Pixar

Ben and David discuss Disney's acquisition of Pixar in 2006. Was it a success? If so, what are the criteria that made it work? What lessons can be learned for other acquisitions in the future? Sponsors: Vanta: https://bit.ly/acquiredvantaServiceNow: https://bit.ly/acquiredservicenow26Legora: https://bit.ly/acquiredlegoraStatsig: https://bit.ly/acquiredstatsig26 More Acquired! Get email updates https://www.acquired.fm/email with hints on next episode and follow-ups from recent episodesJoin the Slack http://acquired.fm/slackSubscribe to ACQ2 https://pod.link/acquiredlpMerch Store https://www.acquired.fm/store! © Copyright 2015-2026 ACQ, LLC

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

• 0:00Ben Gilbert?

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• 2:04Speaker 02

  Welcome to the first episode of Acquired. I'm Ben Gilbert.

• 2:08David Rosenthal?

  I'm David Rosenthal.

• 2:10Speaker 02

  And we're your hosts. We've, uh, we've recorded a pilot before this, but I'm not sure I'm comfortable letting that see the light of day. So this is our, our, our first real episode for the world to hear. Um, we're going to start with a little background on ourselves. We'll talk about what the point of this podcast is, and then we'll get into the nuts and bolts of the first episode.

• 2:33Speaker 02

  So I guess I'll start. Uh, I'm Ben. I'm the co-founder of Pioneer Square Labs here in Seattle, where we come up with companies and, uh, start them, prototype them, see if they work and spin them out.

• 2:44David Rosenthal?

  I'm David. Uh, I'm a principal here at Madrona Venture Group. We're an early-stage venture capital firm in Seattle. We invest in technology startups that, uh, hopefully one day go on to be an acquirer or be an acquiree.

• 3:00Speaker 02

  Yeah. So it's funny, this, this is, um, this is podcast was, uh, something David and I were, were thinking up while, um, we were out drinking and

• 3:10David Rosenthal?

  Has all good podcasts start.

• 3:12Speaker 02

  And it, we kind of came to the conclusion of like, all right, let's try and make a list of companies that have been acquired. Where was actually beneficial for the acquirer. And I think that there's, um, so many examples of, of the opposite of like, boy, that was a huge write down. That was embarrassing. Or, uh, my God, that was an interesting valuation for someone that had no revenue. We'll see if it ever pans out. And I think that, um, it's, it's worth going back and highlighting really interesting tech companies that, um, were acquired and ended up being kind of a one plus one equals three situation where, um, it was, it was actually a good investment in the future.

• 3:50David Rosenthal?

  Agree. And, uh, also interesting, perhaps what could companies operating either as startups or independently take from why or why not? Those companies worked. With that, should we hop into our first episode?

• 4:05Speaker 02

  I think we should.

• 4:07Speaker 02

  So the company that we have chosen as the acquiree is Pixar. And the company that obviously acquired Pixar was Disney in 2006. And this isn't a typical, you know, straight, obvious technology acquisition. There's a lot more to this, the storytelling aspect and the entertainment media production. It's really, really not a straight tech company when you look at it. And I think that's kind of what's going to make this a really interesting first episode.

• 4:36David Rosenthal?

  Totally. And Ben and I were chatting about this before we started recording.

• 4:42David Rosenthal?

  All of that is true, and yet I think you could view Pixar as like the first example of software eating the world. So we'll get more into it. So we're going to break this, this episode and potentially all future episodes into a couple of sections. So first, we're going to talk about the acquisition, history and the facts. Then Ben and I are each going to put the acquisition into a category. What do we think was kind of the key piece of it? And why, the rationale behind why the acquiring company purchased the, this, this acquisition target? Then we're going to talk about what might have happened had history been different? What if this acquisition hadn't gone through? And finally, we're going to assign each acquisition a grade.

• 5:27David Rosenthal?

  So let's start with the history and the facts. So January 2006, Pixar is a publicly traded company. Disney announces that they are acquiring it for $7.4 billion. Estimated roughly 45 times estimated Pixar earnings for that year. And Disney and obviously Pixar changed forever since.

• 5:54Speaker 02

  And famously, that is the day that Steve Jobs became the largest single shareholder of Disney stock, which Lorraine Powell Jobs still, still holds as part of the estate.

• 6:05David Rosenthal?

  Led to a long relationship between Disney content and Apple technology products.

• 6:12Speaker 02

  Yeah, super interesting. That's probably outside the bounds of this, this episode. But one thing we were planning for this episode, we didn't even think about is kind of ancillary benefits there of cooperation between Apple and Disney and revenue created for both companies.

• 6:23David Rosenthal?

  Totally. And so as we were, we were researching kind of the background and, and history here, one... Stat that jumped out to me that I thought was just so cool, especially since we're focusing on technology acquisitions in this podcast. Pixar IPO'd in 1995. You know what else IPO'd in 1995? Netscape. Which do you think was the bigger IPO?

• 6:50Speaker 02

  Well, you're positing the question. So I'm gonna go Netscape.

• 6:53David Rosenthal?

  You would be wrong.

• 6:54Speaker 02

  Really?

• 6:55David Rosenthal?

  Pixar was the largest IPO of 1995, bigger than Netscape.

• 7:01Speaker 02

  Wow. That's not one that the history books often refer to.

• 7:04David Rosenthal?

  And I think if I'm getting, if my memory's right, also ended up being the larger acquisition than Netscape. Pixar being 7.4 billion and I think Netscape was, I could be wrong here, but around 3 billion-ish.

• 7:19Speaker 02

  Is that to AOL?

• 7:19David Rosenthal?

  I think so.

• 7:23Speaker 02

  In the future, when there's actually people that listen to this podcast, we could totally have a chat room and they could be correcting us in real time. This can be great. But since David and I are both holding microphones and I haven't ordered stands yet, we'll leave the Googling to our fair readers.

• 7:36David Rosenthal?

  But I thought that was just totally cool, right? Like, here's this technology company being bought by a media company, much like, much like Netscape was bought by AOL, which was then merged with Time Warner. And, and, and here's this technology company that ends up being both the largest IPO in this banner year and one of the most important acquisitions of all time.

• 8:02Ben Gilbert?

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• 8:40David Rosenthal?

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• 9:13David Rosenthal?

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• 9:30Ben Gilbert?

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• 9:39David Rosenthal?

  So if you're trying to turn AI ambition into real business outcomes and make it work safely, securely, at scale, go check out servicenow.com/acquired and tell them that Ben and David sent you. So after the acquisition in 2006, Disney and Pixar, Disney Pixar, as it was rebranded, has since then released several films. I believe, let's see, the list is Cars later in 2006, Ratatouille, Wally, Up, Toy Story 3, Cars 2, Brave, Monsters University,

• 10:20David Rosenthal?

  and Inside Out. Just going on box office stats alone, so if you take worldwide box office for those films and subtract out production budgets for those films. Now, that's not the total story on profits. You know, of course, there is both on the revenue side, additional revenue from merchandise, from DVD sales, from streaming, and especially as part of Disney.

• 10:44Ben Gilbert?

  Theme parks.

• 10:44David Rosenthal?

  Theme parks. And then there's additional costs, both in the cogs for those items, but also in marketing costs, both for the film and otherwise. But just going with the numbers that we have.

• 10:58David Rosenthal?

  Publicly available. Those films since the acquisition have made just about $7.5 billion in revenue and about $4.5 billion of profit. So 10 years later, here we are, $4.5 billion of profit based on a $7.4 billion acquisition price.

• 11:20Speaker 02

  It's kind of interesting. I mean, there's tons and tons of other ancillary benefits aside, but you know, we could have a 15, the pace of their profits per film is accelerating. So you could have a 15-year payback period on the acquisition. And I think, you know, we'll kind of get into this a little bit more, but just kind of looking at the spot that Disney was in, the spot that Pixar was in, if you could go to Disney exec at the time and say, you know, it's going to be 15 years before you really start seeing profits on top of this acquisition, but look at, look at what Disney has been historically, the powerhouse of incredible animation and sort of that, the source of magic for children

• 12:03Speaker 02

  and adults alike. And kind of what happened to that since Toy Story 1? I mean Pixar had the monopoly on magic and for creating the most successful, incredible films in animation. And I think that, you know, is Disney sort of reacquiring its roots? And to me, you know, that 15-year price tag for that isn't, isn't too bad.

• 12:27David Rosenthal?

  Totally. And, and I think this would be, this is a great segue into the next section of our episode, which is, you know, how would you categorize this acquisition? You know, and some of the categories that we'd identified are, is this about people? Is this about technology? Is this a product that the acquirer is buying, a business line, or is it something else?

• 12:50Speaker 02

  It's funny, there's certainly a people element, but it's not like they were repurposing these people on something. I think in a people acquisition, you typically talk about, you know, they wanted the really smart people to go to work on existing products with existing customers. That's certainly not the case, except with one and one specific person we can call out and probably other people we don't know about in the organization.

• 13:11Speaker 02

  Technology, there's something there, but you know Pixar Pixar started by being a pure technology company and not having any, any animated films out there. They were just producing the Pixar computer with Renderman software on it. The ability for Lucasfilm and then for others to do 3D animation and that's.

• 13:32David Rosenthal?

  And I think this is, you know, before we render judgment on what category we'd put this acquisition into. I think that's a really important point that it's worth discussing. Like Pixar is a technology company.

• 13:46David Rosenthal?

  And you know, it was created as a division within Lucasfilm. There's a long history, even going back prior to Lucasfilm. But, but it really came together as an organization there to solve problems, you know, within Lucasfilm and be a technology enabler for George Lucas. And what's interesting is that like a lot of technology companies, it was then spun out by Steve Jobs and sold by Lucasfilm to Steve Jobs. And like a lot of technology companies, it started really small with what it could do with computer animation. It made short films. It was trying to push its technology to other film companies.

• 14:27Speaker 02

  Totally. And I mean, even before they were making short films, they were, they were purely that, that Renderman software on Pixar animation computer. And the, to your, to your point in starting small, like the ability for hardware to do this sort of thing at the time. If you're, if you go back and watch the Luxo Junior or the rotating hand, any of the really old Pixar animation stuff, it's so limited. And you can totally see.

• 14:50David Rosenthal?

  Even Toy Story.

• 14:51Speaker 02

  Oh, yeah. I mean, there's no faces in Toy Story. There's no human faces because it was too sophisticated at the time.

• 14:56David Rosenthal?

  People talk about big technology companies starting as toys. I mean, literally Pixar didn't start with Toy Story, but their first big hit was toys.

• 15:05Speaker 02

  Yeah. Yeah, I mean, the thing we're actually talking about is there, before the episode, is this just classic low-end disruption at play? I mean, the kind of famous story about John Lasseter is that he came to Pixar and to Ed Catmull with sort of this love for creating animation and not the technology of it, but the art of what kind of storytelling you could do with it. And I think I wrote this down, he was actually hired, Ed Catmull believed in him, but he wasn't allowed to hire animators. He was hired with the title of interface designer. And no one questioned Catmull's decision, but what John was doing was kind of on the side, exploring the possibility of doing real storytelling in this incredibly limited medium.

• 15:47David Rosenthal?

  Totally. And I think also, if I'm getting my history right, Lasseter started his career at Disney and was an incredibly passionate Disney employee. It's all he ever wanted to do was be an animator there. And he was fired because he was espousing this new technology, this computer animation, which people didn't believe would be capable of being part of the Disney way.

• 16:12Speaker 02

  It's so interesting to think about, you know, thinking about what we look at today that we laugh off as like, well, that'll never be good enough. That tech isn't, I mean, that's laughable. How could you ever take that rotating hand and rival the power of Beauty and the Beast with that? Actually, Beauty and the Beast, I don't think was out yet, but you know, Snow White or anything like that. And you can totally see how it just gets incrementally better. It gets better every time. And it's one of those things where you have to check yourself when you're thinking, well, that can't possibly be the future. Like, look at VR today. The screen door effect, the lag, the price tag, like, everything about it, you're like, that is impossible. There's no way that ever reaches mass market. And then like, you know, some of these things die on the vine, but really, if you're gonna win at some of these things, you get in early and it's a matter of time.

• 16:57Speaker 02

  And you grow with the medium and with the technology.

• 17:00David Rosenthal?

  And I think the other point, as I was thinking about this, and Pixar as a technology company... Is even with the short films, but especially with Toy Story, they embraced the limitations of the medium and yet delivered a full solution within it. You know, they didn't skimp on emotional connections within their movies, even when the technology was arguably inferior to both live action and traditional animation. They were able to deliver incredible emotional experiences. And I think those are just hallmarks of all technology companies that are operating in new spaces and at the bleeding edge.

• 17:44Speaker 02

  And it's, it's cool to think about the things that they intentionally did because they would fit well into that medium. I mean, you look at, at Toy Story or Luxo Junior, I mean, these things were basic shapes, a ball where you could easily map it, a pattern onto it that's rolling and the lamp jumps on it. It's because it's so easy to render a sphere. And it's, you look at Brave, I mean, it took them 25, 30 years to do something like Brave, where they had to do this fierce, incredible hair, or cars where they had, you know, thousands, tens of thousands, hundreds of thousands of vehicles flying around in the background, all this crazy stuff. They just, they knew that, or maybe John knew, that the team that was there early knew that the important thing was really communicating that story and picking

• 18:27Speaker 02

  whatever kind of visual representation they needed to fit the medium to still deliver that complete solution, as you put it.

• 18:34David Rosenthal?

  Yep. So that would argue that the technology, clearly a critical part of Pixar.

• 18:43Speaker 02

  Critical, but you know, that Pixar was kicking the crap out of DreamWorks. I think that the computer animation hadn't become commoditized per se, but they weren't the only ones with it.

• 18:56David Rosenthal?

  Yep. So in terms of categorizing this acquisition, so I, I think, you know, for me, as I was thinking about this, I would actually put characterize Pixar best as a business line acquisition for Disney. And the reason I say that is twofold. One, it's interesting what Disney did with Pixar and looking at that almost as a blueprint with things like what Facebook's done with Instagram and with WhatsApp and with Oculus, they kept it completely separate. And this was.

• 19:31David Rosenthal?

  For the most part, driven by, driven by the Pixar side of the house. But the studios are in separate locations. Disney Animation is in Southern California. Pixar is in Northern California, in the Bay Area. The teams are completely separate. There is no cross pollination on products, on projects.

• 19:48Speaker 02

  With the exception of the leadership.

• 19:49David Rosenthal?

  With the exception of the leadership, yes, which we can get to in a second. But really Pixar has remained its own brand and, and its own business line, quote unquote, today. So that's, that's reason one. Reason number two is, I was, as I was reading about the acquisition, there's this great story I read that supposedly is true, that Bob Iger, the CEO of Disney, realized, the new CEO of Disney, when he acquired, when the company acquired Pixar, realized that he needed to buy Pixar, with which they had a film distribution deal in the past, when he was looking at a parade at a Disney theme park and all the characters in the parade.

• 20:30David Rosenthal?

  And he realized that the characters that were developed in the past 10 years, none of them were Disney characters, all or almost all of them were Pixar characters. And that's when he realized Pixar needs to be an official, wholly owned part of Disney.

• 20:45Speaker 02

  Yeah. It is, it is interesting to think about. The, the thing that made Pixar special is this really incredible studio thing that they had going that no one else had in, in the ability to produce movies. And it wasn't, you know, when they talk about the big studios, there's hits and misses. There's, there's big blockbuster hits that they put lots and lots of money into, and they just miss. And the things that, that Pixar has put out, you know, with the exception of Cars 2, which is not necessarily critically acclaimed, like every single one is a box office hit. And nothing Pixar does sees the light of day unless it's wonderful. I mean, there's this emotional connection for kids and adults alike. And it's something where.

• 21:27Speaker 02

  You know, they have this really intense internal process where I think three or four directors over the course of their history have been fired in the middle of projects. They have this really incredible review of, you know, the kind of Pixar brain trust sitting around reviewing milestones and watching early screenings. They have talent development where if there's a young promising director coming up, they do a short first and they kind of prove themselves in the super signature shorts that Pixar does. And it's this process where, you know, when you think that, I think it's, I don't know if it's Christensen, or there's a very business school theory of the fact that what a business

• 22:08Speaker 02

  really is, is people, processes, and priorities. And it was very, very clear at Pixar. And I think that the processes and the priorities had just as much to do with the acquisition as the people did in this case.

• 22:24David Rosenthal?

  Absolutely. And then John Lasseter and Ed Catmull, the principals at Pixar, aside from Steve Jobs, went on to assume control of all of animation within Disney.

• 22:38Speaker 02

  Yeah, and you look at, I mean, what Disney needed to learn to do was not ship crap. I mean, truly, like, only put out really wonderful films. And, you know, they're not to a Pixar level yet. When things have Pixar's name on it, it's a different level of quality.

• 22:57David Rosenthal?

  Yep.

• 22:58Speaker 02

  But, you know, Frozen wasn't Pixar. That was Disney. I mean, that was Disney learning from Lasseter, Pixar, the process that they had there and what, you know, computer animated joy looked like.

• 23:09David Rosenthal?

  And how, we won't name names here. Well, I'm not even going to go to being in Seattle, but how much does that sound like technology companies, right? Don't ship crap.

• 23:25Speaker 02

  Yeah.

• 23:26David Rosenthal?

  And when technology companies go wrong, let's use Apple as, you know, a non-controversial example. There were a number of years in the wilderness when Apple was shipping crap.

• 23:39Speaker 02

  Yeah.

• 23:44Speaker 02

  Yeah, I'm sure we'll have many more episodes about Apple, but obviously the Steve Jobs thread runs deep in both of these companies.

• 23:50David Rosenthal?

  Yep. So Ben, category for you?

• 23:54Speaker 02

  Oh, it's a business line. I mean, it's processes, but it's a business line. They're, you know, this is, this is not something that they're kind of like co-marketing to the same customer segment. This is not a thing where they're having the Pixar people at large work on Disney products. This is something where they have incredible respect for the existing Pixar business and they're keeping it separate.

• 24:18Ben Gilbert?

  All right, listeners. Now is a great time to talk about a new partner of ours here on Acquired, Logora, the agentic operating system that is redefining how the world's best legal teams work.

• 24:32David Rosenthal?

  Yep. It's sort of obvious that AI is going to completely change the legal industry. I bet most of you listening have dropped a contract into some sort of AI chatbot out there. Logora took that insight and asked the question, what if you really built something with that power from the ground up for the legal industry?

• 24:49Ben Gilbert?

  So the founders did exactly what great founders do, operate with obsessive customer focus. They embedded inside a massive law firm for months. They sat with the lawyers just watching how the work really gets done.

• 25:04David Rosenthal?

  And that's how you get features that customers love, like tabular review, where you drop in a folder of hundreds of contracts and it pulls every key term into a grid a lawyer can actually work with. Logora's bet here is interesting. Since it lets each lawyer handle more complexity, any given person can increase the quality of their work and do higher value work. And this means that the pie can grow even as each individual task takes less time.

• 25:28Ben Gilbert?

  And they recently launched Logora Agent, offering greater intelligence and performance. The agent lets lawyers set an objective, then it can handle the planning and the execution and delivery of the final product. Legal teams get to maintain full control and transparency since they're still involved where judgment is required.

• 25:47David Rosenthal?

  And Logora works where you already work. You can use it within Microsoft Word while redlining or drafting. The early Logora numbers essentially speak for themselves. When they have a head-to-head pilot with their top competitor, they win 70% of the time. Logora now has over 100,000 lawyers on the platform from 1,200 legal teams in 50 countries. And crazily, they went from 1 million to 100 million in ARR in about 18 months.

• 26:17Ben Gilbert?

  Truly insane numbers. And that is the real test. Plenty of things demo well, but the question is whether a busy associate actually reaches for it during crunch time, or whether a partner trusts it before going into a conversation with a major client. If your legal team wants to check it out, whether you're a law firm or you're in-house at a company, you can learn more at logora.com/acquired and just tell them that Ben and David sent you.

• 26:42David Rosenthal?

  All right, let's move on to, I think, a very interesting segment of our show, which is, what would have happened otherwise? Let's say Disney didn't buy Pixar. Where would we be standing today? Or where would they be standing today? We'd probably still be right here in Seattle.

• 27:01Speaker 02

  I wouldn't be worried about Pixar, but I would be worried about Disney. I think that, you know, Pixar probably wouldn't have grown like it has, having a distribution into Disney's theme parks and a much more significant marketing budget behind it. But, you know, they had a, they had a passionate, passionate following, and that wasn't, there was no small following. They were grossing over $100 million each film.

• 27:29David Rosenthal?

  Well over $100 million.

• 27:30Speaker 02

  Yeah, actually, I think, I think we just looked it up.

• 27:31David Rosenthal?

  $300 million.

• 27:33Speaker 02

  And Inside Out, most recent, was, was, well, wait, profiter gross. Inside Out had revenues at, I think, 800,000, 800 million dollars.

• 27:44David Rosenthal?

  So Inside Out, which is, I believe, still in theaters?

• 27:48Speaker 02

  Some theaters, yeah.

• 27:49David Rosenthal?

  I tried to watch it this weekend on my Apple TV and I couldn't. So it's not on streaming yet.

• 27:54Speaker 02

  Isn't that weird? That is a weird period. So there's like this, this time where no one's allowed to watch it on anything.

• 27:59David Rosenthal?

  You know, total aside here. X number of years from now with X being like well, less than 10.

• 28:06Speaker 02

  We're gonna laugh at that.

• 28:07David Rosenthal?

  That is gonna be ridiculous. Like, I was talking with my wife about this the other day. And I was like, you know, when we, we don't have kids yet, but someday hopefully we'll have kids. And you know, they'll become culturally aware at some point, hopefully. And, um, you know, one day we're Jenny and I are going to be talking about television. And our kids are going to look at us and say, what's television?

• 28:30Speaker 02

  Yeah.

• 28:31David Rosenthal?

  Total aside there.

• 28:32Speaker 02

  Wild.

• 28:33David Rosenthal?

  Um, so Inside Out, uh, which is still not, you know, run its course has, uh, grossed in worldwide box office over $800 million. Had a $175 million production budget. So over $600 million in profit.

• 28:51Speaker 02

  Wow. Yeah. I mean, so there, there's, there's Disney magic there that.

• 28:55David Rosenthal?

  Yep.

• 28:56Speaker 02

  You know, we, we can't say that's all Pixar, but really I think, I think Disney was a little bit lost. Had a new CEO who had a clear vision. Um, and I think that, um,

• 29:09Speaker 02

  I'd be a lot more worried about Disney than Pixar.

• 29:10David Rosenthal?

  So what I, I'd say about this, um, I did two things. I think on the Pixar side, this really is a good example of, um, you know, the actually working in practice, the rationale that a lot of,

• 29:29David Rosenthal?

  leadership teams of acquired companies will say, which often sounds hollow, which is that going with the acquirer will give you the scale to have an impact at the level much faster and much bigger at a level that you couldn't do standalone.

• 29:46Speaker 02

  That's in so many blog posts.

• 29:48David Rosenthal?

  Totally, right? Um, but here I think it's really worked, you know, I mean Carsland. Cars, I don't know if, if Ben, if you've been to Disneyland recently. I've been twice, I think in the past couple of years. All you guys out there, if you haven't been to Cars Land at Disneyland in LA, you gotta go. It's amazing.

• 30:07Speaker 02

  I'm booking tickets.

• 30:08David Rosenthal?

  And Disney spent a billion dollars, over a billion dollars, creating Cars Land. None of that would have happened if Pixar weren't part of Disney. So that's that's that side. And then I think on the Disney side, what's super interesting is that this kicked off really, not just a transformation of Disney Animation, but a whole transformation of how they thought about their IP and their their entire film business. So since Pixar in 2006, they then acquired Marvel in 2009. And you only need to look at, you know, the Avengers and Iron Man and Thor and Captain America and all of those movies and arguably

• 30:55David Rosenthal?

  superhero fad that we've been in recently, but they've made a ton of money from that. But then Lucasfilm, a couple of years ago, and I don't know about you, Ben, but I am quite excited about this December.

• 31:08Speaker 02

  Did you buy your tickets yet?

• 31:10David Rosenthal?

  I've not bought my tickets yet.

• 31:12Speaker 02

  You know, it's interesting. They really have put together a playbook for how to take a hugely successful franchise with a big following and then people that grew up on something and just has a special place in people's hearts and really just turn it into a machine. I mean, you look at the amount of Star Wars. I mean, there's obviously seven, eight, nine, but there's there's other films that are coming out. There's new video. I mean, they've totally reinvigorated the franchise and taken the love of that fan base and turned it into something that, you know, is like a uniquely Disney asset is their ability to amplify a franchise. And what they've done with both Marvel and Star Wars, I think that Disney learned a lot from buying Pixar.

• 31:51David Rosenthal?

  And not, well, I don't know how not safe for work. We want to make these podcasts, but not.

• 31:57Speaker 02

  I think I think we can't swear. Otherwise, we will get the iTunes explicit tag.

• 32:01David Rosenthal?

  Ah, okay. Well, not, you know, F-bombing up.

• 32:06David Rosenthal?

  The creative process in, you know, in the process of doing this. And I think that's, that's something, would that have happened without Pixar, right? Like, you know, Marvel fans, I'm sure they're planning out there who would argue that it's become too commercial and it's lost the, you know, whatever, but, but that would be a small minority. I mean, the, the Marvel comic book franchises now and movies are at such a better point, I would argue than they were before the acquisition. And we'll see what happens with Star Wars this December. But like, what if Dix, what if, what if, what if Disney hadn't acquired Pixar, hadn't gone through that experience? Would they be equipped to digest Marvel and Lucasfilm in the same ways?

• 32:51Speaker 02

  Yeah, it's interesting. I mean, that, that's a,

• 32:55Speaker 02

  yeah, it's not an asset that Pixar had, but Disney trains institutional muscle in learning how to do that successfully. And that's, um, I mean, that, that's how you get these sort of one plus one equals three things where it wasn't an asset that either company had, but the process of the acquisition itself forced them to get good at a thing that would determine their future success.

• 33:15David Rosenthal?

  All right. I feel like it's time we should wrap up. Overall grade, we're going with A through F here. Disney Pixar, what's your verdict?

• 33:30Speaker 02

  Well, David, we had our choice of picking any single acquisition in history of, in the history of technology to do this. So, um, you know, I'm like looking for reasons not to give it an A, but there's kind of a reason we picked it for our first episode. So, um, thank you for the softball. I'm going to go with A.

• 33:49David Rosenthal?

  I'm going to disagree a little bit. So,

• 33:54David Rosenthal?

  and I think this illustrates just how hard M and A is, um, overall, you know, it's been 10 years since Disney acquired Pixar, of course, for all those reasons that we were just talking about. Incredibly successful, has transformed Disney in many ways. Um, no brainer that this was a great acquisition by Disney. On the other hand, you look at this financially, they spent seven and a half billion dollars for it. Now, they've probably, when you account for everything, which only the internal teams in Disney can, and even then probably not fully, they've probably made that back, but it's been 10 years.

• 34:36David Rosenthal?

  So financially, you know, and I contrast that with in 2006,

• 34:42David Rosenthal?

  Facebook was two years old at that point. And now, what's Facebook market cap? I don't know.

• 34:49Speaker 02

  Whoa, so every acquisition is unsuccessful because it does not match the growth of one of the greatest technology companies of all time?

• 35:01Speaker 02

  Let's track the public markets as a, I mean, like,

• 35:04David Rosenthal?

  I'm self justifying myself here, why I, why I'm more excited about being a venture investor than I am about being, working for M and A teams in public companies. Nothing wrong with working at M and A teams in public companies. So I guess where I'm going is,

• 35:21David Rosenthal?

  I would hope that to get an A, this would have to be, something would have to be just such a grand slam on all levels that everybody can retire and be career making. And what's interesting is that even this, which is, we picked it as the first, the first acquisition of our show, you know, this, it's hard to get much better than this on all levels. And yet, it's not totally clear that this has just turned into an incredible, you know, cash flow decision.

• 35:56David Rosenthal?

  As opposed to a, you know, investment in Facebook in 2006.

• 36:01Speaker 02

  You give it a grade and then I'll make a point.

• 36:03David Rosenthal?

  I'm gonna give it a B plus. Maybe A minus.

• 36:06Speaker 02

  We have, we have pluses and minuses, guys.

• 36:09David Rosenthal?

  B plus slash A minus.

• 36:16Speaker 02

  The thing that I think you're not taking into account, and you know, I'll acknowledge my own bias here of being just absolutely enamored with Pixar. Toy Story defining my childhood. I mean, that was my AOL screen name was BJ Lightyear. My,

• 36:31David Rosenthal?

  Going deep here.

• 36:32Speaker 02

  Yeah. Pixar has a very, very deep place in my heart.

• 36:37Speaker 02

  All that said, I think the thing that, that is not factored into the financial decision is, and actually, we, we don't really ever know what it would look like otherwise, but the long-term success and health of Disney, I mean, what would that look like without Pixar?

• 36:52Speaker 02

  What does Disney look like 20 years from now without Pixar?

• 36:56David Rosenthal?

  Well, and here's a question, which we answered in the what would have happened otherwise, but is there a Pixar land? If there's not Disney Pixar? Get Cat Mall on the phone. All right, with that, thanks for tuning in. We'll see you next time. Have a good night, guys.

• 37:37David Rosenthal?

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• 37:44Ben Gilbert?

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• 38:27David Rosenthal?

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