Cisco experienced rapid growth after receiving capital from Sequoia Capital. Just like in history, Henry felt little concern about their progress.
On July 1, 1986, Henry heard the news that Industrial Light & Magic was planning to sell its computer animation department. Upon learning this, he was almost overwhelmed with excitement! This department would later become the renowned Pixar company, celebrated by Hollywood fans as a powerful animation studio. Eventually, Disney would acquire Pixar for a staggering $7.4 billion!
Henry understood that he had stumbled upon a rare opportunity; if he let it slip away, there would be no second chance! But he wasn't alone in this; he faced another competitor—the former CEO of Apple, Steve Jobs, who had been ousted from Apple in 1985.
To gather more information, Henry dispatched someone to Industrial Light & Magic to investigate. That evening, he received a definitive answer.
Determined to secure the computer animation department, Henry knew he had over $20 million at his disposal, thanks in part to the advance for his "Harry Potter" project. From history, he remembered that Jobs had acquired the animation department for just $10 million, and Henry was willing to go an extra $10 million above that. The following day, he organized his team, and under the name of Nicholas Bookstore, he proposed an acquisition to George Lucas' Industrial Light & Magic.
Nicholas Bookstore was well-established and increasingly recognized. As the head of a successful stunt company, George Lucas had likely heard of it! With Cisco and the Internet's rise, Nicholas Bookstore had also flourished. Although Symbolics had registered the first domain name in 1985, Nicholas Bookstore was the first to create a legitimate website, fully complying with the W3C standards that would define the future of the internet. Following the success of Nicholas Bookstore's site, many businesses sought their help to design their own websites, allowing them to earn substantial profits. The Netscape browser emerged as a major player, renowned for its user-friendly interface and speed, quickly gaining traction among users!
As they assisted numerous companies in launching their websites, Nicholas Bookstore established the Nicholas Web Alliance—an authoritative international organization focused on web technology standards, composed mainly of Nicholas Bookstore and Cisco.
Despite being a small alliance with limited influence, many companies clamored to join in leading web technologies. Nicholas Bookstore devoted significant time developing the Netscape browser and also created the XML Extensible Markup Language and XHTML Hypertext Markup Language to streamline web page creation. Henry was instrumental in this initiative, applying for patents and sharing the language standards with tech enthusiasts for free publication in professional journals.
A first-class organization sets the standard!
Netscape's advancement hinged on establishing standards without patenting; Henry aimed to construct formidable barriers to entry for competitors like Microsoft.
Imagine a scenario where all websites adhered to Nicholas' standards. Who would have any reason to use Microsoft's Internet Explorer? Other websites would be unreachable through it, leading to a user preference for sites accessible through approved browsers. It would be nearly impossible for Microsoft to navigate that obstacle!
George's Industrial Light & Magic was also a user of Nicholas Bookstore, utilizing the Netscape browser and having its own established domain. So, when George heard about Nicholas Bookstore's intention to acquire the computer animation department, he was eager to discuss it with Henry.
However, upon arriving at Industrial Light & Magic with his negotiation team, Henry was surprised to find Jobs there. He shook his head in disbelief at George Lucas, who had invited his competitor!
When Jobs and George realized Henry was present, they both froze momentarily before Henry introduced himself. George stared at Henry, intrigued, while Jobs dismissed him. Henry's resolve to secure the Pixar animation studio solidified upon seeing Jobs.
Jobs later became a household name due to Pixar's successes, impressing the Apple board and earning a chance to make a return to the company. Henry's plan was to obstruct that path and possibly create an opportunity to acquire Apple in the process!
As Jobs and Henry took their places in the meeting room under George's direction, it became clear that this negotiation was a tripartite discussion.
With a welcoming smile, George addressed them, "Mr. Jobs and young Henry both intend to acquire the computer animation department of Industrial Light & Magic. On behalf of the company, I welcome you both! As we begin negotiations, please share your terms!"
Before Henry had the chance to speak, Jobs seized the lead: "I have a strong interest in acquiring the computer animation department and hope George will sell it to me, as only I can drive it to success!" Jobs exuded defiance and confidence. "George, this department is integral to your company. You wouldn't want it to fall into the wrong hands and be mismanaged!"
Henry felt a rush of anger as he retorted, "Mr. Jobs is correct. If the department were not entrusted to capable hands, it would fail, damaging Industrial Light & Magic's reputation. You must find competent leadership to take over. While Mr. Jobs may have established Apple, it's crucial..."
Henry's words implied a pointed critique, and he purposefully avoided being overly blunt, allowing the insinuation to hang in the air.
Jobs' face darkened, his eyes smoldering with anger. He was, after all, the founder of Apple, and having been ousted was a significant blemish on his reputation. Henry had unapologetically exposed this wound, causing Jobs to seethe. If glares could kill, Henry thought he'd already be dead a thousand times over!
Seeing the tension rising, George Lucas intervened, eager to diffuse the situation. "Let's keep it friendly! We all want a positive outcome. Let's continue our talks..."
However, Jobs was unyielding in his anger, slamming his palm onto the table and exclaiming, "George, I'll be buying this animation department! Let's see who dares to compete with me!"
Henry, emboldened, matched Jobs' intensity, pounding the table and declaring, "Mr. Lucas, I'm also buying the computer animation department!"
George felt satisfaction at the escalating competition, knowing that the stakes—namely, the ultimate sale price—would rise with the intensity of their bid war.
"I appreciate both your talents, and I believe under either of you, the computer animation department can thrive. Now, it simply comes down to who offers the highest price!" George announced.
With George's statement, Jobs' intensity shifted, while Henry realized he couldn't let George become the "fisherman" who profited from their rivalry without putting up a fight.
Both sides cautiously gauged each other's intentions. Jobs began the bidding: "Eight million dollars!"
Yet George shook his head. Without missing a beat, he replied, "The absolute minimum is $10 million—don't even think about it otherwise!"
And just like that, the negotiation turned into an auction.
With a smile, Henry raised his hand, casually stating, "Eleven million..."
"12.5 million!" Jobs shot back quickly.
But Henry immediately countered with enthusiasm: "Eighteen million!!!"
Jobs frowned at this steep offer, realizing it significantly surpassed the realistic valuation of Industrial Light & Magic's animation department. To Jobs, it felt as if Henry was playing games with absurd bids for the sake of annoyance—it was foolishness! After taking a moment to think, Jobs chose to bow out from the competition, opting not to raise the stakes further.
George was elated. Initially hoping for a $10 million sale, he had found a buyer willing to pay an additional $8 million. What a windfall!
"Kid Henry, you really have remarkable courage. The computer animation department under Industrial Light & Magic is now yours!" George said with a smile directed at Henry.
"Thank you," Henry replied, bemused.
With a sullen demeanor, Jobs snorted, excusing himself and leaving the meeting as Henry planned to discuss other specifics with George. Henry needed to ensure the computer animation department's entire integrity—the technical and management teams, equipment, animation software, and patents had to remain intact. After investing so heavily, he would not allow himself to be swindled!
George agreed to all of Henry's requests. He knew the buyer wasn't one to cheat, especially at such a price. Besides, he worried that if Henry walked away, he might never find another interested party!
Both felt satisfied as they signed the contract that afternoon. For payment, Henry only committed to pay half upfront, with the remaining portion due in three months. His income from "Harry Potter" netted him over $20 million, and combined with his grandfather's estate inheritance, Henry was still quite wealthy, with nearly $40 million in assets. Although he had invested $10 million in Nicholas Bookstore and $3 million in Cisco, he still had over $20 million left. In addition, he anticipated potential residuals from Penguin Publishing at year's end, which could bring in tens of millions more!
After some consideration, George agreed to Henry's terms. Following the acquisition, George guided Henry to the Computer Animation Department to get acquainted. The staff seemed aware of Henry's arrival and were somewhat prepared, yet the revelation that their new boss was merely a twelve-year-old boy left them confused. Initially resigned to feeling abandoned, they clung to the hope that perhaps their new boss might recognize their talents. But when they discovered he was so young, their spirits plummeted, and motivation dwindled!
Understanding the necessity to prevent this investment from becoming a flop, Henry recognized he needed to inspire them. Clearing his throat to capture their attention, he announced, "Are you all disappointed to see me? If so, let me tell you this: you shouldn't feel disappointed but rather excited! You should be overjoyed! Don't judge me by my age; my aspirations extend beyond my years. Trust me, I didn't impulsively decide to buy this department. This decision was made after careful consideration!"
After pausing for effect, Henry continued, "I aspire to create a classic feature-length animated film for theaters. I have great faith in you and believe you are the best team in this industry! I invested in this animation department with the expectation of achieving significant success. I hope this department will one day be synonymous with global classic animation. When the world thinks of animation, I want our computer animation department to be the first name that comes to mind!"
Applause erupted.
After the cheers subsided, Henry surveyed the room and called out, "Could Edwin Catmull and John Lasseter please stand up?"
Henry was familiar with both individuals; Edwin Catmull was the creator of Pixar and a pioneer in computer-generated films, while John Lasseter was a driving force behind Pixar's creativity.
Forty-year-old Edwin, the current head of Industrial Light & Magic's animation division, and 29-year-old John both stood and introduced themselves. After they spoke, Henry nodded approvingly before informing everyone, "From today onward, this computer animation department will be rebranded as Pixar Animation Studios and will operate as an independent company. Edwin will serve as the CEO, and John will take on the role of Chief Creative Consultant! Additionally, I have exciting news!"
He paused, gauging their curiosity and excitement.
"I plan to invest another $10 million into Pixar Animation Studios!" he announced dramatically.
The room buzzed with enthusiasm, eager to hear more.
"Moreover, I will allocate 12.5% of the shares to implement an equity incentive plan to reward employees who deliver outstanding contributions to our work!"
The collective cheer erupted, revitalizing their spirits!
The equity incentive plan meant that each team member could share in the profits and have a voice in corporate decision-making, a great way to attract talent! Henry intended to implement similar plans across all his companies, but Pixar would lead the way!
Seeing the joy on everyone's faces, Henry was confident that Pixar Animation Studios would soon leave a lasting mark on Hollywood and the world!