Atari's founder tells lessons, plans

Nolan Bushnell may still have the innovation bug, and is even developing coin-operated video games again, but 2003 is a far cry from 1972, says the man who gave the world Pong and Atari.

"You kind of have to get out of California," Bushnell told a keynote audience at Seybold Seminars here. "Starting a business here is getting increasingly difficult. You have tremendous cost disadvantages, from recruiting people to a failed educational system."

Bushnell contends the state's problems--from a US$35 billion deficit to a gubernatorial recall election--are not fixable in the short term, no matter what the legislature does. But the state has been unfriendly to entrepreneurs for a while, he said.

Advice: Be Virtual

For many years, the state "could charge monopoly rents" for innovation and venture capital, but other parts of the world have narrowed the gaps that differentiated California, Bushnell said. The dot-com bubble merely disguised this trend, which dates back to the early 80s, he added.

"If you're going to be in California, go hollow," Bushnell said. "With the quality of products you can get out of China, you can run a very large business with 10 to 15 people and be global."

Bushnell pointed to the tools available at the Seybold show to help. "One smart person with a desktop publishing environment can create brochures and box copy, and the Chinese will tool it for you, sometimes for nothing."

His latest company, UWink , provides coin-operated, multiplayer countertop and tabletop video game kiosks for public locations. Its goal is to get recurring revenue through advertising.

"We're basically an (application service provider) once we sell the terminal," Bushnell says. The UWink network already supports 300,000 terminals, and the company plans to host a million-participant computer game in a few years, Bushnell says.

Opportunities Remain

Bushnell shared the Seybold keynote stage with another innovator, who was cranking out instant books on the show floor for $1 a copy.

"It turns out not to be that hard to print a book, and it takes about 10 minutes," said Brewster Kahle, president of Alexa Internet and promoter of a growing fleet of Internet bookmobiles. His traveling offices print public-domain and other books on demand in several countries.

Both entrepreneurs noted the liberating effect the Internet has had on providing new channels to deliver innovative products to markets.

"You can access markets through the Internet and infomercials," Bushnell said. "New interlopers have better access to markets than ever before."

Kahle noted that the cost of an on-demand book-publishing system has dropped to $5000.

"I wonder if publishing and printing will collapse back in together and look like the 1500s, with much smaller markets getting served," Kahle said.

Innovation remains hard, as do the lessons learned through each new wave of technology, Bushnell said.

"Pioneers get the arrows, and slow buffalo get shot," he quipped. Successful innovators are somewhere in the middle. Two and a half years before Pong, Bushnell's Computer Space game was "modestly successful" but too far ahead of its time for the company that licensed the product. "They had barely discovered wood, much less fiberglass and computers," he joked.

Bushnell Reflects

Atari, which Bushnell sold to Warner Communications, taught him to "never sell to idiots, and take a vacation before making big decisions." He added, "I have a lot of empathy for Ted Turner."

From Chuck E. Cheese's Pizza Time Theatre, another enduring Bushnell creation, he learned that "if it's not broken, don't fix it." The chain nearly vanished when Bushnell "put a restaurant guy in charge" who tried, unsuccessfully, to entice adults instead of staying child-focused.

Androbot, an early home-robotics company into which Bushnell invested and lost US$23 million of his own money, taught him "not to fall in love with your own product too much, and don't trust investment bankers bearing gifts." Also, he learned not to push technology too far. "Can you imagine using a pre-286 chip (in a robot)? When the computer in the robot crashes, instead of (your) seeing a Blue Screen of Death, the robot's likely to be traveling at full speed in one direction. You've got to be really careful with that."

Etak, another ahead-of-its-time Bushnell start-up, pioneered automobile navigation. Its business model was giving away digital road maps in every automobile and making money on Yellow Pages-style advertising. The technology predated global positioning systems. Etak foundered when it erred by licensing the technology exclusively to Buick instead of making it widely available. Yet it left a legacy.

"All the GPS stuff you see today operates on Etak databases," Bushnell said.

Another start-up, Compower, contributed technology for the power supply found in every computer in the world today, he said. Compower's hard lesson for Bushnell: "Keep a nickel or dime on everything you've ever sold."

ByVideo, an early online business Bushnell started to sell books and flowers, was Amazon before its time, grounded because only 150-baud modems were available then. Magnum Microwave, a parts company, taught Bushnell he "should (run) a cell phone company. Don't sell to them."

Axlon, a pre-Nintendo video game company of Bushnell's, "didn't have a 'use-it-or-lose-it' clause in the Hasbro licensing agreement" and sank without a trace, the entrepreneur recalled.

What's Next? Plenty

"When you're innovating, you have no constituency," Bushnell said in summary. "In general, you're goring the ox of someone who's going to be your enemy." Hence, start-ups need to innovate more on the distribution and marketing side than on the idea itself.

"My mantra is to get the unit economics right and then execute," Bushnell said. "Anybody who's had a shower has had a good idea. It's what you do after you get out of the shower that counts."

Bushnell is incubating a number of other start-ups besides UWink. One company, In.10.city, is a "Chuck E. Cheese re-do," a 30,000-square-foot entertainment centre he hopes will launch in Shanghai next year. Another start-up would let consumers see a custom product be manufactured before their eyes. And, over his wife's objections, he wants to create Androbot 2.

"Focus on consumer wants, not needs," Bushnell advised.

Kahle, whose Internet Archive is organised as a nonprofit, urged innovators to strive to digitize all human knowledge and make it available via on-demand custom publishing. That platform itself could also launch any number of for-profit start-ups, he noted.

"There are companies that can break into the big leagues in a period of months, with no advertising budget, just by being really, really good," Kahle said.

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