In 1986, Steve Jobs paid George Lucas $10 million for a small computer graphics company. In 2006, Disney bought it for $7.4 billion in stock, and Jobs became Disney’s largest shareholder.
For years before Toy Story, that company paid its bills by making TV commercials. In the video below, Jobs explains why Pixar walked away from that business even though it was winning almost every award in it.
“It’s all work-for-hire,” he said. “You don’t share in any of the upside of what you create. You just get paid for the work once.”
If Listerine sold more Listerine because of a Pixar commercial, Pixar didn’t make a cent more.
More studios kept piling in, and the margins kept shrinking. “You work harder and harder to make the same amount of money,” Jobs said.
So Pixar pulled out, even though “we loved the commercials business.” It had 25 incredibly talented people doing work-for-hire while the studio had projects where it owned a piece of what it created.
He applied the same thinking to the people. Hollywood kept talent with contracts. Silicon Valley kept talent with stock. Pixar chose stock, so everyone shared the same goal and management had to keep earning their loyalty every day.
Then he pointed to Snow White. Disney re-released the 60-year-old film on video and sold 28 million copies, making probably around a quarter billion dollars in profit decades after the work was done.
A commercial pays once. A film you own can keep paying for 60 years.
Is your work paying you once, or do you own a piece of what you build?View quoted post on X
