Paul Allen’s Memoir Points Out How Bill Gates Kept Increasing Ownership In Microsoft

Posted Mar 30, 2011

Microsoft Corporation (NASDAQ:MSFT) was co-founded by Bill Gates and Paul Allen. The two met when Gates was an 8th grader and Allen was a 10th grader at a private school in Seattle. The two of them ended up at Harvard University and dropped out together to create Microsoft. Allen has recently written a book called “Idea Man: A Memoir by the Co-founder of Microsoft” that goes on sale on April 17th. The book contains information about how Bill Gates kept on reducing Paul Allen’s stake in the company.

According to Paul Allen’s spokesman David Postman, the book is “a very balanced portrayal of their relationship.” He added “Paul clearly values the input and the ideas and energy of Bill Gates.” In the book, it appears that Allen did not receive enough credit for his work at the company.

“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,” said Bill Gates.

However a majority of Allen’s wealth was created under the leadership of Bill Gates long after Allen had left the company. Microsoft isn’t the only major technology company where a co-founder received a lot of wealth long after leaving the company. Eduardo Saverin’s net worth substantially increased several years after leaving Facebook. Same with Steve Wozniak at Apple.

Two years ago, Allen was recovering from chemotherapy from non-Hodgkin’s lymphoma. Gates was one of Allen’s most frequent visitors. Allen described Gates as being “everything you’d want from a friend, caring and concerned.” However Allen said that he had eavesdropped in a conversation that Steve Ballmer and Bill Gates had about diluting Allen’s equity after he had his first brush with cancer in 1982. Allen said he charged into the room angrily and the dilution never happened after that.

“I had 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,” stated Allen in the book. “It was mercenary opportunism, plain and simple.”

Eventually Allen retained only a certain amount of equity and spent a large portion on several investments like Charter Communciations, Asymetrix Corp., and Digeo Inc. He also bought the Portland Trailblazers and the Seattle Seahawks. Some of these investments paid off and some have failed.