WEBVTT - From Business History: How E.T. The Extra-Terresterial Destroyed Atari 0:00:02.200 --> 0:00:05.200 Hey, snafoo fans, it's ed today. 0:00:05.280 --> 0:00:07.760 I'm coming to you with an episode of a podcast 0:00:07.920 --> 0:00:12.600 I have been loving. It's called Business History. Hosts Jacob 0:00:12.640 --> 0:00:16.600 Goldstein and Robert Smith, former Planet Money guys, dig up 0:00:16.720 --> 0:00:22.880 the wildest, most wait what stories about businesses big and small, 0:00:22.960 --> 0:00:26.480 like how Hitler's favorite car became the ultimate hippie vehicle, 0:00:26.960 --> 0:00:30.040 or why Thomas Edison got mixed up in the invention 0:00:30.320 --> 0:00:34.440 of the electric chair. Every episode is a masterclass in 0:00:34.520 --> 0:00:40.320 how fascinating people built something incredible and either watched it 0:00:40.479 --> 0:00:44.560 soar or burn to the ground. Either way, it tells 0:00:44.600 --> 0:00:48.800 us something about how we run business today. Today's tale 0:00:49.159 --> 0:00:53.680 is really wacky, fueled by hot tubs, recreational drugs, and 0:00:53.760 --> 0:00:57.840 a love of games. Nolan Bushnell took computer games out 0:00:57.880 --> 0:01:02.800 of research labs and into bars, launching an industry. His 0:01:03.000 --> 0:01:06.560 arcade game Pong was a monster hit, so he set 0:01:06.640 --> 0:01:10.200 up Atari to build a home games console, which became 0:01:10.319 --> 0:01:15.039 the must have Christmas present of nineteen seventy five. Atari 0:01:15.280 --> 0:01:18.520 was the name on every kid's lips. But then the 0:01:18.560 --> 0:01:23.039 investors came, and the investors brought pressure. Bushnell and his 0:01:23.120 --> 0:01:27.000 engineers were pushed aside as Atari expanded, and in a 0:01:27.040 --> 0:01:30.480 desperate bid to cash in on Hollywood hype, the company 0:01:30.560 --> 0:01:34.240 concocted a wild plan for a game based on Steven 0:01:34.319 --> 0:01:40.840 Spielberg's mega hit ET the Extra Terrestrial. Developed in mere weeks. 0:01:41.400 --> 0:01:45.319 It tanked and brought Atari down with it, which is 0:01:45.520 --> 0:01:49.240 ironic because I remember the game ET on Atari when 0:01:49.280 --> 0:01:53.200 I was a little kid, and I loved it. Anyway, 0:01:53.680 --> 0:01:57.000 here's the episode if you enjoy it. There's more tales 0:01:57.080 --> 0:02:02.600 of founders, business success and spectac failures on Business History, 0:02:02.640 --> 0:02:20.480 available on YouTube, Apple, Spotify, or wherever you get your podcasts. 0:02:21.680 --> 0:02:24.839 Robert Smith, here is the big question for today's show. Yes, 0:02:25.200 --> 0:02:29.280 how did Atari essentially invent the video game industry, win 0:02:29.320 --> 0:02:31.520 the hearts of millions of young people in the nineteen 0:02:31.520 --> 0:02:35.600 seventies and then blow up entirely in the early nineteen eighties, 0:02:36.120 --> 0:02:38.560 basically never to be heard from again. It's a great question. 0:02:39.240 --> 0:02:42.080 We are both of the age where we remember this personally. 0:02:42.120 --> 0:02:44.720 Yeah, I remember my dad coming home with one of 0:02:44.720 --> 0:02:47.919 the first Atari sets. It was like magic. 0:02:48.160 --> 0:02:49.000 What was it? 0:02:49.000 --> 0:02:51.400 It was pong, which was a ping pong game if 0:02:51.400 --> 0:02:55.080 you know, little paddles and you'd send a little electronic 0:02:55.120 --> 0:02:59.160 ball across the screen. And it was transformative because it 0:02:59.200 --> 0:03:01.720 was the first time you could actually interact with a 0:03:01.720 --> 0:03:03.919 television set which was sitting there in the center of 0:03:03.960 --> 0:03:05.920 your home. And to be clear, I was not an 0:03:05.960 --> 0:03:06.560 early adopter. 0:03:06.680 --> 0:03:07.519 I was not cool. 0:03:08.080 --> 0:03:09.760 Everybody had the Atari set. 0:03:09.840 --> 0:03:11.840 I'm a little younger than you, not to throw it 0:03:11.840 --> 0:03:14.040 in your face, but so for me, I don't remember Pong, 0:03:14.080 --> 0:03:17.320 but I remember the Atari twenty six hundred came to 0:03:17.360 --> 0:03:19.520 be called the twenty six hundred, which was like the 0:03:19.560 --> 0:03:21.760 first video game system like we know it today where 0:03:21.760 --> 0:03:23.800 you buy it and there's different cartridges, and this was, 0:03:24.160 --> 0:03:28.680 you know, the dominant video game in the early eighties. 0:03:28.960 --> 0:03:31.560 I loved it. I had Defender, had Journey, the game 0:03:31.680 --> 0:03:35.160 Journey like the band played it for hours. And so 0:03:35.200 --> 0:03:37.440 the big question is what happened. 0:03:38.280 --> 0:03:40.640 I'm Jacob Goldstein and I'm Robert Smith, and this is 0:03:40.720 --> 0:03:41.480 Business History. 0:03:41.520 --> 0:03:44.160 What's it about Jacob Yesterday, Business Today? 0:03:44.160 --> 0:03:46.560 On the show, How a company can invent something that 0:03:46.640 --> 0:03:50.400 changes the future, changes all of culture and wind. 0:03:50.280 --> 0:03:52.640 Up in utter failure, like literally wind up having to 0:03:52.800 --> 0:03:57.440 bury hundreds of thousands of its own products, unsold video 0:03:57.440 --> 0:04:00.640 game cartridges in a landfill in New Mexico. 0:04:00.800 --> 0:04:04.240 I feel like today's show is like walking through my childhood. 0:04:04.280 --> 0:04:07.440 We started with Atari, and our next step. 0:04:07.280 --> 0:04:11.240 Is an amusement park that I initially called the Lagoon Utah, 0:04:11.320 --> 0:04:14.360 and you pointed out it is called Lagoon. And you 0:04:14.400 --> 0:04:15.440 know this because. 0:04:15.280 --> 0:04:17.479 Because I grew up in Utah and went there once 0:04:17.520 --> 0:04:20.960 a year and it was the best day of the year. 0:04:21.240 --> 0:04:23.920 It's an amusement park, right, You play games, the rides, 0:04:24.040 --> 0:04:26.480 you eat a lot of fried salty foods. 0:04:26.839 --> 0:04:28.760 It was amazing, Robert, I guess you would have been 0:04:28.800 --> 0:04:32.000 going to Lagoon in the seventies. A few years earlier. 0:04:32.560 --> 0:04:35.640 It was this college kid named Nolan Bushnell who worked 0:04:35.680 --> 0:04:39.200 summers there on the Midway, like where there was games 0:04:39.360 --> 0:04:41.760 like whatever guess the way to the guy and knock 0:04:41.839 --> 0:04:43.360 down the milk cans or whatever. 0:04:43.600 --> 0:04:45.360 And just in case you have an image of someone 0:04:45.400 --> 0:04:49.240 who's a carne working the milk jug games, this was 0:04:49.279 --> 0:04:50.800 not Nolan Bushnell, but he. 0:04:51.000 --> 0:04:55.320 Was a carnie genius. He became king of the Midway, 0:04:55.480 --> 0:04:58.359 was running running all the games when he was like 0:04:58.400 --> 0:05:02.480 twenty years old. Because he was really good at getting 0:05:02.480 --> 0:05:05.480 people to spend their money on the games. Like one 0:05:05.520 --> 0:05:08.559 example he gave later that is dear to my heart 0:05:08.640 --> 0:05:11.240 is this. So there is that game where there's these 0:05:11.279 --> 0:05:14.360 like metal milk jugs. I guess it's like metal bottles 0:05:14.960 --> 0:05:17.200 and there's whatever four of them or six of them, 0:05:17.240 --> 0:05:19.480 and they're stacked up, and you have a like a 0:05:19.520 --> 0:05:21.960 softball or something. You throw it at it and try 0:05:22.000 --> 0:05:24.400 and you're trying to win a stuffed animal. Yeah, maybe 0:05:24.400 --> 0:05:26.480 a giant stuffed animal or something if you knock down 0:05:26.560 --> 0:05:30.760 all the milk bottles right, and it turns out he 0:05:30.839 --> 0:05:33.560 talked about this later, that like half of the bottles 0:05:33.560 --> 0:05:36.159 are heavy and half of the bottles are light, and 0:05:36.200 --> 0:05:38.440 so if you put the light bottles on the bottom, 0:05:38.880 --> 0:05:40.839 it's really easy to knock them down, right. If you 0:05:40.880 --> 0:05:43.480 put the heavy bottles on the bottom, it's really hard 0:05:43.480 --> 0:05:46.880 to knock them down. Physics, And so he had this 0:05:47.000 --> 0:05:48.520 movie he would make when like a bunch of high 0:05:48.560 --> 0:05:50.560 school students would come. There'd be like, you know, the 0:05:51.040 --> 0:05:53.240 captain of the football team, and then like the water 0:05:53.279 --> 0:05:55.880 boy kind of trailing along behind. Okay, I was more 0:05:55.880 --> 0:05:59.560 than the water boy. Obviously. He'd get the water Boy 0:05:59.560 --> 0:06:01.720 to play, and he'd set it up the easy way 0:06:01.720 --> 0:06:03.360 so that it's really easy to knock him down. The 0:06:03.400 --> 0:06:06.160 water boy knocks him down and gets the big prize, 0:06:06.279 --> 0:06:08.680 and then the captain of the football team's like, oh, 0:06:08.760 --> 0:06:12.080 I'm definitely gonna just kill at this. But then Nolan 0:06:12.120 --> 0:06:14.599 Bush Noel would set it up the hard way so 0:06:14.640 --> 0:06:16.719 that the you know, football player throws it and they 0:06:16.720 --> 0:06:18.400 don't fall down. He's like, Okay, I'll try again. I'll 0:06:18.440 --> 0:06:21.160 try again, and he'd basically take all of the football 0:06:21.160 --> 0:06:23.200 player's money because he couldn't knock him down. 0:06:23.240 --> 0:06:26.840 He realized that games are psychology. Yeah, you know, it's 0:06:26.960 --> 0:06:29.800 storytelling in psychology, and this would of course come in useful. 0:06:30.080 --> 0:06:32.440 Yeah, And he had a real sense of fun, right, 0:06:32.520 --> 0:06:34.680 Like this was fun for the water boy, not fun 0:06:34.720 --> 0:06:37.960 for the football player. But like he he loved a party, 0:06:38.240 --> 0:06:41.839 took a lot of drugs. He was studying electrical engineering 0:06:41.880 --> 0:06:45.720 in school, but it took him like seven years to graduate. Eventually, 0:06:46.080 --> 0:06:49.080 he moves to Silicon Valley, not called Silicon Valley yet, 0:06:49.120 --> 0:06:50.960 but it's becoming that. Right, this is right where we 0:06:50.960 --> 0:06:53.360 were at the end of last week's show, and he's 0:06:53.360 --> 0:06:55.520 going to invent the video game industry, but he doesn't 0:06:55.520 --> 0:06:55.880 know it yet. 0:06:55.920 --> 0:06:59.080 So at the time, he works for a company called Ampex, 0:06:59.279 --> 0:07:01.359 famous for the US in the radio business as the 0:07:01.400 --> 0:07:03.120 makers of magnetic tape. 0:07:03.240 --> 0:07:05.080 Did you use Ampex tape? Is? 0:07:05.240 --> 0:07:07.960 Of course, my closets filled with its stillcitally it is, 0:07:08.080 --> 0:07:12.800 actually can't get rid of them. But Ampex was notable 0:07:12.840 --> 0:07:15.080 not just because it was an electronics company in the 0:07:15.080 --> 0:07:18.160 Bay Area, but because it had this policy that allowed 0:07:18.480 --> 0:07:22.360 their employees to basically take stuff home and tinker with it, 0:07:22.400 --> 0:07:24.680 you know, to come up with new ideas based on 0:07:24.720 --> 0:07:29.600 the equipment. And so Bushnell starts taking stuff home thinking 0:07:29.720 --> 0:07:31.840 about games. 0:07:31.960 --> 0:07:35.320 And in particular he's saying about video games, or really 0:07:35.440 --> 0:07:38.440 video game because at this point in history, there's essentially 0:07:38.480 --> 0:07:42.200 one video game, and it was created by these guys 0:07:42.240 --> 0:07:46.160 at MIT, of course MIT in the early sixties, to 0:07:46.200 --> 0:07:48.280 be run on you know, a computer, which at that 0:07:48.320 --> 0:07:49.720 time was a big machine that you had at a 0:07:49.800 --> 0:07:52.480 university that costs hundreds of thousands of dollars. The game 0:07:52.560 --> 0:07:56.360 was called Space War exclamation mark. Great name for a game, 0:07:56.800 --> 0:08:02.000 and it was fun if you understood like Newtonian gravity, right, 0:08:02.040 --> 0:08:03.920 you like, have a spaceship and there's a star and 0:08:03.960 --> 0:08:06.360 it's like I go around the Sun to get just 0:08:06.440 --> 0:08:08.560 the gravity goes into the square of the distance whatever. 0:08:08.840 --> 0:08:12.760 So he's thinking about Space War exclamation mark. And you 0:08:12.800 --> 0:08:14.800 know when he first played it in college, he played 0:08:14.800 --> 0:08:17.440 it at the university on this extremely expensive computer, where 0:08:17.440 --> 0:08:20.560 it obviously wouldn't work anywhere else. It wouldn't work as 0:08:20.560 --> 0:08:22.400 a business because the computer was too expensive. You just 0:08:22.440 --> 0:08:24.600 did it at night for fun. But by the time 0:08:24.640 --> 0:08:27.360 he's in Silicon Valley in the early seventies, you know, 0:08:27.720 --> 0:08:30.800 Moore's law, like we talked about last time, is cranking along. 0:08:31.080 --> 0:08:33.240 Computers are getting cheaper and cheaper and cheaper and faster 0:08:33.280 --> 0:08:35.880 and faster and faster. And he's like, oh, maybe now 0:08:35.920 --> 0:08:38.640 that technology has got to a place where I could 0:08:38.800 --> 0:08:42.080 make Space War on a machine that I could build 0:08:42.120 --> 0:08:44.280 cheaply enough to put it in a bar next to 0:08:44.320 --> 0:08:46.600 a pinball machine and get people to put quarters in it. 0:08:46.760 --> 0:08:50.800 That's Bushnell's law, which is basically, if people have coins 0:08:50.920 --> 0:08:53.679 in a place of amusement, they will spend all the 0:08:53.679 --> 0:08:56.120 coins they have on something that's new and fun. 0:08:56.280 --> 0:08:59.800 Yes, And so he starts working with this other guy 0:09:00.040 --> 0:09:03.760 from Ampex, and you know, he buys up a black 0:09:03.800 --> 0:09:07.440 and white TV at Goodwill and he actually, interestingly, he 0:09:07.559 --> 0:09:11.240 builds essentially a computer from the ground up, right, because 0:09:11.240 --> 0:09:15.080 he is optimizing for cheapness, right, he wants to build 0:09:15.120 --> 0:09:18.320 the cheapest functional machine he can. And he gets like 0:09:18.320 --> 0:09:20.880 a little coin slot like they have in in pinball machines, 0:09:20.920 --> 0:09:23.000 has like a paint thinner can for the coins to 0:09:23.040 --> 0:09:26.600 go into. And they build a functional prototype of a 0:09:26.600 --> 0:09:29.000 game that is a lot like Space War and it 0:09:29.040 --> 0:09:32.640 looks like an arcade game, although there's not really any 0:09:32.640 --> 0:09:34.439 such thing as arcade gets at this point. But it's 0:09:34.480 --> 0:09:36.719 a box in the corner. Yeah, it's next to the 0:09:36.840 --> 0:09:37.440 juke box. 0:09:37.520 --> 0:09:41.320 It stands up and it has and it has computer 0:09:41.400 --> 0:09:43.720 space on it, and you're like, oh, computers space. 0:09:43.760 --> 0:09:46.560 There's a screen, and there's controls, and there's a place 0:09:46.559 --> 0:09:48.840 to put coins it, right, the three things you need. 0:09:49.200 --> 0:09:52.760 They get this company to make fifteen hundred of the machines. Right, 0:09:52.800 --> 0:09:54.160 it's going to be a thing in the world. Now 0:09:54.200 --> 0:09:58.400 it gets out into the world and nobody really wants 0:09:58.440 --> 0:10:00.840 to play it, basically because it's not that fun. It 0:10:00.920 --> 0:10:03.480 seems it's it's violating one of the tenets you laid 0:10:03.480 --> 0:10:05.720 out in your made up Bushnell's law. 0:10:05.800 --> 0:10:07.560 Right, you had to have a lot of instructions to 0:10:07.600 --> 0:10:08.720 play it. Is the way I understand. 0:10:08.840 --> 0:10:11.000 Yeah, or at least like it helps if you understood physics, 0:10:11.000 --> 0:10:12.520 you know what to think about physics when you're playing 0:10:12.520 --> 0:10:14.280 a video game, but not in a bar now, Yeah, 0:10:14.320 --> 0:10:19.040 and so you know what do you do in Silicon Valley? 0:10:19.040 --> 0:10:22.040 If you make something and it's a failure, you start 0:10:22.080 --> 0:10:24.720 your own company, exactly right, And they call it, of 0:10:24.760 --> 0:10:30.439 course sissy g s y z y. 0:10:30.559 --> 0:10:34.960 G y, really going in on the astronomical theme, which 0:10:35.000 --> 0:10:37.360 you know SIGs win like the planet's lineup something. 0:10:37.480 --> 0:10:39.960 Yeah, so I think so clearly a bad name, hard 0:10:39.960 --> 0:10:42.040 to say, hard to spell, and kind of a lucky 0:10:42.040 --> 0:10:46.920 break for Nolan Bushnell. It's already taken by a candlemaker 0:10:47.160 --> 0:10:50.800 up in Mendocino. So they go with another name Atari. 0:10:50.960 --> 0:10:52.680 And for those of you who have played the game Go, 0:10:53.240 --> 0:10:56.440 it's like check in chess. You say Atari when you 0:10:56.520 --> 0:10:58.840 have almost surrounded someone's stone. 0:10:58.920 --> 0:11:00.440 You're saying this, like you play Go? Have you played? 0:11:00.640 --> 0:11:02.199 I have played? You never talked about this? 0:11:02.240 --> 0:11:04.040 Oh yeah yeahah, Tarry, And I mean so much so 0:11:04.160 --> 0:11:05.120 that it also has. 0:11:05.240 --> 0:11:07.960 Where is your Go? Game? It's okay? Really yeah, it's okay. 0:11:08.000 --> 0:11:10.600 So now they have a company and a name one 0:11:10.679 --> 0:11:14.280 key thing. They're missing a game that people want to play. Yeah, 0:11:14.440 --> 0:11:18.200 minor thing. It's nineteen seventy two, and one day Bushnell 0:11:18.400 --> 0:11:21.200 hears about a thing happening at a hotel in I 0:11:21.200 --> 0:11:24.719 think Sunny Vale, somewhere in in Silicon Valley. Magnavox, the 0:11:25.080 --> 0:11:27.360 TV company, they're working on their own video game. This 0:11:27.440 --> 0:11:29.160 is actually going to be one not to put in 0:11:29.200 --> 0:11:31.280 a bar, but to play at home. Right. Their idea 0:11:31.360 --> 0:11:33.200 is they're going to have this machine that will help 0:11:33.240 --> 0:11:36.200 them sell more televisions. Yeah, and so they have a 0:11:36.240 --> 0:11:39.600 prototype of this machine, and you know, there's like a 0:11:39.679 --> 0:11:43.400 special preview for insiders. And so Bushnell's like, I got 0:11:43.400 --> 0:11:45.520 to see this thing. And so he drives over there 0:11:46.120 --> 0:11:49.640 and he does not say I'm a competitor. Competitor, No, 0:11:49.679 --> 0:11:51.840 he knows. He says, oh, yeah, I work at the 0:11:51.840 --> 0:11:55.520 Magnavox store whatever over down El Camino or whatever. It is. 0:11:55.640 --> 0:11:58.360 Corporate intrigue easier to get away with a lie, I 0:11:58.360 --> 0:12:00.200 guess in nineteen seventy two, Right, they're not gonna come 0:12:00.240 --> 0:12:02.040 up on the internet. And he gets to go in 0:12:02.160 --> 0:12:06.559 and and see what this product is and it kind 0:12:06.559 --> 0:12:09.520 of sucks. So he's relieved, right, It to him, is 0:12:09.559 --> 0:12:12.080 clearly made by somebody who doesn't understand games. And one 0:12:12.080 --> 0:12:15.480 thing about Bushnell is he really understands games because they're 0:12:15.520 --> 0:12:18.360 just not that fun to play. But there is one 0:12:18.480 --> 0:12:21.600 game that has some spark of promise to him, and 0:12:21.640 --> 0:12:24.880 it's essentially like a simple tennis or ping pong game 0:12:24.880 --> 0:12:28.040 where there's like two rectangular sort of paddles or rackets 0:12:28.240 --> 0:12:30.400 and then like a square ball and it goes back 0:12:30.400 --> 0:12:33.720 and forth and there's two players, but there's no score 0:12:34.000 --> 0:12:37.880 in the game, there's no music like it's it's it's 0:12:38.040 --> 0:12:40.240 just a weak version, but. 0:12:40.240 --> 0:12:42.439 That shows some promise to him, and for those of 0:12:42.480 --> 0:12:44.920 you who have played pong what he is about to develop, 0:12:45.760 --> 0:12:48.200 it does have this amazing sound. 0:12:49.360 --> 0:12:52.800 Dok doink, which is just so. 0:12:53.200 --> 0:12:55.240 Like I can hear it in my brain right now. 0:12:55.320 --> 0:13:02.880 Right. So Pushnell goes back to the office and there's 0:13:02.920 --> 0:13:05.040 this engineer who's just started that day, and he's like, 0:13:05.720 --> 0:13:07.880 you know, make this, make this kind of pingpong game, 0:13:07.920 --> 0:13:09.800 but make it fun, make it do all these fun things. 0:13:10.320 --> 0:13:13.440 And the engineer does a great job, and you know, 0:13:13.480 --> 0:13:15.920 a few weeks later, they have this prototype of an 0:13:16.000 --> 0:13:20.640 arcade style game that they call Pong. They just want 0:13:20.640 --> 0:13:22.760 to see how it does, right, it's a prototype. So 0:13:23.760 --> 0:13:27.920 there's this bar nearby. It's called Andy Capps Tavern. 0:13:28.400 --> 0:13:31.240 Named after a cartoon character from the newspapers of the 0:13:31.360 --> 0:13:32.280 nineteen seventies. 0:13:32.440 --> 0:13:34.400 Too hard to explore. Its basically what we would call 0:13:34.440 --> 0:13:38.640 today an alcoholic Yeah, a problem. Yes, And they say, 0:13:38.679 --> 0:13:40.760 can we just put this machine in the corner here 0:13:40.760 --> 0:13:43.280 at Andy Caap's tavern, like, you know, like a pinball machine, 0:13:43.480 --> 0:13:45.480 And the guy at the bar says sure, And so 0:13:45.559 --> 0:13:48.000 they put the machine there and it's you know, it's 0:13:48.080 --> 0:13:52.760 really simple. It's called pong. It has two knobs, one 0:13:52.760 --> 0:13:56.720 for each player, and unlike computer space, it has beautifully 0:13:56.760 --> 0:14:02.600 simple instructions. Avoid miss ball for high score. That's it. 0:14:03.280 --> 0:14:05.800 Love it just a few words, yeah, yeah, three plays 0:14:05.840 --> 0:14:08.440 for one quarter. They plug it in and they go 0:14:08.480 --> 0:14:11.560 back to the office. And a few days later, like 0:14:11.600 --> 0:14:14.000 three days later, they get a call from the bar 0:14:14.800 --> 0:14:17.280 and the guy at the bar is calling him says, yeah, 0:14:17.280 --> 0:14:19.040 the machine's broken. I don't know what's going on. It's 0:14:19.080 --> 0:14:21.360 not working. I like whatever, it's a prototype, you know, 0:14:21.400 --> 0:14:23.640 it's a new kind of computer. Of course it's gonna break. 0:14:24.120 --> 0:14:26.520 Somebody from Atari goes down there, to check it out, 0:14:27.080 --> 0:14:30.960 and it turns out it is broken because the coin 0:14:31.080 --> 0:14:34.120 box is full. It's broken because people have put too 0:14:34.240 --> 0:14:38.640 much money into the machine. It's too good. It's too good. Yeah, 0:14:38.680 --> 0:14:40.720 you know, Nolan Bush and out of his colleagues have 0:14:40.840 --> 0:14:44.720 built a machine that people just cannot help themselves put 0:14:44.800 --> 0:14:47.120 money into. We're gonna need a bigger coin You're gonna 0:14:47.160 --> 0:14:50.120 need a bigger box. People love to put quarters into 0:14:50.160 --> 0:14:50.640 a new thing. 0:14:50.840 --> 0:14:52.880 Well, to see the new technology and then tell everyone 0:14:52.880 --> 0:14:55.000 about it, right, that is the that's one of the 0:14:55.040 --> 0:14:56.680 first insights of the technology. 0:14:56.920 --> 0:14:57.080 Huh. 0:14:57.120 --> 0:14:59.280 And then it's gotta be worth playing a second time, 0:14:59.440 --> 0:15:00.760 which is what he also had. 0:15:00.800 --> 0:15:02.880 He had the two pieces. It's super fun. It's a 0:15:02.920 --> 0:15:07.200 new thing and it's super fun. Now he's got a scale, 0:15:07.680 --> 0:15:11.200 very classic startup problem. You have a thing, people want it. 0:15:11.240 --> 0:15:15.280 But remember he essentially stole the idea from Magnavox. By 0:15:15.320 --> 0:15:17.800 the way lawsuit they said a out of court whatever. 0:15:18.040 --> 0:15:20.720 Lots of people now you know it's Silicon Valley. People 0:15:20.760 --> 0:15:23.560 are coming by Andy Kapstavern who are engineers who are like, 0:15:23.920 --> 0:15:26.200 we can do this, and so he's got to get 0:15:26.280 --> 0:15:29.480 video games out into the world fast, gonna need money. 0:15:29.920 --> 0:15:33.160 He's gonna need money. Nobody's gonna give him money yet, right, 0:15:33.200 --> 0:15:35.800 He's just some stoner with one video game in a bar. 0:15:36.800 --> 0:15:38.760 So he makes a move that has already come up 0:15:38.800 --> 0:15:40.800 a few times on our young show. 0:15:41.320 --> 0:15:44.000 Your favorite negative cash conversion cycle. 0:15:43.720 --> 0:15:46.680 The negative cash conversion cycle. He's able to sell games 0:15:47.040 --> 0:15:49.560 before he has to pay for the parts. So the 0:15:49.640 --> 0:15:53.320 parts to make a game cost Atari like three hundred dollars. 0:15:53.520 --> 0:15:56.280 But crucially they don't have to pay for those parts 0:15:56.320 --> 0:15:58.480 on delivery. Right, they have like a month, so the 0:15:58.520 --> 0:16:00.800 parts come in, Ataria doesn't have to pay anything. They 0:16:00.800 --> 0:16:03.720 put them together and sell the machine for nine hundred dollars, 0:16:03.920 --> 0:16:05.480 and then a few months later they have to pay 0:16:05.480 --> 0:16:08.400 three hundred but meanwhile they got the money from that machine. 0:16:08.440 --> 0:16:12.920 They're growing. They're often running now other problem, classic scale 0:16:12.920 --> 0:16:18.000 problem hiring. And then one day this like nineteen year 0:16:18.000 --> 0:16:20.880 old hippie kid walks in and he says he won't 0:16:20.960 --> 0:16:24.240 leave until they give him a job. And the receptionist 0:16:24.240 --> 0:16:27.400 calls the head engineer and she goes, yeah, we got 0:16:27.400 --> 0:16:29.240 a hippie kid in the lobby, says he won't leave 0:16:29.320 --> 0:16:32.000 until we hire him. Should we call the cops or 0:16:32.040 --> 0:16:35.360 let him in, and the engineer says, bring him on in. 0:16:35.480 --> 0:16:38.760 It's nineteen seventy's a Silicon valley, and this guy wanders 0:16:38.800 --> 0:16:41.840 in and he is whenever you tell a story like this, 0:16:41.880 --> 0:16:42.400 you know who it is. 0:16:42.440 --> 0:16:45.000 It's Steve Jobs. It's Steve Job. So fun, it's so 0:16:45.160 --> 0:16:51.440 delightful and perfectly. Steve Jobs is very good at his job, yes, 0:16:51.640 --> 0:16:56.480 and very unpleasant to wrqu classic unsurprising. He tells Bushnell 0:16:56.640 --> 0:16:59.360 that like everybody's soldering wrong, right, they're actually putting together 0:16:59.360 --> 0:17:01.800 the hardware, slatter the hardware. He's probably right, and Bushnell 0:17:01.880 --> 0:17:03.720 was like, yeah, he was right. He keeps calling his 0:17:03.800 --> 0:17:08.000 manager a dumb shit. Probably was not kind, not necessary. 0:17:08.560 --> 0:17:12.160 Bushnell winds up putting Jobs on the night shift, partly 0:17:12.200 --> 0:17:15.600 so he won't bother so many people, and partly because 0:17:15.640 --> 0:17:18.240 he knew that Jobs like to hang out at night 0:17:18.280 --> 0:17:22.040 with his buddy Steve Wozniak, who was a great engineer. 0:17:22.119 --> 0:17:24.720 It would be great to have hanging around atari And 0:17:24.760 --> 0:17:28.680 in fact, Jobs and Wozniak helped to make Breakout a 0:17:28.720 --> 0:17:30.560 great a target. Remember breaking of. 0:17:30.520 --> 0:17:32.480 Course, you're trying to knock down the bricks in a wall. 0:17:32.760 --> 0:17:34.679 Still, games like that, we got a little paddle at 0:17:34.680 --> 0:17:35.159 the bottom of it. 0:17:35.200 --> 0:17:36.720 There's a moment when he goes through the wall and 0:17:36.720 --> 0:17:39.440 then goes so satisfying. 0:17:39.320 --> 0:17:42.520 So good. So Jobs worked at Atari for a little 0:17:42.520 --> 0:17:44.520 while and then decided he wanted to go off to 0:17:44.600 --> 0:17:49.320 India to find his guru perfect and asked Atari to 0:17:49.480 --> 0:17:52.040 pay for the trip. Nobody ever said he lacked moxie 0:17:52.359 --> 0:17:55.320 and wound up making a deal with Atari where they 0:17:55.680 --> 0:17:57.399 pay him to go part of the way there. There 0:17:57.480 --> 0:17:59.560 was they had exported some games to Germany and there 0:17:59.560 --> 0:18:01.280 was some kind of problem with the games in Germany, 0:18:01.280 --> 0:18:03.720 and they're like, we'll send you to Germany to fix 0:18:03.760 --> 0:18:05.280 the games and then you can get the rest of 0:18:05.280 --> 0:18:09.080 the way to India from there. And that's what happened. 0:18:09.119 --> 0:18:11.919 And you know, the Germans said Jobs was terrible to 0:18:11.920 --> 0:18:13.840 work with, but he fixed the games. 0:18:14.240 --> 0:18:17.800 You know, there's an alternative history where we're carrying around 0:18:17.840 --> 0:18:19.359 Atari devices in our pocket. 0:18:19.400 --> 0:18:22.199 It's true. And you know, there is something right I 0:18:22.320 --> 0:18:25.240 was thinking about, like the link between Atarian Jobs and 0:18:25.280 --> 0:18:26.760 what did he learn there, and it felt like maybe 0:18:26.800 --> 0:18:30.280 a little overdetermined, but I do think you know, clearly 0:18:30.359 --> 0:18:34.680 he had this profound sense of aesthetics and of delight, right, 0:18:34.800 --> 0:18:37.880 Like think of the Macintosh, right, this breakthrough Apple machine 0:18:37.920 --> 0:18:40.720 in the eighties. It was round and instead of squares, 0:18:40.720 --> 0:18:42.639 it was rounded, and it cost them more money, but 0:18:42.720 --> 0:18:45.040 it was beautiful and it was fun and you were 0:18:45.119 --> 0:18:46.720 engaged with it like a game. 0:18:47.320 --> 0:18:49.400 It almost looked a little bit like an arcade game 0:18:49.480 --> 0:18:52.080 with the curves. Yeah, but more than that, I think 0:18:52.119 --> 0:18:54.560 that especially at Silicon Valley at the time when they 0:18:54.560 --> 0:18:57.159 were dealing in actual silicon Right, if you're making chips 0:18:57.160 --> 0:18:59.960 for somebody, you're thinking about the future and the computer. 0:19:00.600 --> 0:19:03.000 You're not thinking about the psychology of the customer, because 0:19:03.000 --> 0:19:05.320 the customer was another electronics. 0:19:04.640 --> 0:19:05.320 Company, right. 0:19:05.640 --> 0:19:08.080 And so Atari and the strength of it was really 0:19:08.119 --> 0:19:11.199 the first time where they're just like, how will a 0:19:11.359 --> 0:19:15.760 regular human being who has no training whatsoever interact with technology? 0:19:15.880 --> 0:19:18.520 Yeah? Yeah, with a computer? Right, Like what they are 0:19:18.520 --> 0:19:22.760 making is going to become essentially the first widely adopted 0:19:22.760 --> 0:19:26.000 home computer, the first computer that ordinary people literally children 0:19:26.240 --> 0:19:28.639 can just plug in and turn on and interact with. 0:19:28.760 --> 0:19:31.919 But the inside Bushnel had is that it wasn't labeled 0:19:31.920 --> 0:19:33.720 a computer. Yeah, it was a fun game. 0:19:33.840 --> 0:19:39.960 Yeah. Yeah. So Atari now mid seventies, they're selling all 0:19:40.000 --> 0:19:43.679 the machines they can make. They're growing, they need more space, 0:19:44.480 --> 0:19:48.080 and so they rent an abandoned roller rink. They stencyle 0:19:48.080 --> 0:19:50.480 Atari on the window, and they turn it into this 0:19:50.600 --> 0:19:54.439 office slash video game factory. I've been ten years older. 0:19:54.640 --> 0:19:56.200 I would have loved to have worked in a roller 0:19:56.280 --> 0:19:57.359 rink video game factory. 0:19:57.440 --> 0:20:01.560 Yes, everybody smoked weed. Yeah, there was a hot tub. 0:20:03.200 --> 0:20:05.359 There was a pool party where everybody ended up naked 0:20:05.359 --> 0:20:09.280