Paul Allen: Gates, Ballmer tried to 'rip me off'

Microsoft's co-founder plans to release a new book entitled "Idea Man: A Memoir by the Cofounder of Microsoft." And his recollection of events involving Bill Gates isn't too glowing.

The cover of Allen's new book. Penguin

Microsoft co-founder Paul Allen has written a new book that takes aim at Bill Gates, and, according to some critics, fails to live up to reality.

According to The Wall Street Journal, which received an early copy of Allen's book, "Idea Man: A Memoir by the Cofounder of Microsoft," much of the book focuses on Allen's efforts as a philanthropist and entrepreneur. Allen's personal Web site claims he has given more than $1 billion to philanthropic efforts. He is also well-known in sports circles, thanks to his ownership of the Seattle Seahawks and Portland Trailblazers.

But it's his commentary on Microsoft co-founder Bill Gates and criticisms of his one-time partner that has garnered the most attention.

One of the most biting complaints by Allen is his contention that from the very beginning, Gates sought ways to take ownership stakes in Microsoft from Allen for his own gain.

According to Allen, the issue started when he and Gates were able to land their first big contract. When it finally came time to form the company that would become Microsoft, Allen says, he assumed he would receive an equal split of the company. However, he says in his memoir, Gates had another idea.

In an excerpt from the book published by Vanity Fair today, Allen claims Gates said it wouldn't be "right for you to get half." According to the Microsoft co-founder, Gates reasoned that because he "did almost everything on BASIC," the split should be 60-40 in his favor.

After Allen accepted the terms, Gates had another idea. Allen claims Gates said that he thought he should get more than 60 percent, and asked for 64 percent ownership in Microsoft, leaving 36 percent to his co-founder.

"I might have haggled and offered Bill two points instead of four, but my heart wasn't in it," Allen wrote in his memoir, according to the Vanity Fair excerpt. "So I agreed. At least now we can put this to bed, I thought."

But Allen says it didn't stop there. As Microsoft continued to grow, it was time for the two co-founders to find someone who could manage the company. They tapped Steve Ballmer in 1980. It was a move that Allen says caused a rift between the co-founders that ultimately climaxed in 1982 with another potential hit to Allen's ownership in Microsoft.

"One evening in late December 1982, I heard Bill and Steve speaking heatedly in Bill's office and paused outside to listen in," he writes in his memoir. "It was easy to get the gist of the conversation. They were bemoaning my recent lack of production and discussing how they might dilute my Microsoft equity by issuing options to themselves and other shareholders. It was clear that they'd been thinking about this for some time."

The lack of productivity wasn't intentional, Allen claims. A few months earlier, he was informed by doctors that he had Stage 1-A Hodgkin's lymphoma. He stayed on at Microsoft during his treatment, but Allen says that he was a victim of Gates and Ballmer at his weakest moment.

Paul Allen alleges that Bill Gates and Steve Ballmer tried to dilute his Microsoft ownership.
Paul Allen alleges that Bill Gates and Steve Ballmer tried to dilute his Microsoft ownership. Dan Farber/CNET News

"I helped start the company and was still an active member of management, though limited by my illness, and now my partner and my colleague were scheming to rip me off," Allen writes in his memoir. "It was mercenary opportunism, plain and simple."

By early 1983, Allen says, he was finally ready to move on from Microsoft. According to the Vanity Fair excerpt, he and Gates tried to hash out a deal for him to leave, a deal he says resulted in "a lowball offer for my stock: five dollars a share."

Allen said he held out for $10 per share, but Gates balked at the idea. He left Microsoft in 1983 without selling his ownership in Microsoft.

It was a smart move. By holding on to his shares as Microsoft's stock value continued to rise, Allen cemented his position as one of the world's richest people. According to Forbes, he's the world's 57th richest person. His net worth is $13 billion, though that figure includes his investment in Microsoft and other companies. Bill Gates is worth $56 billion , according to Forbes.

Allen's recounting is one Bill Gates isn't so quick to agree with. In a statement to The Wall Street Journal, Gates said Allen's account of his time at Microsoft doesn't match his own. But he freely admits Allen was integral to the success Microsoft has enjoyed.

"While my recollection of many of these events may differ from Paul's," Gates reportedly said to the Journal, "I value his friendship and the important contributions he made to the world of technology and at Microsoft."

Microsoft told CNET it had nothing to say about Allen's claims (after having earlier told the Journal that Steve Ballmer, specifically, had no comment).

Paul Allen's "Idea Man: A Memoir by the Cofounder of Microsoft" will hit store shelves April 19.

 

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