The Story Of How Ross Perot Saved Pixar From Being Owned By GM

What if, instead of making beloved movies like Toy Story, Wall-E, and Up, everyone's favorite CGI film studio Pixar had been swallowed up by General Motors? It sounds insane, but it almost happened had it not been for the timely intervention of one of America's most famous living billionaire/failed presidential candidate Texans.

I am, of course, talking about Ross Perot, the computer magnate who unsuccessfully ran for president as a third-party candidate in 1992 and 1996. We have him to thank for some of the best animated movies of all time.

To understand how this bizarre circumstance happened, we must start with the history of Pixar, which was founded in 1979 as a computer graphics division of LucasFilm. In 1986, they were spun off as a separate company with $10 million in capital investment from Steve Jobs not long after he was forced out of Apple.

But Pixar nearly ended up in the hands of GM in 1985. In his recently-released book Creativity, Inc.: Overcoming the Unseen Forces That Stand in the Way of True Inspiration, Pixar co-founder Ed Catmull writes that Lucas nearly sold Pixar to the automaking giant, along with Dutch technology company Phillips.

Here's Autoblog's account of what Catmull says in the book:

"General Motors was intrigued because we were leading the way in the modeling of objects, which they felt could be used in car design," says Catmull. Philips was interested in the technology behind the Pixar Image Computer, which could read huge amounts of data from imaging machines like CT scanners or MRIs.

Those two pieces of technology made Pixar a sweet acquisition target, one GM and Philips valued at around $30 million. The companies had agreed to pay George Lucas $15 million and invest a further $15 million in Pixar's operations in order to consummate the deal.

Catmull elaborated on the situation in a recent podcast:

"We had built some hardware we had designed, so we were going to use that as a basis for the business.. But in the end it was Phillips medical and General Motors who came through and were willing to buy the company for $15 million to George (Lucas) and give $15 million to us to get us going and it was within one week of signing when within General Motors. The EDS part, the Ross Perot holdovers, and the cars people got into a war with each other and it brought all the deals to a halt and so ours fell apart."

Emphasis mine. At this point, it's important to explain Perot's connection to GM.

Perot started out as a salesman for IBM and then made his wealth founding and running an IT company called Electronic Data Systems, or EDS. He sold his Plano, Texas-based company to GM in 1984, something its employees described as getting "swallowed by the whale."

EDS was supposed to help GM modernize its computer systems and better compete with the Japanese car companies, who back in the 1980s seemed to threaten the very survival of American automakers. Not surprisingly, many of its employees chafed under GM's massive bureaucracy.

The sale did make Perot GM's largest single shareholder and gave him a spot on the GM board, although his hard-charging, no nonsense Texan management style inevitably led to clashes with the rest of the board and the company's executives. He often criticized the quality of the company's cars and how long decisions took to be executed. Here's what Perot told BusinessWeek in 1986:

"The first EDSer to see a snake kills it. At GM, first thing you do is organize a committee on snakes. Then you bring in a consultant who knows a lot about snakes. Third thing you do is talk about it for a year."

It's easy to see how Perot's outspokenness didn't fit well with GM, a company where apparently no one is allowed to say anything, ever.

Back to Pixar. At that time, GM was looking to possibly absorb the fledgling company into its design department. After months of work, the deal with them and Phillips came very close being sealed, but then a disagreement with Perot scuttled things.

Here's an account from Pixar co-founder Alvy Ray Smith, on his personal site devoted to debunking many of the "myths" around the studio's creation:

Ross Perot's EDS branch of General Motors teamed up with Philips of the Netherlands to strike a deal with them (and with Lucasfilm), for over $25 million. This deal almost succeeded after months of negotiations. It fell apart when Ross Perot told the GM board they were a bunch of fools (for buying Hughes Tools). From that moment on, any deal that involved GM and EDS was impossible. That included Pixar funding. But the point is that Ross Perot was almost a potential funder of Pixar before Steve Jobs.

Smith refers to GM's purchase of Hughes Aircraft in 1985 to merge it with its own Delco Electronics. Evidently Perot thought this was a poor decision, and ifthe Smith account is correct, his saying so helped dash the Pixar deal.

Let's put this into perspective: if Ross Perot hadn't shot his mouth off about Howard Hughes' company to General Motors, the world never would have had Buzz Lightyear.

I can't say I saw that one coming.

Smith says that after the deal fell through, he and Catmull approached Jobs and told him to make his move. It probably worked out for the best. I mean, it's possible that Pixar would have thrived at GM and contributed to some great designs there, but I'd rather have the wonderful movies they made instead.

As Autoblog noted in their post on Catmull's book, even he says getting bought by GM would likely have killed their dream of making animated movies, and it's unlikely the Pixar name would have even survived acquisition by GM.

Of course, the movies would be way down the road. Initially, Pixar wasn't a film studio at all, but a high-end computer company that developed expensive, specialized machines used by the government and the medical industry. Poor sales and high prices meant that didn't pan out for them, so eventually they branched out into doing computer animated TV commercials.

Years later, this would lead to a multimillion-dollar deal with Disney, and the release of Toy Story in 1995. And the rest, as they say, is history.

Photos credit AP/Wikimedia Commons