Atari & Chuck E. Cheese's: Nolan Bushnell

Before he turned 40, Nolan Bushnell founded two brands that permanently shaped the way Americans amuse themselves: the iconic video game system Atari, and the frenetic family restaurant Chuck E. Cheese's. See Privacy Policy at https://art19.com/privacy and California Privacy Notice at https://art19.com/privacy#do-not-sell-my-info.

Speaker names marked ? are inferred from speaking time and the show’s known hosts — they are not voice-verified.

• 0:01Speaker 00

  We started out essentially designing this little game-looking thing out of wood and painting it so that it looked like plastic, but it was really wood. And our idea was to take it to the toy show in New York.

• 0:19Guy Raz?

  And you show this at the toy convention and were people like, "This is amazing. This is going to change the world."

• 0:24Speaker 00

  We sold zero.

• 0:32Guy Raz?

  From NPR, it's How I Built This, a show about innovators, entrepreneurs, idealists, and the stories behind the movements they built.

• 0:44Guy Raz?

  I'm Guy Raz, and on today's show, how Nolan Bushnell took his love of arcade games and built an industry, two industries in fact, that shaped the childhoods of millions of Americans.

• 0:59Guy Raz?

  If you grew up in the US in the 1980s, then you were probably playing a little bit of this.

• 1:08Guy Raz?

  And then, when your birthday rolled around, maybe you celebrated, you know, like this.

• 1:21Guy Raz?

  OK, so these are two very iconic sounds. Chuck E. Cheese, the pizza joint with the games that kept you distracted for hours, and an Atari video game, which could frankly distract you for a lot longer, days perhaps. But what's incredible is that both of these childhood experiences were created by the same person, by the same guy, by Nolan Bushnell. He founded Atari just a few years out of college, and he started Chuck E. Cheese just a few years after that. And for Nolan, it all began when he was a kid in Utah in the 1950s, and he learned a very simple lesson about business.

• 1:58Speaker 00

  At dinner one night, Mom said, "Boy, we've got so many strawberries, we're not going to be able to eat them all. Maybe we'll give them away." I didn't think that much about it. The next day, I happened to go to the grocery store with her. And I saw that in the store, in the grocery store, they were selling strawberries for 50 cents a basket. And I looked at that and I said, hmm, that's what the market is. So I went home, found all the extra little baskets that were around the house, went out, picked a bunch of strawberries and went up and down the street, selling the strawberries for a discount off of what the grocery store was selling. And I sold out in an hour.

• 2:43Speaker 00

  I mean, I don't even think I made it all the way to the end of the block. And all of a sudden, I had more money than I would make on allowance and mowing lawns for a year.

• 2:54Guy Raz?

  Nice. You say young entrepreneur.

• 2:56Speaker 00

  Yeah.

• 2:57Guy Raz?

  And I read that like later on, when you were in college, you worked at like carnivals?

• 3:02Speaker 00

  That's correct. I started out actually on the midway, selling balls to knock down milk bottles and guessing people's ages, weights and occupations and, you know, being a carny.

• 3:17Guy Raz?

  Like shouting at people like, come on down, throws.

• 3:20Speaker 00

  Yep. You got it. And, and I found out that I was kind of, kind of good at it.

• 3:27Guy Raz?

  How do you get into arcade games? Does that start at the carnival?

• 3:31Speaker 00

  Yes, that was sort of where I got indoctrinated because you end up, a lot of people don't realize how much coin operated games earn. It's actually quite surprising. And so when you look at each of the coin operated games as a little business, typically you go into Joe's Cafe and say, can I put my machine in your location? And I'll split the income with you. These locations would very often do $100 to $200 a week.

• 4:05Guy Raz?

  And at that time, these are mainly like pinball machines, right?

• 4:09Speaker 00

  Pinball machines. There were mechanical games, but yeah.

• 4:12Guy Raz?

  No video games at this time. We're talking about the late 60s.

• 4:16Speaker 00

  Correct.

• 4:16Guy Raz?

  Yeah.

• 4:17Speaker 00

  Then I was working summers at the amusement park, winters pursuing an engineering degree at the University of Utah. And wow, one day I saw Steve Russell's Space War.

• 4:31Guy Raz?

  What's that?

• 4:33Speaker 00

  A guy named Steve Russell at MIT programmed this game called Space War. And I was mesmerized by it. Let me put a little more context. My fraternity brother says, I gotta show you something that'll knock your socks off. He says, meet me at 1 o'clock at the Merrill Engineering Building. And I say, 1 in the afternoon? And he says, no, no at night. And so 1 o'clock, show up at the Merrill Engineering Building, and there was Space War. He handed me a box that had four buttons on the top. Rotate left, rotate right, fire, and hyperspace.

• 5:17Speaker 00

  Those were the controls, and we played until literally 5:00 in the morning. And I thought, wow, if I could put this game in my arcade, it would make money. But then you divided 25 cents a play into a half a million dollar computer, and the math didn't work. But I did think to myself, maybe someday, the cost will come down, and this would be cool.

• 5:43Guy Raz?

  So you graduate college, I guess, in like the late 60s, like 68, 69, something like that?

• 5:48Speaker 00

  Yeah.

• 5:49Guy Raz?

  And what did you do? Did you, you're in Utah, did you start a business, or did you decide to move? Like, where did you go? What happened?

• 5:55Speaker 00

  My wife's sister lived in Silicon Valley, and I was a little bit of an anarchist. At that time, you'd call me a lapsed Mormon, or failed Mormon, or whatever. And I kinda wanted to get out of Utah and see the world a little bit. And so California seemed like a cool place to go. So that Thanksgiving, we drove to California, stayed with my wife's sister, and I papered the street with my resume and got a job at Ampex.

• 6:28Guy Raz?

  And Ampex was a, like, tape, right? They made like electric, like...

• 6:33Speaker 00

  They invented the videotape machine and the instant replay. I worked there for two years. But about 18 months in, I discovered a computer that looked like it was fast enough to do a video game.

• 6:48Guy Raz?

  So you're thinking, I'm going to start something?

• 6:51Speaker 00

  It started out a little bit as a research project. And then I said, yeah, I'm going to start something. And in fact, it was almost prescient that when I was driving down the Sierras towards Silicon Valley, I told my wife, I said, you know, in two years, I'm going to start my own company. I just knew that that was kind of on my trajectory. I didn't know at that time it was going to be a video game company. I just thought I'd do it, you know? And in the back of my mind, and I always kind of had this entrepreneurial itch, I think I've always had it.

• 7:24Guy Raz?

  Yeah.

• 7:25Speaker 00

  Since eight.

• 7:26Guy Raz?

  So how did you start this computer company, this like game company?

• 7:30Speaker 00

  My office mate was a guy named Ted Dabney. This was at Ampex. And I said, I'm going to start a company, let's form a partnership. We had this computer, and the computer was mind-numbingly slow. And in order to make the economics work, the computer cost like 5,000. Coin-operated games at the time needed to be less than $1,500. So the way I was going to do it is I was going to time-share that one computer across three screens with three coin slots, and I felt that I could get to the $1,500 that way.

• 8:10Guy Raz?

  So you were, you were trying to design basically what would become an arcade machine, like a giant machine that would be installed somewhere, and people would put in a quarter and they could play a game?

• 8:19Speaker 00

  Exactly.

• 8:20Guy Raz?

  Were you trying to do like a knockoff of Space War?

• 8:23Speaker 00

  Yeah.

• 8:24Guy Raz?

  And where did you install this arcade game? Where was it?

• 8:28Speaker 00

  We put it in a bar called The Dutch Goose. It was in Menlo Park, and it was right next to Stanford University. The game was a smash hit at The Dutch Goose. I licensed the game to a company called Nutting Associates, and

• 8:45Speaker 00

  Realized that it did really well on college campuses. So, I mean, it sold a couple of million dollars in units, which was, to me, a big hit, but to the industry was kind of a mediocre flop. But I had a 5% royalty, and so that was, you know, $100,000, which was a massive amount of money. Put this in context, I came to work at Ampex for $825 a month as an associate engineer.

• 9:13Guy Raz?

  So how did you fund the company from the beginning? Like, did you have to go to outside investors and ask them for money?

• 9:19Speaker 00

  No. This was also at the time when venture capital was just getting started. And so Ted put in $250, I put in $250, and that's all the money that went into Atari.

• 9:34Guy Raz?

  Wow, 500 bucks to start Atari. And your first game was a flop? So how did you guys go on to do the next thing?

• 9:43Speaker 00

  Well, then came Al Alcorn, which was our first technical employee, because we were growing and we needed to get some more talent. And I gave him a simplest game I could think of, which was a ping pong type game. When you think you're going to be in the video, coin-operated video game, you write down every sport you can think of, every construct, and ping pong was one of them. And he went off, and he basically had the thing working in one or two weeks. I mean, it was really quick.

• 10:17Guy Raz?

  And we are talking about what, of course, became Pong, which was just like two lines with a ball bouncing around a screen between those lines.

• 10:26Speaker 00

  Correct. And it turned out to be, I thought it was going to be a throwaway.

• 10:31Guy Raz?

  Yeah.

• 10:32Speaker 00

  It was just a training program. And it just turned out to be fun. We were staying after work to play the damn game. And then I get the idea, ah. Maybe Bally wants this game. Bally, who is also a big coin-operated game player out of Chicago. And so I get in the airplane, fly to Chicago. I have a little mock-up that I can, a portable unit. And I show it to them and they don't like it. Because it's a two-player game. And the coin-operated world doesn't allow for a two-player game if there's not a one-player game at that time.

• 11:13Speaker 00

  That was sort of written in stone somewhere in the annals of coin op worlds. And I'm kind of dejected. On the way to get on the airplane to come back to California, I get a call from Alcorn, who was the engineer. And they had a service call because they had put a basic Pong game in a cabinet and put it in a bar. And the game became so popular that it filled up the coin box that it couldn't take any more quarters. So I think to myself, maybe I don't want Bally to have this. Because the math was so outstanding that the machines could literally pay for themselves.

• 11:57Speaker 00

  I mean, the game was earning almost $300 a week.

• 12:02Guy Raz?

  Wow.

• 12:03Speaker 00

  And the total cost that we had was about $300.

• 12:08Guy Raz?

  So you're thinking, maybe we should just make these machines and license them ourselves?

• 12:13Speaker 00

  Exactly.

• 12:14Guy Raz?

  So was that what you did?

• 12:15Speaker 00

  So that's exactly what we did. I looked at all the cash we had and we had enough cash to build like 12 units. You know, the minute I got off the airplane, I submitted the order for the parts and we were off to the races. I get on the phone. I have literally orders coming in from all over the nation.

• 12:37Guy Raz?

  And of course, I mean, we think about Pong today and it's such a basic, you know, rudimentary game, but in the context of the early 70s, this must have been revolutionary.

• 12:47Speaker 00

  Absolutely. To put it in context, people would come to me and say, how does the TV station know that I turned the knob?

• 12:58Speaker 00

  And clearly their construct was that if there's something on a TV screen, it came from a studio somewhere.

• 13:05Guy Raz?

  Yeah.

• 13:06Speaker 00

  And so that was kind of the construct that we were dealing with. But, you know, there's, there's actually some very interesting psychology, looking back on it. And one of the reasons that I think Pong was such a massive success is that it fed into the narrative of what was going on at the time. You know, just after the Summer of Love, the hippie movement, women's liberation was, was starting to rear its head. And Pong, by its structure, made it ladies' choice because it became very acceptable

• 13:47Speaker 00

  for a woman to tap a guy sitting at the bar on the shoulder and say, "I want to play Pong. Would you like to play? I'll buy."

• 13:56Guy Raz?

  Who knew Pong's role in the history of women's liberation?

• 13:59Speaker 00

  Exactly.

• 14:01Guy Raz?

  So, so we're, Nolan, were companies just calling you or establishments just calling you saying, "We want a machine. We want a machine." Was that, is that what was going on?

• 14:09Speaker 00

  It was. And so our big problem then is we had no factory, we had no systems, we had no procedures, we had no employees. I mean, we had, there were four of us.

• 14:21Guy Raz?

  And you guys were all in your, like, mid to late twenties?

• 14:24Speaker 00

  Correct.

• 14:24Guy Raz?

  Okay.

• 14:25Speaker 00

  And in fact, Al, I think, was 23. He just, he just graduated from Berkeley.

• 14:29Guy Raz?

  Wow.

• 14:30Speaker 00

  And we had a thousand-square-foot roll-up, which we thought was huge for the six of us.

• 14:35Guy Raz?

  This was in, what town was it?

• 14:37Speaker 00

  This was in Santa Clara, California.

• 14:39Guy Raz?

  Okay.

• 14:40Speaker 00

  Then we found out that we had a real problem. We could build these games literally in two days.

• 14:46Guy Raz?

  Like, literally by hand, not in a factory?

• 14:49Speaker 00

  Yeah, but...

• 14:52Speaker 00

  We had neglected to buy shipping cartons. So we couldn't ship them on common carrier. And so to solve that problem, we bought an old furniture truck and started making deliveries without cartons to Los Angeles.

• 15:09Guy Raz?

  You tried like driving down the 101 or something?

• 15:12Speaker 00

  Yeah, yeah. But slowly, we were able to get procedures in place. We were able to get systems. And how we financed the company was we would sell for cash the machines. We had 30 day terms. Most of our parts, we had 60 day terms. So we'd get the cash literally 60 days before we had to pay for the parts for that.

• 15:34Guy Raz?

  Yeah. And how many, at its height, you know, how many of these arcade Pong machines were out there in the country?

• 15:42Speaker 00

  About 150,000, only of which Atari only did about 35,000 of them. We got massively copied.

• 15:50Guy Raz?

  Wait, you couldn't, you couldn't prevent these companies from basically stealing your idea and copying you?

• 15:55Speaker 00

  I didn't have patents yet. It was, in those days, patents were just slow boat for China.

• 16:00Guy Raz?

  So there was no, so basically you could do nothing about these copycats?

• 16:04Speaker 00

  Nothing.

• 16:05Guy Raz?

  Wow.

• 16:05Speaker 00

  And when we were copied, we knew we didn't have as efficient a manufacturing.

• 16:11Guy Raz?

  Yeah.

• 16:11Speaker 00

  We knew we didn't have as much money. We knew we didn't have as good a relationship with the distributor chain that the competitors that had been dealing with them for 20 years had. And so I felt that my only tool was innovation and understanding of the technology because copying the technology and creating the technology was different.

• 16:34Guy Raz?

  So you were still not really profitable. You were just kind of breaking even?

• 16:39Speaker 00

  Cash was always our limitation.

• 16:40Guy Raz?

  Yeah.

• 16:41Speaker 00

  And I tried to get, you know, investors, but everybody thought that video games were kind of flaky.

• 16:46Guy Raz?

  They thought, who's going to pay for this thing?

• 16:48Speaker 00

  Yeah, exactly.

• 16:49Guy Raz?

  So how did you even come up with the idea that maybe we should sell this to people and they could do it at home?

• 16:56Speaker 00

  One day, we figured out that there was a new semiconductor technology called N-channel MOS. And these chips, once they were designed, you could buy them for $5. It occurred to us that we could put Pong on a single chip and hit a price point that would sell to the consumer.

• 17:16Guy Raz?

  And how did you even begin to think of ways to do this? Because you're talking about like, building a cabinet for a giant arcade system. Like, how do you then shrink that down into something that would fit in someone's house?

• 17:30Speaker 00

  Well, once you had it on a single chip, then it was just a matter of putting two knobs on a piece of plastic. We started out essentially designing this little game-looking thing out of wood and painting it so that it looked like plastic, but it was really wood. And our idea was to take it to the toy show in New York.

• 17:55Guy Raz?

  This is a toy, this is a toy convention in like, '74, '75?

• 17:59Speaker 00

  Yeah, it's 1975, spring.

• 18:01Guy Raz?

  And you show this at the toy convention and were people like, "This is amazing! This is gonna change the world!"

• 18:06Speaker 00

  We sold zero.

• 18:08Guy Raz?

  What?

• 18:09Speaker 00

  And it was a great demo and everything, but what we didn't know is that the toy business at that point in time did not sell anything that was more than $35.

• 18:22Guy Raz?

  And how much were you selling this Atari console for?

• 18:25Speaker 00

  $79.

• 18:26Guy Raz?

  Which, in 1975, that must have been a fortune.

• 18:29Speaker 00

  It was a lot. And so, we thought, boy, you know, we spent all this money to get this thing developed, but all our neighbors wanted one, and they were happy to spend $79.

• 18:41Guy Raz?

  Did you leave that toy show feeling dejected? Like, you, this was...

• 18:45Speaker 00

  Failure. It was abject failure.

• 18:47Guy Raz?

  You must have been pretty depressed, I guess, after putting all this money into this thing.

• 18:52Speaker 00

  You don't, I'm not easily depressed, but I'm very easily challenged. And I said, you know, there's something not right here. You know, we just haven't found the right guys yet.

• 19:03Guy Raz?

  What do you mean you hadn't found the right guys?

• 19:05Speaker 00

  The right distribution channel.

• 19:06Guy Raz?

  So basically, you're thinking, these guys are wrong. I know this is gonna work.

• 19:10Speaker 00

  Exactly, exactly. I said, these guys are missing a wonderful opportunity. And so we were thinking Radio Shack, I was thinking TV dealerships. I was thinking all kinds of stuff. And then my head of sales thought about Sears Sporting Goods. And the previous year, Sears Sporting Goods really focuses on the inclement weather family room. And they sell pool tables and ping pong tables and things like that.

• 19:45Guy Raz?

  Ah.

• 19:47Speaker 00

  The year before, they had made a consumer pinball machine for $200. And they sold out. So my sales guy said, maybe these guys. And so he calls up the buyer at Sears Sporting Goods. And he says, oh, that's kind of interesting. The next day, he was on our doorstep.

• 20:07Guy Raz?

  And they were based in Chicago at the time?

• 20:09Speaker 00

  They were based in Chicago.

• 20:10Guy Raz?

  So Sears buyer comes to, flies out, comes and says, I wanted to see what you're talking about.

• 20:16Speaker 00

  Exactly. And we actually had to scramble because we didn't realize he was coming. He didn't say, hey, I'm showing up tomorrow. He just showed up.

• 20:23Guy Raz?

  Wow.

• 20:24Speaker 00

  And so we were in the conference room after that. He says, okay, yeah, I think we're gonna do that. How many can you build? We didn't have a clue.

• 20:31Guy Raz?

  Right.

• 20:32Speaker 00

  Because we were, we were building coin operated games, you know, where a big run was 5,000.

• 20:38Guy Raz?

  Right.

• 20:39Speaker 00

  We kind of do a huddle. And I said, let me check on that. And so we did a huddle outside the conference room. And I had my manufacturing guy there. And then I, and he says, we could probably do 25,000.

• 20:52Speaker 00

  And so not wanting to be soul-sourced, I said, we can do about 75,000.

• 20:57Guy Raz?

  You go back to the Sears guy and say, we could do 75,000 after your own guy tells you we could do 25.

• 21:03Speaker 00

  Yeah.

• 21:03Guy Raz?

  OK.

• 21:04Speaker 00

  Yeah, I'm a carny.

• 21:05Guy Raz?

  Right.

• 21:06Speaker 00

  I'm well-trained.

• 21:07Guy Raz?

  Exactly. Right, OK.

• 21:09Speaker 00

  He gave us an order for 150,000.

• 21:12Guy Raz?

  Wow.

• 21:13Speaker 00

  And he wants them delivered by Christmas, by, you know, October, November.

• 21:17Guy Raz?

  Well, you've got basically six months to...

• 21:20Speaker 00

  To build a factory, to train the personnel, to sort out the technology, none of which we'd done before.

• 21:28Guy Raz?

  All right, so is anybody at Atari freaking out at this point?

• 21:32Speaker 00

  Everybody is.

• 21:37Guy Raz?

  Nolan Bushnell, founder of Atari. When we come back, after the freakout, the real work begins, plus a side hustle that brought together pizza, games, and a rat. I'm Guy Raz, and you're listening to How I Built This from NPR.

• 22:05Guy Raz?

  Hey, welcome back to How I Built This from NPR. I'm Guy Raz. So it's 1975. Nolan and his partners have gotten a huge order from Sears to make a consumer version of Pong. And so they need to figure out how to build a manufacturing chain virtually overnight.

• 22:22Speaker 00

  We sit down and we say, OK, if we were to build 150,000, how would we do it? And then the big question, how much money are we going to make after we spend all this money on the factory and we realize that we didn't earn enough? And so I call it... The Sears buyer and say, I hate to do this to you, but I'm going to have to up the price.

• 22:47Guy Raz?

  What was the price that he wanted to pay?

• 22:49Speaker 00

  We were quoting a retail price of 59, and we decided that we needed an extra 20 bucks per unit. And he said, that's OK. I can do that. Then I went through the math, and there was no way that I had enough capital to put in the conveyor belts, to rent the extra facility, to buy the parts. And I call him up and I say, you know, I really appreciate the order, but I said, I can't fund this. He says, oh, don't worry. I'll introduce you to Sears Bank. And so Sears Bank set up a bonded warehouse at the end of the conveyor line. And so as soon as a consumer Pong dropped off the assembly line, they would advance

• 23:31Speaker 00

  us 80% of the contract price with Sears.

• 23:35Guy Raz?

  Hmm.

• 23:36Speaker 00

  And all of a sudden, it worked.

• 23:37Guy Raz?

  I mean, the Atari console that you were building only played Pong, right?

• 23:41Speaker 00

  Correct.

• 23:42Guy Raz?

  And did you get it to them in time? 150,000 consoles by Christmas?

• 23:46Speaker 00

  We did. And in fact, I think that year, we sold almost 180,000, and they took them all.

• 23:52Guy Raz?

  Wow. I mean, at this point, you, I guess, you guys invent the home computer game phenomenon.

• 24:01Speaker 00

  Exactly.

• 24:02Guy Raz?

  And then how did you go from making one console that played one game to like a home video game system that played a bunch of games?

• 24:10Speaker 00

  Well, we realized at that time, when we were doing the one game, $70, that this was an unsustainable business. And then a magical thing happened. A semiconductor company in Silicon Valley came up with a microprocessor that they were willing to sell us for $8. And all of a sudden, our eyes were opened, and we said, we can do a von Neumann architecture, program-based, put cartridges with ROMs in it, and we can have a program.

• 24:51Guy Raz?

  That microchip allowed you guys to basically create a cartridge system that we, most of us came to know, right?

• 24:59Speaker 00

  Exactly. You know, it was just a magic time for technology. Silicon Valley at the time. You were as likely to learn about a new technology standing on the sidelines of your kid's Little League team as you were at any other time. And several times, I'd be talking about a technical problem we were having with one of the other parents. And they'd say, "Oh, yeah, we've got a chip like that in development. Would you like a prototype? It's not going to be really on the market for six months." And I'd say, "Yeah, we don't need production quantities for six months. You're not going to get that if you're a technology company in Oshkosh."

• 25:44Guy Raz?

  Were, I mean, were there many companies in Silicon Valley at the time that were focusing on entertainment?

• 25:51Speaker 00

  I can't think of another one.

• 25:52Guy Raz?

  Wow.

• 25:53Speaker 00

  We kind of always felt like we were the sleazy company who were focusing on fun instead of all this, you know, how many more megabytes can we get on a hard drive?

• 26:03Guy Raz?

  I mean, were there like the serious companies? Were they, did they look down on you?

• 26:08Speaker 00

  We liked our rebel status. And we were rebel in several ways. First of all, we were all young. I was the youngest CEO. And people didn't know what to think about a CEO in their twenties. I mean, that was just off the radar. And I actually feel like I paved the way for Gates and Jobs and some of the idea that you can be young and still a serious businessman. But more than that, we got known as a real party culture. Because instead of bonuses, since all our employees were in their early twenties, we'd have a beer bust on the back dock.

• 26:49Speaker 00

  And you'd get, you know, a hundred dollars worth of pizza and two kegs, and you had a party. And that was totally unheard of. And of course, we had a game room, and we had ping pong tables, stuff that Silicon Valley kind of thinks is de rigueur and necessary now.

• 27:06Guy Raz?

  Yeah.

• 27:07Speaker 00

  It was very, very different. And then, we didn't have a dress code. And we didn't have time clocks. We had this attitude that everybody knew what they needed to do. And...

• 27:20Speaker 00

  They were adults and they could wear what they want and they could come and go when they want and we weren't big brother, you know, and so we tried to make this meritocracy in which outcome was the only thing we counted.

• 27:33Guy Raz?

  As a young CEO, do you think you did a good job? Were you, you know, were you, were you a good manager of people at the time?

• 27:41Speaker 00

  So, so. I think I was a good manager of people. I think that I always had a little bit of an inferiority complex in that because of my age, I felt a little bit like a poser, which was okay with me on some level because of my carnival background.

• 28:00Guy Raz?

  Yeah, right.

• 28:02Speaker 00

  But at the same time, I always felt that I didn't know what the hell I was doing.

• 28:07Guy Raz?

  Yeah.

• 28:08Speaker 00

  And what I didn't realize is that most of the big companies don't know what the hell they're doing either.

• 28:12Guy Raz?

  Right, right.

• 28:13Speaker 00

  I wasn't mature enough to understand that all companies are somewhat screwed up.

• 28:17Guy Raz?

  But you, I mean, you clearly like had an eye for, you clearly had an eye for hiring interesting people. I mean, I think anyone who knows a little bit about the story knows that Steve Jobs and Steve Wozniak worked for you.

• 28:29Speaker 00

  Steve Jobs worked for me and he was a technician in quality control and he was really good at it. I can remember him coming in and saying, Nolan, if you allow these kinds of solder joints, you're going to have failures in the field that will ruin your reputation.

• 28:46Guy Raz?

  Could you already tell like that, you know, we think of him as this sort of mercurial kind of impetuous leader. Was he like that even as a, you know, 20 something kid?

• 28:55Speaker 00

  He was opinionated, but he was never wrong in his opinions. You didn't have to worry if you empowered Steve to do something. It happened. I mean, Steve had one speed. It was full on. And so he got the, the apple going and he came to me and says, I want to start this company and I'm going to be leaving. Do you want to be my first investor and I'll give you a third of the company for $50,000?

• 29:23Guy Raz?

  And you said, of course.

• 29:25Speaker 00

  Yeah, I did not say that. And I've regretted it, but you know, anyway, it was fun times.

• 29:32Guy Raz?

  What's a few billion?

• 29:34Speaker 00

  Exactly.

• 29:35Guy Raz?

  It doesn't matter. It doesn't matter.

• 29:36Speaker 00

  Doesn't matter. It would have ruined my life.

• 29:38Guy Raz?

  It would have made you totally insufferable.

• 29:40Speaker 00

  Yeah, and I was already insufferable.

• 29:42Guy Raz?

  So thank goodness you did not take that deal.

• 29:46Speaker 00

  Exactly.

• 29:48Guy Raz?

  So, all right, so you're running Atari. It's doing really well. And then what? You decide to sell it, I guess, right?

• 29:56Speaker 00

  So I felt that we had to take the company public to raise $15 million. Which seems paltry now, but that was all the money in the world to us at the time. And the market hiccuped. And they said, there's just no way we're going to do it.

• 30:12Guy Raz?

  This is the late 70s, right?

• 30:14Speaker 00

  This was the summer, summer of 76.

• 30:17Guy Raz?

  Right.

• 30:18Speaker 00

  And all of a sudden, we had Christmas coming, and I knew I didn't have enough money, even with Sears, to be able to get this new massively wonderful product into the marketplace.

• 30:30Guy Raz?

  This is the Atari console with the cartridges, right?

• 30:34Speaker 00

  Yeah, that's correct. So without an ability to do that, I said, maybe it's time to get a corporate partner. And so I started dialing for dollars from corporate partner. Warner Communications showed up and said, we'll not only put up the money, but we'd like to buy you. And we'll pay you money, and we'll put money into the company. And you'll get this big royalty stream. And we understand creatives. And we're going to link arms and march into the sunset.

• 31:07Guy Raz?

  And what was it? Well, how much were they offering you?

• 31:10Speaker 00

  28 million bucks.

• 31:11Guy Raz?

  Which is, that must have been a huge amount of money at that time.

• 31:14Speaker 00

  Yeah, I mean, you know, I was a farm boy from Utah. All of a sudden, I mean, you could buy a Learjet in those days for a million dollars.

• 31:21Guy Raz?

  So you took the money?

• 31:24Speaker 00

  Took the money. Yeah. Yeah.

• 31:27Guy Raz?

  And so what happened? So you continued to work for Atari at that point?

• 31:32Speaker 00

  Correct. After the sale, I was not as rigorous as I had been. I sort of started taking care of my personal life instead of my business life.

• 31:43Guy Raz?

  Right.

• 31:43Speaker 00

  And I found that there were a lot of decisions that were being made that were really... Really pretty toxic, I thought.

• 31:51Guy Raz?

  Decisions about where to take the company?

• 31:53Speaker 00

  Yeah, and slowly, we brought in a president of consumer who had all the hierarchy, you know, reserved parking places and executive dining rooms and all the things that were anathema to me.

• 32:09Guy Raz?

  Yeah, you're going from keg parties on your loading dock to an executive dining room?

• 32:15Speaker 00

  Yeah, and I just thought that was so wrong on so many levels because I don't think you need to arbitrarily create an us versus them mentality in your company, you know? And one of the things that happens when you're owned by a New York company, they think that your laid back style is that you're not working as hard. And they think that people that come in at 10 should be fired. And so all of a sudden, there was this clash of cultures that got to be really ugly. And ultimately, they got tired of me and I got tired of them and I was fired.

• 32:54Guy Raz?

  How long, so between the time that they bought you and the time that you were ousted, how long was that?

• 32:59Speaker 00

  About 20 months.

• 33:01Guy Raz?

  Wow, that must have been a tough period for you.

• 33:04Speaker 00

  Actually not.

• 33:10Speaker 00

  I kind of view business a little bit like a game of chess.

• 33:14Guy Raz?

  Yeah.

• 33:14Speaker 00

  You play the game, you play hard, sometimes you win, sometimes you lose. And then you set up the pieces and you do it again. And you don't have angst that the fact, oh, my God, I lost that game of chess. What am I going to do? What was me? And what that allows you to do is to view a little bit as an outsider from yourself, things that happened to you. So when something doesn't work out that well, you can say, gee, that was. Horrible, but it was an interesting experience.

• 33:44Guy Raz?

  OK, let me just stop here for a second because this episode could end here and we could say, OK, that's Nolan Bushnell, visionary who founded Atari. We are now going to talk about the second company you founded, which is Chuck E. Cheese.

• 33:56Speaker 00

  Yeah.

• 33:57Guy Raz?

  How did that happen? How do you even come up with this concept?

• 34:01Speaker 00

  Well, the math is very simple. Before I sold to Warner, we were selling games. These were coin-operated games, remember? We were selling them for about $1,500. During their lifetime in CoinDrop, they'd earn $30,000 to $50,000. So it didn't take rocket science to say, I'm on the wrong side of this equation. I need to be operating these things to a bigger extent. But I didn't want to compete with the guys I was selling to, so I decided I had to create my own location. I thought to myself, why are people going to come to this freestanding arcade? And I decided that adding food would be a benefit because then families could come.

• 34:43Speaker 00

  And that indicated pizza because there was wait time, and that would be good game-playing time. While I was still mulling this whole concept around, I went to Disneyland and went to the Tiki Room.

• 34:56Guy Raz?

  Oh, yeah.

• 34:57Speaker 00

  And I said, huh, my guys can do this.

• 34:59Guy Raz?

  You mean, my guys can make these little creatures?

• 35:02Speaker 00

  Yeah.

• 35:03Guy Raz?

  Really?

• 35:03Speaker 00

  We can animate things.

• 35:04Guy Raz?

  OK.

• 35:05Speaker 00

  And then I realized that I really wanted to have a branded mascot and that I wanted it to be a longer-form entertainment. I figured, kids are going to be wanting to play the games. Parents are going to be bored. The more I can entertain them, the less they're going to be bugging their kids to leave. So I said, let's do some animated skits. The whole idea was to roll this out, make it seamless, not have labor costs, just make it happen.

• 35:34Guy Raz?

  Right.

• 35:35Speaker 00

  So anyway, I went to an amusement trade show, bought a costume.

• 35:41Guy Raz?

  Like a costume that a human would wear, like a full-size adult? And you would just, your guys would just turn it into an animated robot?

• 35:48Speaker 00

  Exactly.

• 35:49Guy Raz?

  And this was the famous Chuck E. Cheese?

• 35:51Speaker 00

  That was the famous Chuck E. Cheese.

• 35:53Guy Raz?

  Which was a rat?

• 35:54Speaker 00

  Right.

• 35:55Guy Raz?

  What restaurant is going to pick a rat as their mascot and think that's going to work?

• 36:01Speaker 00

  Well, to understand, when I bought the costume, I thought I was buying a coyote.

• 36:06Guy Raz?

  Okay.

• 36:06Speaker 00

  The code, the code name was Coyote Pizza. And my guys, I said, how's the coyote coming? He said, what coyote? And I said, well, the costume I sent you. He says, oh, you mean the rat? So all of a sudden, we had a problem. So I said, okay, we'll just change the name. It won't be Coyote Pizza anymore. It's gonna be Rick Rat's Pizza.

• 36:25Guy Raz?

  Rick Rat's Pizza? That was gonna be the name of Chuck E.

• 36:29Speaker 00

  That was gonna be the name.

• 36:29Guy Raz?

  Who was gonna eat pizza at a place called Rick Rat's Pizza?

• 36:33Speaker 00

  That's exactly what my marketing department said. And they said, they said, there's no way, Bushnell, that's the stupidest idea I've ever heard. They said, we couldn't even, you know, they'd be on the guard and we wouldn't get our health license. And I said, okay, you name it, I don't care, but it has to be a happy name.

• 36:52Guy Raz?

  Right.

• 36:53Speaker 00

  And so they came back all smiles the next, the next week and they said, we've got the name. It's a three smile name. And I said, what is it? And he said, Chuck E. Cheese.

• 37:04Guy Raz?

  So, so what happened? You, you opened up your first location in Silicon Valley?

• 37:08Speaker 00

  Yeah, it was, it was basically in San Jose. We took over a old Dean Witter office and it was like 5,000 square feet and that was huge compared to pizza parks at the time. We knew the day we opened that we'd made a huge mistake and it was too small.

• 37:25Guy Raz?

  Wow, you mean it was that popular?

• 37:28Speaker 00

  Massive. I mean, lines out the door on a Monday.

• 37:32Guy Raz?

  Were your customers little kids? Who, who, who was coming?

• 37:34Speaker 00

  Everybody. But then we sold the company and Warner didn't want to be in the restaurant business.

• 37:41Guy Raz?

  Right, so just to clarify, you, you sold Atari to Warner and I guess Chuck E. Cheese was, was kind of part of that deal, right? Because you created it while you're there, so for you to keep Chuck E. Cheese, you had to buy it back from them?

• 37:53Speaker 00

  Yeah.

• 37:53Guy Raz?

  And, and what did you have to pay for it?

• 37:55Speaker 00

  Half a million dollars.

• 37:56Guy Raz?

  500,000 bucks to buy Chuck E. Cheese?

• 37:59Speaker 00

  And that was all the technology and the one open store. The one open store was cash flowing a half a million dollars a year. And they let me pay it 100,000 a year for five years. And that was maybe the deal of a lifetime. So I had this business that was positive cash flow day one while I was still chairman of Atari. And I had a team of people that had been working on it. I brought them on my payroll and we immediately expanded to the second store. This one was 25,000 square feet. And I was having more fun at Chuck E. Cheese than I was having at Atari. Atari was getting political.

• 38:40Speaker 00

  So when we decided to part ways, I decided I could focus all my time on Chuck E. Cheese and I was kind of happy about it.

• 38:49Guy Raz?

  Yeah, it must have been pretty liberating to work on this thing that, you know, you were like super excited about.

• 38:55Speaker 00

  You know, sometimes I feel that inadvertence shines on me because I hadn't even thought about franchising. And a guy came in and said, I want to franchise this. And I said, okay. And we started franchising. And so the franchise business was hugely profitable.

• 39:14Guy Raz?

  So how many Chuck E. Cheese locations did you eventually franchise?

• 39:19Speaker 00

  I sold the company when we were about 280 stores and half were franchised at the time. So we built about 120 and franchises built about 140, I think.

• 39:32Guy Raz?

  What sort of mistakes do you think you made that you learned from at Chuck E. Cheese?

• 39:39Speaker 00

  I think that I didn't understand the nature of entertainment. Now, that sounds funny, coming from the amusement park and all that, but entertainment is very fragile. It's driven on novelty. And so when we would first open a unit, people would come from all around because it was novelty. So there was sort of a half-life of a shine in which you say, gee, you know, this is St. Louis. Looks to me like I need four more Chuck E. Cheeses. When in fact, what you were seeing is this novelty bonus.

• 40:22Speaker 00

  And that people in normal life didn't really want to come to Chuck E. Cheese three times a month.

• 40:30Guy Raz?

  Yeah.

• 40:30Speaker 00

  They wanted to come to Chuck E. Cheese every other month. We got overbuilt because we got another false positive.

• 40:38Guy Raz?

  What was a false positive?

• 40:40Speaker 00

  That you could pack the place 365 days a year in a population of a million people, which you couldn't.

• 40:51Guy Raz?

  You know, it's amazing because you built these two iconic companies. I mean, companies that for many, many people in America define the contours of their childhoods. And you've gone on to start at least a dozen other companies, some of which have been spectacular failures and spectacular successes. You've had this amazing range of experiences on both ends. And I guess, I guess I wonder what, I mean, I'm sure the successes were incredibly satisfying for obvious reasons, but in some ways, do you think the failures were sort of more interesting?

• 41:33Guy Raz?

  Or times where you learned more about life and about you and about business?

• 41:39Speaker 00

  There is no question that a good failure is good for your soul. There is nothing worse than feeling like you are invincible and really cool and entitled. Being entitled is probably the ugliest thing that a person can be. Because all of a sudden, it's not what you do, it's who you are. And people who rely on who they are as opposed to what they do become very banal.

• 42:18Guy Raz?

  How long did it take you to become who you are? To realize that that's who you are?

• 42:26Speaker 00

  Well, I hope that I'm not there yet.

• 42:28Guy Raz?

  Hmm.

• 42:28Speaker 00

  I, I want to stay on this deep part of the learning curve. And in fact, I've even done a methodology on it. I, I force myself to do something totally outside my comfort zone every year. And I write down 11 things that I think I can accomplish in a year that are outside my comfort zone. And then I mix them up, put a number on them, throw a pair of dice, and I have to, in that year, do what the dice tell me to do.

• 43:00Guy Raz?

  Hmm.

• 43:01Speaker 00

  And I've discovered a funny thing. Maybe it's just me, but I think it's a generalized principle that when you do different things, you're happier.

• 43:11Guy Raz?

  Huh.

• 43:11Speaker 00

  That this process of, of exploration and of discovery and of winnowing out the game and the meta-game is very satisfying.

• 43:26Guy Raz?

  If you were able to go back to, like, I mean, now you are a sort of an elder statesman of the tech world, you're in your, your 70s, and if you could go back to, to Nolan Bushnell in the late 70s or early 80s and say, hey, you know, I want to give you some advice, what would you tell yourself?

• 43:46Speaker 00

  Boy, that's a real hard one because, you know, I, some of the bad decisions I've made, I'm not sure that I would like my life to not have had them. And I'm not sure that if I were to give myself advice and change that trajectory, I would end up where I am right now. And I like where I am.

• 44:11Guy Raz?

  Tell me about what you're working on now.

• 44:15Speaker 00

  Well, then I'll have to kill you. No.

• 44:22Guy Raz?

  Nolan Bushnell is the founder of Atari and Chuck E. Cheese. And he's actually working on some pretty cool stuff right now, including a company called BrainRush, which makes software designed to help students learn school subjects eight to 10 times faster.

• 44:44Guy Raz?

  Please don't turn us off just yet. In a moment, we're going to hear from you about the things you guys are building.

• 44:54Guy Raz?

  Hey, we're back. And thanks for sticking around because now it's time for how you built that. And this story comes to us from Danit Zamir. About three years ago, she was planning her wedding near her hometown of Fairlon, New Jersey. 240 guests, 20 tables, and $7,000 just for the flowers, just for the flowers, $7,000.

• 45:18Speaker 02

  And it was that frustrating feeling of I'm spending all this money on something that I want to have, but I don't want to be spending this kind of money on, quite frankly, anything that is going to be thrown out.

• 45:29Guy Raz?

  So as Danit was trying to figure out how to cut down on the costs, she thought about a friend who was getting married the very next day.

• 45:37Speaker 02

  So what I did was when I was talking to the florists, I was asking them, is it possible to maybe have her reuse the flowers? Maybe we can do some sort of sharing? And that was kind of that lightbulb moment where I was like, OK, well, the florist is telling me that this can work and I know that I'll do it and I know that she'll do it.

• 45:53Guy Raz?

  OK, so ultimately, Danit and her friend could not make it work. It was too complicated. But she couldn't let go of this idea. So Danit went online and she started to search through wedding chat rooms.

• 46:06Speaker 02

  You have everyone just getting advice from each other and asking who's in the same area? Can we share this? Can we do that? And so I think that was another big moment of, OK, customers do want to do this. I'm not the only one who has wanted to share my flowers.

• 46:20Guy Raz?

  And a few months later, Danit leaves her job at another startup to start Bloomerent. And her idea was that brides in the same city could log on to a website and then share flower arrangements with other couples getting married on the very same weekend. They'd each get a discount on their flowers. Bloomerent would get a cut of the florist's fee. And the florist would make out really well, too.

• 46:42Speaker 02

  Exactly. So for them, they get to create those centerpieces once and sell them twice.

• 46:48Guy Raz?

  But as Danit started to put her website together and then reach out to florists in the New York metro area, she was surprised that a lot of them said no.

• 46:56Speaker 02

  You know what was interesting? Literally, every single person said, you know, this is a really good idea. And I love that you're reducing waste. But I just don't want to do something new. And that is both the most frustrating thing in the world, but it's also, you know, really motivating.

• 47:10Guy Raz?

  And so, Danit just kept at it. Her first paying client was a friend getting married in New Jersey. And then things just kind of grew from there.

• 47:19Speaker 02

  You tell one person who uses it, and another person uses it, and they tell their friend who tells their friend.

• 47:24Guy Raz?

  And since she started the company three years ago, Danit and her business partner have expanded Blumerent to 14 cities and to other events besides weddings. Right now, all of their money is being plowed back into the business. They're not paying themselves yet. But this year, Danit says, they'll open up to outside investors. Oh, and those florists that couldn't get behind Blumerent at the beginning?

• 47:46Speaker 02

  You know what's funny? I do actually have that list. I do have a small list of people that I am definitely planning on calling in the next year. And I'm really excited to have those conversations.

• 47:58Guy Raz?

  That's Danit Samir. To find out more about her company, Blumerent, head to our Facebook page. Just search How I Built This on Facebook. And please do keep sending us your stories. We love sharing them. You could tell us all about the things you're building by visiting build.npr.org. That's build with a D, dot NPR, dot org. Thanks for listening to the show this week. If you want to find out more or listen to previous episodes, you can go to howibuiltthis.npr.org. Please also consider subscribing to our show on iTunes. And do us a favor, write us a review while you're there. You can also write directly to us at [email protected].

• 48:42Guy Raz?

  And if you want to send a tweet, it's at howibuiltthis. Our show was produced this week by Ramtin Arablouei, who also composed the music. Thanks also to Neva Grant, Sanaz Meshkhanpour, and Jeff Rogers. Our intern is Claire Breen. I'm Guy Raz, and you've been listening to How I Built This from NPR.