Jobs flew down to have lunch with Disney CEO, Michael Eisner, who was stunned at his audacity.
They had a three-picture deal, and Pixar had made only one. Each side had its own nuclear weapons.
After an acrimonious split with Eisner, Katzenberg had left Disney and become a cofounder, with Steven Spielberg and David Geffen, of DreamWorks SKG.
If Eisner didn't agree to a new deal with Pixar, Jobs said,
then Pixar would go to another studio, such as Katzenberg's, once the three- picture deal was done.
In Eisner's hand was the threat that Disney could, if that happened, make its own sequels to Toy Story,
using Woody and Buzz and all of the characters that Lasseter had created.
"That would have been like molesting our children," Jobs later recalled.
"John started crying when he considered that possibility."
So they hammered out a new arrangement.
Eisner agreed to let Pixar put up half the money for future films and in return take half of the profits.
"He didn't think we could have many hits, so he thought he was saving himself some money," said Jobs.
"Ultimately that was great for us, because Pixar would have ten blockbusters in a row."