Nolan Bushnell

VIDEO GAMES INTERVIEW

King Pong is now the head cheese at Pizza Time Theatre, a fast-food chain that serves up video games for dessert. His motto—”When I see a concept that makes sense I have to put it into action.”

Nolan Bushnell, 39, is the most legendary figure in the brief—but frenzied—history of video games. In 1971, while still working as a $12,000-a-year research engineer for the Ampex Corporation, Bushnell and a partner—Joe Keenan—each contributed $500 to start a video games company. One year later, that infant operation (then named Syzygy), which had begun as a lab in Bushnell’s daughter’s bedroom, became Atari, Inc. Atari ultimately developed and marketed 35 types of video games before selling the company to Warner Communications for $32 million—Bushnell’s take was just under half of that—in 1976.

That same year, while still with Atari, Bushnell designed a family entertainment center for San Jose’s Town and Country Village. His idea was to combine a quality pizza restaurant with a video arcade and have a trademarked Cyberamics system of three-dimensional, computer-controlled characters with names like Chuck E. Cheese, Jasper T. Jowls and Harmony Rowlette, entertain the diners. That first small unit, opened in 1977, served as a prototype for Pizza Time Theatre, Inc., Bushnell’s current major business interest. Pizza Time has more than 60 centers now in operation.

VIDEO GAMES recently interviewed Bushnell at Pizza Time headquarters in Sunnyvale, California. His office is small, but somewhat opulent by Silicon Valley standards (old-line CEOs like Charlie Sporck of National Semiconductor and Robert Noyce of Intel don’t have private offices—only partitioned spaces). The dominant features of the room are a larger-than-life papier mache carnival figure, a beer cooler disguised as an antique cabinet and large, burgundy-colored distinctly Edwardian English leather club chairs. A photo of Bushnell’s attractive wife and young son sits atop a bookcase where copies of books by Albert Camus and Mark Twain rest alongside tomes with titles like Pulse, Switching & Digital Wave Forms.

Bushnell, himself, cuts an Edwardian figure; tall, bearded, a slight paunch that suggests that the antique beer cooler is still functioning. He is a friendly, candid man with a self-confident manner that many people mistake for ego. On this particular day, he’s sporting a blue blazer and grey slacks, an Armani tie and loafers. This is as close to getting dressed up as anyone comes in Silicon Valley. Bushnell radiates a lot of energy and throughout the interview moved from one chair to another all the while fiddling with his pipe.

VIDEO GAMES asked Jerry Bowles, a freelance writer whose most recent book A THOUSAND SUNDAYS -The Story of the Ed Sullivan Show was published by Putnam’s, to take time out from his busy schedule during a recent visit to California and interview Bushnell. Their conversation went something like this.

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VIDEO GAMES: You’re aware, no doubt, that some of your contemporaries have taken to calling you the “godfather of video games.” It’s an apt conceit and makes an interesting point about the similarities between the high technology and film industries. The players are essentially the same: risktakers, creative types, venture capitalists, and so on. In some ways, your career parallels that of George Lucas. If Atari was your “Star Wars,” then Pizza Time is “The Empire Strikes Back.”

BUSHNELL: That’s a good point. The similarities are certainly there. There’s a lot of money and glamour in both industries. I must confess, however, that my Hollywood hero was Walt Disney. He was one of the great American entrepreneurs. A little boy once asked him if he drew Mickey Mouse. He said he didn’t. The boy asked him if he directed the studio’s movies. Again he had to confess that he didn’t. “Well, what do you do,” the boy asked. Disney replied, “I’m sort of like a honeybee. I fly from flower to flower and pollinate them.” That describes what I do.

VG: That raises another interesting point. The press always credits you with being the creator of Pong, Atari’s original video game. But, as I understand it, you didn’t actually write the program.

BUSHNELL: That’s true. The software for Pong was written by an engineer named Al Alcorn. Pong was really a mistake. The game I was really going for was a driving game, but I had just hired Al and didn’t feel he was quite up to that speed. I asked him to do a sort of simple Ping-Pong kind of game as a practice exercise, a throwaway, really. It turned out to be a heck of a lot of fun, so we decided to market it on the way to the driving game.

VG: Then, you are admitting there is some question about the authorship of game?

BUSHNELL: Well, it’s one of those funny things. Al and I talk about it all the time. He did the software, but I designed the game. I sat down and said the ball should act this way and the sound should sound like that—that sort of thing. He executed it. Alcorn steadfastly maintains that he designed it and I maintain that I did. I always tell him I get the credit because I have more access to the press than he does.

VG: Let’s go back in time a little. When and where did you first become interested in video games?

BUSHNELL: There were a couple of factors involved. My interest really began in the early 1960s when I was studying electrical engineering at the University of Utah. They have a good computer science department there headed by Dr. David Evans, one of the pioneers in the field of computer graphics. Anyway, I used to go over to the department at night and play an old game called Space Wars, which had been written on the first computers at M.I.T. It was a good game, although a little advanced for its time.

Every summer while I was in college I worked as manager of the games department of an amusement park in Salt Lake. I was struck by how old-fashioned most of those attractions were. I mean, knocking milk bottles over with a baseball is not the most contemporary game in the world. I got to thinking one day that there would be a tremendous market for a computer game like Space Wars. But it just didn’t make economic sense at the time. It would have taken a heck of a lot of quarters to pay for an $8 million computer. So I just filed the idea in the back of my mind.

VG: When did you—as they say in computer parlance—retrieve it?

BUSHNELL: Around 1969 or 1970. I was working for Ampex in Redwood City as a research engineer by then. Microcomputers had just begun to hit the market and I could see my idea becoming more viable. Originally, I envisioned linking a number of video screens to one central computer. But as I kept adding more and more elements, one day it just hit me: I can do this whole thing in hardware. Once I figured that out, though, the economics seemed overwhelming.

VG: What was your first game?

BUSHNELL: It was called Computer Space. Actually, it was a refinement of Space Wars. It was a good game, but a little ahead of its time. We only sold about 2,000 units, but that was enough to get us off the ground. We also operated a 100-unit route at night. With our technical skills, we were able to put back together old junker games that we had picked up dirt cheap. It provided cash flow.

VG: What kind of corporate structure did you have at the time?

BUSHNELL: Complicated. I had started a company called Syzygy and through that sold Computer Space to a local firm, Nutting Associates. Then, I went to work at Nutting to put the unit into production and to refine it. Syzygy was just a partnership, but when we tried to incorporate we found that the name was already taken. That’s when we changed the name of the corporation to Atari.

VG: And why Atari might I ask?

BUSHNELL: In the Japanese game of Go, Atari is a polite warning to your opponent that he’s about to be engulfed. It’s something like check in chess. I just thought that that was a neat name for a corporation.

Anyway, Nutting never really understood the relationship that was required for me to stay with them. After Computer Space was in production they said “OK, Nolan, you’re head of engineering—how about designing another game for us?” And I said, “OK, let’s figure out how much of Nutting Associates I get.” I saw it as a situation where I was helping them get into a new business, but they said they were Nutting Associates, big and strong, really smart guys. It was obvious to me very early on that they were not smart guys in terms of business strategy. Anyway, I said, “What I want is an option on a third of the company and more say in the marketing strategy.” They basically said, “No, Nolan, you’re a good engineer. We’ll give you five percent of the company on an option if you stay in engineering. We’ll take care of the marketing.” And I said, “Nyet!” Two days later, I resigned and set up Atari.

VG: With $500, as the story goes.

BUSHNELL: Well, actually it was a situation where Syzygy was set up for $500. I had negotiated a royalty rate from Nutting for Computer Space, so, in reality, Atari was founded on royalties from Computer Space.

VG: Then, there was a company called Kee Games, Inc. which merged with Atari in 1974. Who were they and how did they fit into the picture?

BUSHNELL: Kee was a marketing ploy. You probably know that Joe Keenan and I have been close friends and partners in business since the very beginning. Joe was president of Kee and ran the company. The reason we set Kee up is because each city had two major distributors and each one demanded an exclusive contract. That left the other guy, who was usually almost as strong, without a source of video games. These guys were running around like crazy trying to get manufacturers to supply them with games so they could compete with the guy down the street. We knew we had a technological lock, but we didn’t have the marketing lock. So we formed Kee Games and operated it as a separate company even though it was primarily owned by Atari. It was a kind of subterfuge, if you will. Whenever Atari would come out with a game, lo and behold, Kee would produce an equivalent or a modified version. That way we were able to keep other manufacturers out of the market, at least for awhile. It was a distribution game. Strategy! Gameplay! Joe left Atari in ‘79 to join me here. He’s the president and CEO of Pizza Time.

VG: Let’s talk about your latest collaboration with Keenan—the Pizza Time Theatre. When and how did that idea get started?

BUSHNELL: I first came up with the idea around 1974. We were moving toward its realization when I sold Atari to Warner Communications in ‘76. Warners went ahead and opened one center; but they were clearly not very interested, so Joe and I bought the concept back from them for $500,000 in June, ‘77. The following year we raised some more venture capital and incorporated.

VG: I’ve understood that you hated the way video games were being presented. Was this a factor in your decision to start Pizza Time?

BUSHNELL: Definitely. I felt there were a lot of people who would like to play video games but found no accept able environment for them to do it—particularly as a family. Kids love the games, but I didn’t like the idea of them having to hang out in pool halls or junkie arcades in order to enjoy them. I think one of the real values of video games is that they allow parents to compete with their children. I wanted a family place where parents were encouraged to do that.

VG: Do you believe there is something essentially wrong with the arcades as we know them today?

BUSHNELL: Only in this sense: Arcades seem to be the domain of the teenager and I don’t think it’s necessarily good for eight-year-olds to be bumping elbows with a whole bunch of guys who are in their teens. Don’t misunderstand—I have nothing against teenagers. I just thought there should be an environment more compatible for the younger child.

VG: As I’m sure you’re aware, arcades are under attack nationwide. How do you react to all of this?

BUSHNELL: I believe it’s another case of what I call “anti-technology” forces at work—the nothings having their say. Whether it’s nuclear power or whatever, they’re really afraid of technology. Also, people have an ingrained notion about leisure—essentially, anything that’s fun is somehow not holy.

What they don’t see is that video games are really the training wheels for computer literacy. They almost feel that it’s magic that kids can operate computers and they can’t. An awful lot of the basic skills that are necessary for computer literacy are learned on video games. For example, I don’t see a significant difference between moving a race car on a TV screen and moving a cursor. These skills are not only allowing kids to become computer literate, but computer skillful. But, no matter what happens, you’re going to always have do-gooders who don’t understand what the hell’s going on attempting through legislation to prohibit something that they perceive as a danger—without really understanding what’s going on.

VG: What could be done to make video games more acceptable to parents?

BUSHNELL: I think the manufacturers have not been doing as good a job as they could in making the games more educational. They are educational now, but there’s so much more that could be done, that should be done.

There are ways that you can teach problem-solving as part of the game-playing activity. Right now, there’s a little too much emphasis on eye-hand coordination and not enough on algorithm solution. That’s kind of a mouthful and it means something to me, but it would be difficult to explain.

VG: I’m sure parents would. be glad to hear that something was being accomplished other than shooting down goblins from space.

BUSHNELL: I wouldn’t discount that as irrelevant, however. I think if parents put a stopwatch on their kids, they’d find they spend an awful lot more time watching TV as a passive involvement than they do on video games, which is an active involvement. I will guarantee you that active is better than passive in almost every case.

VG: Although almost everyone in the high technology and venture capital fields grants that you are a great entrepreneur, you do take some flak on the subject of management style. Your critics point to things like Grass Valley—the think tank you had at Atari, which obviously didn’t get its name from the kind of grass that grows on lawns. Does this talk irritate you?

BUSHNELL: Not really. I happen to think that you can’t manage extremely creative people in the traditional ways. Pizza Time has a think tank, also; that’s just my belief about how a company should work. The essence of manufacturing is to tap the creative lifeblood of the engineers and give them an opportunity to express themselves. In applied engineering, the far-out things always take a blackseat. Yet, if you don’t do the seedwork you end up with a very lackluster and uninteresting company.

So, I think it’s necessary to take people—even if there are only three or four of them—and get them away from the factory as far as possible…and just let them look into the future to two or three years down the road. Those ideas will form the base of tomorrow’s technology.

VG: It’s hardly a secret, however, that it was this kind of unorthodox approach to management that lead to your falling out and eventual departure from Atari after Warner bought it.

BUSHNELL: Well, that’s debatable. The fact remains every single one of Atari’s major innovations originated in Grass Valley: the basic architecture of the Video Computer System, the XY-monitor, the high-speed microprocessor game drive, the 800 computer all came out of Grass Valley.

I just think there’s no direct correlation between hard work and good results. You need leisure for perspective and work for execution. But all execution and no perspective leads to a bad product.

VG: Is it true that Steve Jobs came to you when he was working at Atari and told you about a “personal” computer that he and Steve Wozniak were building in a garage and you weren’t interested in it from a business point of view? It’s only interesting now, of course, since their company turned out to be Apple Computer.

BUSHNELL: I thought it was a good idea, but I was trying to get Pizza Time off the ground at the time and my legal situation with Warners was tangled on the matter of competition with them. I did, however, put Steve in touch with some venture capital sources.

VG: Let’s move along to the latest venture you’re involved in, the Catalyst Group. What is it about?

BUSHNELL: Well, as you know, this is a very active area for entrepreneurs. They’re always looking venture capital sources for financing, but before they get to that stage there are often millions of decisions to be made, such as what kind of telephone system to install, which xerox to buy, whether to have an auditor, an attorney, what kind of accounting system to set up, whether you should incorporate as a subchapter corporation, where to go for venture capital. All of these things are basically of an administrative nature. The Catalyst Group—which now has seven companies under its umbrella—takes care of these functions for the entrepreneur so he can focus on his technology and marketing capabilities.

Essentially, it’s a kind of pre-venture capital nursery for entrepreneurs. I’m attempting to help start-ups to not make the same mistakes I did. It’s not altruism entirely, of course. If the entrepreneur’s idea really takes off, the Catalyst Group owns part of the company.

VG: By the time the Catalyst Group gets its share and the venture capitalists get theirs, is there anything left for the entrepreneur?

BUSHNELL: Sure. Twenty-five or 30 percent of something is better than a hundred percent of nothing.

VG: One final question. How do you view yourself-as a technological pioneer or an entrepreneur?

BUSHNELL: Oh, I’m an entrepreneur. When I see a concept that makes sense, I have to put it in action. I guess I’m a person who’s driven by the dream of converting fantasy into reality. The minute I believe in something I have to take steps to turn it into a reality.