Microsoft Co-Founder Paul Allen's Withering Take on Bill Gates

In his new memoir, Allen crafts a revisionist history of the inception of Microsoft

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Remember that one scene in The Social Network where Facebook co-founder Eduardo Saverin eagerly returns to Palo Alto for the site's million-user party, only to be rebuffed by a conniving Sean Parker, Mark Zuckerberg, and an infuriating lawyer who informs him that his shares in the company have essentially been diluted to nothing? Well, according to Microsoft co-founder Paul Allen, decades ago a sneaky Bill Gates and his partners were trying to do something similar to him.

Instead of slinking away like Saverin (only to reemerge brandishing a $600+ million dollar lawsuit), Allen alleges that in 1982 he was eavesdropping on Gates and now-CEO Steve Ballmer scheming to dilute his equity in Microsoft by "issuing options to themselves and other shareholders."

After listening in on the discussion, Allen "burst into the room and confronted Messrs. Gates and Ballmer, both of whom later apologized to him and backed down from their plan," wrote the Wall Street Journal. The moral high ground, and his early stake in the company now worth $13 billion, were preserved. "It was mercenary opportunism, plain and simple," Allen confirmed.

This and numerous other intriguing anecdotes were relayed by The Wall Street Journal and Vanity Fair this week, both of whom were granted access to Paul Allen's blistering memoir of his early years as co-founder of Microsoft with Bill Gates. After parsing the excerpts published of the forthcoming book Idea Man (April 17th), here's a few other episodes we found interesting so far:

  • His First Impressions of Bill Gates as an Eighth Grader -"You could tell three things about Bill Gates pretty quickly. He was really smart. He was really competitive; he wanted to show you how smart he was. And he was really, really persistent." Also, young Bill read Fortune magazine "religiously." [VF]
  • He Thought of the Name 'Microsoft' - "We considered Allen & Gates, but it sounded too much like a law firm. My next idea: Micro-Soft, for microprocessors and software. While the typography would be in flux over the next year or so (including a brief transition as Micro Soft), we both knew instantly that the name was right. Micro-Soft was simple and straightforward. It conveyed just what we were about." [VF]
  • From the Beginning, Bill Was a Shrewd Businessman - From the inception of Microsoft, Bill insisted he got a 60-40, then 64-36 share of the money. Allen's first hesistations: "I think Bill knew that I would balk at a two-to-one split, and that 64 percent was as far as he could go. He might have argued that the numbers reflected our contributions, but they also exposed the differences between the son of a librarian and the son of a lawyer. I’d been taught that a deal was a deal and your word was your bond. Bill was more flexible; he felt free to renegotiate agreements until they were signed and sealed. There’s a degree of elasticity in any business dealing, a range for what might seem fair, and Bill pushed within that range as hard and as far as he could." [VF]
  • Some Events in Allen's Book May Be Recalled Incorrectly - Although a spokesman for Allen denies that there are errors in the book the Wall Street Journal points a few out: "Mr. Allen, for instance, puts himself in meetings that people familiar with the meetings say he never attended. In one case, Mr. Allen visits Palo Alto, Calif. to help woo a computer scientist who would later become one of the Microsoft's most important programmers. People familiar with the meeting said it was Mr. Gates who made the visit." Also, on a more subjective note: "In the book, Mr. Allen also positions himself as the spark of many of Microsoft's most important ideas, playing down Mr. Gates's role in some cases."

And, about that aforementioned Social Network-sounding eavesdropping episode, Microsoft CEO Steve Ballmer had this to say to the Journal through his spokesman: "no comment."

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