Valley of Genius Page 5

  Ted Dabney: Nolan and I shared an office. We were very close.

  Al Alcorn: At Ampex in the late sixties, you had to wear a suit and tie. You had to dress properly, neatly. You had to be there at eight a.m. You took a one-hour lunch and left at five… I don’t recall anybody staying after work. It was pretty straitlaced. You stayed there. You retired there. You got the golden wristwatch and your pension and all that. That was the plan.

  Nolan Bushnell: As an engineer I wore a coat and tie to work every day; however, we all had our hippie costumes and we would go to San Francisco and pretend we were flower children. The ultimate posers, we were! The hippie culture was fascinating to us.

  Al Alcorn: Dabney was the old man. At the time, he was probably in his late thirties or something, and served in the military at one point. He certainly was not a hippie by any stretch of the imagination.

  Ted Dabney: Nolan was supposed to be an engineer, I mean, he was hired as an engineer but I don’t think he was capable of doing any engineering work. He didn’t have the background; he didn’t have any training in it. He just wasn’t very capable. And a lot of that I found out later. I didn’t know that at the time.

  Al Alcorn: Nolan was an okay engineer, but he was such an entrepreneur. Nolan wanted to play the market but didn’t have enough money. He actually got together a stock investors’ club—a group inside of Ampex—to invest. Back in those days, one could not buy stock unless one was of the right class—you couldn’t afford to open an account. It was not like today, where everybody buys stock. But if you pulled about five or six guys together, then you could buy stock. Nolan was that kind of guy. He worked adjacent to me. We were friends.

  Ted Dabney: Nolan knew games. He was really into that kind of stuff.

  Nolan Bushnell: I became infatuated with the game of Go and I would drive to San Francisco every other weekend and spend basically most of Sunday morning playing Go at the old Buddhist church by Bush Street. There I met a guy who worked at the Stanford Artificial Intelligence Lab and one day we got to talking and he said, “Have you ever heard of Spacewar?” I was like, “Spacewar? The first time I played Spacewar was at the University of Utah, in 1965 or 1966.” We left and drove up to the Artificial Intelligence Lab and played until all hours of the night. Oh yeah! Oh boy! Bingo! And that in some way was the recatalyzation of the idea for the video game. I can remember coming back to work next day and regaling Dabney with it.

  Ted Dabney: He wanted me to take a look at this game on a computer over at Stanford. It was called Spacewars or something. It was a neat game but it was on this big computer—a million-megabyte kind of thing—and he said, “Hey, we should be able to do that with a smaller computer and, you know, TVs.”

  Nolan Bushnell: Coincidently there was an ad for a Data General Nova minicomputer. It had an eight-hundred-kilohertz clock cycle, and it looked like you get a stripped-down version of it for about four thousand bucks. I thought, A-ha! The time is right! It was time to form a company. I asked Dabney if he wanted to be part of it, because he was really, really good at analog circuitry, and I knew I need an analog interface for the television. He said, “Sure!” I was the digital guy—I could put integrated circuits together. This was probably October of 1969.

  Ted Dabney: Nolan and I were sitting around my living room one day trying to think of what we wanted to do. We had decided to come up with a partnership, and we each were to put in $100 to kind of get this thing started. We knew that wouldn’t be enough, but at least it was a place to start. So I started a bank account and put in my hundred dollars, Nolan put in his hundred dollars.

  Nolan Bushnell: So I said that my addition will be to figure out a way to have a regular television set driven by this computer. We had to take the TV apart, cut a trace, solder a wire on it—you’d get a hell of a shock if you did it wrong. In a TV the signal is very fast, up to 3.5 megahertz. And the chips in those days didn’t like to go more than a megahertz. I tried to solve this timing problem over the Thanksgiving holiday. I built a little circuit that would bring up the stars, I built a little circuit that would put the score up, various things to off-load tasks from the computer. But soon I found myself thinking that This just isn’t going to work, the computer just isn’t fast enough. I abandoned the project for about two days. Then I had an epiphany: Let’s not use the computer at all… I can do it all in hardware! We never did buy that computer.

  Al Alcorn: The story I heard was that Nolan was going to send $10,000 to Data General for a Nova minicomputer, for several of them—and his wife just refused—so she never sent the check. And by the time the computer should have shown up, they had figured out that the minicomputer, although wonderful for its time, was nowhere near fast enough to do anything. The hardware they were building was doing more and more, and pretty soon the stuff that was left to the computer was so trivial that they didn’t need the computer.

  Ted Dabney: Nolan really, really worked on it. I helped him with the circuitry and then he would say, “Well, how do I this? And how do I do that?” and I would show him, you know, the basics, and then he’d go and turn it into a circuit that actually worked.

  Nolan Bushnell: Both Ted and I had daughters, and he was working in his daughter’s bedroom, and I was working in my daughter’s bedroom, and when we brought this stuff together we got this electric feeling. The first time we had a little rocket ship going, flying on the screen, it was just one of those wow-we-thought-we-could-do-this-and-now-we-did-it moments. Productizing it happened that summer.

  Ted Dabney: At some point, and I don’t know when it was, he decided to contact Nutting Associates, mainly because there’s no way we could have done anything with it, no matter how good it was. So, he went and talked to Nutting.

  Al Alcorn: Nutting was the only coin-op manufacturer west of the Rockies—they had something called Computer Quiz, which is a filmstrip game—fairly simple, nothing big.

  Ted Dabney: Nutting had a game called Computer Quiz that they had been milking for years. So Bill Nutting was really kind of desperate for something.

  Al Alcorn: Nolan did a deal with them.

  Nolan Bushnell: I called him up and said, “Would you guys be willing to manufacture this new game?” And I went to lunch with him and showed him the thing and they were all jacked up and said, “Yeah, we can do this!” So we negotiated the licensing agreement and they said, “You are going to have to come on as our chief engineer as well,” and I felt good about this, because I literally doubled my salary. Not only that, but they agreed to my salary so quickly that I said, “And a company car.” So I ended up doubling my salary and got a company car and left Ampex. About June I talked Nutting into hiring Ted as my assistant.

  Dick Shoup: The first time I met Nolan Bushnell, his desk was in the hall of Nutting Associates. I heard what he was doing and came by. He was making video games. Then occasionally I would run into him at the Dutch Goose having a beer. I thought what he was doing was pretty interesting. He had some great ideas.

  Al Alcorn: Conceptually, the idea, from an engineer’s standpoint, of making a device, that was digital, that generated a video signal, and worked on a display, was fairly novel. That was interesting—very impressive…

  The game that Dabney and Bushnell created was Computer Space, a Spacewar knockoff, but more importantly: the first arcade video game.

  Ted Dabney: I spent most of my time building a cabinet, because we needed to have a cabinet to display this thing in. Nolan actually did the design work and I worked on the cabinet.

  Nolan Bushnell: It was totally rounded, it had a screen, it had a pedestal that organically grew out of the base and four buttons which were illuminated, and it looked like it was from outer space.

  Ted Dabney: Totally Nolan’s idea. The guy is brilliant! He’s absolutely brilliant! He just happens to not be a particularly good engineer. But his imagination and his ideas and… I mean, all the ideas that came around were his ideas.

  Nolan Bushnell: We put it in the Dutch Goose, wh
ich was a hangout for Stanford students. It was an immediate success—just cash dropping through! Now people say that Computer Space was a failure, but it did about $3.5 million, which was a lot of money in those days. The royalties deal allowed me to start Atari, so it was a winner for me.

  Al Alcorn: Computer Space did modestly well, so Nolan said to Nutting, “Give me some stock in the company and I’ll be the VP of engineering.” They were contractors, not employees.

  Ted Dabney: We owned the game. That was the whole deal. We owned the game. They were going to manufacture it and they were going to pay us a royalty. And they’re going to pay us a salary while we’re building this thing up. You know, developing it.

  Nolan Bushnell: I said, “I’m clearly making this company, I want 15 or 20 percent.” I think they came back with an offer of 5 percent of the company.

  Ted Dabney: Nolan tried to negotiate with Nutting, you know, for an ownership of the business and all that kind of stuff, which didn’t work for Nutting at all. Bill Nutting was not the sharpest pencil in the box.

  Al Alcorn: Bill Nutting basically told Nolan, “You are not a businessman. I am a businessman. You’re just a worker.” The fact is, Bill Nutting’s claim to fame was his wife, who was wealthy. He had kind of an attitude.

  Nolan Bushnell: I got on a flight to Chicago and called on Bally and said, “Would you like to license my next game? A driving game? It’s going to cost you this much of money in development.” They said, “Yeah, we’d love to do it!” And so I had my cash flow in hand. I went back to Nutting and said, “I’m going to have to leave.”

  Ted Dabney: We wound up getting this contract, $4,000 a month for six months to develop a video game and a pinball machine for Bally.

  Al Alcorn: Nolan then goes and hires me, employee number three, and we go off and start Atari.

  Atari is a Japanese term borrowed from the game of Go. It’s the equivalent of the word “check” in chess.

  Al Alcorn: It was a flyer. It was a big risk. But so what? I had nothing to lose at that age. I reasoned that if it did fail, which it probably would, I could get my job back at Ampex or someplace.

  Lee Felsenstein: In 1972 Ampex was beginning to implode.

  Al Alcorn: I figured Atari would be a valuable lesson, even in failure. Much to my surprise, that didn’t happen.

  Nolan Bushnell: My idea was simply to be a design shop for the big companies that had the factories and cash flow. Because even with all those royalties, we still were nickel-and-dime compared to what was necessary to really get into manufacturing.

  Al Alcorn: Looking back on it, it was really risky, because we didn’t have some slug of money or something like that. Nolan and Dabney didn’t have much at all. Banks wouldn’t talk to us because we were in the “coin-operated entertainment business,” which meant jukeboxes and vending machines, which meant mob controlled, and no way were they going to give us money for that. We had no track record, no money.

  Nolan Bushnell: That spring I heard that somebody else had a video game which was, you know, scary, particularly somebody like Magnavox.

  Ralph Baer: The Magnavox caravan was a vehicle that traveled around with an original Magnavox Odyssey before it became public.

  The Magnavox Odyssey TV Game System was not a coin-operated arcade game, but rather a gaming console—a box that hooked up to a TV so one could play computer games at home.

  Nolan Bushnell: So I find out where it is and I drive up and it’s at the Burlingame Marriott or something and I go in, sign the guest book, and I see the thing and I look at it and I think, Ahhh… no competition here!

  Ralph Baer: Nolan played the game. His opinion from the get-go is negative. That’s fine that he had that opinion. It was mostly based on not learning how to play it properly. I bet you dollars to donuts he never found the English knob on it!

  David Kushner: You could turn it to put a little spin on the ball.

  Nolan Bushnell: The game was fuzzy, it wasn’t that fun, it had no screen, no scoring, no sound. It was just really what I considered to be a marginal product. I drive back from the thing feeling relieved.

  Ralph Baer: Maybe it wasn’t as fancy, it didn’t keep score… but people have played table tennis for 250 years. How do they score? They call out the scores. No big deal. I really resent that Nolan treats me like an engineer that didn’t know what the hell he was doing, like it was a piece of junk and he’s the great hero. Bullshit! All you have to do is look at the record: 350,000 Odysseys sold in the first year. I didn’t go before the president of the United States to have the National Medal of Technology hung around my neck because I am just an engineer. I invented video games!

  Nolan Bushnell: It was Al’s first or second day and I needed a training project. Computer Space was a pretty complex project, and Bally’s driving game was going to be a hard project, and I thought, Okay, I’m going to pitch him this learning project: this ping-pong game.

  Ralph Baer: My ping-pong game. Pong, they called it.

  Al Alcorn: Nolan described Pong: one moving spot, a score, a net, and a ball. It couldn’t be any simpler.

  Stewart Brand: Pong was clearly a brain-damaged version of an interactive game, but it was one that you could play on a simple computer.

  Al Alcorn: Pong was the simplest thing Nolan could think of. In his mind he thought that the game he really wanted to do was something more complicated than Computer Space. He wanted to do a driving game, something like that. But, he didn’t tell me that. He told me he had this deal with General Electric.

  Nolan Bushnell: I told him that I had a contract with General Electric because I find that people don’t like training projects or dead-end projects. It was a little fabrication.

  Al Alcorn: It never occurred to me that this could be bullshit.

  Ted Dabney: Pong was an exercise for Al Alcorn in figuring out how to use this motion circuit that Nolan and I had developed.

  Al Alcorn: I had never designed a video game before. Nobody had but Nolan. So we just talked about how you get the ball, the spot, to move all over the place with no memory—there’s no memory as such in the thing. The trick of how you do that is a brilliant insight. Once I understood the Bushnell Motion Circuit it was, “Okay, no problem.” I went right ahead and did it.

  Ted Dabney: Al Alcorn was a good engineer. He didn’t need anybody’s help at all.

  Nolan Bushnell: Al basically had the thing going in a week, it might have been a week and a half—and it was fun! I thought, Maybe Bally would like Pong instead of the driving game? Al built one which had a modulator so I could hook it up to a regular television set, and I took it to Chicago and presented it to Bally. They were troubled by the fact that it was a two-player game and at that time you needed to have a one-player game… so they thought. That was the entrenched wisdom at the time.

  Ted Dabney: Bally paid for it. They paid $24,000 to us for that game, but Bally kept not accepting the game, kept not accepting it. Nolan and Al and I were sitting around looking at each other: What are we going to do?

  Al Alcorn: So Nolan said, “Put it out on location.” We put it next to a Computer Space at Andy Capp’s Tavern. I remember the day we put it in. Nolan and I popped it in one day after work and went and bought a beer and watched until somebody played it. I never thought anybody would play it! Think about it. There’s no instructions. It just says “Pong,” which meant nothing. There’s two knobs and a coin box. What’s the motivation here? So, some guy plays it. Nolan went up to him afterward: “What did you think of that?” And the guy said, “Oh yeah, I know the guys who made this machine.” And I’m thinking, Save the bullshit for the ladies. So we left.

  Not long afterward, Alcorn receives a phone call from Andy Capp’s Tavern.

  Al Alcorn: The machine stopped working. It didn’t surprise me. It was just thrown together quick and dirty. It was never meant to run on location. So, I went there after work and the attract mode was working, so that tells me most of the thing is working. So what’s wrong with
it? I open up the coin box—it was a Laundromat bolt-on coin box—to give myself a free game to see what was going on, and when I opened that coin box up it was just jammed full of quarters. I can fix this! I told Nolan, “Wow, this is interesting…”

  Nolan Bushnell: Pong was earning $300 a week: a huge amount of money! And so my greedy little mind thought Wow, this thing’s a gold mine! It was so much better than Computer Space in terms of earnings. So I figured out how to get into the Pong business.

  Al Alcorn: We were sitting, I’m pretty sure, at Andy Capp’s after work having our beers and Nolan said, “We want to build this. We want to be in the manufacturing business,” and Ted and I were saying, “This is not what we signed up for. We don’t have any manufacturing capacity, nothing.” And Nolan, just basically through force of will, said, “We’re going to do this.”

  Nolan Bushnell: I figured out that I could build ’em for about 350 bucks. I priced them at $910. And I figured out this financing model where the manufacturing would self-fund. I negotiated thirty to sixty days from our vendors, and if we could build the machine and ship them in less than a week, the company would operate in positive cash flow. Because we had no capital. Venture capital? I didn’t even know what it was at the time. But we had the tiger by the tail: more orders than we could fill. I remember telling Alcorn and Dabney that we were going to move production up to a hundred a day and they looked at me like I was just stark raving mad.

  Al Alcorn: I would come home and tell Katie, my wife, “Nolan is crazy. He wants to build a hundred machines a day.” We didn’t have the money, the capacity, the experience. This is insane, but I’m going to go along with the gag to see how far it gets.

  Ted Dabney: We started out in seventeen hundred square feet, but when we started building Pong we needed more room, and it turned out that the guy next door to us had moved out in the middle of the night. He didn’t pay his rent. So I cut a hole in the wall, literally cut a hole, and moved into his area and took over that seventeen hundred square feet, too. The manager came around and said, “You can’t do that!” And Nolan said, “We did it! You just figure out how much it’s going to cost us.” But even that wasn’t big enough. But then this roller rink down the block became available: ten thousand square feet! I mean we were just jam-packed and we had people on roller skates actually running around on the roller-skate rink building Pongs.