Pixar Is Laying off 14% of Workforce
Pixar isn't safe from Disney's cost-cutting measures during Bob Iger's second tenure as CEO.
One of my favorite business books is called The Ride of a Lifetime, which is Bob Iger’s 2019 autobiography. The Disney CEO wrote about his rise to become one of the most successful CEO’s in the history of Fortune 500 companies (at least until that point… more on that later).
The two most fascinating parts of the story both took place in the mid-2000’s. Iger landed the CEO position in 2005, and his account of that process is riveting. Also riveting is how Disney bought Pixar, which at one point seemed as unlikely as Mickey and Minnie Mouse getting a divorce.
Here’s one sneak peek: Iger and Steve Jobs, who was running Pixar, were about to make their introductory press conference announcing the $7.4 billion acquisition. Only a half hour before they were slated to speak in front of the cameras, Jobs told Iger that he had pancreatic cancer. Iger had to decide on the spot whether to go through with the announcement; he chose not to turn back.
It was a fantastic decision under the utmost pressure, as Pixar made Disney billions in revenue in the following years with movies like Up, Cars, and Toy Story 3. (Pixar had previously made movies like Toy Story and Finding Nemo for Disney under a different agreement, but I’m listing the ones that were made after the purchase.)
Disney and Pixar’s marriage has been an incredible one… which makes Tuesday’s news of impending layoffs at Pixar all the more sad. Disney laid off about 175 employees on Tuesday, which represents about 14% of Pixar’s workforce.
Disney is doing this to cut costs, as Iger has promised investors that Disney’s streaming service will be profitable by the end of September. It’s just about there, and this is one of the final steps. Disney is choosing to focus more on feature films (which have traditionally been Pixar’s bread and butter, like with the aforementioned movies), rather than productions like streaming series. Iger wants to reduce costs and encourage “quality over quantity.” .
And that’s smart, because it has not been a great four years for Mickey Mouse’s company. (Note: Try and name another newsletter that gives Mickey Mouse two shout-outs for no reason whatsoever.) Iger stepped down as CEO somewhat abruptly in February 2020, which was incredibly strange timing. Its theme park business was already taking a huge hit in China, where the new coronavirus that none of us understood was already spreading through East Asia like wildfire. Bob Iger handed the reins to another Bob – Chapek – whose run at Disney did not go so well.
Chapek was replaced by Iger himself in November 2022 after a tumultuous 2.5 years. But in fairness, was he really set up for success? Iger’s biggest criticism was (and probably still is) that he had done an awful job in setting up a succession plan. He was still involved in a lot of Disney’s affairs during Chapek’s run, which undermined the new CEO, and he had passed on the chances to properly groom anyone else before Chapek. And let’s be real: It’s pretty weird to work out a deal with your old employer to succeed your own hand-picked successor and kick him out on a minute’s notice.
Disney’s numbers haven’t been good for the past few years, and Iger is trying to right the ship largely to protect his legacy. In 2019, his legacy was “One of the best CEO’s of all time,” and he wants it to stay that way after a second tenure. He wants the world to see him triumphantly return, right the ship, rectify his one major mistake, and set Disney up for the long run with a great business plan and a great succession plan.
This is a huge reason why the Pixar news today is so fascinating. Sure, it’s “only” 175 jobs out of 200,000+ employees in all of Disney. But Pixar was maybe the best move that Iger made in his legendary first tenure as CEO. And even he now believes that they need to be reined in. They can’t get a blank check, and they have to pick their battles and their projects much more judiciously. Whether Iger is doing this to benefit Disney or benefit his legacy (let’s be real – it’s for both reasons), it says a lot that Pixar isn’t safe from the cost cutting that Disney is doing in Iger’s second tenure as CEO.