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Atari Alumni Talk About the Tall Tales They Told to Launch an Industry

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I thought I’d heard them all. Atari stories, that is. I started covering the company in 1981, followed company founder Nolan Bushnell and first engineer Al Alcorn through their other adventures, became personal friends with more than a few Atari alumni, and even had a memorable lunch with Warner COO Manny Gerard after that company bought Atari (and, many say, then destroyed it).

But last Thursday evening, at a sold-out 100-person event hosted by the IEEE Silicon Valley History Committee, a few behind the scenes stories came out that were new to me—and even new to some of the people who were key players at Atari at the time. It’s hard to get startups off the ground, particularly those trying to do something as revolutionary as start a videogame—or personal computer—industry. So let’s just say the truth, at times, was stretched—or simply ignored—in order to make things happen. A few examples:

Motivating an engineer with a fictitious client:

Pong has gone down in history as the first consumer video game. In 1972, shortly after Atari’s inception, Atari founder Nolan Bushnell saw a demo of what became the Magnavox Odyssey; it included a ping pong game. “I thought the game was crap,” Bushnell recalls. “It was fuzzy, analog. Our tech was better.”

Bushnell said he’d contracted with pinball manufacturer Bally to build a driving game. But he recalls that as he drove home from the demo, he thought his one engineer, Al Alcorn “doesn’t know jack shit about video. I felt that [the driving game] was too hard as a learning project, so I told Al to do this ping pong game.”

Alcorn jumped in to continue the story. “And you told me you had a contract with General Electric, [to build] a home game, so I thought wow, this is going to be hard to do, the fact that nobody from GE came by, or wrote us a letter, well, I was 24, I didn’t know better.”

“I just wanted you to be motivated,” Bushnell said.

Faking out the market:

“I wanted world domination,” says Bushnell. “And it turns out that there are two coin-op [game] distributors in every city. One would have Gottlieb pinballs, one Williams. We had chosen the best distributors, but the [distributors] who didn’t have the Atari brand were doing everything they could to spawn a competitor. So I thought, let’s make that happen.”

So Atari secretly started a second company, Kee Games, with Bushnell’s next door neighbor, Joe Keenan, at the helm. “We took our number two engineer, our number two manufacturing guy, and every other game in our lineup, and gave it to Kee. We started Kee Games in August, and they were up and spinning by the November AMOA show (the big trade show in the games industry). Their goal was to pick up the rest of the distributors.”

Continued Alcorn: “We told the distributors that those bastards are stealing our games, and then the distributors would run off and grab the games. We would rag at our distributors’ meetings about [Kee] stealing our games—and stealing our employees no less.”

“I knew that I couldn’t keep it a secret forever,” Bushnell said. “So I started rumor that they had stolen a bunch of stuff and we were suing. Then I put it out that we had settled. Then I said we settled for some shares. Then eventually I said a lot of their shares, then I said we decided to buy the rest of the shares and merge companies.”