Rebirth 1973 - Chapter 28 Offer To Atari

Nolan Bushnell frowned as he really doesn’t know the teenager in front of him. So he replies with a rude tone, “I don’t have time now as can you see I’m busy now?”

Henry feels unexpected upon hearing Nolan replies, but he still try to talk to Nolan as Atari is a giant cake after all. “I want to talk about business with you, at least $10 Million business. Are you sure you don’t have time?” Henry then throws a bait.

Atari in 1974 is just barely successful. Even though the majority bar in the United States has a PONG machine, it not mean Atari has success. Now the whole Atari is burdened with heavy debt as to expand the production line for PONG, Atari has borrowed a huge sum of money from the bank.

A PONG machine cost $90 to make, and Atari just sell it for $140 per machine. But not just that cost counted included retailer seller pay, transportation, tax and miscellaneous cost the machine cost $130. The profit is just that pitiful amount of $10, so now Atari can barely running.

Atari engineer Harold Lee suggested Atari should develop PONG home version to expand Atari profit. Under many people consideration within Atari, the PONG home version approved to be developed in 1974 which is now.

To develop the PONG home version of course it would need money. The original Atari will be seeking Venture Capital to inject fund into Atari. Later in late 1974 the famous Silicon Valley Godfather ‘Don Valentine’ inject fund into Atari. After Atari got the fund, the production of Home PONG started.

It was Home PONG that truly made Atari successful, so now Henry thinks this is the best time for him to insert a hand. If Henry came 1 month later, he fears some change happen so he feels more assured if this was done early.

When Nolan Bushnell heard $10 Million business, his eyes immediately shine. Atari profit from PONG is extremely meager, just enough to run the company. Especially now they developed Home PONG, the fund even tighter. Nolan already considered to introduce Venture Capital into Atari to ease the pressure.

So quickly Nolan invites Henry into his office. Seeing Henry want to chat with Nolan, Steve Jobs quickly found an excuse to pack his thing.

“Tea or Coffee Mr. Henry ?” Nolan asked

“Tea please, I already drink cappuccino earlier.” Henry replies with a smile.

Nolan quickly presented a piping hot tea to Henry. He then sits opposite of Henry with his leg crossed and asked, “So, what $10 Million business we are talking about ?”

“I’m optimistic about the future of the game industry. Now the whole world source of entertainment basically is just TV, Film, Book, Radio, and Sport. This provides extremely limited entertainment to a lot of people. But when I see Atari PONG, I know this would be a new source of entertainment.” Henry then sipped the tea as he wants to talk more slowly.

Nolan Bushnell just nodded when he heard Henry remark into the game industry. He himself founded Atari because he feels the same way as this Henry does. Now seeing a people other than himself understand this thing, Nolan feels closer to Henry.

Seeing Nolan nodded, Henry knows his speech already work, so he continued, “Atari PONG is a revolutionary piece. Almost every bar in the United States has Atari PONG, this means peoples loving this new source of entertainment. But I more optimistic about Atari itself, who can think to make this masterpiece.” Henry then glanced toward Nolan.

Nolan already knows where would this conversation pointing, so he directly asked, “How much do you want ?”

Henry smiled as he knows Nolan already catch his meaning. To not beat around the bush, Henry immediately offers, “$10 Million for 51% shares of Atari.”

When Nolan hearing Henry offers, he can feel his lung almost blown up as this is too unexpected, “$10 Million for 51% shares of Atari? Why don’t you just grab it ?”

Henry already knows his offer indeed outrageous as 51% shares mean he can control the Atari. But he confident to make Nolan accept his offer as he has one thing that Nolan or at least Atari can’t refuse.

The valuation of Atari right now is $15 Million. Henry offers $10 Million for 51% is considered premium now. Henry understands why Nolan is angry as who want to see the company you founded is grabbed by someone else. Now Atari future prospect not yet clear as Home PONG not yet successfully developed and tested by the market.

So actually Henry offer considered good now especially Atari is in a special period right now. After a while, Nolan calmed his emotion to think Henry offer with a calm mind. Nolan just silent and Henry is just waiting for Nolan reply.

“Can you add more money? I mean Atari is like my child, so you must understand what I mean.” Nolan trying to increase the price.

Henry grinned when heard Nolan reply as this is nothing unexpected. Atari prospect for the future is uncertain, it can be bankrupt or it can rise. But everything is unknown at the moment as the only thing that holds Atari future is just the Home PONG. But if Home Pong failed to be received by the public, Atari consequences can already be known.

Nolan Bushnell essentially is just a capitalist that seek the greatest profit with the least cost. If Nolan seeks Venture Capital, the price that he will get will be less than what Henry give. Now that someone offered a great price for Atari shares, Nolan of course more interested in real money compared to illusory Atari.

“I can increase the price, but with one condition. $500,000 per 1% shares you sell.” Henry quickly set a seemingly sweet deal.

Nolan Bushnell breath rapidly increases and his face reddens due to the excitement. $500,000 per 1% shares, sound like a great deal for him. But in order not to discovered by Henry for his eagerness, Nolan say, “Mr. Henry, can you give me a moment to think about this. As you know Atari is like my child after all…..”