Video game pioneer Nolan Bushnell focuses on education

Model for the modern entrepreneur

He’s the father of video gaming (Pong anyone?), online ordering and in-car navigation systems. Now he’s trying to revolutionise education with his BrainRush company. Meet Nolan Bushnell, the man who helped make the modern world.

This article is from the October 2015 issue of INTHEBLACK.

Before Steve Jobs, before Bill Gates, Nolan Bushnell showed the world how tech businesses could grow from nothing. In the process, he created the model for the modern entrepreneur.

You may not know his name but you’ll know what made him famous – Atari video games. Pong, Space Invaders and Pac-Man were a rite of passage for teens in the 1970s and 1980s.

This year, the video game industry Bushnell launched will create global revenue of more than US$90 billion. Those revenues already far outstrip the movie box office, and they’re growing faster, too.

After Atari, Bushnell founded the Chuck E. Cheese restaurant chain in the US, which offers video games along with pizza for the family. Last year it changed hands for US$1.3 billion. He also helped finance a pioneering car navigation system. Little wonder that Newsweek magazine named him as one of the “50 Men Who Changed America”.

It all started in the garage at his childhood home, where Bushnell used to play with his father’s construction tools. Having a project, he says, builds your creativity. 

Nolan Bushnell, 1985

Nolan Bushnell, 1985

Aged just 15 when his father died, Bushnell decided he should be financially independent and so began his journey as an entrepreneur. He studied electrical engineering at university and within a year of graduating he launched Atari. Four years later in 1976, needing cash to fund his next big thing, Bushnell sold Atari to Warner for about US$28 million.

Bushnell launched numerous companies that still impact our lives today – Catalyst Technologies, the first technology incubator; Etak, the first car navigation system; and ByVideo, the first online ordering system.

Bushnell also happens to be the only person to have hired Steve Jobs. “He was very intense,” says Bushnell, who has the dubious honour of turning down Jobs’ offer to buy a third of Apple in its early days.

What’s striking about Bushnell is that he’s been an entrepreneur for more than 40 years, but he’s so good at it that his thinking remains incredibly relevant today. Not that he’d tell you. That old-school wisdom means he is free of the modern-day ego.

Now he’s on a crusade to use gaming to lift education outcomes. He says gaming can increase the rate of learning tenfold, but he’s having trouble convincing the education establishment.

He told former CPA Australia chief executive Alex Malley that he still plays Go, chess and Minecraft but that he’s ditched the “twitch” games that need fast fingers on the buttons. "Games that require stealth and guile, I’m still in the game,” he quips.

Alex Malley: Nolan, you were only 15 years old when you lost your father. What was that like for you and what did you learn?

Nolan Bushnell: It was very much the growing-up experience for me. It felt like “I’m on my own financially now” because I had two younger sisters and any money I took from my mother for school or anything else would be taking it out of their nest egg. I essentially became financially independent that day. That really ups your entrepreneurial game because if you’re a kid working for minimum wage it’s pretty hard to be self-supporting. I was always looking for ways to make money.

Malley: Was childhood a creative environment?

Bushnell: Because my dad was in construction, we always had stuff around – not every household has a woodpile! There was always a garage full of tools. Projects are really helpful for creativity – building things, figuring out how to do things with your hands. My parents were also very supportive. A lot of the electronics that I had in my bedroom were dangerous!

Malley: Looking back to 1972 when you founded Atari, what was life like for you?

Bushnell: I was a graduate engineer – 1971 was the year I created most of the technology and in ’72 I was as much a businessman as I was an engineer. When a television malfunctions there is vertical roll and I realised something was causing that visual motion that I could harness. So I needed a digital computer.

There was never any question about my belief that you could do a game on a computer; the issue was the cost for the computer to carry the freight. I understood the economics for a game business very well and I knew that if I could put a coin slot onto a big computer or a theatre screen driven by computer it would make a lot of money compared to other arcade games.

I understood what the revenue expectation was and that meant the cost per screen had to be less than US$1000. That was impossible unless some other things went on and that was where I really focused on “How do I drive the costs out of this?”

“A true entrepreneur has been starting little companies to give himself or herself a job for 10 years before they decide that there is something big.”

Malley: In those early days the self-belief levels have to be high. How hard was it to bring people on board to support it?

Bushnell: To raise money, it was impossible. Everybody thought that I was crazy and so the only thing I was able to do was license a game for royalty. Those royalties really kind of allowed cash flow to get Atari started.

Somebody else would have invented a video game if I hadn’t, they just would have done it about eight years later. My innovation gave me an eight-year jump because it was a weird way of building a video game if you consider the normal architecture of computers. I’m proud of that.

I really regret, however, selling it to Warner [in 1976 for about US$28 million]. I feel like Atari could have been a great, relevant company today if it hadn’t been for them screwing it up. We had great people, a great corporate culture, it could have done a lot of very interesting things which were sort of snatched away.

Malley: So what do you do with that regret?

Bushnell: I believe that you always talk about that regret with a shrug, but you can’t live with it. You can’t be defined by it. Do I get up every morning and cry about not owning a third of Apple Computer? No, I don’t even think about it (see “Bushnell and Jobs”). Do I get up every day and say “Gee, my life is over” because I sold Atari? No. But at the same time, it was my baby and I loved it dearly. Somebody else misused it and I’m not happy about that.

Creativity as a competitive weapon

Malley: I was lucky enough to do the, sadly, final interview with [astronaut] Neil Armstrong. He was one of the world’s great engineers. I asked him to reflect on the era, an era of vision rather than risk management. How do you see your country today in terms of creativity, innovation, entrepreneurship?

Bushnell: Well I think that the enthusiasm for science and engineering is not as strong as it was then. However, I believe the enthusiasm towards entrepreneurship is much, much, much higher. In the ’60s and ’70s nobody was talking about … I don’t think I even heard the word entrepreneur in that time. And as for young people starting businesses, it just wasn’t part of the ecosystem.

Malley: You talk about creativity as a competitive weapon. Do you see that as being even more the case in the future?

Bushnell: Absolutely. It will be as much as 10 times more important within the next five years.

Malley: When people approach you and they’re so focused on their creative ideas, how much time do you spend talking to them about the balance of creativity and sound business?

Bushnell: I’m actually working on a book right now and the main theme is that too many would-be entrepreneurs think it’s about raising venture capital and doing a dotcom business. But I say that’s like trying to get a position on an NFL team if you’ve never played football.

A true entrepreneur has been starting little companies to give himself or herself a job for 10 years before they decide that there is something big. People scoff at the idea of flipping hamburgers at McDonald’s or working at Gap, but I think all those things are areas where you get extra skill sets and figure out a way to provide a service to your neighbourhood.

It’s making up a brochure and putting it in everybody’s mailboxes and then going back and saying: “Can I fix your computer, can I mow your lawn …” It’s what I call “make a job not make a company”. Because if you can’t make a job through yourself, what makes me believe that you can start a company where you’re employing others?

Achieving a balanced life

Malley: You and Steve Jobs have had a great life, big life. With yours there seems to be a wonderful balance. Some of that no doubt comes with having so many children [Bushnell has eight children] and from your wife. But there is a spirit of entrepreneurship with a really commonsense balance. How long do you think it took you to get there?

Bushnell: Right now I’m balanced peace-wise. I still have projects I need to work on. The first three or four years at Atari I was very unbalanced. I was so nervous about it that I worked too hard.

Later on I developed this sense of what life is all about – work hard, play hard and to not sweat it. Having a series of successes gives you a part of that because you feel like once you’ve had a success you can always repeat it.

Malley: When you think about someone like Richard Branson, wanting to fly passengers into space, is there an ongoing gambler in an entrepreneur?

Bushnell: Well there’s what I call subsistence money – all the money that you need to eat and drink and keep yourself clothed and sheltered from the elements. And then there’s what I call “let’s have some fun” [money] where you buy a boat, you buy a house.

“In the ’60s and ’70s, I don’t think I even heard the word entrepreneur.”

All the rest of the money is what I call “poker playing money” which allows you of visionary and one of those visions is space travel, one is longevity, one is robotics, one is how do we cure cancer? They want to play in some big games. Going to space, it’s one of the bigger games and so the fact that you’re going to try, God bless them.

Malley: So when does an entrepreneur stop and say this isn’t going to happen?

Bushnell: An entrepreneur has to have some grit and relentlessness, but there are absolutely times when the financing isn’t right, the market isn’t right, the technology isn’t right, the idea has flaws that you didn’t see before and the project should be abandoned.

I don’t think I’ve ever been able to do that right. I’ve abandoned a couple of projects too soon and carried a couple too long, so I think I’m the wrong guy to ask.

Tech threats and opportunities

Malley: Your comments about technology confirm what a lot of people think: that technology will cost a lot of jobs. But you’re looking for ways to build on the opportunities for jobs that come with technology.

Bushnell: Yes, for example, self-driving cars. In the US alone they will knock out somewhere between 15 and 25 million jobs in the next 20 years. That’s a big number. Some people think that with ancillary aspects it can do as much as 35 to 40 million jobs. There are a lot of people employed in automobile transportation.

However, if we do it right, it will be possible to change the way our cities work and our transportation systems operate. In order to make that change it’s probably going to take 30 to 50 million jobs [and] 25 years to make those transitions. So there’s almost two jobs created for every one that is lost in that area.

I like to tell the story of a pair of jeans. You buy a pair of jeans, I pay US$60-70 for a pair. (My wife spends US$200.) But both those jeans could be bought out of China for about US$6. So the question is, what’s the difference between the US$6 and the US$70? That difference is data, it’s information, it’s branding, it’s marketing.

So when the company is totally roboticised it’s just the manufacturing job, that’s the US$6-8 part. The branding and all the digital parts are staying, that’s not going to be automated.

So if you’re running the economy, which do you want to protect? The US$6 part of the value chain or the US$100 part of the value chain? The US$100. Better jobs. Better working conditions.

Malley: Now it would be remiss of me not to ask you what video games you play these days.

Bushnell: You know I’ve been playing the crazy games on an iPad. I still play Go, I still play chess. I like Portal and I still play around with Minecraft a lot because my grandkids and kids still like to do it, so I have to keep up with it and stay relevant.

The iPhone game Colors United, that is kind of fun. I’m not going to twitch games anymore because you lose reaction time as you get older. My kids can just whack me and my ego won’t allow me to get consistently beaten. Games that require stealth and guile, I’m still in the game.

Nolan Bushnell presented at CPA Congress in 2015.

“I could have had a third of Apple Computer for US$50,000.”

How gaming can boost education

Malley: You’ve tried to revolutionise education through gaming [with the BrainRush company]. Tell us about where that’s going.

Bushnell: This is maybe the most frustrating market I’ve ever dealt with because the architecture of the education system is so mired in the past that they don’t even know that it’s mired in the past.

Usually in a business you say what’s the objective of this business? In education it’s to educate good citizens that can be gainfully employed, and to do it efficiently, don’t waste their time. That would be the design goals of the school system. But they give lip service to that. It’s all about protecting [the performance] curve and maintaining the status quo.

We have software right now that demonstrably teaches things 10 times faster than the classroom. You’d think school systems worldwide would be adopting it, knocking it off, buying it … whereas we have a penetration of maybe 0.5 per cent.

I think so many kids end up after 12 years, 16 years at school with all their passion gone. Just burned up in boredom and process, and that’s a horrible amputation.

“You always talk about that regret with a shrug, but you can’t be defined by it.”

Bushnell and Jobs

Steve Jobs

Steve Jobs

Malley: One day many years ago a confident Steve Jobs sauntered into your office and you reacted to him as a creative would, you hired him! [Bushnell was the only person to ever hire Steve Jobs.] Tell me about your early observations of Steve and what he taught you about individuals, creativity and how to manage that in a team environment.

Bushnell: Steve was one of these people who, when you’re around him, you knew that there was something special and that his opinions were worth listening to. It’s very interesting how some people believe they need to have a lot of opinions all the time, some of which are good, some of which are bad; but there are certain people that are just spot on all the time. You want to listen to both, but you always give a little more credence to people who have a 100 per cent success ratio.

Malley: Did he suffer fools badly?

Bushnell: Yes.

Malley: And when you think of the team, I read that you commented that with people like Steve Jobs, if they are on the money on an issue, then the team needs to grow up and deal with their quirks.

Bushnell: Yes. Absolutely.

Malley: How did your relationship unfold as he started to develop in his own right?

Bushnell: We had an ongoing thread of discussion. It was about the future but it was also about philosophy. Steve was really interested in philosophical approaches and I was, too. But mine was pretty much in Western philosophy, the German philosophers, the British philosophers, and Steve was pretty much Confucianism, Buddhism, much more Eastern.

We talked a lot about that because I was interested in learning about Eastern stuff and he was interested in learning about Western stuff.

Malley: I understand you turned down an offer to buy a stake in Apple?

Bushnell: That’s right. I could have had a third of Apple Computer for US$50,000.

This article is from the October issue of INTHEBLACK

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