Pixar Nearly Went Bankrupt Selling Computers. Steve Jobs Lost $50 Million Before Toy Story Saved Everything.
Before Pixar made Toy Story, it was a failing hardware company hemorrhaging Steve Jobs' money. The first fully CGI feature film wasn't just an animation milestone — it was a desperate Hail Mary.
The Real Problem
Traditional animation took years per frame — CGI could revolutionize it, but no one believed it was possible for a feature film
IMPACT: Created the first fully computer-animated feature film and launched a $15B studio
The Unsung Heroes
Ed Catmull
Co-founder & CTO
Invented texture mapping and other foundational CGI techniques at University of Utah
Alvy Ray Smith
Co-founder
Created the alpha channel compositing system used in all digital imaging
Key Takeaways
- •Pixar started as Lucasfilm's computer graphics division in 1979
- •Steve Jobs bought it for $5M in 1986, then invested $50M more to keep it alive
- •Toy Story (1995) was the first fully CGI feature film — grossed $373M
- •Disney bought Pixar for $7.4 billion in 2006
Root Connection
Pixar's CGI technology traces back to Ivan Sutherland's 1963 Sketchpad program — the first computer graphics software — created on a TX-2 computer at MIT Lincoln Lab.
Timeline
Ivan Sutherland creates Sketchpad — the first computer graphics program
Lucasfilm hires Ed Catmull to build a computer graphics division
Steve Jobs buys Lucasfilm's graphics group for $5 million — renames it Pixar
Pixar's short film 'Tin Toy' wins an Academy Award — proving CGI can tell stories
Toy Story releases — first fully CGI feature film — grosses $373 million
Disney acquires Pixar for $7.4 billion — Jobs becomes Disney's largest shareholder
Pixar almost didn't exist. The studio that gave the world Toy Story, Finding Nemo, and Up spent its first decade as a failing hardware company that happened to make short animated films on the side.
The story begins at the University of Utah in the early 1970s. Ed Catmull was a PhD student who wanted to make the first computer-animated feature film. At the time, this was like wanting to fly to Mars — theoretically possible, but no one knew how. Catmull invented several foundational techniques, including texture mapping (putting images on 3D surfaces) and z-buffering (determining which objects are in front of others).
In 1979, George Lucas hired Catmull to run a new computer graphics division at Lucasfilm. Lucas wanted technology for visual effects, not animated movies. But Catmull quietly assembled a team of graphics geniuses, including Alvy Ray Smith, who invented the alpha channel — the transparency layer used in virtually all digital imaging today.
By 1986, Lucas was going through a divorce and needed to sell assets. Steve Jobs, freshly fired from Apple, was looking for his next thing. He bought Lucasfilm's graphics division for $5 million and renamed it Pixar.
Jobs put $50 million into Pixar and nearly pulled the plug multiple times. He later called it 'the best investment I ever made.'
Jobs thought he was buying a hardware company. Pixar's main product was the Pixar Image Computer — a $135,000 machine for medical imaging and government intelligence. It sold terribly. Jobs kept writing checks to keep the company alive.
Over the next nine years, Jobs poured $50 million into Pixar. He considered shutting it down multiple times. The hardware business failed. The software licensing business struggled. The only thing that kept getting attention was the animation division — a small team led by John Lasseter, a former Disney animator.
Lasseter's short film 'Tin Toy' won the Academy Award for Best Animated Short Film in 1988 — the first CGI film to win an Oscar. That caught Disney's attention.
Every animated film you watch today — Disney, DreamWorks, Illumination — uses techniques that Ed Catmull invented in a Utah lab in the 1970s.
In 1991, Disney signed a deal with Pixar to produce three computer-animated feature films. Toy Story, directed by Lasseter, would be the first.
Production was brutal. Disney's notes nearly killed the project — at one point, Woody was rewritten as such an unlikeable character that Disney shut down production for months. Pixar rewrote the script and fought for their vision.
Toy Story released on November 22, 1995. It was the first fully computer-animated feature film in history. Critics loved it. Audiences loved it. It grossed $373 million worldwide.
Pixar went public one week after Toy Story's release. Steve Jobs, who had invested $50 million in a company that seemed destined to fail, was suddenly worth $1.5 billion.
What followed was one of the greatest runs in entertainment history: A Bug's Life, Toy Story 2, Monsters Inc., Finding Nemo, The Incredibles, Cars, Ratatouille, WALL-E, Up. Every single film was a critical and commercial success.
In 2006, Disney acquired Pixar for $7.4 billion. Jobs became Disney's largest individual shareholder. Ed Catmull and John Lasseter took over Disney's entire animation division.
The root of Pixar isn't Toy Story. It's a PhD student in Utah who dreamed of making a computer-animated movie in 1972 — and spent 23 years making it happen.
How did this make you feel?
Recommended Gear
View all →Disclosure: Some links on this page may be affiliate links. If you make a purchase through these links, we may earn a small commission at no extra cost to you. We only recommend products we genuinely believe in.
Framework Laptop 16
The modular, repairable laptop that lets you upgrade every component. The right-to-repair movement in action.
Flipper Zero
Multi-tool for pentesters and hardware hackers. RFID, NFC, infrared, GPIO — all in your pocket.
The Innovators by Walter Isaacson
The untold story of the people who created the computer, internet, and digital revolution. Essential tech history.
reMarkable 2 Paper Tablet
E-ink tablet that feels like writing on real paper. No distractions, no notifications — just thinking.
Keep Reading
Want to dig deeper? Trace any technology back to its origins.
Start Research