Pixar Bear's Rebuttal
by Bill Barker ([email protected])

Rick opens with "Purity pays," and right away he loses me in those first two words. I'll come back to that in a moment, though.

Something else is opening tonight besides A Bug's Life, and I'm not talking about its main box office competition Babe: A Pig in the City. Much more interesting to most Foolish readers is that Nerds 2.0.1: A Brief History of the Internet, the sequel to the wildly successful PBS mini-series Triumph of the Nerds, airs tonight. Why do I mention that? Because Pixar's owner, Steve Jobs, is a nerd -- and I mean that only in the best sense.

I remember Jobs in Triumph of the Nerds speaking about Bill Gates and Microsoft, stating that he did not at all begrudge Microsoft its success, but that Microsoft just had "no taste -- and I mean that in the big sense." That's who the owner of Pixar is -- a man with taste. That's why I love Pixar, but I wouldn't want to own shares of PIXR.

"Huh? Whatdidhesay?"

Pixar, for those of you that haven't been looking carefully at it, is a company of artists who craft fine work. That takes time. That takes dedication. It doesn't, however, often intersect brilliantly with maximizing return on investment. The people of Pixar have taste, and that means they're going to pass up on a lot of commercial potential to create the art they want to create. Believe me, with Jobs owning over 70% of the company, Pixar is being run to please Jobs (and the other employee shareholders -- Pixar has issued over 20 million shares in options over the last four years). Steve Jobs doesn't desperately need a lot more money.

I'll give you a "for instance." Pixar's most recent 10-Q already says that in order to get movies out in 1999 and 2000, there's going to be such strain on the company that it won't be able to get a movie out in 2001. This is a company that currently has about $130 million in cash on hand, and makes movies for around $50 million a piece. You do the math -- there's enough time and there's enough money to squeeze in another movie by hiring a couple more people. Even though Pixar could get a movie out every year as far as the money goes, there are artists there who simply won't work that way. It's three years away, and today they know what the limits on their artistry are. That puts an automatic ceiling on the return on investment potential that can ever exist with this company.

I love that. I respect that. But I don't want to be invested in that. Right now, the #1 box office movie is Disney's The Waterboy, which, as I understand it, is not much of a movie. Pixar won't ever make a movie like that -- and it will certainly never make two or three movies a year like that.

That's art -- that's great, but it isn't the case that "purity pays." Selling out pays -- and I don't expect to see Steve Jobs or Pixar ever doing that.

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