• August 9, 2017
• by:Serhat Pala

This article originally appeared on Inc.

You’re almost certainly familiar with the domino effect. It’s when you do something that causes something else to happen, which then causes something else to happen and so on like a line of dominoes after you push over the first one.

Particularly fruitful entrepreneurs use the domino effect to parlay their prosperity into even bigger success. However, it can also be the downfall of successful projects that are interconnected.

Take, for example, one of the United States’ most successful entrepreneurs who built an empire from his penchant for family entertainment, headed by one of the most famous rodent mascots in the entire world.

I’m talking — as you no doubt have guessed by now — about Nolan Bushnell, founder of Chuck E. Cheese’s. (Who did you think I was talking about?)

Despite losing its way back in the ’80s, Chuck E. Cheese’s has left its mark on American Culture, coming from one of the most influential business minds of the 20th Century. Bushnell is heralded as a technological pioneer and has been inducted into the Consumer Electronics Association Hall of Fame and named one of Newsweek’s “50 Men That Changed America.”

So, what lessons can we learn from his fascinating life? Let’s take a look:

1. Future business ideas often come from current business success.

Bushnell didn’t start out with Chuck E. Cheese’s. He had already founded Atari and was looking for ways to expand the burgeoning arcade game industry. Rather than keep arcade games in the smoky, adult-oriented pool halls they were often featured in, he wanted to put them into family friendly places.

He didn’t know of any family friendly restaurant chains that would fit his idea, so he just started one in Chuck E. Cheese’s Pizza Time Theatre. This was the perfect progression of business ideas for someone who grew up working in the amusement park industry like Bushnell had. He loved the Walt Disney Company and had already started a video game company in Atari.

With the perfect progression plan and relevant industry experience, Bushnell founded Chuck E. Cheese’s in a highly strategic business move by purchasing a small local operation and building it into an iconic business from the ground up that would also help expand his other business.

This was Bushnell putting the domino effect to work for his entrepreneurial success. One good business idea can lead to another one if it’s related.

2. You can recover from major mistakes.

As visionary an entrepreneur as Bushnell was, he did have a few major stumbles in his life. Once an employer of Steve Jobs, Bushnell made the cringeworthy mistake of rejecting an offer from Jobs to invest $50,000 for a one-third ownership stake of the then-newly formed Apple Computers, simply because he had no interest in home computers. (This is especially bad when you consider that this is a man who played an integral role in the creation of the home video gaming industry.)

However, despite missing out on an opportunity to be able to wallpaper his house with money, Bushnell not only survived, but thrived. He is still around today heading highly successful projects like educational software company BrainRush.

3. Knowing the right time to exit a business is just as important as knowing when to start one.

Timing plays an important role in entrepreneurship. A business that wouldn’t work right now might be perfect to start in five years and a business that you start now, which succeeds might suddenly tank in a year as the market shifts.

Atari did eventually end up tanking, but not before Bushnell sold controlling rights of the company and quit (at least according to his version of events). Chuck E. Cheese’s also tanked, but unfortunately for Bushnell, he didn’t get out in time from that and had to go through bankruptcy.

The restaurant ended up tanking largely due to Atari failing, and had Bushnell kept a keener eye on what was happening with Atari, he might have been able to avoid the losses he took with Chuck E. Cheese’s. So, just as the domino effect can be a good thing with entrepreneurship, it can also be devastating.

Entrepreneurs rarely just start a single business. Once you get that taste of success, it’s hard not to want to get it again. By looking for opportunities that are related to your successful business, you can more easily expand that first business with the help of subsequent ones. But, beware. A failure in one of your businesses can drag down others if they are too closely related. The domino effect is as powerful as it is fickle.

[Photo of Nolan Bushnell by Javier Candiera/Flickr]