Gates criticized by Microsoft co-founder Allen in book
Gates criticized by Microsoft co-founder Allen in book
Microsoft Corp co-founder Paul Allen has accused his former business partner Bill Gates of plotting to dilute Allen's stake in the world's largest software company before he left in 1983, and tried to buy his share of the company on the cheap.
Allen, who now runs a Seattle-based investment firm and philanthropic foundation, makes the claim in a forthcoming book of memoirs, excerpts from which were published in Vanity Fair magazine.
Allen, 58, says he overheard a heated conversation between Gates and now Chief Executive Steve Ballmer in December 1982, shortly after Allen told them he was thinking of leaving the company.
According to what Allen wrote in the memoir as reproduced in Vanity Fair, 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.
Allen, who at that time was receiving treatment for Hodgkin's lymphoma cancer, and was scaling back his work at Microsoft, acknowledged that he later received apologies from both Gates and Ballmer over the incident.
Allen, who made up the name Microsoft, co-founded the company with Gates in 1975. Two years later, he and Gates agreed to take 36 and 64 percent shares in the company respectively, Allen wrote in the book, owing to Gates' greater contribution to their first coding job for the new Altair computer, which turned out to be the company's first big break.
The two men's holdings in Microsoft were later diluted as more people joined the company and it issued shares publicly in 1986.
As the company grew, the two clashed over the hiring of Ballmer - a friend of Gates' from Harvard - to lead sales and marketing efforts in 1980.
Allen claims in the book that they agreed to give Ballmer no more than 5 percent equity in the company, but adds that Gates went behind his back to offer Ballmer 8.75 percent.
Allen continues to write that Gates eventually made up the extra equity given to Ballmer from his own share. Ballmer became CEO in 2000, and is the second-largest individual shareholder behind Gates.
Before he left Microsoft in 1983, Allen claims Gates attempted to buy his shares from him at a bargain price.
Gates, who has recently been traveling in India working on his own philanthropy projects, did not directly contest Allen's account, but sought to play down friction.
While his recollection of many of these events may differ from Paul's, he values his friendship and the important contributions Allen made to the world of technology and at Microsoft, according to a Gates emailed statement.
Allen is ranked the 57th richest person in the world with a fortune of $13 billion, according to Forbes magazine, largely due to his Microsoft holdings. Gates is ranked No. 2 with $56 billion.
Allen's book, titled "Idea Man", is set to be published later this month by Portfolio.
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