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Microsoft Pri0

Welcome to Microsoft Pri0: That's Microspeak for top priority, and that's the news and observations you'll find here from Seattle Times technology reporter Matt Day.

March 31, 2011 at 7:27 AM

Paul Allen goes public with hard feelings toward Gates

This story ran in the print edition of The Seattle Times on March 31, 2011. -Sharon Pian Chan

A bone of contention between Microsoft co-founders Paul Allen and Bill Gates has apparently been nagging at Allen for the last 34 years.

In “Idea Man,” a book coming out April 19, Allen complains that Microsoft Chairman Bill Gates whittled down Allen’s ownership stake even though he had contributed just as much to the creation of the world’s most successful software company.

In an excerpt of the book published by Vanity Fair on Wednesday, Allen retells his partnership with Gates from the day they met at Seattle’s Lakeside School in 1968, the manic coding and arguing that followed, until the day he resigned from Microsoft in 1983 after being diagnosed with Hodgkin’s disease.

In the climax of the excerpt, Allen caught Gates and now Microsoft Chief Executive Steve Ballmer complaining about Allen’s lack of productivity after he was diagnosed with cancer, and plotting how to reduce his stake in the company.

“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 wrote, according to Vanity Fair.

Gates released a statement saying, “While my recollection of many of these events may differ from Paul’s, I value his friendship and the important contributions he made to the world of technology and at Microsoft.”

Microsoft declined to comment on the excerpt. Paul Allen’s spokesman David Postman said, “When people read the book, they’ll see that there’s a very balanced portrayal of that partnership and that relationship.”

Postman added that the book is not all about Microsoft.

The Odd Couple

Throughout the Vanity Fair piece, Allen paints Gates as a wolf of a negotiator, tireless automaton of a programmer and passionate but arrogant leader. Allen describes himself as logical and rational. The magazine dubs them The Odd Couple.

Allen is now a billionaire with a net worth of $13 billion, owner of two professional sports teams — the Seattle Seahawks and the Portland Trail Blazers — and the Vulcan development company remaking Seattle’s South Lake Union neighborhood. (Allen says in Vanity Fair he didn’t have $50 to pay for a hotel room for a business meeting in 1975, though.)

Gates is now worth $56 billion, according to Forbes magazine, and trying to eradicate malaria, among other global health projects, at the Bill & Melinda Gates Foundation.

Allen wrote that Gates, at age 13, showed him a copy of Fortune magazine and asked, “What do you think it’s like to run a Fortune 500 company? … Maybe we’ll have our own company someday.”

“He was really smart. He was really competitive; he wanted to show you how smart he was. And he was really, really persistent,” Allen wrote of his first impression of Gates.

Allen, on the other hand, was content at just being decent at math in college. “I was OK with being a generalist.”

Gates paid no attention to social convention, he wrote. When Allen, his girlfriend and Gates had dinner in college, Gates ate his chicken with a spoon. He also advised Allen’s girlfriend to buy all her clothes in the same style and colors so she wouldn’t have to spend time picking out outfits that matched.

Allen retells the night-and-day project when Allen and Gates wrote BASIC for the Altair microcomputer while Gates was still at Harvard. Landing the contract with Altair meant they had to establish a partnership.

Allen says he came up with the name of the company “Micro-Soft.” He assumed the partnership would be 50-50. Gates first suggested 60-40, then pushed it to 64-36. Allen said he could not figure out the logic behind it, but agreed to it.

As the company grew, Allen said Gates thrived on conflict and fiery debate while Allen wanted to “solve the problem logically and move on.” Gates seemed to never need recharging, and couldn’t understand why an employee who had worked 81 hours in four days wanted to take a day off, Allen wrote.

“Our great string of successes had married my vision to his unmatched aptitude for business,” Allen wrote.

Cancer before 30

When he was diagnosed with Hodgkin’s disease before he turned 30, Allen said, it began as an itch behind his knees. “This was an agony that had me clawing at myself.” He underwent several weeks of radiation treatment.

A few months later, he heard Gates and Ballmer “bemoaning my recent lack of production and discussing how they might dilute my Microsoft equity.” He burst in on them, he wrote, and shouted, “This is unbelievable! It shows your true character, once and for all.”

That night Ballmer came to his house and apologized, Allen wrote. A few days later, Allen wrote that he received a six-page, handwritten letter from Gates with an apology.

Life at Microsoft was stressful for Allen. “If I continued to recover, I now understood that life was too short to spend it unhappily,” he wrote.

Gates offered to buy Allen’s stock at $5 per share, Allen recalled. By then, it appears Allen had picked up some negotiating skills. He turned it down.

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