Nolan Bushnell speaking at the Keiretsu Forum Angel Capital Expo in Redmond.

Atari founder Nolan Bushnell is a true American entrepreneur, an iconoclast who has made a mark on everything from video games to pizza chains to mapping software. During an entertaining talk this afternoon at the Angel Capital Expo in Redmond, the 66-year-old businessman took audience members on a wild tour of his career. It started with Bushnell sneaking into a college lab to play the 1960s computer game "Space War" and ended with his current plans to use video games to overhaul the education system.

"I felt like I was charged with making technology fun and interpreting it for the masses," Bushnell said.

Along the way, Bushnell shared stories about the creation of the game Pong, how he nearly came up with the idea for Amazon.com and why entrepreneurs should avoid venture capital. We even captured some entertaining video of Bushnell describing what it was like to manage Steve Jobs and Steve Wozniak during the early years of Atari. Continue on for excerpts and the video.

On the first version of consumer Pong: "We took it to the toy show, and guess what? We sold none. Zero. One of the most successful consumer products of the time, and we sold none.... Innovation is hard. People don't realize that the channels aren't there, people don't understand what it is. I always like to say that everyone believes in innovation until they see it."

On managing Steve Jobs and Steve Wozniak at Atari in the 1970s: "About at this time two guys worked for me called Steve Jobs and Steve Wozniak. Jobs was a very, very bright young man, but a little bit abrasive -- nobody has heard that before. I always felt to run a good company you had to have room for everybody -- you could always figure out a way to make room for smart people. So, we decided to have a night shift in engineering -- he was the only one in it." (Audience laughs)

Steve Jobs

"And he and Wozniak for Atari actually designed a game called Breakout, which was a game that I blocked out, but I needed to get an engineer to work on it. But at the time we had gotten all corporate ... and we let the engineers bid on it, they bid on projects they wanted to do. And at that time, all of the paddle games were considered passe, so nobody wanted it. So, I got Wozniak to do it, and it turned out that Breakout was the game that launched Nintendo. They unmercifully copied it, released it in Japan... But oh well, that's another story." (See video below).

On missing the boat on what became the game Simon: "(Atari's) Touch Me to this day is a giant irritation. Why? We did it as a coin operated game. It did OK, but it wasn't a big win... What Touch Me really was what you all would call Simon, which makes me grit my teeth because the guy who saw it, actually patented it after seeing it and sold it to Hasbro... So, I got nothing for Touch Me, or Simon. Anyway, it is one of those things, but it still really bugs me. I just can't let it go."

Atari 2600

On the Atari 2600 game console release: "The idea here was, let's give people a choice. Let's sell some razor blades. Cartridges we could build for about $3, and we could sell them at retail for about $20. That's a nice a margin. But it was basically obsolete on the day that we shipped it because it had 128 bytes of RAM. 128 bytes. That's not kilobytes, bytes. And why? RAM was very expensive then. And from the time we started the design from the time we actually launched it, the cost of RAM had come down.... The 2600 was really a crappy game system. If you look at it, you know we didn't make the ball square because we thought it was cool. It's because all we could do."

On losing $27 million of his own money on a robotics startup: "I lost a bundle. No matter how smart you are on your first few, you can really screw things up if you give it a try."

On why he decided to create Chuck E. Cheese's Pizza Time Theaters: "We were actually having a hard time getting coin operated games into pizza parlors. Can you believe that? You know, I always thought pizza and games went together like peanut butter and chocolate, and so we decided to go into the arcade business. And to give you a little bit of an idea of the economics. We sold a coin operated Pong game for about $1,000. And those machines would make between $150 and $300 a week. Which do you want to be -- the seller of the machine or the operator of the machine? It didn't take us long to figure that puppy out."

On creating ByVideo: "It was basically Amazon in a kiosk. Too soon. We sold that company to McKesson. You could buy stuff in airports, and it was all connected by modems and laser discs... We tried to push the technology a little too fast. But what we knew about that, we should have been Amazon. We really learned a lot about shopping behavior online, fulfillment and that sort of thing. We sold a little too soon."

On virtual currencies and his involvement in Seattle virtual currency startup MetaTix: "Last year, China will have over $3 billion of virtual goods. That is where you buy a new sword or a new outfit on your avatar, a new shield... In the United States, the average purchase of a person who is into a game that is playing virtual goods is $40 per month -- three times what a World of Warcraft subscription is."

On becoming a monopolist: "Everyone knows that in currencies -- if you are not a walled garden -- you become uber important. And whenever you become a de facto monopolist you win. Let's face it: An antitrust suit is like the Academy Awards of business. You know you've done it really well when they come after you."

On raising capital: "I always want to have a company that can grow to $1 billion without having any more input of cash. If you are constantly having to raise cash, raise cash, raise cash -- you pretty soon get diluted down. What you really want to do -- and what I've been telling my boys -- the objective is not to raise money. And if you think the object is to raise money, no! Keep from raising money. Raise a little bit, and then grow the business organically. That is what we did at Atari. When I sold Atari, I owned about 70 percent of it. That was a good thing. But it was also bad because we could have used money. But believe it or not, nobody believed that the video game business was a business. They couldn't get passed the idea. And it was in the early days of venture capital and that sort of thing. But I didn't raise a penny of capital until I was at $40 million in sales. And we figured out a way to do it by bootstrapping. And that sort of is the best way."

On what is next: "I was working very, very hard on the SnapSchool project. And then, all of a sudden, an opportunity came along that I am working hard on and I am trying to buy a pretty good sized company. And I have some private equity backers, and things like that. If I can pull that off, I am probably going to get stuck on that. But I am going to know by Christmas whether or not I pull this big thing off. And -- if I don't-- I will go back to my entreprenerurial roots."

[Atari 2600 photo via El Photo]