The Founder Formula
The Founder Formula

Episode · 1 year ago

Nolan Bushnell, Co-founderAtari, Inc. - A Crash Course in Founding


For the 25th episode of The Founder Formula, we thought we’d pull out all the stops, and invite one of the most famous founders in Silicon Valley history on the show for a two part extravaganza. If you spent any amount of time in the 1970’s & 1980’s playing Atari, you have our guest, Nolan Bushnell to thank.

Nolan founded Atari, and brought video games to the home user, selling over 30 million units. As if changing the video game industry wasn’t enough, Nolan also went on to found Chuck E. Cheese, which at the height of its popularity, had over 200 locations. Not to mention the countless boards he sits on, advisory roles he’s taken, and incubators he’s founded.

The first part of our conversation centered around:

- The history of Atari and what led to it’s founding

- The concept of “eat your babies” (Don’t worry, it’s not what it sounds like)

- Straddling the line between leading a company and inventing forward at the same time

- How the University of Utah & Silicon Valley had equal impact on his career

Listen to this and all of The Founder Formula episodes at Apple Podcasts, Spotify, or our website

Gordon Morong said the only the paranoids survived, and that's kind of true. And so what you have to realize is if you see something that is stronger, better, or you think it's more marketable or cheaper, and you don't do it because it will cannibalize your current business, that's a real mistake. The founder Formula Brings you in behind the curtains and inside the minds of today's brave executives at the most future leaning startups. Each interview will feature a transformative leader who's behind the wheel at a fast paced and innovative tech firm. They'll give you an insider's look at how companies are envisioned, created and scaled. We hope you're ready. Let's get into the show. Hey, everybody, welcome to a very special twenty five anniversary episode of the founder Formula. We have pulled out all the stops on a red letter day, as today we welcome one of the most famous founders in Silicon Valley history, the father of video games, Nolan Bush. Now, before I welcome our guests, I'd like to welcome my cohost for this episode, who's a longtime colleague of mine and Cmo, a trace three, Sandy, Salty Sandy, thanks for sharing this big day with me. Thanks, Todd. It's so good to be here. I'm excited about today because we get a chance to talk to not just an entrepreneur but a true innovator. I mean he launched entire industries. It's going to be a lot of fun. Yep, I know, crazy, crazy, and I couldn't think of a better person to conduct this interview with. For our listeners, were going to follow the similar format that we normally do on this podcast, asking a ton of founder questions, but we're going to do it in more of a chronological order of Nolan's career. But before we do that, let me give you a little rundown on Nolan's history. Nolan Bushnell started more than twenty companies. Possibly, he is most known for being the founder of the legendary video game company Atari. While there, he redefined the coin operated business when he invented the first blockbuster game, Palm. And if that wasn't enough, you went on to famously bring video games to the home user. In total, over thirty million at tready. Twenty six hundreds were sold, and it gave birth to virtually a new industry. Later he went on to found chucky cheese, which at its high point had over two hundred locations, and he found the incubator catalysts, where he was able to shift his attention to different industries such as robotics, personal computers, education and then eventually virtual reality. There's so much to cover that we actually plan on doing this interview as two parts. So in some ways this is our first two parter episode. Nolan is coming to us from his workshop in Los Angeles. We're thrilled to have them. Nolan, welcome to the founder formula. Thanks long you guys know, and so currently you're the CEO of verse six. Can you tell our listeners about what they do? Versus is a company that we're actually in the game business, but we're in the board game business and we use the Amazon, echo and Google home to augment the Board Game Experience. So, for example, echo is a much better timer than a little simple, you know, our glass and you can add now sound effects and music. But more than that, you can now have a computer ai as an NPC. So our first game was called St Noir and it was there is a murder mystery. You survailable one Amazon and you can go around the town interviewing people and the everybody has to tell the truth, except the PERP, who can lie. So it's all about figuring out whose line would be able to solve the mystery and it's a it's kind of a collaborative game and really, really fun one. All kinds of wards and went...

...innovasion year, award from CS this year and a couple of others. But our current game that we're actually going to be doing a kickstarter on, I love your people support, but it's a it's called screen test and it's about great reading eight lines of script in a dialect or a language that is is unique to that and it's hilarious. Maybe one is maybe one of the funniest things that we've ever done in terms of a test group. So that's screen test. Me Out later this month and it's just, you know, it's fun to design games around a new technology and use the technology maybe in a little bit of an unexpected way and tell our audience where they can download screen test on. Screen test will be available on kickstarter second so you can buy them there and and support the project. There's another interesting thing. You can also submit scripts that you write and things that you do uniquely and we will try to integrate them into the game. So what? We're not just crowd sporty funding. We want to crowdsource the creativity. Yeah, because, you know, everybody smarter than anybody and and so I've always liked the idea of the of the brilliance of the masses. Yeah, that's that is a great and a perfect environment to take advantage of that, Pinol, and let's go back a little bit to the beginning, and we wanted to talk about, you know, growing up in the in the rights environment and be in the right environment. You grew up in Utah and you've obviously went to the University of Utah, which is has its own amazing computer lab. I mean it's got some famous people that were there, including Edwin cadmull who is, you know, one of the founders of Pixar. You grew up there and then you also spent a tremendous amount of time in the Silicon Valley. Can you talk about how those environments impacted you massively and it was it was actually happens things? I mean, I wasn't happened since I was born in Utah, but I was probably the only engineer in the world that was managing a Games Department at Amusement Park to put himself through college, and so I understood about Queen operated games because there was a couple of our kids that I'm responsible for. And then the magic of Dr Evans, and he was basically the first guy that got serious about hooking video monitors up to big computers and we played a game called space war. But the university, late at night we break into the computer lab and it was clear to me that if I had a coin slot on this screen, that did make a lot of money in one of my arcades. But you take twenty five cents for three minutes and divided into a half a million dollar computer in the math doesn't work. So I just kind of filed it away. Graduated, went to to California, so looking valley and they're all of a sudden I heightened my digital skills and all of a sudden the ttl circuitry was you're basically the building blocks from the computers at the time went from two dollars a chip to fifteen censorship and I said Hey, the price is right now. So you talked about that and you were working on computer space which leads in in my next question, which is retaining Ip our understanding is that you had a full time job, but then you would be working on these things in the evenings and weekends. How important is it to retain your Ip it and just to make sure that you've got yourself covered why you're potentially working with somebody else? Massively important, and so you can do that by several ways and I actually got sued by that company...

...thinking that they were going to be able to get a what they call a shop right. But here I was lucky again. There was a half hour class, that half credit class, in my senior year in in my engineering degree, all business law, and they talked a lot about how you can secure trademarks, patents, copyrights and the things you have to be aware of. So I realized that I had to not do anything on the company clock, that it had to be on my own clock. Otherwise you hypothecate some of your your invention. I also wrote up a contract single page. You know, in a lot of ways single page contracts are better than molted page contracts because you get right to the point and it's the essence of the deal. So I was able to maintain my control of video game technology, and the rest is history. So, Nolan, pass forward a couple of years and and you you start a company by the name of SISS A gy. Can you tell us what they is? S A G was right out of the last tess and the dictionary and it means a conjunction of planets in a solar system like we're in. This says is right now, which gives us really, really high guides. The moon and the sun and the earth, they're all on the line. But we named it and pretty much figured out that nobody could pronounce that, nobody could spell it, which is kind of a bad name for a company. When we went to incorporate, turns out that the candle maker in Mendocino had already taken the game the name, and so we the way you did it by snail mail in those days is you listed all the names that you were going to name Your Corporation, and Atari was actually the third on the list. Says you was number one and I don't remember what was number two. That Attari was number three and it came back and there was no element. That's okay, and it turned out to be a really great name. This. This is becomes a tar and you hire your first engineer, that's Alan alcorn. Is that right? That's correct, and Allen with your guidance, of course, and mentorship develops pong. It was meant to be a training program for me because it was just a really simple game. You know, if you look at the difference in complexity between Pong and computer space, computer space filled up three complete boards of ships long, only one, which made it much more reliable and in the game earn more money because it was simple. So you create Pong Games tremendous amount of popularity and puts a tar you on the map. I once reducing an in an interview that part of what made Pong such a huge hit is that the typical woman could beat the typical man, and that's that really suck with me. What was the significance of that during that time? Specifically? It's arguably the same reason a game like that would resonate even in current times. Dive into that for us. Well, this is conjecture on my part that the reality is this. Women have better small Muss of coordination than men do. Men have better large muscle coordination. This just on the average, and I'm not saying, you know anything other than that. So Pong required small must of ordination and it was really empowering because it was kind of the beginning of the Women's Liberation Movement and all of a sudden was it was empowering more than that. It turned out that you could become ladies choice, meaning that the game required two players. Women Love the game and so it became very...

...normal for a woman to say somebody on the bar stool, Hey, would you come over and play hang with me? And we all know that women are much better at relationship making the men are. We're just clumsy Claude's out there kind of around, and I think that was also a help. It was it was kind of match making. So tremendous success, obviously, with Pong and and Atari is underway. I want to talk a little bit about innovation, in the importance of innovation. While you were there, a couple of things stand out to me in your story. One is that you had a manifesto that you would not copy anyone else and you would only create new games. The other thing is that, and this is the first that I'd seen of this, you kind of created a far away from the Atari HQ. You created a place outside the grass valley where you wanted to, quote, create things that people said could not be created. Was the first kind of thing tank. Yeah, no matter what happens, if you've got a factory in the back room, you're constantly feeding that beast, and so I felt that it was important to have somebody that had a next year agenda as opposed to next week agenda, and because a lot of times things that are truly revolutionary require more time. And so that was the prime focus of that one. Get it away from the factory that always had to be fed, and that was kind of the key. The reason our manifesto was for creativity is that we had less money. We didn't have all our manufacturing figured out yet. You know, we're just kind of making it up as we go along, and we were not as initially we were considered to be the odd people out in terms of distribution. It kind of liked our products. They weren't sure about us because we were too new as a long term so in some ways innovation was the only tool we had. That was the way that we could differentially ourselves in the marketplace because, quite frankly, our machines weren't as put together. Well, we didn't have as good coin next and all the normal stuff that all the cop other companies spent forty years honing. We didn't have any of that, and so it was everything except innovation. We were in disadvantage. We even had a shipping disadvantage because everybody else was in Chicago and so if you were shipping to the east coast, we had a two hundred dollar machine disadvantage. Pricewise just been shipping cross you know. So it was a thing where, if you looked at it objectively, everything was against us except invasion. Well, I'm going to continue to hurdle down the provocative question track, Nolan are. The concept of eating your babies is a very personal concept and in the context of of our company, we've heard our founder use that phrase before several times, especially in the context of writing playbooks that are designed to sort of evolve our business. Sometimes you have to eat your baby to get better or to innovate in a different way. Please tell the audience if you could share with the audience what eating your baby means and the context of innovation and Entrepreneurship and why you coined this phrase in the first place. Well, it's really about being scared, you know, Gordon moral said, you know, the only the paranoid survived, and that's kind of true. And so what you have to realize eyes is if you see something that is stronger, better, or you think it's more marketable or cheaper,...

...and you don't do it because it will cannibalize your current business, that's a real mistake because if you can see it, somebody else can see it and they will come along, maybe a month later, maybe a year later, and do the very thing that you're avoiding. So you have to be willing to get, you know, compete with your your main gridline. You just have to do it, and that can be construeds eating your own babies, because it's, you know, it's you're wonderful thing that's supporting your company. Now you're going to compete with it and maybe decimated. Yeah, you know, in context for our listeners, for Tari, this is something that, when you coin this phrase, you had been asking to develop the next generation of the home system. In some ways, at that was rejected. They stuck with the older BCS, and the reason I mentioned this is because you're absolutely right. What you predicted in some ways came true for Atari, and if perhaps they had eaten their baby at the time that you had mentioned it, things might have been a bit different for the company. Well, it was so clear to me that from the time we started designing the BCS so the time we've got it on the market, the cost of memory for bit that dropped by three orders of magnitude, and so it was very, very clear to me that if you could just do a line buffer, that all of a sudden you get rid of the quarter inch pixels on the two thousand six hundred and do something that was closer to real time graphics. In fact, that's exactly what an attendo did. Yeah, let's talk a little bit more about that. I'm of the belief that that the structures, processes and sort of Sun cost bias of a big corporation is sort of the Nemesis of the constant entrepreneur and innovator in a lot of ways. And while we have Nolan, I want to pick his brain about what it's like to go from building a company that is wildly successful, pioneered home gaming in every sense of the word, to then getting acquired by Warner, a bigger company, and what that transition is like for the founder himself. Well, for me, I've often talked with if I just taken a couple of weeks vacation I wouldn't have sold, but I was tired. We a trey never had enough money. We were growing like a weed and and though we were always profitable, we've just never had enough cash to feel comfortable. So it was scary. Yeah, and then all of the sudden I found the vcs required a lot of capital and we needed to be able to get that either through VC's or or an IPO. Stock Market was not good for IPOs at the time and so it kind of became necessary to sell, though you know, sometimes you think things necessary that really aren't. I could probably have hacked my way through and got the two thousand six hundred watched without venture capital, but maybe not. And what did with me? It allowed me to kind of clear my head a little bit and I wanted to get married again and get at and have a family. I've had a lost my first wife on the altar of Atar because she didn't like the life of a wife of an entrepreneur. It was too unpredictable and scary for and so I met what my my wife forty two, forty three years now, and and I'm really glad on that aspect, that I sort of had my financial house in order, my personal life in order then was able to get married to a wonderful woman and start having kids. It's honey. We've never ventured down the path of entrepreneurship and the...

...impact it can have on a person, on the personal life, yeah, the family life, and that's I mean, I think if we have time at the end, it's something we say we could definitely fight into a deeper yes, so that would be great because I think that a lot of big decisions are made and we forget sometimes the lens that pixcisions are are made in. So I have a question a knowing about about leading and inventing. Right, so you're an entrepreneur and then inventor just one more brief moment while you're at a tar, and we can we can move forward. But so you're leading the company. Poll had been a huge hit, but you hadn't created a game yourself for over a year and then you kind of rolled up your sleeves and and created breakout, which ended up being another huge, colossal hit for the company. Can you tell us a little bit of the straddling that line between leading a company and then actually inventing forward at the same time? You know, I kind of feel like that's like asking a fish to discover water. You know, I just somehow get ideas and I don't know where they come from, but I get them and they tend to be you know, I'm actually pretty good at seeing poles in the market and products that can feel them. And if I could characterize the mistakes I consistently make is, I do think, sometimes a little bit ahead of its time. I get a little too out in front of the technology. This is the place you make money, is where the technology is somewhat settled and down in price, as opposed to founding your company to be a research project, which is really scary, and so you what you really want to do is find little pieces of technology and adapt them in unique ways. Gosh, everything you say honestly leads me to like a million more questions that I want to ask you. It's when I think about entrepreneurship, especially the context of innovation. You know, obviously timing is is a key component. The concept itself is a component, the financial the investment scenario is obviously a critical component. Are there other aspects of innovation that you think play an impactful role in kind of the successor failure of that company or concept? Trends, having a good idea about timelines and tracking trends of things that are important are important. So, for example, have I've been a little bit smarter and looked at the trends of the cost of memory, I could have actually put memory into the twenty six more memory in the two thousand six hundred, because the trend all said, hey, by the time you this product gets to market, the memories going to be one Morezero of what it was, and so that was a fail on my part. This is the way I look at it. But trends are important because we a lot of entrepreneurship ticular, if it's innovative, you're predicting the future and trends give you an idea of what the future maybe you know you can make mistakes that way, but it's one way where you can start something and do something before other people think it's peet feasible, just because you've tracked it and figured out where it's going to be at the right time. makes total stunts. So I think we spend a lot of time on the gaming top yeah, this might be a good time to hit the pause button on part one of this interview and then pick it up on part two before we let you go. Is there anything else you want to share with the audience? Yeah, I'm also on the board of a self driving car company called prone robotics, and they have such a brilliant Ip, you know,...

...stack of software. They can actually instead of having a super computer in the backseat like the other guys do, they can actually run their software with better outcomes in a raspberry pie if they wanted to. And they're going to be doing a crowdfunding thing about the same time that you out, and I just encourage people take a look at it because their software is truly remarkable. That's prone robotics on we funder. Okay, perfect, and for our listeners you can go check that out. That we fundercom Perrone dot robotics and Perronas spelled Perr O and e and Nolan. You can count on the sport for it, Myself, Sandy and the rest of the tracery folks to help move this along. For the rest of our listening audience, please check that out and please join us for the second part of our interview with Nolan. That'll be our next episode, qued up on the podcast feed until then. Thanks a lot. So yeah, trace three is hyper focused on helping it leaders deliver business outcomes by providing a wide variety of data center solutions and consulting services. If you're looking for emerging technology to solve tried and true business problems, trace three is here to help. We believe all possibilities live in technology. You can learn more at trace threecom podcast. That's trace, the number threecom podcast. You've been listening to. The founder formula, the podcast for all things start up, from Silicon Valley to innovators across the country. If you want to know what it takes to lead tomorrow's tech companies, subscribe to the show wherever you get your podcasts. Until next time,.

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