The Founder Formula
The Founder Formula

Episode · 1 year ago

Nolan Bushnell, Co-founder Atari, Inc. - When Two Titans Cross Paths


Last Episode we spoke with a man who has been called the Father of Video Games. Silicon Valley legend Nolan Bushnell. If you haven’t listened to that interview, make sure you go back and do so, because we talked all about his career up through his time at Atari, and ultimately the sale of Atari to Warner Media. So again, if you haven’t listened to that episode, make sure to go back and do that.


In part 2 of our interview with Nolan, we’re covering the second half of his career. With someone as storied and experienced as Nolan is, he wasn’t content to just sell Atari and fade into the background.


The second part of our conversation centered around:

  • Nolan’s first adventure after leaving Atari
  • His fascinating relationship with the iconic Steve Jobs
  • Why Chuck E Cheese was more of an arcade business than a restaurant business
  • The technology that he sold that became the bedrock of Pixar
  • Did Steve actually solicit help from his Buddy Steve Wozniak
  • How would Nolan describe their relationship?
  • What percentage of Apple did Steve offer Nolan when seeking investment?
  • Why did Nolan turn him down?

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

... forty hour week and his wife, I think it was an eighty two hundred hour week. 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 insiders look at how companies are envisioned, created and scaled. We hope you're ready. Let's get into the show. Hey everybody, welcome back to the show. We so appreciate you listening to our podcast. My name is Todd Galena, and today we continue our two part interview with Silicon Valley Legend Nolan Bushnell. He's been called the Father Video Games. In an episode twenty five, our previous episode, we covered his career through his time at a Tari and ultimately to the sale of Atari Two Warner media. From here on out, Sandy and I are going to be discussing his first adventure after leaving Atari and his fascinating relationship with the iconic Steve Jobs. I want to shift gears for a bit, because Nolan has impacted really kind of the broader universe and and and sphere of entrepreneurship. You are obviously pioneered the gaming industry, but you also got into the the restaurant business at one point with chuck e cheese. Was sucky cheese your concept and vision? Or we have a little bit of a difference in history on that one, Nolan. I I was under the impression that Warner Acquired Atari from you and at one point you acquired chuck e cheese from Warner. But there there's some history out there that actually suggest that you you create a chucky cheese from scratch and that it was your vision from the outside. Well, they're actually both true. I started chuck e cheese inside Atari. I set up a little division, hired a general manager for it and sketched out, you know, what what needed to be done and it got open. But it was engineered by my engineers. The guy who running it figured out the pizza recipe and all that, and so I was the creator of the high concept, but they actually implement the concept. Then one of the things I discovered use the big companies or stupid and that yeah, they didn't see that. I was just vertically integrating towards the market. The Ro we were selling coin operative games at the time for about Twozero Bucks, but the coin drop in those machines would be thirty to fortyzero dollars for the life of that product. So any idiot could see that we were on the wrong side of the equation, sewing, you know, making five hundred dollar margin on a on twozero dollar machine versus operating it getting thirty grand. So when you say I got into the restaurant business, I really got into the arcade business disguised is a pizza business. Yeah, love that. So obviously hugely successful. At its peak I think it was well over two hundred and fifty locations. But then later down the road, or right around the same time, you started an incubator called catalyst, and I think this gave you the opportunity, if you don't mind me to guessing, gave you the opportunity to kind of pick and choose some companies that you wanted to help fund and then kind of keep your toe in the water where they were by they're developing. Have a small piece of those companies. Can you tell us a little bit about those incubator years. Why...

...and what excited you about that time? Well, I was I felt that the people that every time you have a start up you have a built in in efficiency because people come in home numbers and so the first year you maybe need ten percent of an accountant and when you maybe you don't want your entrepreneurs spend a week figuring out which zerox machine to get and what you know, health insurance and all that stuff. So I felt that by automating that and sharing things like payroll and accounting and and health insurance, and I called it funding the company by with a key and the key and launched the door and the bank accounts all set up, the payroll set up, the accounting books are all ready to go, there's already a shared zerox machine, facts machine, what have you, and so the person who's the entrepreneur can really start working on their project that afternoon and I felt that that was a very efficient way to bound and run companies. It was also an outgrowth of the fact that a lot of the neat things that I had planned for Atari warning didn't want to do. They wanted to be mono focused onto video games, and I love this story. We had developed the fastest modems in the world with lowest latency, and the idea was that we were going to get a closet in every area code with a bunch of modems that you could call in and play games over the telephone lines. And it turns out that the IP that we IP stack, that we were using in the communication protocol was almost identical to the IP stack for the Internet. This was in one thousand nine hundred and seventy six and I think that there's a possibility that had I not sold Warner and continue to pursue that that I could have owned the Internet. Amazing. What have been a lot more fun. Well, it's a bit of a reach, but we would definitely had a network of connected computers all of the world. That's incredible. Let's talk a little bit more about catalyst technology. So under under this incubator, a company by the name of cadaver scope came to life. Tell us what candaproscope is. The ambroscope was actually in chucky cheese and it was it was the core of computer animation and we had a big backs seven ndred and eighty and various other things, but rendering video with the technology in those days was just slow. It would take that big computer almost twenty four hours to render a single frame and and it was meant to make computer animation and spend a lot of time on it and it turns out that the technology. I later sold it to Lucas and it became the count, the bedrock of Pixar. And then later, of course, jobs bought it and I think that he bought it because he was fascinated, because I showed him cadambroscope with Chucky when he was the younger guy, and he was really interested and I said, but you don't do it until you can render a frame in less than three or four minutes. When what he realized is that he it was when render farms were just starting. In fact,...

I'd never heard the term rendered farm and Steve knew it and that was one of the things that made him pursue the purchase of Pixar. That's crazy. So yeah, the near your this close to the Internet, this close to Pixar in some ways. Sandy and I have a lot of questions about Steve Jobs. We're going to stick a pin in there. I now you just mentioned him, but we know that as we kind of get to to pass the catalyst part of the history and we know that you are now part of our six. Were very excited about hearing what happens with that. What excites you about the future? What's next, Nolan? What are the things that you you think about? Obviously a lot of different things. For those of you who can't see Nolan, we are speaking with him from his workshop. It is what can I assume is it's garage, but this guy is a working away even as we speak. But what are you excited about the future? No, I'm very fascinated by bio implants and quantum computing and bio implants, I think can do some wonderful things. Also, nanobots, the whole idea that you can create these micromachines can flote in your blood stream and repair your arteries and do various things. You know, have a have enough smarts to be able to be ticked coronavirus and pluck it out. I think that nanobots, nanotechnology is going to be very, very important for healthcare in the future. I mean they're always you can postulate how how a you can program a little machine to maybe differentiate between the legends cell and a regular cell and then the the whole area of bio implants where we become the Cyborg a little bit. We don't look that bad, but we're basically getting there when you wear an apple watch or heart rate monitor or a lot of the other things. So I'd like to make the comparison that when you're playing a game, that's very often you see the little hearts up in the side of how much help you have. Well, I think in the future you're going to have a read out on your on your phone that tells you how much heart, how much help you have, and and it will advise you that the things you're doing right now or not helping, or the things that you're doing right now are helping to increase your health. So this feedback system, I think, will be very interesting to the people of the future. Perhaps the next invention by Nolan Bush. Now you heard it here first during this during this discussion, you mentioned that at times you are a bit further out than you then you thought the market would be ready for to hear you talk about this. Do you have a better sense of when you think this would be a reality? Not a clue. I mean the thing about nanotechnology is really primitive right now, and not even well. They've got they've got little swimming Nana bots and and things that are really clever, but they're not they don't have the power to be truly useful now. But that's a you know, because one of the questions you have is how do you power Anana Block? And and there has to be a sort of dynamic little energy generator that feels the nanoblock kind of the same way the metabolism in a muscle cell pupils and there's some work being done there, but it's it's really primitive. So if you can't see something actually working in the lab, it's more than ten years out. Usually if it's working in the lab, then it's five years out.

This is not working in the lab. That's my best. That's guess. So yeah, yeah, say, did you have anything else for no one before we move into the Steve Job? I do. And you know, I think we skipped over one monumental point in in sort of Nolan's innovation history, which is he mentioned he you know, really cadabroscope was the bedrock of what is Pixar today. One area we did not cover is, and Nolan correct me, from saying this wrong, but etalk detect yeah, back, yeah, was actually the company that was founded before in the morning in the middle of the Pacific Ocean, halfway between Hawaii and Long Beach, over chart table, because we were doing navigation and and said to ourselves, Hey, this would be really easy if we didn't have all this squishy stuff under us. We were on a sailboat running racing in the Trans back and and I said, you know, we should do that and we got through the race, we won the races, we grap self pad on the back and then we founded the company and it became massively successful. fact, if you use Google maps or a any of the mapping APPs right now, they're all using pieces of the database that we created. Amazing when you think about I mean that's a technology would basically use every day to get from point eighty what to point B and again. Nolan is the source of that innovation. Crazy. Okay, so no one. Before we move on to basically the we had some Steve Jobs questions. Is there anything else you would want to impart on founders and entrepreneurs who might be listening to the show? Well, I tell entrepreneurs that they can't just go to college or they can't just drop out of college and think they're good for entrepreneurship. You've got to have a lot of experience, you've got to have you know you. I think you need to field your brain for of all kinds of weird things, because good entrepreneurship is a synergy and if you don't have enough raw material to put together, you're not going to get as good as stuff. The other thing I talked entrepreneurs about. As I said, remember, this isn't about your idea. When you're in front of a VC, they're asking whether they should hire you as a CEO, and that when you say well, you know, I they ask you a financial question, they say well, my my cfo take care of that. Wrong. Not to be the profit architect of your company. That means you. You know, you can't really be an entrepreneur unless you can speak of county and and it's it's I think a lot of people that get over focused on their idea not focused enough on the infrastructure, which is their own skill set. Yeah, they're they're investing a whole person right, not just the idea. That's amazing. Well, a lot of times a team because you're judged by the company you keep. If you have a good team, that all sort of bet out. That's also a good thing, and advisory board and I boardant directors, all that helps. Yeah, if you find yourself currently on a couple of boards people in mentoring people, which I imagine is this the tremendous value to those companies? Yeah, I was going to ask you. You know I mean. Well, to that point, exactly odd to you've been on on many, many boards. I could name a dozen. Describe what it's like to be an advisor versus the founder. Do you see things more clearly when it's not your baby? No, you don't see more clearly. You see a different perspective, but you don't...

...have time to get down into the nitty gritty of what their actual problems are, but you can look at global problems of their strategy, and that's kind of the help. I also think that being that, when I'm on the board I'm responsible for providing a little bit of stand up comedy, because I firmly believe that people who and companies to take themselves too seriously will fail. They have to walk this line between work hard, play hard and be responsible or be silly, and I believe that that balance that you have to balance all those factors. Be responsible or be silly. That one's going to go on the bus. I love that. Okay, perfect. So you're ready to move on to the steam job? Start with a few, minister, we have left. You take the first one. Sure, so, will you the one that hired team jobs? No, Al was okay, okay. So we so just going through some of the history, which I found just just borderline comical. So he's at Atari and one of the first things, I don't know the chronological order, but we do know that he's part of the team. And eventually he wants to go on a sabbatical to India, and he is an Atari. To help him with this, sends him to Germany to fix a coin up game called tank that had been experiencing a bunch of glitches. They sent him there to fix them and then and then he was off to his sabbatical. Is that? Is that fact or fiction? Absolute fact. But when here's the funny part. The Germans were always the squeegy wheel and I thought that if I, you know, if I sent jobs, that he'd be cantankerous enough that they wouldn't want us to help me ever again. Oh my God, okay, I think that. Yeah, okay, all right. Another another famous story around him being at the company is that, you know, I'd mentioned earlier in the conversation. We were talking about breakout of being your second game, and one of the one of the things that needed to be addressed before it was brought to market is it had seventy five chips and that chip number needed to be reduced tremendously and the company had a contest to all engineers, hey who can reduce the amount of chips and by how much? And Steve had submitted an entry to the contest that had the chifts that go from seventy five to twenty five. But in reality the work had been done by his Buddy Steve. Wasasniak, fact or fiction, part fiction, part fact. The real story is that we have a bidding project process where engineers could decide which games they wanted to do because they got a kind of royalty if we if they did a good, good game. And none of them wanted to do break out. And Steve had just come back from his sabbatical and he was on the night shift primarily so that he could hang out with the WAWS. I looked at as having two steves through the price of one, and I assigned jobs the project and it was a thing where I gave them a bonus program for which if they reduce the chip count they'd get more money, they'd get a bonus, and so and that's where getting a really, really tight design was was good. Now, the bad part of that story is that several years later I was sitting around the dinner table with Wazi Act and I asked him, I said,...

...what did you do with them? Your half of the bonus for breakout, and says I went out to dinner. I should well, that must have been expensive dinner. And and jobs are told walls that he got a five hundred dollar bonus when in fact he got a five thousand dollar bonus, and the law says damn it. He did it to me again then. Well, for those of you that don't know, Steve Jobs was hired into a Tari as employee number. For you knowing, can you describe your relationship with jobs throughout the years? He said that I was his mentor that I liked Steve's mind a lot, and one of the threads of our conversations was determinism versus free will and sort of the pigeon knt model of philosophy, you know, Hideger Lock, what have you, versus the eastern Buddha, Confucius, you know. And that was always really fun to sort of Mash up against this, because Steve didn't know that much about Western philosophy and I didn't know much about eastern philosophy and we sort of tugged and pulled and taught each other on that, which I find very, very nice. Did you guys have any further interactions businesswise when he was at a Tari? Was He? Did you guys still communicate with one another? Oh, yeah, but then then when he left to start apple, he came to me for the third of Apple Computer for FIFTYZERO dollars and I've turned it down, which I've really regretted knowing it. Yeah, but in some ways I'm not sure. The person he got to invest instead of me was a guy named Marcola and he was sort of adult supervision and mearly years of happen and I wouldn't have been able to do that, and I think that apple may not have succeeded if it hadn't been for Marcolus. So I think that, at least I tell myself that when I'm not crying. Why did you decline jobs is offered to Dustin Apple? I didn't think you could be a good CEO. He was just barely a tolerable engineer. I mean he was good. It was good technician and in a pretty good engineer, but he was not personable. He didn't he didn't have what I considered the skills to be a team building. He just described the skills of someone you would expect to Silicon Valley BC firm to invest in and it doesn't sound like he had much of that. So at the time it was probably very sound decision. I'll never know. Well, there's always two Steve Jobs. There was a steve jobs at first half before he left Apple, and then there was the second one, which is the one that most people, I think, remember is more the second coming. But okay, one last te regarding steeping. I can say, though, the people should understand is there was never a harder work than jobs. I mean I don't think he worked a forty hour week in his life. I think it was an eighty two hundred hour week and I've often thought that when he came back to apple, apple was just a mess. Jill Emelo and scully had just basically knocked the wheels off physical of company when he came back. I heard people saying that he basically was there all the time and I think that that can affect your health after time and I think it odly killed him. Wow, I've heard you say before that the true entrepreneur is a doer, and it sounds like Steve slves was indeed a doer. Yeah,... question on. Well, Nolan, I think that's that's everything from us. I know we took a full hour with you here, you know, before we let you go as is there anything else you want to share with the audience? We definitely heard you loud and clear about versux. Sandy and I are going to spread the word quickly, hopping in here to do that. We'd love for you to go to verse six DOT Games. So basically that's www dot vr six dot games. There you'll see an opportunity to get involved with them through kicks starter. I'm also going to give you, guys, the direct kickstarter link as part of the podcast notes, so please check that out and get involved if you can. Again, that's Vier six DOT games. I just encourage people take a look at it. Truly remarkable. While Standy, Wot a Trede Huh, this was the highlight of my year, probably. Thank you so much, Nolan. It was such a pleasure speaking with you and we appreciate all the wisdom. Well, I I want to be appreciated for my humor. The levity definitely fixed in and we appreciate that. Okay, thanks, will you, guys. You're welcome to no all and thanks to time. Okay, by now, 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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