Bushnell founded Atari in 1972 with companion Ted Dabney with an investment of 250 dollars per person. Because of large differences of insight, Bushnell bought Dabney out after a couple of years. With the shares Dabney got he could later call himself a millionaire. 

Syzygy
As a company name the two considered 'Syzygy', an astronomical term they pricked in the dictionary which means the alignment of heavenly bodies. But soon they discovered they couldn't use this heavenly name, because a candle company (according to Bushnell a sort of hippie commune) already called itself Syzygy. That was the moment this famous name was born: Bushnell and Dabney decided to call their company Atari, which roughly speaking means 'chess' in the game Go.

Al Alcorn
The second employee Atari hired, after a 17-year-old receptionist, was the young engineer Al Alcorn. He stood at the cradle of a revolution in the videogame industry, although that wasn't planned at all. On the contrary, Bushnell asked Alcorn to develop the simplest game Bushnell could imagine: something with a ball, two paddles and a score. To motivate Alcorn, Bushnell told him he had already closed a contract for the game with General Electric, but that was totally made up. In reality Bushnell considered the project as an exercise for Alcorn and he was convinced he would never use the result of the young engineers work.

Prototype
But Alcorn worked very seriously. Within a week and a half, he had the first hand-wired version ready. After that, he added some refinements, like paddles that contained eight segments. Aim of the segments was that the paddles wouldn't return the ball all the time in the same direction. All together Alcorn worked three months to finish a functional prototype, which looked in the inside, because of all the wires, like the back of a telephone-operator's switchboard.

Smart negotiations
Bushnell became more and more aware of the commercial possibilities op Pong. The problem was he already had told two companies, Midway and Bally, enthusiastic stories about the device. Bushnell decided that Atari should produce Pong, and to play Bally and Midway off against each other. He told Bally that Midway on second thoughts wasn't interested in Pong, and vice versa, after which both companies really weren't interested anymore.

Pinball route
Bushnell first tested Pong on the so-called pinball route Atari maintained. On those pinball routes a company or person maintained or repaired game machines in bars and at other spots. For Atari the route meant a structural cash flow - not superfluous because until then Bushnell and Dabney earned hardly anything else.

Andy Capp's Taven
The test version of Pong was put in a bar named Andy Capp's Tavern in Sunnyvale. According to a persistent legend, Atari already on the first day got an angry phone call from the tavern manager, because Pong was broken. Alcorn had expected such a phone call: he wondered if the machine would be robust enough to put in a bar, and also if the silicon chips wouldn't burn out, which was a frequent problem in those days. But... according to the story it appeared that coin box was jammed up!

Later it appeared to be one of those sturdy stories from the early days of Atari. The phone call came only after two weeks, and the owner of Andy Capp's asked very politely if they wanted to repair Pong.

Smash hit
Like everybody knows the coin-op version of Pong was an overwhelming success. Alcorn: ‘Pong was a runaway smash hit in the coin-op amusement business. It was the biggest success anyone had seen.' And this time, the instruction was astoundingly simple: Avoid missing ball for high score.

Marijuana
Before the home version of Pong appeared in the shop, Atari manufactured several other coin-op machines, for instance Space Race. In the beginning the manufacturing process of the machines had to content with many problems. For the manufacturing line, Atari hired nearly everyone it could get, among them many students and other youngsters who didn't dislike marijuana. Reputedly one could get stoned outside the manufacturing hall because of the smell of marijuana. Many machines didn't pass the final test.