“What?” responded Smith, “I can’t write on your whiteboard? Bullshit.” At that point Jobs stormed out.
Smith eventually resigned to form a new company to make software for digital drawing and image editing. Jobs refused him permission to use some code he had created while at Pixar, which further inflamed their enmity. “Alvy eventually got what he needed,” said Catmull, “but he was very stressed for a year and developed a lung infection.” In the end it worked out well enough; Microsoft eventually bought Smith’s company, giving him the distinction of being a founder of one company that was sold to Jobs and another that was sold to Gates.
Ornery in the best of times, Jobs became particularly so when it became clear that all three Pixar endeavors—hardware, software, and animated content—were losing money. “I’d get these plans, and in the end I kept having to put in more money,” he recalled. He would rail, but then write the check. Having been ousted at Apple and flailing at NeXT, he couldn’t afford a third strike.
To stem the losses, he ordered a round of deep layoffs, which he executed with his typical empathy deficiency. As Pam Kerwin put it, he had “neither the emotional nor financial runway to be decent to people he was letting go.” Jobs insisted that the firings be done immediately, with no severance pay. Kerwin took Jobs on a walk around the parking lot and begged that the employees be given at least two weeks notice. “Okay,” he shot back, “but the notice is retroactive from two weeks ago.” Catmull was in Moscow, and Kerwin put in frantic calls to him. When he returned, he was able to institute a meager severance plan and calm things down just a bit.
At one point the members of the Pixar animation team were trying to convince Intel to let them make some of its commercials, and Jobs became impatient. During a meeting, in the midst of berating an Intel marketing director, he picked up the phone and called CEO Andy Grove directly. Grove, still playing mentor, tried to teach Jobs a lesson: He supported his Intel manager. “I stuck by my employee,” he recalled. “Steve doesn’t like to be treated like a supplier.”
Grove also played mentor when Jobs proposed that Pixar give Intel suggestions on how to improve the capacity of its processors to render 3-D graphics. When the engineers at Intel accepted the offer, Jobs sent an email back saying Pixar would need to be paid for its advice. Intel’s chief engineer replied, “We have not entered into any financial arrangement in exchange for good ideas for our microprocessors in the past and have no intention for the future.” Jobs forwarded the answer to Grove, saying that he found the engineer’s response to be “extremely arrogant, given Intel’s dismal showing in understanding computer graphics.” Grove sent Jobs a blistering reply, saying that sharing ideas is “what friendly companies and friends do for each other.” Grove added that he had often freely shared ideas with Jobs in the past and that Jobs should not be so mercenary. Jobs relented. “I have many faults, but one of them is not ingratitude,” he responded. “Therefore, I have changed my position 180 degrees—we will freely help. Thanks for the clearer perspective.”
Pixar was able to create some powerful software products aimed at average consumers, or at least those average consumers who shared Jobs’s passion for designing things. Jobs still hoped that the ability to make super-realistic 3-D images at home would become part of the desktop publishing craze. Pixar’s Showplace, for example, allowed users to change the shadings on the 3-D objects they created so that they could display them from various angles with appropriate shadows. Jobs thought it was incredibly compelling, but most consumers were content to live without it. It was a case where his passions misled him: The software had so many amazing features that it lacked the simplicity Jobs usually demanded. Pixar couldn’t compete with Adobe, which was making software that was less sophisticated but far less complicated and expensive.
Even as Pixar’s hardware and software product lines foundered, Jobs kept protecting the animation group. It had become for him a little island of magical artistry that gave him deep emotional pleasure, and he was willing to nurture it and bet on it. In the spring of 1988 cash was running so short that he convened a meeting to decree deep spending cuts across the board. When it was over, Lasseter and his animation group were almost too afraid to ask Jobs about authorizing some extra money for another short. Finally, they broached the topic and Jobs sat silent, looking skeptical. It would require close to $300,000 more out of his pocket. After a few minutes, he asked if there were any storyboards. Catmull took him down to the animation offices, and once Lasseter started his show—displaying his boards, doing the voices, showing his passion for his product—Jobs started to warm up.
The story was about Lasseter’s love, classic toys. It was told from the perspective of a toy one-man band named Tinny, who meets a baby that charms and terrorizes him. Escaping under the couch, Tinny finds other frightened toys, but when the baby hits his head and cries, Tinny goes back out to cheer him up.
Jobs said he would provide the money. “I believed in what John was doing,” he later said. “It was art. He cared, and I cared. I always said yes.” His only comment at the end of Lasseter’s presentation was, “All I ask of you, John, is to make it great.”
Tin Toy went on to win the 1988 Academy Award for animated short films, the first computer-generated film to do so. To celebrate, Jobs took Lasseter and his team to Greens, a vegetarian restaurant in San Francisco. Lasseter grabbed the Oscar, which was in the center of the table, held it aloft, and toasted Jobs by saying, “All you asked is that we make a great movie.”
The new team at Disney—Michael Eisner the CEO and Jeffrey Katzenberg in the film division—began a quest to get Lasseter to come back. They liked Tin Toy, and they thought that something more could be done with animated stories of toys that come alive and have human emotions. But Lasseter, grateful for Jobs’s faith in him, felt that Pixar was the only place where he could create a new world of computer-generated animation. He told Catmull, “I can go to Disney and be a director, or I can stay here and make history.” So Disney began talking about making a production deal with Pixar. “Lasseter’s shorts were really breathtaking both in storytelling and in the use of technology,” recalled Katzenberg. “I tried so hard to get him to Disney, but he was loyal to Steve and Pixar. So if you can’t beat them, join them. We decided to look for ways we could join up with Pixar and have them make a film about toys for us.”