In 1985, Steve Jobs was ousted from the company he had co-founded nine years earlier. After leaving Apple (AAPL), Jobs followed other ventures – using the proceeds from his investment in Apple to do so (he sold all of his stock in the company besides a single share). In addition to starting NeXT Computer in September of that year, Jobs made another notable investment at that time.
In February 1986, He invested $10 million in Pixar, a spinout from Lucasfilm, $5 million for exclusive rights to technology developed by the computer graphics division at Lucasfilm, and another $5 million to capitalize the company. At that time, the employees and managers held a 30% stake in the company, with Steve Jobs owning the other 70%.
Pixar’s breakthrough moment in animation was the short film Tin Toy, which won an Academy Award in 1988. The first film to hit the big screen from Pixar was Toy Story, part of a deal in which Disney agreed to co-finance and distribute the film. It was a home run: Toy Story took in $39 million on its opening five days (Thanksgiving weekend 1995), and ultimately brought in $191 million domestically and $362 million worldwide (per Box Office Mojo – link). It was the highest-grossing movie in the U.S. in 1995.
Pixar Animation Studios went public on November 29, 1995.the stock went public at $22 per share and closed at $39. According to the Wall Street Journal (link), Jobs held a roughly 80% stake in the company at the time – valuing his holdings at $1.1 billion.
At the time, it was estimated that he had invested a total of $60 million in Pixar between his initial purchase from Lucasfilm. Steve Jobs had increased his investment in Pixar nearly 20 times in less than a decade – good for a compounded annual growth rate of roughly 35% on the $60 million.
Fast forward 10 years: Pixar gave some hit movies like A Bug’s Life, Monsters Inc., Finding Nemo, and others. in January 2006, The Walt Disney Company (DIS) announced that they had reached a deal to purchase Pixar for $7.4 billion.
The transaction was an all-stock deal-making Steve Jobs Disney’s largest shareholder (he owned 50.6% of Pixar at that time. Disney’s proxy statement filed in early 2007 shows that Jobs owned 138,000,007 shares of Disney – enough for a nearly 7% stake in the company.
Laurene Powell Jobs Trust owns 64.3 million Disney shares as of the end of 2016. Over the course of 29 years, an initial investment of ~$60 million is now worth more than $6 billion.
The position in Disney, worth more than $6 billion, has increased by more than 100 times from the $60 million invested in Pixar. Steve Jobs's investment in Pixar – and his wife’s ongoing investment in Disney – has paid off Greatly over the past three decades.
This article sheds light on the major investment that brought Steve Jobs to limelight, in contrary to the peoples' perception on Apple as the source. Thanks.