How Steve Jobs Took a Group of “Crazy Guys” and Created Pixar

When most people think of Steve Jobs, they think of Apple. The iPhone, the iMac, the sleek design and polished keynote presentations. But there’s another story—less talked about but equally powerful—that shows the real magic of Jobs: his ability to see potential where no one else could. This is the story of how he turned a small tech group inside George Lucas’s film company into Pixar, and in the process, changed animation forever.

“And after ten years, we have done exactly that.” —Steve Jobs

Strap in, because this is the story of how nurturing big dreams and investing in bold ideas can turn static into symphony.

Steve Jobs at Pixar conference

The Origin: George Lucas's Problem-Solving Initiative

In the late 1970s and early 1980s, George Lucas had revolutionized filmmaking with his groundbreaking "Star Wars" trilogy. The success of these films generated substantial revenue, but Lucas, ever the visionary, wasn't content to rest on his laurels. Instead, he identified technical problems that needed solving to advance the art of filmmaking.

"George Lucas, whom you know, produced the Star Wars film trilogy, was a smart guy. And at one point, when he had a lot of money coming in from these films, realized that he ought to start a technology group. He had a few problems he wanted to solve." —Steve Jobs

One of the most pressing challenges Lucas faced was the degradation of image quality during the film composition process. Each time analog film is copied, it accumulates noise artifacts—visual imperfections that compound with each generation of copying. For a perfectionist like Lucas, this was unacceptable.

George Walton Lucas Jr., creator of Star Wars Photo: Getty Images

The Technical Challenge: Analog's Inherent Limitations

To understand the magnitude of the problem Lucas faced, it's important to grasp the limitations of analog film technology. When creating the stunning visual effects for "Star Wars," Lucas's team had to composite up to 13 separate pieces of film for a single frame. Each layer added—whether it was matte paintings for backgrounds, models, live action footage, or special effects—introduced additional noise.

"Every time he'd make a copy to composite two together, then add a third, then add a fourth, he was adding noise artifacts in each generation. And if you go buy a laser disc of any of the Star Wars movies and you stop it on some of the frames, they are really grungy. Incredibly noisy. Very bad quality." —Steve Jobs

The result was far from the perfection Lucas sought. If you've ever examined freeze frames from the original "Star Wars" trilogy, you might have noticed this graininess—the visual price paid for the revolutionary effects of the time.

The noise artifacts that can be seen clearly in Star Wars (1977)

A Team of Visionaries: The Birth of Digital Filmmaking

Lucas, determined to overcome these limitations, assembled a team of brilliant minds to find a solution. Their approach was revolutionary for the time: go digital. By processing and compositing images digitally rather than through analog means, they could eliminate the noise problem entirely.

"George, being the perfectionist he was, who figured out how to do this at all, said, I'd like to do it perfectly. I'd like to do it digitally. And nobody had ever done that before." —Steve Jobs

This team didn't just implement existing technology—they had to invent it. They developed specialized software and hardware that would allow for digital image processing without the noise artifacts inherent in analog processes. This innovation would eventually transform not just Lucas's films but the entire industry.

Ed Catmull was the first to be recruited by George Lucas Photo: Pixar

Steve Jobs Sees the Future: From Obscurity to Pixar

By the mid-1980s, the technology group at Lucasfilm had made remarkable progress in developing digital imaging tools. However, maintaining this specialized division was costly, requiring several million dollars annually. Eventually, Lucas decided he could no longer justify this expense.

Steve Jobs purchased the Computer Division from George Lucas and established the group as an independent company, “Pixar.” (1986) Photo: Pixar

It was at this pivotal moment that Steve Jobs entered the picture. Recently departed from Apple, the company he co-founded, Jobs was looking for new opportunities. When a friend suggested he visit "these crazy guys up in San Rafael," Jobs recognized the potential of what the Lucasfilm technology group had created.

"So I bought this group from George Lucas. And I incorporated it as Pixar. And we set about basically revolutionizing high-end computer graphics."—Steve Jobs

In 1986, Jobs purchased the division from Lucasfilm for $5 million, invested another $5 million of his own money and established it as an independent company called Pixar. Under Jobs's ownership and guidance, the company would continue to develop groundbreaking computer graphics technology—but with an expanded vision for its application.

Pioneering Computer Graphics: Pixar's Technical Dominance

Once established as its own entity, Pixar quickly became the leading innovator in high-end computer graphics. The software they developed wasn't just incrementally better than what existed before—it was revolutionary.

"If you look at the ten most important revolutions in high-end computer graphics in the last ten years, eight of them have come out of Pixar."—Steve Jobs

This technical prowess didn't go unnoticed by the film industry. Major studios began using Pixar's software to create spectacular visual effects for blockbuster films. The digital dinosaurs in "Jurassic Park" and the shape-shifting T-1000 in "Terminator 2: Judgment Day" were brought to life using Pixar's technology. Industrial Light & Magic (ILM), the visual effects company founded by George Lucas, incorporated Pixar's software as the foundation for much of their work.

The Pixar Image Computer was a creation ahead of its time Photo: Pixar

"All of the software that was used to make Terminator as an example, to actually construct the images you saw on the screen, or Jurassic Park with all the dinosaurs, was Pixar software. Industrial Light and Magic uses it as the basis for all of their stuff."—Steve Jobs

These achievements alone would have secured Pixar's place in filmmaking history. But Jobs and the Pixar team had an even more ambitious vision.

Pixar Isn’t Just Tech—It’s Heart

Why make such a risky move investing in Pixar? Because Jobs had a vision—not just of making cool software, but of telling stories with technology. He saw a world where entire movies could be generated inside a computer. Where animation wasn’t limited by physical models or analog limitations.

"Pixar's vision was to tell stories. To make real films."—Steve Jobs

This vision differentiated Pixar from other technology companies. They weren't content to be merely tool providers; they wanted to be storytellers. And not just any stories—they aimed to create the world's first fully computer-animated feature film, where everything from the characters to the environments would be digitally created.

Pixar executives circa 1995: Ed Catmull, CTO; Steve Jobs, CEO; John Lasseter, VP of Creative

"And so our vision was to make the world's first animated feature film that was completely computer synthetic. Sets, characters, everything."—Steve Jobs

This ambition represented an enormous challenge. At the time, computer animation was still in its infancy. Creating convincing characters, environments, and movement that could sustain audience interest for a feature-length film had never been done before. Many industry experts considered it impossible or, at best, commercially unviable.

The Ten-Year Journey: Building Tools and Techniques

Bringing this vision to reality wasn't a quick process. It required a decade of persistent innovation, problem-solving, and artistic development.

"And after ten years, we have done exactly that. We have developed the tools, which are all proprietary to do this, to manage the production of this thing, as well as the drawing of this thing, the computer synthetic drawing."—Steve Jobs

During these ten years, Pixar wasn't just developing technical capabilities. They were also building a unique company culture that blended technical excellence with artistic creativity—a combination that would become their hallmark. They hired not only brilliant computer scientists but also talented artists, animators, and storytellers.

This blend of art and technology was essential to their vision. While other companies might have focused solely on technical achievements, Pixar understood that compelling characters and emotional storytelling were just as important as visual innovation.

Toy Story: The Culmination of a Dream

After years of development, Pixar's vision was finally realized in the form of "Toy Story." Scheduled for release in November 1995, this film would represent the culmination of over a decade of technological innovation and creative development.

Toy Story wasn’t just a hit. It was a cultural earthquake. For the first time ever, audiences saw a feature-length film made entirely with computers. It wasn’t just about visuals—it was about heart, character, emotion. Woody and Buzz Lightyear weren’t digital experiments. They were beloved heroes.

Pixar had done what few thought possible: They combined the cold precision of technology with the warmth of timeless storytelling.

"It's called Toy Story, and you will hear a lot about it, because I think it's going to be the most successful film of this year."—Steve Jobs

Jobs was right. Toy Story became the highest-grossing film of 1995 and established Pixar as the future of animation. Disney, once the undisputed king of animation, partnered with Pixar instead of competing. Jobs’ gamble had paid off.

The tale of Woody, Buzz Lightyear, and their fellow toys captured the imagination and emotions of viewers of all ages.

The Legacy: How Pixar Changed Animation Forever

Toy Story was both a critical and commercial success, grossing over $373 million worldwide and receiving three Academy Award nominations, including a Special Achievement Award for John Lasseter, the film's director.

But "Toy Story's" impact went far beyond box office numbers and awards. It demonstrated that computer animation could create not just impressive visual effects but entire worlds and characters that audiences could connect with emotionally. It showed that this new medium could tell stories every bit as compelling as traditional animation or live-action film.

Steve Jobs under the Pixar lamp

The success of "Toy Story" transformed the animation industry. Within a decade, most major animation studios had shifted from traditional hand-drawn animation to computer-generated imagery (CGI). Films like "Shrek," "Ice Age," and "Finding Nemo" followed in "Toy Story's" digital footsteps, building on the foundation Pixar had established.

For Pixar itself, "Toy Story" was just the beginning. The company went on to create a string of critically acclaimed and commercially successful films, from "A Bug's Life" and "Monsters, Inc." to "The Incredibles" and "Up." Each film pushed the boundaries of what was possible in computer animation while maintaining Pixar's commitment to storytelling excellence.

In 2006, Disney acquired Pixar for $7.4 billion, bringing the two companies' partnership full circle. Jobs, who had invested in Pixar when others doubted its potential, became Disney's largest individual shareholder and a member of its board of directors.

The Lesson: What You Can Learn from This Story

What stands out in this story is Jobs’ ability to spot potential where others saw a financial burden. While Lucas saw the tech group as an expense, Jobs saw the seeds of a revolution. There are powerful lessons here for founders, creators, and anyone chasing big dreams:

Follow the Spark Others Miss

Jobs didn’t see a group of engineers burning money. He saw the future of film.

Solve Real Problems

Lucas’s analog noise was a concrete obstacle. Pixar’s engineers attacked it head-on, developing tools that still influence CGI today. Innovation without purpose is noise, not signal.

Invest in People

Pixar’s early team was world-class. Jobs let them build, experiment, and grow.

Foster Cross-Disciplinary Collaboration

Pixar’s secret sauce was animators and computer scientists speaking the same language. Break down silos to fuel creativity.

Play the Long Game

Ten years of funding Pixar without returns. That’s patience.

Because short-term metrics rarely capture revolutionary potential.

Art + Tech = Magic

Don’t just build tools. Use them to tell stories. Inspire. Entertain.

Create from Passion, Not Just Profit

Jobs didn’t start Pixar to make money. He started it because he believed in the mission.

Conclusion: Pixar Wasn’t an Accident. It Was a Masterclass.

This isn’t just a story about animation. It’s a story about belief, patience, vision, and the willingness to bet on something that doesn’t make sense—until it changes the world.

From addressing noise artifacts in "Star Wars" to creating Woody and Buzz Lightyear, the path was longer and more challenging than anyone could have predicted. But the result was nothing less than a revolution in how stories are told and experienced—a revolution that continues to unfold with each new film that builds on Pixar's pioneering work.

So next time you watch Toy Story or any Pixar film, remember: it wasn’t just code and computers. It was Steve Jobs seeing a better future and doing what he always did best: making it real.

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Source: The Steve Jobs 95 Interview unabridged