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In 1976 Bushnell sold Atari to Warner Communications for $28 million. He stayed on with Warner for a while, but was increasingly uneasy inside the large corporation. When Warner displayed no interest in his idea for a chain of pizza parlors featuring video games, Bushnell stormed out to start Pizza Time Theatre. There are now 85 outlets in five states, where robots named Chuck E. Cheese, Mister Munch and Madame Oink perform vaudeville acts and tell corny jokes to the smell of pizza and the sounds of roaring video games.
Among Bushnell's other current ventures is the Catalyst Group, which he touts as a company to "mass produce small companies." It plans to provide a group of new businessmen with services such as accounting and advertising. Bushnell will take some of their stock in return, and he also gets a chance to be present at the creation of other new ventures.
Dealing in Discounts
Founded in 1971 by a 33-year-old Stanford M.B.A., Charles Schwab & Co. of San Francisco was initially just another struggling young firm in the securities business, with only a dozen employees and 2,000 or so clients. Then, in 1975, the Securities and Exchange Commission discarded the old fixed-rate system for buying and selling securities in favor of negotiated rates, in which investors are free to haggle with brokers over commissions.
Most Wall Streeters dreaded the change, correctly predicting a rash of mergers among brokers and drastically altered ways of doing business in the securities markets. But Schwab, now 44, embraced negotiated rates. He began offering clients deep commission discounts on securities transactions, sometimes slashing them to only 30% or 40% of their former levels. Schwab quickly became the largest discount broker in the U.S., with offices in 40 cities, 600 employees and 220,000 clients. For its fiscal year ending last September, the firm had revenues of $42 million and profits of $5 million.
With prosperity came new services that Wall Street firms were slow in offering. Says he: "There was a fantastic advantage in not being part of Wall Street. They had been doing things the same way for years." Schwab began providing cash management accounts to customers, complete with Visa cards and checking privileges. He also ventured into the insurance business, turning his firm into a mini financial supermarket in competition with banks, who eventually adopted some of his offerings.
One institution that took notice: nearby Bank America Corp., parent company of the nation's largest bank, which was eager to move in fresh directions under its new president, Samuel H. Armacost. BankAmerica approached Schwab about a takeover last September, in a move to become the first U.S. bank to acquire a broker. After weeks of agonizing, Schwab decided to sell. The price: $53 million in BankAmerica stock. If the deal is approved by regulators, Schwab will stay on as boss of the new bank subsidiary.