Robert Gottliebson wrote a book a few years ago summarising the best
and worst business decisions by Australian companies and CEOs. If
someone ever writes an American version, former Disney boss, Michael
Eisner, would have to be a shoo-in to be nominated for the “worst
decisions” category. James B Stewart’s fantastic expose, Disneywar,
outlines the autocratic nature of Eisner’s leadership and its many
blunders, with the Pixar case being one of the most staggering.

The Disney-Pixar relationship began way back in 1985 when the Eisner
led-Disney made what turned out to be one of its more costly mistakes,
knocking back the opportunity to buy half of Pixar for US$15 million.
At the time, George Lucas needed to sell his stake in Pixar due to
costly divorce proceedings. Disney employee, Stan Kinsey (together with
animation boss Roy Disney, nephew of Walt) saw potential in the
software and approached Eisner and studio chairman Jeffrey Katzenberg
with a view to acquiring half of Pixar. Eisner and Katzenberg baulked,
believing the software would not save Disney any money. In the end,
Apple’s Steve Jobs acquired the stake for US$10 million.

The rest is history, with Pixar going from strength to strength, producing hits for Disney including Toy Story 1 and 2, The Incredibles and Finding Nemo (ironically, Eisner strongly criticised Nemo
before it eventually earned Disney more than $1 billion at the box
office alone). While the on-screen relationship was blossoming, things
were getting ugly behind the scenes. Eventually, Pixar and Disney
terminated their highly successful relationship with Pixar chief, Steve
Jobs allegedly telling Roy Disney that Pixar “can never make a deal
with Disney as long as Michael Eisner is there.”

A few years later, after Eisner was deposed as Disney CEO and president
(in a coup led by Roy Disney and Stanley Gold) the new Disney delivered
a final insult to Eisner’s legacy, announcing on 24 January 2006 that
it would pay US$7.3 billion for Pixar in a stock swap – approximately
243 times the amount that Eisner could have bought it for all those
years ago.