CH : 27 Offer to Atari

27 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't you see I'm busy now?"

Henry didn't feel any offence but it was quite unexpected upon hearing Nolan's tone, but he still tries 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 did what he knew works best; he threw another bait.

Atari in 1974 was just barely successful. Even though the majority bar in the United States has a PONG machine, it does 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 banks in form of business loans.

A PONG machine costs $90 to make, and Atari just sells 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 with this miscule profit Atari can barely run.

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

To develop the PONG home version of course it would need money, a lot of money. The original Atari will be seeking Venture Capital to inject funds into Atari. Later in late 1974 the famous Silicon Valley Godfather 'Don Valentine' injected funds 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 thought this is the best time for him to insert a hand. If Henry came 1 month later, he fears some change will happen so he feels more assured if this was done early.

When Nolan Bushnell heard the $10 Million business, his eyes immediately shone. Atari profit from PONG is extremely meagre, just enough to run the company with a lot of budget cuts. Especially now they have to develop Home PONG, the fund even tighter. Nolan already considered introducing Venture Capital into Atari to ease the pressure.

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

"Tea or Coffee Mr. Henry ?" Nolan asked

"Tea please, I already drank cappuccino earlier." Henry replies with a smile.

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

"I'm optimistic about the future of the game industry. Now the whole world's 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 but not for long it's not sustainable." Henry then sipped the tea as he wanted 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 Henry does. Now seeing a person other than himself understand this thing, and he also agreed with the fact that it was not not sustainable enough for people to craze over. So Nolan feels closer to Henry's view.

Seeing Nolan nodded, Henry knew his speech already worked, so he continued, "Atari PONG is a revolutionary piece. Almost every bar in the United States has Atari PONG, which means people love this new source of entertainment. But I am more optimistic about Atari itself, as the game itself doesn't last more than a few years." Henry then glanced toward Nolan.

Nolan already knows where this conversation is pointing, so he directly asked, "How much do you want ?"

Henry smiled as he knew Nolan already caught his meaning. To not beat around the bush, Henry immediately offers, "$10 Million for 51% shares of Atari."

When Nolan hears 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 is indeed outrageous as 51% shares mean he can control the Atari. But he is 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 offered $10 Million for 51% is considered premium now. Henry understands why Nolan is angry as who wants to see the company you founded is grabbed by someone else. Atari future prospect not yet clear as Home PONG not yet successfully developed and tested by the market.

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

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

Henry grinned when heard Nolan reply as this is nothing unexpected. Atari's 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 seeks the greatest profit with the least cost. If Nolan seeks Venture Capital, the price that he will get will be less than what Henry gives. Now that someone offered a great price for Atari shares, Nolan of course is more interested in real money compared to illusory Atari.

"As someone who recently founded my own company, I empathize with your position. I understand the immense dedication, effort, and countless hours required to build a successful venture like Atari. It's like your own child, and naturally, you want to reap the rewards. So, how about this—I'm willing to increase the price, but on two conditions: First, for every 1% of shares you sell, I'll offer $400,000, and on top of that, I'll take care of all the loans you've taken out in the name of Atari. All up front.

But my second condition is that you have to sell more than 40% of the company to get this $400,000 for 1% deal" Henry proposed what seemed to be an enticing offer.

Nolan Bushnell's breath rapidly increases and his face reddens due to the excitement. $400,000 per 1% shares sounds like the best he could get in his whole life. Additionally he doesn't have to pay a single penny for all the lines he took. But in order not to be discovered by Henry for his eagerness, he didn't see any reasons why shouldn't sell more than 90% of the company. After all, he was becoming a millionaire at such a young age. Nolan says, "Mr. Henry, can you give me a moment to think about this. As you already said Atari is like my child after all....."