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CFO's Book "To Pixar and Beyond"

Updated: Nov 16, 2023


Steve Jobs is synonymous with the incredibly business success under his leadership at Apple. However, perhaps equally impressive but less talked about, was the turnaround success accomplished at Pixar under his ownership.

A new book by the former CFO of Pixar (Lawrence Levy) called, “To Pixar and Beyond: My Unlikely Journey with Steve Jobs to Make Entertainment History,” describes the remarkable journey at Pixar from near-death to triumph.

CFO Magazine recently highlighted some of the more interesting passages from the book. Levy was the CFO for Electronics for Imaging in 1994 when Jobs recruited him as CFO for Pixar. Here are some tidbits from the article:

  • At that time, Pixar was losing money and was kept alive only by cash infusions of almost $50 million by Jobs.

  • Despite Jobs desire for quick IPO, those were a pipe dream as the various revenues streams were shaky at best and unlikely to be attractive to public market investors.

  • For example, their biggest sales driver was a very high-end graphical imaging piece of software called RenderMan. However, the market and demand was so small a very good year amounted to only a thousand copies sold at $3,000 each for a total of $3 million of annual sales.

  • The company also produced computer-animated short films and commercials, but with virtually no significant revenues to show for it.

  • The feature film “Toy Story” was still a long ways from being released and no one knew what the financial benefit would be.

  • In order to raise desperately needed cash, Levy and Jobs completed licensing deals with Microsoft and Silicon Graphics instead of suing them for patent violations. The strategic decision appeared to be to that smaller amount of short-term cash was better than an uncertain amount of a larger financial award.

  • As CFO, Levy began to realize that Pixar’s business model had to change from being a software developer to producer of computer-animated feature films. However, at the time, Pixar had a terrible, one-sided distribution agreement with Walt Disney, which would give Disney 90% of each film’s profits. The agreement also gave Disney veto power over Pixar’s film ideas and also prevented Pixar from working with other distributors.

  • Drawing upon his experience as a CFO, Levy worked to restructure this agreement. One of the key steps was develop a more robust, updated financial model. However, he encountered all sorts of problems in trying to model the projected revenue for computer-animated films.

  • Eventually, he persevered in developing forecasts specific to Pixar’s business strategy and business model. This proved to be crucial in being able to explain the Pixar’s business to potential investors in an IPO:

“We were now looking at a spreadsheet and were able to say that if we meet the assumptions on the spreadsheet, and make a specific number of films over a given period of time, and those films have this level of success at the box office, then this is how the money will flow.”

  • The eventual IPO for Pixar had enormous challenges tied to how well “Toy Story” did at the box office. Due to its being a fantastic success, the IPO was very successful and was the hottest IPO of 1995.

  • Renegotiating the restrictive distribution deal with Disney was absolutely key to the long-term success for Pixar. At one point, Pixar was willing to walk away from the negotiating table when Disney gave into their demands for a more equal split of the profits in exchange for the rights to purchase Pixar stock.

  • Ultimately, many years later, Disney ended up acquiring Pixar in 2006 for $7.4 billion. By that time, Levy had had long-since left his post as CFO and Jobs was back as CEO of Apple.

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