re-rigging of particular characters, Up was made in fewer person weeks than we had originally thought possible." Recalling her decision to speak up in that meeting, Denise told me, "They had us delivering the movie at what I felt was an arbitrary early date." And I said, "I don't understand why we're doing this. Because you know we're always gonna hit the brick wall. No one ever finishes early. So why don't we just call a spade a spade now, two years before our deadline?" "To me, it seemed clear that you'd want as much time as possible to get the story working.

• 1:20:05David Senra?

  My goal was just to push the back end off as long as I could, and it wound up paying off."

• 1:20:12David Senra?

  That couldn't have happened if the producer of the movie and the company's leadership in general hadn't been open to a new viewpoint that challenged the status quo. That kind of openness is only possible in a culture that acknowledges its own blind spots. It's only possible when managers understand that others see problems they don't and that they also see solutions. So to me, that's a combination of his idea of the hidden and also what he learned from Deming about decentralizing decision-making because they're gonna find, now they're gonna see problems that you don't see from a management's perspective, but they're gonna find solutions that you would've never thought of. So he has this idea, which I love and I always talk about, it's a constraints force prioritization.

• 1:20:57David Senra?

  They name it the beautifully shaded penny problem. So there's a phenomenon that produces at Pixar called the beautiful shaded penny. It refers to the fact that artists who work on our films care so much about every detail that they will sometimes spend days or weeks crafting the equivalent of a penny on a nightstand that you'll never see. So this is coming from this lady named Catherine Seraphin, who's a producer, and she was a producer on Monsters Inc. And she's talking, she goes, "This is one scene that perfectly illustrates the beautifully shaded penny idea. It occurs when bewildered Boo," I haven't seen the movie, so I don't, at least I don't think I have, so I don't know the characters, "but there's a character named Boo, first

• 1:21:41David Senra?

  arrives in Mike and Sully's apartment and begins, as toddlers do, to explore. As the monsters try to contain her, she wanders up to two towering piles of compact discs, more than ninety in all. 'Don't touch those,' Mike screams, as she grabs a CD case on the bottom, sending the piles crashing to the floor. Mike complains, and then she waltzes away." Okay, so that's the description of the scene, right? "The moment is over in three seconds, and during it, only a few of the CD cases are at all visible. But for every one of those CDs," remember, there are ninety in total, "Pixar artists created not just a CD cover, but a shader. A shader is a program that calculates how an object's rendering changes as it moves." "Can you see all the CD cases?" Seraphin says. "No." "Was it fun to design them all?" "Yes."

• 1:22:23David Senra?

  "Maybe it was an inside joke, but there was someone on the crew who believed that each one of those was going to be seen close up, and so they were lovingly crafted." I don't want to think about how many person weeks this consumed. So this is really another interesting paradox. Clearly, something in our process had broken. The desire for quality had gone well beyond rationality. But because of the way production unfolded, our people had to work on scenes without knowing the context for them. Okay, so that's the real problem. It's not that they're, it's really good that they take their work so seriously, but they didn't understand that it's only three seconds and most of them weren't ever be seen. So is it really smart to spend how many person weeks to do that? No. So they overbuilt them just to be safe. To make things worse, our standards of excellence are extremely high,

• 1:23:06David Senra?

  leading them to conclude that more is always more.

• 1:23:11David Senra?

  How then do you fix the beautifully shaded penny problem without telling people in effect to care lesser, to be less excellent? So he continues on, but the summary is that you need to limit it. You have to design with constraints. So limits force us to rethink how we are working and push us to new heights of creativity. And I just want to hit one of another idea that he likes. And it's you're not required to justify, justify everything. It's in this section where he's talking about short experiments. In most companies, you have to justify so much of what you do to prepare for quarterly earnings statements if the company is publicly traded or if it's not, to build support for your decisions. I believe, however, that you should not be required to justify everything. We must always leave the door open for the unexpected. Scientific research operates in this way.

• 1:23:53David Senra?

  When you embark on an experiment, you don't know if you will achieve a breakthrough. Chances are, you won't. But nevertheless, you may stumble on a piece of the puzzle along the way. A glimpse, if you will, into the unknown. He has a deep love for experimentation because he understands the, the upside to it. And so there's another idea he has of a tool they use. It's a, the note I left is postmortem, it's called postmortems. And I think about, this is the way the note I left myself to think about postmortems. Postmortems. So postmortems are a tool to analyze ways to improve your process after a project, movie, etc. is over. It's an experiment. Okay, so the goal here is, is to analyze everything that you could have improved after the project's over.

• 1:24:38David Senra?

  And that you understand that sometimes postmortems are going to Yield beneficial results that you can apply in the future. And sometimes there's just gonna be an exercise of futility, but it doesn't matter. It has to be done because you need to constantly experiment in a creative environment, right? So he says, "When the release date finally rolls around, everyone is ready to move on to something new. But we are not done yet. At Pixar, there's one more essential phase of the process: the postmortem. A postmortem is a meeting held shortly after the completion of every movie in which we explore what we did and didn't... Well, we... Excuse me. In which we explore what did and didn't work, and an attempt to consolidate lessons learned. Companies..." I love this quote. "Companies, like individuals, do not become exceptional by believing they are exceptional,

• 1:25:22David Senra?

  but by understanding the ways in which they are not exceptional. Postmortems are a route into that understanding.

• 1:25:31David Senra?

  To keep anyone from going too long, we have a 15-minute limit." There's, again, he's designing constraints. See, all these ideas he repeats over and over again, and they tie into one another. I think that's what makes this book so amazing. "This postmortem, which took an entire day..." They're talking about one that happened after A Bug's Life. "...delved into all aspects of the production. There was no aha moment, no epiphany that would turn our processes inside out. Instead, it's the spirit of the meeting that I remember most. Everyone was so engaged in rethinking the way we did things, so open to challenging long-held ideas..." I think that's hugely valuable. "...and learning from errors we made. No one was defensive. Everyone was proud, not only the film, but how committed we were to the culture from which that film had sprung."

• 1:26:16David Senra?

  Remember, environment... People are more important than ideas, and yet even more important than people are the idea... The environment that you put those people into. So it's talking about, "We were committed for the culture from which the idea had sprung..." Or, "From the film had sprung. Afterward, we decided we should do this kind of deep analysis after every movie. Over the years, some were profound and others were a complete waste of time." And he says that as a great thing. And finally, we'll close here. And this is about keeping a beginner's mind and a startup mentality. When a new company is formed, its founders must have a startup mentality, a beginner's mind, open to everything because, well, what do they have to lose? This is often something they later look back upon wistfully.

• 1:26:58David Senra?

  But when that company becomes successful, its leaders often cast off that startup mentality because they tell themselves they have figured out what to do. They don't want to be beginners anymore. That may be human nature, but I believe it's part of our nature that should be resisted. By resisting the beginner's mind, you make yourself more prone to repeat yourself than to create something new. The attempt to avoid failure, in other words, makes failure more likely.