Entrepreneurs EXCLUSIVE Case Study: Nolan Bushnell, co-founder of ATARI
October 20, 2014
Its often the case that today’s entrepreneurs and start-ups know more about the back stories of Michael Dell, Richard Branson, Bill Gates and Steve Jobs than they do their own business plans and yes, they are all very successful and inspiring people, but there are many others out there who have also done remarkable things. Sometimes those remarkable people and their achievements can get lost in the mist of time and periodically it’s good to remind the gathering entrepreneurial crowd that there are others that you can draw lessons and inspiration from.
One such person is serial entrepreneur and industry disruptor, Nolan Bushnell. Described by many as the granddaddy of the modern gaming industry, Nolan is the co-founder of Atari! Yes you heard it Atari! (Incidentally that was the brand of my very first games console that I still have today!). I asked seven questions of Nolan from lessons learnt and barriers along the way through to challenges and opportunities ahead – all knowledge that today’s entrepreneurs can really learn from! (get all of the downloadable quick tip cards and content here)
But, before we get to the seven questions – some more of the incredible back story!
Born in Utah in 1943 Nolan attended both the University of Utah (college of engineering) before heading off to the Utah State University. It was a time computer science students were discovering a new world of entertainment such as Spacewar, built on DEC mainframe computers (for the un-initiated DEC stands for Digital Equipment Corporation acquired by Compaq in 1998 ahead of Compaq being acquired by HP). Combine that with the fact Nolan pretty much grew up (and worked at) around the Lagoon Amusement Park you have an interesting intersection where an idea will be seeded about whether or not something, potentially an industry, can be disrupted.
In 1971 Nolan and Ted Dabney founded the pre-cursor to Atari – Syzygy Engineering and on June 27th, 1972, Atari was incorporated. One of the first hires was Allan Alcorn who, as a design engineer, was put to the test of building an arcade version of Magnavox Odyssey’s tennis game which would, eventually become the famous Pong game! In fact have you ever wondered what Atari means? Well, if you are guided by the Atari history then in the context of a game it means “a state where a stone or group of stones is imminently in danger of being taken by one’s opponent.” In Japanese Atari essentially means “to hit the target” or “to receive something fortuitously".
In 1976 Nolan sold the business to Warner Communications for a purported $28-32 million (enough to possibly buy a small pacific nation on those days) and at its peak Atari accounted for a third of Warners annual income. In fact, it was the fastest growing company in the history of the United States at the time.
Of course, being a serial entrepreneur Nolan’s ingenuity didn’t stop at an industry disruptor like Atari – he also founded Chuck E. Cheese’s chain of family entertainment centres (in the United States) – a concept purchased from Atari’s parent company Warner Communications in 1978. Seeing the opportunity the classic business model for success, franchising, came into play and while Chuck E. Cheese would eventually fall into Chapter 11 the lessons learnt carried the new business forward where today they have 577 stores and revenue of more than $240 million (USD).
There have been others such as Catalyst Technologies (and VC) Group who amongst its companies included Etak (founded in 1984) that became the first company to digitize maps of the world which would ultimately provide the spine of what would later become Google Maps. Interestingly enough (and as a side point) it was bought by News Corporation Head Rupert Murdoch in the 1980’s which means Rupert bought quite a few multi-billion dollar potential companies that may not have lived up to their full (well) potential (Myspace anyone?).
Today Nolan is the Founder, CEO and Chairman of education video game software business Brain Rush and is an avid supporter of technology (and gaming) playing an important role in education.
So, let’s take a look at those seven questions I posed to Nolan:
1. What were some of your initial barriers to success in the early days?
“Lack of capital. Atari started significantly before there was a robust Venture Capital market and games and few believed in the video game business at the time.”
Okay – take a read of these two quotes: “The horse is here to stay, but the automobile is only a novelty—a fad.” (Advice from a president of the Michigan Savings Bank to Henry Ford's lawyer Horace Rackham. Rackham ignored the advice and invested $5000 in Ford stock, selling it later for $12.5 million) and “That the automobile has practically reached the limit of its development is suggested by the fact that during the past year no improvements of a radical nature have been introduced.” (Scientific American, Jan. 2, 1909).
People have poured scorn on ideas since time began and have been proven wrong time and time again. The key is, if you firmly believe you are onto a winner, particularly a disruptive idea, then stay the course. Lack of capital is something we all still grapple with and partly it comes down to the pitch. Your pitch has to turn the naysayers into believers otherwise they will continue to be convinced that something so obvious to you will never happen.
Why persevere? Because sometimes timing has a lot to do with it which is why we all need to keep a watch on market trends – keep an eye on the market, refine the pitch, mix and match terminology familiar with your narrative combined with how other people will interpret what you’re saying and you have a winner.
2. What kind of support network were you able to tap into?
“American Electronics Association gave me the ability to meet other Silicon Valley executives.”
That lesson is important because today we sometimes forget that networking is still a very meet and greet exercise. There are only so many emails you can send someone that turns positive persistence into spam and annoyance! Industry associations and even local chambers of commerce are still great places to meet the people that can help you make things happen.
3. What were your own personal clear drivers to success?
“After my experience in the amusement park business, I was eager to bring video games to the masses.”
An important lesson here is that our formative years are spent learning through experience. If it is one thing that many great entrepreneurs have in common its by keeping your eyes and ears open while often doing little in the way of talking (unless of course it’s asking questions!)
4. Who were your own role models in terms of business?
“Robert Freed, my boss at Lagoon, the amusement park where I worked during college, and Bob Noyce, founder of Intel.”
Be inspired by those around you – look at their success (however large or small) and take the very best of what all of those people have done to improve on what they have done – this is where disruption comes from – invariably the ability to innovate on top of something that already exists in order to change the way at which that industry will move forward from what you have done. From Atari essentially came a whole new way of playing games in addition to the tool in which we played them – just as Bob Noyce had done before him, disrupting an industry comes from the seeds planted as we develop either in our own thinking or in the environment in which we are working.
5. What do you think the current state of entrepreneurship is and what might we do more of?
“Crowd-funding sites are an important addition to provide seed capital, which has always been difficult. I think we can encourage entrepreneurs to find businesses that don't need large amounts of outside capital.”
This is great advice because we often turn to traditional means of funding such as venture capital or angel investors. With the rise in Crowd Funding we are seeing a new dimension to seeding start-ups but we still need to be conscious that getting the pitch right is still important. Always think of creative ways of funding the idea as opposed to leaping into mountains of debt or losing early control of the business through a diluted shareholding as a result of a VC deal.
6. If you could share two of the biggest lessons you learnt along the way – what would they be?
“Fire toxic employees as soon as possible. Hire the best people you can and reward them generously.”
This is a theme touched on by many successful entrepreneurs – always nurture, reward and encourage talent and know who is toxic. By removing toxic employees early on you can actually change (from a positive perspective) the culture and therefore the productivity of the business.
7. What do you think we have left to disrupt in terms of business models or industries?
“I think transportation and education are going to go through major upheavals. Both will be unrecognizable in 10 years.”
Now this is an insight – two traditional sectors with one that requires us to think about education being delivered in a non-traditional sense! Let’s do away with the cloistered corridors, throw open the windows and let the fresh air in maybe! What do you think? Is it time for futurists to step forward and team with the entrepreneurs?
Nolan continues to be a man on a mission, that rare combination of futurist and entrepreneur all packaged up at one. At 71 years old there is no slowing this serial entrepreneur!
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