by Adam Fisher
Jim Levy: The mother church of venture law.
Bob Whitehead: We went over and had a meeting and one of the lawyers says, “You know what, I’m talking to a guy named Jim Levy who’s kind of doing the same thing. He’s from the music business, and he’s been working with a group that has been distributing BASIC games and talking about splitting that off and starting his own company.”
David Crane: He said, “You need to talk to this guy, because you guys have all the technical expertise but you don’t have the business experience. So he’s going to be your CEO.”
Jim Levy: So, these guys pull up out in front of my house about two in the afternoon. They pile out of this car and they’re all really young. I think the oldest was thirty, Larry Kaplan. But Al Miller, Bob Whitehead, David Crane were all like twenty-three, twenty-four, or twenty-five, somewhere in there. I wasn’t that much older. I was thirty-four at the time. So they sit down and start explaining to me what they do. I had seen arcade games and I think I had brushed up against things like Pong and so forth, but I hadn’t really seen or taken notice of the cartridge-programmable system, the VCS.
Clive Thompson: The Atari VCS games were definitely the rock and roll for that generation. It was a deep and intense culture for the kids.
Bob Whitehead: Well, it wasn’t very long with our meeting with Jim where we started asking each other cool questions. It could have been prompted even by Jim himself: “Why can’t we just do Atari games? Cartridges?”
Jim Levy: So they said, “Do you realize Atari has a million-plus systems out there and they are the only ones doing software for it?” I said, “Oh, okay.” They said, “So would you consider doing your start-up, but starting with video games, Atari-compatible games instead of personal computer software?” And I said, “Well, that’s an interesting idea. Tell me more.”
Bob Whitehead: Within a pretty short period of time Jim put together a business plan.
David Crane: It all went pretty quickly after that.
Al Alcorn: Those kids went off with a lot of energy and a lot of venom and started a company.
David Crane: We ended up getting venture-capital funding and forming Activision in 1979.
Clive Thompson: There were video games before the VCS. There were arcade games. But once games became things that you could play over and over again while sitting in your basement there was a new economic logic. An arcade game wanted you to lose after about two minutes so that you would put another quarter in. But once a game became something that you could buy and take home with you, it created a different relationship with the game—you could explore a game that was longer and richer. So you started getting these games where you had to go roaming around and find things and complete this quest. It became storytelling.
David Crane: Programming for the VCS was the greatest technical challenge that has ever existed in video games. My goal was to do a game with an actual human figure in it. Back at the time your main character was a tank or a jet airplane. Creating a realistic-looking person was very difficult. And I would walk around the lab and freeze my motion and sketch where my legs were. Animators do that sort of thing; they often use themselves as models for their animation. And I would do that for hours and hours on end until I had a pretty nice character.
Jim Levy: David was really a computer animator and still is.
David Crane: I said, “Okay. There’s my little running man. What’s he doing? Well, he’s running. He’s probably running on a path.” So I drew two lines that represented a path. “Where is this path? Let’s put it in a jungle.” I drew some trees. “And why is he running?” I put threats, treasures to collect, that sort of thing, and figured out these quicksand and tar pits and alligator heads to jump over and just tied a bunch of this stuff together. And, really, I had a sketch in about ten minutes which defined the whole game.
Jim Levy: Pitfall made David a rock star. Pitfall was our Space Invaders. It was a landmark game that had spin-offs: Saturday morning cartoon shows and an arcade game. I think it was the first time that a home game had spun out to the arcades instead of the reverse.
David Crane: Pitfall took me about a thousand hours sitting at a computer to do. Now that’s a long time except it’s only a few months. Six or seven months. And it turns out that Pitfall earned Activision $50 million wholesale. So I made for them $50,000 an hour given the thousand hours I worked on it.
Jim Levy: The party for Pitfall was spectacular.
David Crane: Live animals hanging in cages from the ceiling in the jungle theme. Three live bands, a marimba band just in the entryway before you got into one of the three ballrooms. Those parties, everyone in the industry and then some would come. We’d have four thousand people coming to a party at Activision. Those were good times.
Larry Kaplan: Activision was so flush with cash, the programmers were traveling first class, had limousine service, company cars, a private chef, and a DO NOT DISTURB sign on the door and the phone.
Activision, one of Silicon Valley’s earliest software companies, made millionaires and celebrities out of its programmer-founders. Meanwhile, things were starting to go downhill at Atari.
Al Miller: Atari just dropped the ball because senior management did not understand the technology. They had pissed off the really capable people.
Nolan Bushnell: What we were planning was a network for playing games online. It was going to be very simple; we were going to have a closet full of computers in every area code, because in those days a local call was free but long distance was very expensive. And then we were going to link the closets with a T1 line. Now when you think about that, that’s fundamentally the architecture of the internet. Our IP stack was very, very similar to the internet’s IP stack. And that was killed! Now think about if Atari owned the internet. That would have been massively cool!
Al Alcorn: There was a fear of introducing new products that might fail. Even though we were making the billions of dollars and if it failed it wouldn’t even be a blemish, it would be just nothing. But to a big corporation it was, “What if we introduced this thing and everyone laughed at us? Thus if we don’t introduce this thing they won’t laugh at us.” So that was going on. It was clear that Atari was not going to release any new products.
Nolan Bushnell: They started killing off the projects that we were working on because every prototype looked like a tiny business to them—not realizing that all businesses at the outset look like tiny businesses. They just thought they were geniuses. You know it was just a corporate culture that became very toxic.
Al Alcorn: So Nolan and I go off, well, actually Nolan goes off first. Nolan left in ’80, I left in ’81. And we were just going to start a bunch of companies.
Nolan Bushnell: I had a lot of ideas for businesses that were somewhat disparate, and so I got a facility, centralized Xerox machines, centralized health care. The idea was that if I funded an engineer to do something, they could go in, get a key, a stack of papers on their desk, sign their name sixty-four times, and within forty-five minutes they’d be incorporated, they’d have payroll set up and be working on their project without all this other noise. Catalyst was the first incubator. It was absolutely unique at the time.
Stan Honey: Upstairs at Catalyst, Nolan had a great big office suite and this enormous desk that had computer screens buried in it. The feeling of it was kind of tablet-like. It was a prediction of things to come, pretty interesting. Nolan has always been involved in a ton of stuff.
Nolan Bushnell: I did automobile navigation. I did this kiosk project called ByVideo, which was the first online shopping kiosk. I had a toy company. I had a little robotics company, and life was good.
The most notable spin-out was Etak, the world’s first commercially available computerized in-car navigation system. Bushnell sold Etak to Rupert Murdoch for thirty million dollars—the same price that Warner had paid for Atari.
Al Alcorn: So now Ray was beginning to learn a lesson but he overlearned it, and now he’s trying to coddle
the engineers. The office was too noisy or whatever, and so they had to have a facility over at Santa Cruz or something.
Steve Perlman: I was an Atari intern. I remember going to the office where the software engineers were—I had to ask them something, I don’t remember what. So I knocked on the door, and I heard from outside a voice say, “Who is it?” I say, “It’s Steve, the summer intern.” The voice says, “He’s cool, man, let him in.” So they open the door and let me in and blue smoke just comes flowing out.
Howard Warshaw: There was a lot of dope that was smoked at Atari when we were there.
Steve Perlman: They’re passing around a joint, and the guy says, “Steve, I call this my number seven. Do you know why?” I say, “Why?” He says, “Well, it’s got three bits in it: It’s Maui Wowie—with hash—dunked in hash oil!” If you know binary, seven is one-one-one: three bits in binary. I’m like, “Great! Cool. I can understand how that can help with your creativity, but I’ve got work to do…”
Al Alcorn: And toward the end Ray got Larry Kaplan to jump ship from Activision and come back to Atari. He was going to run engineering, at least get the cartridges done. Larry was the first manager that could read the code, and he could see these guys were doing nothing. They were just goofing off, getting money, and nobody could assess them. So Larry came back and told them, he said, “You’ve got to start firing people.” “Oh no, we can’t fire them.” “Look, they are out of control. They are not doing anything. We’ve got to show them who’s boss because they don’t take orders.” And Ray wouldn’t let him do it. So I think Larry gave up at that point.
Larry Kaplan: I left to start a game hardware company to build a replacement for the VCS, since no one had done anything comparable.
Al Miller: At Activision we kept waiting. “When is Atari going to introduce their next great game machine?” And they never did.
Alan Kay: Atari was greedy and they were making a shitload of money off really obsolete games toward the end there.
Al Alcorn: You know in Silicon Valley if you don’t obsolete yourself somebody else will, right? The Warner guys didn’t really understand that. They were from an East Coast company and thought that they had an evergreen kind of product. They thought that they would just sit back and mint money for the rest of their lives selling the Atari VCS for the next twenty years.
PARC Opens the Kimono
Good artists copy, great artists steal
The Apple II—which Woz designed in order to play Breakout at home—found its greatest success with businessmen who bought it to play with spreadsheets at work. Seeing this, Jobs concluded that Apple needed to turn away from games and reorient itself around the needs of business. The next computer should be an office-of-the-future machine. But what did that mean, exactly? The answer came when Jobs went to Xerox PARC to see the Alto. In December 1979 Jobs was ushered into the ivory tower to get the full demo and more. He saw the laser printer, networking, and something called object-oriented programming. But what impressed Jobs most about the Alto was the mouse. He was twenty-four at the time—too young to have attended Engelbart’s Mother of All Demos—but he fixated on the mouse, which was Engelbart’s most fundamental breakthrough. With the mouse one could point and click, cut and paste, doodle and paint. It was the key to the virtual desktop on the Alto’s screen: the office of the future. After seeing what PARC had invented, Jobs knew exactly what he had to do.
Bruce Horn: Bob Taylor’s group at PARC was CSL, the Computer Science Lab. That group was very computer science heavy: real heavy hitters in the field, in the industry.
Bob Taylor: The people in CSL despised Steve Jobs, to a person. Steve Jobs was a college dropout who didn’t know shit about computing. The CSL people were PhDs in computer science.
Alan Kay: The reason that the Homebrew-type stuff works is because some guys with PhDs put a lot of complicated electrical engineering into the chips.
Bob Taylor: We laughed at his Apple II! Compared to an Alto it was laughable.
Alvy Ray Smith: I knew this hobbyist stuff was happening. There were people at Xerox PARC saying, “Alvy, you’ve got to come over to the garage.” But I just didn’t give a damn. I was like, Those are just toys.
Larry Tesler: I went to Homebrew Computer Club meetings. And I was telling everybody that Xerox is going to miss the boat unless we get into this. This is really taking off! Xerox headquarters got concerned. And a guy named Roy Lahr, in the business development group in East Coast Xerox headquarters, came out to PARC. He said, “We have a task force—we’re going to study these personal computers. We’re going to come to some decision about what the company should do. And we want your input. But the decision is going to be made by the management of the company.” So we all gave input. And as he went around meeting people, he found that there were three or four of us that thought personal computers were going to happen and that Xerox couldn’t wait until PARC came out with something. And they wrote up their findings and recommended that they, in fact, partner with somebody like Apple to get into this market. And so they came up with a deal where Xerox would be allowed to invest in Apple.
John Couch: Steve said, “Well, you know, if you open the kimono of Xerox PARC, we’ll let you invest.” It was really an exchange of favors.
Larry Tesler: Apple would be allowed to see some PARC technology, which they’ve heard of from the graduate students that they’d hired from various places. And PARC would help Apple to do the kind of hardware they were doing with mice, and bitmap displays, and so on. They would give a limited amount of technical help, and more sourcing help, help them find manufacturers who would make things like the mouse for them. And Xerox’s view was this would be a benefit to Xerox.
Alan Kay: By ’79 we had shown this system to about three thousand people. Why did Steve Jobs decide he wanted to go there? His people had seen the demo, and they just wanted Steve to see it.
Adele Goldberg: Mind you, they could have come at the once-a-month demo day if they wanted to. But they wanted a special visit. So Xerox closed off the foyer and they set up a machine up there.
Alan Kay: There was a table with their display console and stuff and the demo was given.
Adele Goldberg: It was given by Dan Ingalls and Larry Tesler, with me in attendance.
Alan Kay: And our typical way of doing things is pilot/copilot things where people trade off. And Steve was sitting to the left and a couple of his people were there. Adele and I were standing in the back of the room watching this.
Adele Goldberg: In fact it wasn’t one demo, it was two demos. They were maybe a week apart. But you’ve got to separate these because they were very different. The first demo was a management demo. So this was “look at multimedia as built on the Smalltalk system.”
Smalltalk was Alan Kay’s revolutionary object-oriented programming environment that was developed at PARC for the Alto. Thanks to the Alto’s bitmapped graphics capability, Smalltalk was the first system to have a full-blown graphical user interface, or “GUI”—a feature that proved to be very influential.
Dan Ingalls: I gave a demo in which I was sort of showing off the programming environment.
Alan Kay: It was kind of like what we have today, but better. It was a completely integrated system that was not made up of applications but “objects” that you could mix and match anywhere. You’ve got a work area and you can bring every object in the system and you just start: You’ve got every tool, you’ve got every object, and you can make new objects. It was programmable by end users, and it had the famous GUI.
Larry Tesler: It was the first one that was graphically based—overlapping windows, a mouse, stuff like that.
Adele Goldberg: It was very much a GUI demo.
Dan Ingalls: I was scrolling up some text and Steve said, “I really like this display.”
Alan Kay: At that time, when text scrolled it did so discretely: So jump, jump, jump, jump—like that.
Dan Ingalls: And Jobs said, “Would it be possible to scro
ll that up smoothly?”
Alan Kay: “Can you do it continuously?” Steve liked to pull people’s chains.
Dan Ingalls: Because it did look a little bit jerky, you know?
Alan Kay: So Dan or maybe Larry just opened up a Smalltalk window and—
Bruce Horn: —changed a few lines of code in Smalltalk, and in the blink of an eye it could do a smooth scroll.
Alan Kay: And so it was like, “Bingo!” And so Steve was impressed but he didn’t know enough to be really impressed. The other Apple people just shit in their pants when they saw this. It was just the best, best thing I’ve seen.
Dan Ingalls: I think that sort of blew Steve’s mind. Certainly, just about anybody who worked on development systems responded really well to that particular demonstration. It really showed how the Smalltalk system could be changed on the fly and be extremely malleable in terms of stuff you could try out in the user interface.
Alan Kay: On Smalltalk you could change any part of the system in a quarter of a second. These days it’s called live coding, but most of the stuff today—and virtually everything back then—used compiled code, so your programming and editing and stuff like that was a completely separate thing. You had to stop the system and rebuild.
Dan Ingalls: So you had a regular sort of programming environment sitting there in front of you with windows and menus and the ability to look at code and stuff. But the neat thing about it was that if you edited the code, it would actually change the code that you were running at that very moment. The object-oriented architecture made it really, really quick to make changes.
Bruce Horn: Even today if you wanted to change something at the level of the operating system in MacOS or Windows, it’s simply impossible unless they have decided to give you that option to smooth-scroll or not. It’s simply impossible to get to the source code to do that unless you’re an employee—and even then it would probably take six months to get that feature in. Whereas within Smalltalk, you pop up the menus, accept the change, and it’s working right now. You can’t even do that today.