Pixar Animation Studios: Home of the Toys

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"It's nice to be up where the air is clear and there aren't any other studios," says Jobs, taking a gentle swipe at Hollywood. Up north they don't read the movie trades first thing in the morning; they don't gossip about A-list parties. There are no megadollar contracts--except for Lasseter's. Don't imagine for a minute, however, that Jobs is a Silicon Valley apologist. He sees the beauty--and the beast--in both places. "What Silicon Valley thinks is creative is a bunch of guys sitting around on a beat-up old couch thinking up jokes," he says. "It's also true that Hollywood thinks technology is something you buy. Pixar is the only place where both cultures exist under one roof. It's why we're so far ahead."

Boasting aside, Pixar does seem to be light-years ahead technologically. Pixar's animation software, RenderMan, created the dinosaurs in Steven Spielberg's Jurassic Park as well as the battle droids in the latest Star Wars. Jobs spends more than $5 million a year on computer R. and D., and it shows in TS2--in more realistic skin and fur, more flexible characters, more sophisticated lighting and better depth of field.

As much as the Pixarians love their technology, however, the refrain you hear over and over here is that story is king. Even that's not quite right. "We're not looking for stories," says Catmull, "but for groups of people that ignite stories."

Toy Story 2 was the ultimate in collaboration, with three directors on the final credits. Lasseter first got the idea back in 1995 after watching his four youngest boys playing with his Woody collectibles. "My sons looooove to come to Daddy's work," says Lasseter. "But Daddy has one-of-a-kind toys, old and expensive, and he gets very nervous when the bulls are playing in the china shop. I found myself freaking--and laughing at myself." He also started thinking. Toys were meant to be played with. How must they feel about being put on the shelf? Out of that insight came the central plot line of TS2.

As Dan Jeup's story-development team sketched out storyboards, the children's story slowly took on adult themes of mortality and immortality. "It deals with dying and abandonment, issues we all face," says Jeup. "Woody's choice is between his friends and immortality." Everyone had a say about plot and characters. The two female producers, Helene Plotkin and Karen Robert Jackson, insisted on a strong girl character--something lacking in the original. Joan Cusack signed on as the voice of Jessie the Cowgirl and turned the character into a showstopper--one with a lesson for Woody. "She knows what it's like to be abandoned. She's been jilted," says Jackson.

Despite the movie's three years of development, however, Pixar's creative team woke up one morning last January to a sinking realization: the story just wasn't good enough. Lasseter stepped in full time as director to help his two younger co-directors. More than half the movie had to be redone. Buster the dog was added, as was Wheezy, the damaged penguin. Tensions rose as the workload increased. The company stock was on a yo-yo ride, with merchandise income from the $358 million megahit Toy Story trickling out and home video and merchandise sales from A Bug's Life ($362 million worldwide) expected to fall below expectations.