Something Ventured Page #4

and went in search of capital

to start a venture fund.

We went to see a guy

at Salomon Brothers,

and he said "You know'

I've listened to the pitch,

but, you know, you didn't go

to Harvard Business School."

I said, "Great observation.

True. Guilty as charged."

He says, "Why didn't you

go to business school?"

I said, "I went to Fairchild Semiconductor

Business School. Great business school.

Start-up company.

Pioneer in a technology.

Phenomenal leadership

and recognition."

I said, "I don't need to go to a

business school for what I'm gonna do."

Rebuffed by Wall Street,

Don Valentine found a mentor...

in a Southern California

mutual fund manager...

who staked the money for Don's

first venture fund.

I'm not interested in entrepreneurs

who will do it our way.

I'm not interested in entrepreneurs

who think there's a dress code.

I'm interested in entrepreneurs

who have a vision...

of doing something consequential,

preferably that becomes big.

For most people,

there's something intimidating...

about the idea of interacting

with a computer,

but that is

what's happening here.

Atari had one of Silicon Valley's...

absolutely larger-than-life

personalities leading it,

Nolan K. Bushnell.

Bushnell was a young engineer...

working for game manufacturer

Nutting Associates...

when he decided to strike out

on his own in 1972.

The real thing that

allowed me to start Atari...

was I worked for Nutting,

and these guys couldn't find

their butts with both hands.

I said, "You know,

I can run a company,

and I won't make any of these same

mistakes these idiots are doing."

The first game

Atari designed was Pong.

Nolan took a prototype of the game,

strapped it to his back...

and placed it in a bar

in Sunnyvale, California.

By the next morning,

customers were lined up outside...

clamoring for a chance to play.

We put it on location.

It earned a lot of money.

Production soared, and there seemed

to be an insatiable appetite...

for the coin-operated game.

From the outside, Atari looked

like a wildly successful company,

producing an endless stream

of popular games.

But there was one key problem.

The company was started

with 250 dollars.

And so we never had any money.

If you're a hardware company,

you need a lot of capital for inventories.

The more successful,

the more you have to raise.

Because the more inventory

you have,

the more customers

you're waiting to pay you.

It takes a lot of capital

for a hardware start-up.

In 1974 Atari was

flirting with bankruptcy...

and desperately needed

financial help.

But Nolan found

the traditional channels off-limits.

Banks-in the traditional sense

of banks-lend on assets.

So, "Do you have a house?

I'll give you a mortgage.

Do you have a car?

I'll give you a loan on your car."

Nolan had no basis

for a bank to be comfortable.

I went through the factory,

and the smell of marijuana

nearly knocked me to my knees.

And I was gasping and coughing.

Nolan says, "What's the matter?"

And I said, "I don't know what those people

are smoking, but it's not my brand."

Don might have passed on Atari...

had Nolan not shown him a surprising

new product in development-

Home Pong

Atari's engineers had discovered they

could get the entire Pong game...

down to the size of a shoe box.

At the time, playing video games at

home was a revolutionary concept.

We showed Don our plans

for the home games.

He finally decided

there was a business there.

Fabulous product.

Giant market.

He used to say, you know,

"The coin-op business-you think it's big?"

He says, "You ain't seen nothin'."

Huge.

Once we decided

to finance Atari,

it was a matter of trying to figure

out who else would invest in it.

Funds in those days were tiny,

and in order for us

to start a company,

we had to very collegially

work together.

I brought him other investors.

However, it takes a while

to get used to Nolan.

And there's a story there

about one of our meetings,

where the man from Fidelity was sitting

in a chair with his blue suit on,

and the rest of us

were in the hot tub.

Nolan was unrelentingly

picking on him...

about his prudish behavior and why

he wouldn't get in the hot tub.

With a controversial

entrepreneur...

and no existing market

for home video games,

months went by while the other investors

remained on the fence about Atari.

So Nolan himself took his Home Pong prototype

on the road in search of customers.

Of course, we were young

and felt we could solve...

any problems that came along,

and, you know,

selling them to Toys R Us,

that can't be that hard.

It was, actually.

I like to tell the story about...

taking the Pong game to the toy

fair in New York and selling none.

So we thought,

"Let's try the television shops."

And they didn't want it.

These are very fragile companies

with a lot of things missing.

And the approach

we've always taken is,

if we make this investment,

is our Rolodex...

strong enough

to help these people?

So much luck

goes into these things...

that without it, I think very few of

us would have very many successes.

One of our investors was

a very big shareholder of Sears.

And they facilitated

the introduction...

to the buyer at Sears

who would buy a product like this.

I think he was charmed by Nolan...

and found this experiment

might be fun.

Everybody's talkin' 'bout

a new way of shopping

Do you wanna lose your mind?

Home Pong hit the shelves...

just in time

for the 1975 Christmas season.

And of course, the rest is history.

When he plays the game

from Atari

Have you played Atari today?

Have you played Atari today?

My father was the sole proprietor

of this little candy store.

My father was a very petty

union member.

My dad was a wonderful guy,

and, um, he really encouraged

self-reliance.

Well, we sold a little groceries,

a little magazines,

a little candy,

a little ice cream, cigarettes.

At a very early age,

I worked there.

I clerked.

I was six years-

seven years old.

It's easier to explain

he drove a truck...

than it is to explain

what he did in the union,

'cause I didn't understand

what he did in the union...

other than fight

with the head of the union.

And we used to have

a lot of, uh, arguments...

once I understood

what a union was,

and he couldn't understand why I was

so adamantly opposed to the unions.

It probably has to do with my...

deep-seated

sense of disobedience.

When I was 12 or 13,

I was trying to figure out how to

earn some money in the summertime.

So I said, "You know, Dad,

maybe I could sell light bulbs."

So I went down

to the local general manager...

of the Sylvania operation.

He said the smallest amount

that he could sell me...

would be a half a freight car

full of light bulbs.

And so I asked my mother if I could populate

our basement with all these light bulbs.

And so I got this wagon-

this big wagon-

and I went around and I sold light

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