Ed Catmull, Pixar: Keep Your Crises Small (with transcipt)

Source: Coding Horror

Ed Catmull's talk about Pixar, about problems they faced, about people and ideas. Priceless.



Transcript:
Well, I have a fun job. But I'm not going to talk about the fun parts. I'm going to talk about the problems that we've had - about the hard parts.

I want to start with two questions. The first question is "Why do successful companies fail?". Now, I grew up around this whole industry of computers, and - as it went through this remarkable revolution - and saw a lot of companies come and go. But there were two that stand out in my mind.

One was Evans & Sutherland, which is located in Salt Lake. This was one of pioneering companies in computer graphics, and they had the lead. They had more knowledge and expertise than anybody else. And they were in the best position to take that knowledge and go to the next level as a company. But they made some decisions in which they lost that lead. And a new company leapt to the front and that was Silicon Graphics, founded by Jim Clark who incidentally used to work for Evans & Sutherland. And SGI had this remarkable run. They built the graphics machines that was used throughout the world for a variety of visualization graphics techniques. A lot of software was built on it. The revolution in computer graphics in the entertainment industry was build on their machines. They had everything. But they made two serious mistakes. And the things about these serious mistakes was, there were several people on the outside that took a look at that and say "That's a really bad idea. You shouldn't do that". Nevertheless, they did it, and they lost the lead. They lost the lead to NVidia. Incidentally, made up of former SGI employees. And they did some remarkable things. And they, with ATI, are still out in the lead.

But the company that had that lead was SGI and all the knowledge. Now, the people had said they're making the wrong decision. In some ways, they're like Cassandra, where you're telling the truth, but the people don't listen. And Cassandra was cursed with being able to see the future, but not having people believe her. And it felt like that kind of situation here.

The reason I start with this question was, at that time, while all this is going on, I'm with this struggling company, and we're trying to figure out how to make things work. And we start off with a company. It's just hard. And it was pretty - a very difficult task. But I'm thinking, "If we're ever successful, how do I keep from falling into the trap that these companies are falling into. And it's not like they blindsided by something which catches them totally off-guard. This stuff is really pretty obvious. They're missing the obvious.

The second question relates to a dinner that I had with a studio executive - the head of a studio - a couple years ago. And he said at that - actually, it was a lunch - he said at that lunch, "Our central problem is not finding good people. It's finding good ideas."

So that was an interesting expression. So as I gave talks for the next while after that, I would pose that question to the audience and ask them whether or not they agreed with him. And what I found was that, in every case, the audience was split 50/50. It's really pretty astonishing. Didn't matter whether they were students, experienced business executives, artists, high school teachers - they all split. Some thought it was right; half thought it was wrong.

Well, let me come back to that second question later. So now, let me step into the store, which is, in '91, when our company was about five years old and went through the various hells you go through when you're starting a company. We finally got our chance, and we entered into a relationship with Disney to make the first computer-animated film, "Toy Story". And at that time, we got a few things right. We did have a culture where the artists and the technical people were peers with each other. They socialized with each other. They each thought the other was world class. The compensation structure was the same. They were allowed to intermarry [laughter]. If there are problems - and there were always problems - people felt comfortable about coming in and expressing their problems. You couldn't fix every problem, but it's important to hear them.

The other thing we had was something which we called the "Brain Trust." We had a certain group of people who were very remarkable at telling stories. And part of being remarkable was, not only that they were funny and focused and good at storytelling, but they had complete trust in each other. And they were very often - what you might call "brutally honest" - except for them, they didn't think of it as "brutally honest." They thought of it as "necessarily honest," and it was always taken that way. It was never a matter of ego or putting somebody down. It was always about the story. And therefore, you could say something hard, and it was taken in the right spirit. And given that kind of camaraderie in the key group of people, it is just gold. And it's an amazing group. And to this day, it's an amazing group of people. So we got that right.

We had a review process that was actually a combination of some things that Jonda learned from Disney, along with things that were at ILM at Lucas Film. But it was unique because of that combination. But what it amounted to was that, in the process of making the film, we reviewed the material every day. Now, this is counterintuitive for a lot of people.

Most people - if you can imagine this - you can't draw very well, but even if you can draw very well, suppose you come in, and you've got to put together animation or drawings and show it to a famous, world-class animator. Well, you don't want to show something which is weak or poor. So you want to hold off until you get it to be right. And the trick is, actually, to stop that behavior. We show it every day when it's incomplete. If everybody does it every day, then you get over the embarrassment. And when you get over the embarrassment, you're more creative. And that's - as I say - it's not obvious to people, but starting down that path helped everything that we did. Show it in its incomplete form. There's another advantage to doing that, and that is, when you're done, you're done. Now, that might seem silly, except that a lot of people - they work on something. And they want to hold it, and they want to show it, let's say, two weeks later to get done - only, it's never "right". So they're not done. So you need to go through this iterative process. And the trick was to do it more frequently to change the dynamics.

Also, as we started up in making this film, we brought in a new group of people, because we had artists, we had technical people, but we never made a movie before. So we didn't have a group of people who were really production managers. They were the ones keeping track of things, making sure that the material went from place to place. You got, literally, millions of things that are going on. There's a lot to manage, a lot to take care of. So you needed people who thought that way and were experienced with it. So this new group coming in from Los Angeles. So, we finish the film, and the film was a big success. It went way beyond what anybody thought. It was a great start to this new field of computer animation. And we were building company. We went public at that time. We went public one week after the film opened. And it was the biggest IPO of the year, I think. And we wanted people to see our product before they invested. And it just went well; it was a great, whirling event.

But at that time, or just prior to going public, we had to start on the next film. Because you can't just have one product, and that's it. You've got to keep coming out with them. And we're very aware there's a "second-product syndrome" where you kind of overdo it in the second one, and you blow it. So, we got somebody working on the second one. And as the team started to roll off the Toy Story, we began to put them on the new film, which is White Sock. And so, then we met with the artists and said, "This is great. Let's move on to the next film." And we met with the technical people, and they said, "Great, we're ready for it." And we met with the production managers. They said, "What?! We don't like it here. We want to quit." So, we undercovered this major problem. They felt like they were second-class citizens - felt like people treated them second class. So I went around and asked people, among the artists and the technical people. And sure enough, they thought the production managers were second class [laughter]. It's all true. They thought they were , that they were getting in the way of getting the job done. So we had this major disaster.

So the first question is "What was the problem?". And then, I want to come back to the deeper thing for me. Making a movie is a very organized activity. And so, what was happening is, because it's so organized and there is so much stuff going on, you can easily lose control of it. That we had this very hierarchical structure in place. And the carious people there wanted to make sure that all the information went through the proper channels. Because it went up the hierarchy and down the hierarchy, so that everything happened in the right place. And that whole notion of controlling that information flow pissed everybody off. And yet there was this feeling you had to maintain control. The key concept - we realized at that time - was that we had confused the organizational structure with the communication structure, a very common thing that happens in a lot of companies. They are different. Yes, you must be organized; things must happen in order. You can lose control. But communication needs to be able to happen between anybody in the company at any time. It really is, you know, it's peer to peer, right? It's the notion you can go to anybody else. Yes, let your managers know if you have to go anywhere. An open-door policy frequently means you can go to the head of the company. But open-door policy, to us, means anybody can go to anybody any time. Very important. And once we actually broke that down, things changed dramatically.

The other part of that, though - and this is the harder thing for people to realize - and that is that for managers the one thing you hate as a manager is to be surprised. So you don't like to walk into a meeting and find out something for the first time in your meeting. In fact, it's kind of a sign of disrespect if you weren't told before the other people in the meeting. And if you've got everybody thinking that way, you got a problem. So one of the tricks for a manager to learn is, you don't need to be the first person to learn. Don't get upset. Get over it. It actually doesn't matter. The fact that somebody else talked about the problem ahead of time is a good thing - not a sign of disrespect. OK.

So the other question, which was the difficult one for me was "Why had I missed this problem?" We're off making this film, I was having a good time and I'm not looking for it. I thought I had a great relationship, open door and everything like that. Totally missed it. Well, part of the reason was that there was a group of new people that came into an existing structure. They accepted it. They were used to reporting to producers. And if you didn't like it, well, you're only on the job for four months, you just put up with it and you'd move on. So there was no reason for them to complain. Just put up with it. The other problem though, was that they really did like the fact that they were working on a groundbreaking film. It was very exciting to be making history. They loved that. They loved working for John Lasseter. So I realized that, because they loved a lot of things, they were willing to put up with stuff that they didn't like. And this is one of the fundamental problems, I think, with companies. And that is that "success hides problems." It happens to a lot of us in our personal lives with our health. When we're healthy, there may be a lot of things that are bad for us, but our health lets us get away with doing stuff that's bad for us. Then years later, the logic of that time doesn't hold up, but we do that. It happens with a lot of companies. It happens with state, local, and national governments. When you're healthy, you've got the resources, you don't need to address the problems. And when I look at a lot of the companies - I look at SGI, and so forth - they were actually very healthy, and they're very strong. And the problems were there, but they didn't have to look at them at that time, because they lucked at success. And they were successful at that time.

They let that get in the way of diving deep and finding the problems. So even though I was kind of aware of this problem, I'd been caught by it too. So just being aware of it wasn't enough. So the next stage for us, while we're making Bugs Life is, we started to make a sequel to Toy Story. Now, the logic, initially, which came from Disney was, if you have a successful film, you need to have follow-on things to keep the characters alive. At that time it was to make direct, video sequels. So we picked a couple of animators to give them a chance to direct this picture, put together a team, started to make this film. Well, right away, we ran into a problem. And that was that one group was making a direct video sequel, which was essentially like B or C level of expectation and quality.

And the other team - the A team - was working on A Bug's Life, where you've got the very best people and the expectation is, "We have to match Toy Story." Well, this wasn't good, we realized. You've got two different standards of quality under the same roof? We realized, "This actually isn't good for our souls to do that." We shouldn't be thinking that it's OK to be doing something which isn't great. So fairly early on, we actually stopped that. We decided to make Toy Story a theatrical release. So, we decided that, OK, we've got to go for the A quality. Now, incidentally, when you make a film - when you start to make it - it isn't very good. When you put the reels together and you get the story, if it's really good, you're almost done, right? But when you're starting, you're not almost done. So you've got to go through a lot of steps to get there. And what you want to see is every six months or three months, whenever you do a reel, you want to see a step forward. And sometimes you make a step back, but in general, you want to take that step forward. what we found was, this was sort of hovering around not being very good. And just lots of issues weren't right and the directors didn't get along and the producers were having problems and that wasn't very functional team. So I went to John, who's focused on Bug's Life, and said, "Well, we got a problem here." He said,"Don't worry. Trust the process. It'll get to be better." No, it wasn't getting any better.

So, in 1998, A Bug's Life is finished. And there was a worldwide tour, and John went on that tour. But he knew that, when he returned, that he then had to address the issue of Toy Story 2.

Now, Toy Story 2, as he returned, had to be delivered in nine months, all right. So it was already a tight schedule for all they were. So he came back. He watched Toy Story 1 before he came in to work from this trip to Europe, came in to watch the reels. He walked in and said, "You're right. We've got a major problem." So basically, we took the A team - we put them on the project. We went down to Disney and said, "The film isn't good enough. We have to throw it away and start all over again." And the answer was, "Well, actually, it's better than you think. We think it is good enough, but more importantly, it's too late. You literally do not have the time between now and then to deliver it to redo this film." So we said, "It's not good enough, and we know we don't have enough time, but we're going to do it anyway." So we came back. John told the story crew to take a good rest over the holidays and come back on January second. We were reboarding the movie. So we then started - we now had eight months left.

We then started this incredibly intense effort to get this movie out. It was boarded quickly. It was pitched to the company. It was an electrifying pitch. We had a lot of overachieving people working for overachieving managers to get the movie out - worked brutal hours with this. When I say "brutal", we had a number of people that were injured with RSI. One of them permanently left the field.

We had, actually, a married couple that worked there - and this was in June, so it's summer. And the farther was supposed to drop the baby off ad daycare, but forgot - don't know why. But he came and left the baby in the car and came into work. and given, you know, as the heat was rising, the mother asked about - and they realized - they rushed out, and the baby was unconscious.

The right thing was then, they out the ice water on the baby. And the baby ended up being fine in the end, but it was one of those traumatic things like "Why did this happen?" Are we working too hard? So when I say it's "intense," I mean it really was intense. So but the film was finished on time, and it was a huge success. Many people think that it was better than the first one. But we learned several things from that.

One, I should say on the activity of working so hard, we adopted new ways to the way we work in terms of the RSI. We hired a full-time ergonimist and a dock nurse coming in twice a week. A masseuse is available all the time. We limit the number of hours that people can work. There's a whole number of things that we instituted and really got people to take this seriously. A pilates and yoga classes, soccer - everything - just to keep people physically fit. They realize they're in for the long haul. The reason I say this, though is cause it's kind of a side note, but it turns out that this program costs money, which of course, we're going to do anyway, but what we found after we did this was that the injury rate dropped dramatically. The insurance company lowered our premiums and the reduction of premiums more than aid for the entire cost of the program. I say that because some people say they can't afford this kind of stuff. And I think the answer is they can be affordable and should be.

On the issue of the film itself, it wasn't working. But what was it that wasn't working? Because it turns out, the theme of the story was actually the same. It was a toy that gets stolen by the Toy Collector, and ultimately, has to make this choice. It wasn't working as a movie. And the reason was that the movie's coming out from Pixar and Disney, so you know that Woody's going to end up with his original family. If yo know what the end is before you start, you don't have a movie. So you need to have people believe that he has a real choice to make. And so, when they came back and reboarded it, that's when they add Jessie's Song, who talked about her growing up and she was the darling of this little girl, but the little girl grew up and moved on. And that's really what happens. And that was her message to Woody. She says, "Yes, you may like the situation you were in, but life goes on. It changes. You can't hang on to that." And that's something that's true, right? We all know that. And because of that, we can relate to why there's a hard decision that has to be made. And so, the things that are put in the movie are to get it so that it relates to decisions that we all have seen or we can appreciate and that we can therefore enjoy as a movie. And that's what turns it into a real movie instead of just some cheap follow-on. So, I come back to the first question: "Which is more important?" The, "What's the central problem?" - finding good ideas or finding good people? And the answer is very clear: the idea was the same. If you have a good idea and you give it to mediocre group, they'll screw it up. If you give a mediocre idea to a good group, they'll fix it, or they'll throw it away and come up with something else.

The other thing to note is, there is a confusion, I think, that the people have and is - the books and press kind of work this way in that we think about "an idea." When we think of ideas for movies, we think about ideas for products. and it's usually thought of the some singular thing. But the reality is, there successful movies - as with all successful products - have got thousands of ideas. It's just all sorts of things necessary to make it be successful. And you have to get most of them right to do it. And that's why you need a team that works well together.

Now, we had a development department at the time, and our development department was structures just as it was with other studios. That is, it's a group of people looking for ideas to make into movies. And as we went through this, we realized, "We're thinking about it in the wrong way." The goal of development is not to find good ideas. It's to put together teams of people that function well together. And that change just altered the way we thought about making movies. And to this day, this development department is loved by the directors, because it's a support group. It's not somebody telling them what to do. It's not a gate. It's a support group. the directors - because we're a director-driven studio - are the ones who are responsible for the movie and everything else is to support them. On the way, we measure progress. It's how well that team gets together. Because initially, the films they put together - they're mess. It's like everything else in life. The first time you do it, it's a mess. And sometimes it's labeled, "well, the first time it's a failure," but it's not even the right word to use, right? It's just like you get the first one out, you'll learn from it. And the only failure is, if you don't learn from it - if you don't progress. So the way we measure it is like, "Is this team functioning well together?" and it's the thing that's never let us down.

When that team functions well, they will succeed. When things are going wrong, they will fail.

So for me, Toy Story 2 was the defining moment for the studio. Our third movie was our defining moment. It set the way we think about things and still do. You know, around this time, we were successful - a lot of people were jumping on the bandwagon. One of the unfortunate consequences is that 2D animation in this country was actually shut down. They thought the audience lost the taste for 2D, and they just wanted 3D. It was all nonsense. It has nothing to do with the technology. It had to do with the story.

But, unfortunately, people like to copy the wrong things. Now, people do copy things. And it's bizarrest thing, because copying, in some ways, is a form of learning. So you say, "Well, I'll learn from what everybody else did. And then, I'll copy that." But, in many respects, it's shallow. It's sort of like, if you think about movies, you know, sometimes you see people do a remake of a movie. But you notice, they always remake good movies. And rarely do they beat the good movies. But the fact is, there are thousands of movies out there that are actually "great idea," but they're poorly executed. They should be remaking bad movies. Or does it happen with product?

The ones that do better aren't those that just copy somebody else's good product. They actually take the thing that's going wrong and fix that. All right. That's the better idea. So anyway, what we found was, all of a sudden, everybody is trying to copy what we're doing. You know, they could copy the technology, but they couldn't copy the process we were using to come up with the story. Now, even though - we have this great Brain Trust, though, and a lot of experience and learned all this, things didn't get any easier. We kind of hoped, at some point, you'd get under your belt, and it gets easier, but it didn't get easier.

So we instituted a process in doing postmortems after every movie, trying to do a deep analysis. The first postmortems were very successful. We worked very hard to make sure people were safe - they didn't get shot for pointing out problems. And everybody got a lot out of them. They valued them greatly. So we're off to a good start. But then, as you go on to the next postmortem, people began to game the system. And it turns out, people know the value - they know they should do them - but they don't like to do it. So why don't they like to do the postmortems. Why don't they like to do the analysis. Well, they're kind of tired of working on something for three years. They don't want to think about it anymore. Some people are defensive. Some people feel that one of the things they want to do in these meetings is make their team feel good. "Look what we did!" So it's not really an in-depth analysis. And for us then, the task is to keep pushing this, because unless we do the in-depth analysis, we will always go for the easy thing. Because again, it's when you're successful and the film goes off right, you kind of like to stop at that point - you sort of bask in it and not dive deeper.

So what we found is, we have to change the way we do the postmortems every single film. Because the next film, they'll game it. But if we can change it in the right way, then it will work. So, the latest thing we're doing until it gets gamed is, we're asking them to pick, from their process, the five things that they would do again and the five things they wouldn't do again. We try to get both to get the balance. What we're really interested in are the things that they wouldn't do again. but you try to get both out there. And the other - and this is a fairly important one - is to get a lot of facts about the process. When you put the facts up, and you factor it in, it actually stimulates discussion. And it's those discussions which are very valuable. You come out of that - we have a new theory about how to do things. And we would get it - so we'd come up with a new way of doing it. And we'd get that every time about two-thirds right and one third wrong. And you never know what the mix is going to be, but roughly, it's like, one-third of the stuff you try to do is just bogus, because you called it wrong, but that's OK. At least you got two-thirds right.

So let me summarize a few of the things we've learned. On is the constant review. The second is, it must be safe for people to tell the truth. Third is that communication should not mirror the organizational hierarchy. People and how they function is more important than ideas. And do not let success mask problems. Do a deep assessment. Now, having said those things, because it's a part of the culture of Pixar. And well, there's another problem. So let me set this up by discussing another discovery. Early on, we came to believe that the story is the most important thing in our process - it led our decision-making process.

and so, as we had a lot of different polls, we'd come back to his driving principle, "It's the story that counts." And we thought this is one of the things that made us successful was this realization. And now so, having said that and we would say that and we would tell people about it.

And we made all the sacrifices for it. And then, I discovered - as I was listening around - that studio says the same thing. Everybody says "The story's the most important thing," even if the story was drivel. It might be true - in fact, it is true - but it doesn't affect behavior. Now, when I say "story is the most important thing," I think the analogy is probably "quality is the most important thing." It's one of those things that's true and you agree it's true and you say it. That doesn't mean anything. Now, when I first started Pixar, I came from a pure technical background - I had to learn a lot about business quickly. And I hadn't gone to business school, so I just read a lot of books. And there were a few bits and pieces, but I got to say for the most part, I didn't get a lot of traction with them. Tried a variety of things. So I said, "Well, maybe the problem is, I got to get to the essence of them." So there's this service that gets the summaries in business books. So I tried that, and I read those. That was actually an amazing experience, because in reading the essence of the books, I realize they were content-free[laughter]. So I thought, "Well, what's going on here? Is it the fact that the book doesn't have any content?" - which is probably true in many cases - or, another thing is - "Is it that you can't take some of these things and reduce them in a meaningful way?" - which I suspect is also true. I ran into a similar thing. This just happened a while ago. It's similar to "the story is most important thing." It comes right out of the world of architecture. And at that time, we were looking at building a building. Actually, it was just this last year. And I know there's some buildings down there which are abysmal. They're just awful buildings. And so, I started talking with our building person up at Pixar as we're coordinating to get this built, he explained to me the concept in architecture, "designing from the inside out" as opposed to "from the outside in." And "outside in" is the bad one that you get the look of the building, and sort of that dictates what you're doing. You end with poor buildings. And "inside out" is where you think about the functions, where people work, and that sort of dictates things, and you try to make it look good from the outside. So, in that world, "inside out" is good, and "outside in" is bad. So, then I met with an architect who was responsible for one of the buildings. And he used the phrase, "If you design the buildings from the "inside out," but the building he designed was a disaster. So I realize, "Oh, it's the same thing." The phrases important in this community - it just doesn't have any effect on behavior. So once - and the principle is - once one can articulate an important idea into a concise statement, then one can use the statement and not have to have the fear of changing behavior. And I just see this over and over again. So it's like, I can summarize some of these things, but the real issue is, "What do we do?" Not even what we say about it, what are the things that we do? Every product that we're making has got to be original, which implies that we can never repeat ourselves.

Now, this is - to me, it's an important thing - because a lot of people in Hollywood don't understand that. If something is successful - if you've got Star Wars or Shrek or whatever, then basically, "Let's do that again," right? We'll try to do the same thing again. But you can't think that way with any products. Everything is new and original. And therefore, our way of dealing with and solving the problems has got to be an original. So the secret is, we have to keep on digging deeper and deeper and knowing that we're always missing something that's important. So let me return to the first question. Why do successful companies fail? For that matter, why did Golden Age is end? I do believe that organizations - human organizations - are inherently unstable. They will fall over, and you have to work to keep them upright. But they fall slowly. Most people don't notice it. They let their success blind them. They don't see it's falling over. The falling takes place slow, but the collapse is quick. You have to do constant assessment. You have to look for the hard truths. Mentioned Cassandra before - it's the Greek myth. And again, she's cursed with seeing the truth, but nobody will believe her. I don't think the Greeks had it right, actually. I think the curse is on the people that don't listen, right? We have to be the ones who are looking for it all the time. And when we hear things evaluate it, "Is it right?" I think in the movies - in our process - we have various crises, but there are two fundamental kinds of crises. One is that you don't like what you see. So you have to make changes. Now, the fact that you make changes is not in and of itself a crisis. That's just hard work. What makes it crisis is that there are a lot of people with vested interests and with positions. And you've got to actually rearrange things, and it's people butting up against each other. And that's a hard thing to do. It's an emotional thing to do. But you do that, and you end up making a better film. The second kind of crisis is, you release the film, and the audience doesn't like it. Now, at that point, it's too late to do anything about it. But the difference between the two crises is that the first one is self-imposed. And that's the important part.

Now - and in this talk, I've focused on our problems, and the tone might be a little downbeat on some of this, but I haven't talked about the fun part. but this approach in thinking about it always diving deeper and questioning, has led us to assemble the best people in the industry.

It's the most extraordinary team I've worked with. We are in this extraordinary building up at Pixar that it's one of the greatest places to work. we have a lot of fun together and a lot of laughter. and our job is to keep it going. Thank you.

Q&A:

Q: You mentioned that Silicon Graphics made some crucial mistakes, what were they?
A: In my opinion was, they bought Cray Computer, all right? The second one was, they came out with an add-in PC board, and it was not successful. They reached the conclusion that it was not a good idea, all right? Rather than saying, "The first one is not successful, what should we do to make it successful?" Because that, basically, is the way the whole industry is structured now. And it's not taking the information they learned from that first failure, if you will, and turning it into a success.

Q: How do you document this? And how do you make sure that this knowledge that you're gaining is actually turning in to something practical? Was there somebody documenting this and writing down the process to work on, or how would you do it?
A: Honestly, in all of our meetings - whether creative or postmortem - we have notetackers. And they're staff members, but they're really good. They just keep track of everything. The second thing is that the people - in preparing for it - actually get a lot of information. It's the people in charge who go through the process and, thinking through it, get a lot of their information. And the people who are then presented to are frequently the leaders of a follow-on film. So there's a direct hand-off in communication. And just having the discussion surfaces a lot of issues. So there's a variety of things. Excuses why they don't do it are frequently like, "Well, I've already started the next process, so it's too late. The postmortem happens too late for me." So there are things like that, which get in the way, in addition to people not wanting to do it. So for me, it's saying, "Okay, we all know it's good, but it's like your medicine, you know? You've got to do it. Or actually, like your vitamins - it's something you take. You need to do it."

Q: You talked about collecting facts, so how effective or ineffective [inaudible]
A: The process of gathering the evidence is mixed. That is, we're fairly good at it. And we're getting better at it, but there are a number of times you haven't kept track of the detail. In general, when we actually gather the facts and we present it, then the reaction of most people is like they're just fascinated by it. Because they're flying by their gut, which is pretty good, but there are things they missed that the facts show. And people don't let facts override judgment, but it actually is - it sometimes gives you pictures you can't see otherwise. So it's very well-appreciated at Pixar. And we've got - in fact, there's a graduate from Stanford University, Alori Organi, who's brilliant. And he was extremely good at taking facts and teasing out important information. And you present that information in really concise ways, and just - it's things that people didn't see before. So the fact they see that means they want to participate, and it helps them commit to gathering facts in the future. So it's a very successful way of working.

Q: So second question that you raised, finding good people vs. good ideas. I think they kind of go hand in hand. So have you really reached the conclusion that they really should go together as opposed to one vs. the other?
A: Where do the ideas come from? The reason of phrasing it that way - because you essentially need the new and the fresh ideas - is, what you're doing is giving credit and camaraderie to the team of people. You can't give that to an idea. And what you're trying to do is, have the people work well together. So I'd much rather say, "The people are the important thing, and they're going to come up with the ideas." If I say, "The ideas are the important thing." It's like, "Okay, what do you want to come up with?" You know, you have to support them. So that's why I do put the people first, because the ideas are a process that result from people working together. I mean, the result of people working well together.

Q: Two quick things. First, is there any way to share the Pixar process with [inaudible]? The second thing is, how do you track audience? How do you segment and track audience interests, and is that something that changed and evolved over time as you're doing these films?
A: Well, on the first question - oh, God, I wish - no actually, I do believe there is a notion of self-assessment, which is unfortunately lacking. I think one of the things, if I look at the left and the right, fundamentally, they actually don't trust people. The thing I like about the center is that it's more based on trust, not that mistakes aren't made. When I look at the extremes, it's like, "We're going to impose something," and it's not a trusting mechanism. And I think the notion of self-assessment is apolitical. It doesn't matter whether Republican or Democrat. Some people sort of get the notion of "honest assessment," and some people don't, because they've got an agenda - you know - and we all know that. And we see the results. And we talk about - so when the golden age is in, even at the national level. Are we guaranteed that America will be great in 200 years? There are no guarantees. We have no guarantees any company will be around. You know, all of it requires constant diligence in the thought process, which is to say, we have responsibility to make them better. As far as heading for an audience, we don't target a group - in particular, we don't go after kids, all right. It's a bad idea to target films for little kids. Two reasons. One is, it essentially is talking down to them. And if you talk down to them, they don't like it that much. And for adults, it's very boring. The truth is, children live in an adult world, and they're used to hearing things they don't understand. So our approach is, we want to make movies that we enjoy. There's a physical humor and physical comedy that comes from acting from animation that kids do enjoy. So there's a thing that they do like. And obviously, we don't put in things into our movies that would offend families or their children. But we write the dialogue and the story for us. We want them to be meaningful to us. And that's how we think about it. We will do some late screenings after the story is fairly well-along. Partly because, if you've seen a movie over and over again, you actually lose perspective on it. So sometimes you just need that somebody who's never seen it before and you just sit there in the room. and it sort of open your eyes. You don't even record anything. You just see things that are just different. And that's more of the way that the feedback works.

Q: [inaudible] evolution company writerband to a service system. It looks like a brilliant move now, but I'm wondering ten years ago, was it - when you try to transform a company and the culture, was it as obvious a decision as it turned to be?
A: Well, when we formed a company, we spun off from Lucas Films. And initially, we sold a hardware product, which is an image computer. And that was rough. That's my reading all the books. And I called Jim Clark, the head of Sun - Scott Bernelli - for advice. And it turns out that well-meaning advice, but it turns out, it was the wrong advice, because it wasn't appropriate for what we were doing. I didn't know enough to start of figure some of this out. And we were - it was hard - and we got into the software business. We then did the RenderMan software, and we started doing commercials. But I got to tell you, we kept losing money. It didn't matter what we did. The one nice thing was, is that, our investor was Steve Jobs. And now mind you, in one sense Steve is - he's not known for being patient - but the reality is that he was patient with us. He was funding our education. And so, by the time they got the chance for the big one, which was the movie, we'd been through a lot. We had bonded together as a team. And he funded that education, but then it came back in spades, because we worked together with him as a team to build this rather remarkable place. And it was really cool, really, to have an investor sort of understood what we were doing and what we were going for, which really helped change the industry. So, we moved over into filmmaking. So we're actually not in service anymore, except for, we do still sell RenderMan. So it's just really nice business. It's - almost all the special effects you see in movies are using software that we sell. It's the only piece of software that we do sell. We don't sell any of our other animation software, because we think there's a certain advantage we have. but in this case, we like the fact that there's an industrywide standard.

Q: [inaudible] Successful process of telling stories, that back then you worked with animated actors instead of real, live actors. And where do you see the industry heading?
A: Well, when we make films. The question is animated actors vs. "live action" actors. The characters in our films are really a combination of the writers from the story team putting it together, the design, and the animators from the physical acting and the voice of the actor. Since we pick and select actors, we've got really remarkable voice. It's really that collection that creates a character. And it's just this part of the animations, which is different than live action. The time scale is different; the way that it's put together is different. And in both "live action" and "animation," you can also do it badly and you can do it well. It just depends upon talent.

Q: The Pixar was a Lucas spin-off and obviously there have been other very successful Lucas spin-offs like PhotoShop and DigitalDomain and Telltale and others. What is it about Lucas veterans that makes them successful entrepreneurs? And do you see the same characteristics in Disney entrepreneurs?
A: Well, the - George Lucas was really remarkable in that, having produced Star Wars, he believed that bringing technology into the industry would benefit it. And so, the job that I was given when I came in to Lucas Films in 1979, was to bring high-technology into the industry. So then, digital audio, video-editing, computer graphics and games. So nobody else was funding it in this industry except for George. So I was able to go out and hire the best people in each one of these areas. So that was a great activity to be engaged with. Now, in the end, it's a filmmaking company. And we sort of like this hotbed of ideas and good people. So there's some spin-out from that. So this was a computer division. Within ILM, they didn't actually spin out other companies. It was actually people who - it's because they were successful that some people were stolen away to start competing companies. But it wasn't as if an island had spun them out. And in the case of PhotoShop, the original one was written by John Knolls, who is the Knolls brothers, one of whom is still there and is a sub-tech for making films, a rather remarkable one. But it was early sold off to Adobe. And it's big changes actually been through Adobe. But part of it is, there's something about the environment - where you've got technology and art together - that's a great mix. It's a nice place to be. And if you think about it - and mostly we've all thought about this - because they think of films like the old fashion. But when Walt Disney started off back in the '30s with this, it was a technological revolution. Films were new, color was new, sound was new. He was the first one to put sound in there. He was the first one to put color. He locked up Technicolor for awhile. So there were a lot of things. He was adopting every technology as it came along. And that mix of the technology on the artist provided - or made this environment where a lot of cool things were happening. And you look back in the past, and you sort of focus on the art without realizing, "What was the environment that made that?" And then, over a while, that environment sort of went away. And then, the new environment basically picked up at Lucas Film, and then at Pixar, where there's the mix of the artist and the technical together. And now, realizing that and seeing what had happened then and what happened now, it's very important for us to keep the technology changing. Keep it mixed up. Sometimes the individuals don't always see that, when they look at it from their point of view, but you have to look at it as a whole ecosystem and having that mixture together. Sort of like what a university is supposed to be, right? A lot of things happening in one place to stimulate you to think about things in new and innovative ways. All right, good.

Q: Could you have successfully managed Pixar without your technical background to the success that it is today?
A: Well, I don't know. I always look at Pixar as really having the combination of a variety of people there. I brought one way of looking at things. John brought something. Steve Jobs brought something. And there are various other people who brought something to the mix. And it was the balance. And there are things that could have gone wrong in that, and then, that wouldn't have happened. But you know - and none of us even point and say any of us did it alone. It really took all of us together to do that. So, I can't separate out my background and say, "Well, what would I have done different?" I am who I am, and each one of those is different in a complementary way. We're very different from each other, but that difference is our strength.

Q: The naive sort of assessment of selling RenderMan is that you're enabling your competition. Can you explain kind of how you look at that internally and why you continue to believe that that's the right strategy for the company, and why it helps to raise the level of excellence at Pixar?
A: Well, with any piece of software like that, it requires a great deal of work to keep it in good place. And we have a lot of things going on. There are certain things that we actually invented in the first place, but now, we buy commercially. When we made the first paint program, the first composited, right? But, in fact, we don't do them. We do them as commercial products. It is to our advantage to have an industrywide standard. If we didn't sell it, there would be another one. And then it would be a pain in the neck, because we would be different than the rest of the studio in something that needs to be "across the studio" and now "across two studios." So in that case, we're better off having an industrywide standard. For me, the technology is part of the culture. It is a - we have some competitive advantage in several of the things we do with technology, but I do think that the biggest competitive advantage is the way we work - we have the technology and the creative work together. The things that have been talked about is actually the thing that, is somebody hears it, they'll probably copy the wrong piece of it. So like, I can tell them what's important. It won't matter, you know? They'll just say, "Oh, I understand that. The story is the most important thing." And that, in fact, is interesting. If somebody else figures it out, then they'll make good stories. We're also in a funny industry where the competitors are competitors for the weeks that you're out, and the rest of the year, you actually want them to do well. If people go to movies and have a bad experience - a competitor's movie, have a bad experience - then that sort of takes away their enjoyment from going to the movies. If they have a lot of bad experiences, they won't go to movies. If they go and have a great time, then they'll want to go more. So we want our competitors to do well, except when our movie's out. Then they can burn and die. [laughter] Thank you.