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Microsoft Co-Founder Blasts Bill Gates

Microsoft co-founder Paul Allen has accused his former business partner Bill Gates of conspiring to reduce Allen's stake in the software conglomerate.  Allen, now a venture capitalist based in Seattle, says in his book “Idea Man: A Memoir by the Co-Founder of Microsoft” that he learned of the plot while listening in on a 1982 conversation between Gates and current Microsoft CEO Steve Ballmer.  The conversation occurred as Allen was battling Hodgkin's Disease.  Allen left Microsoft in 1983.

Vanity Fair magazine published an excerpt from the book, scheduled to arrive in bookstores April 19th, on Wednesday:

“I heard Bill and Steve speaking heatedly in Bill's office and paused outside to listen in,” Allen wrote.  “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.”  Allen explained that it was evident from the conversation that the duo had been considering the move for some time.

“Unable to stand it any longer, I burst in on them and shouted, 'This is unbelievable! It shows your true character, once and for all,'” Allen remembered.  “I was speaking to both of them, but staring straight at Bill. Caught red-handed, they were struck dumb. Before they could respond, I turned on my heel and left.”  Allen said he was devastated by the incident, and could think of nothing else that night as he drove home.

“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," he wrote. "It was mercenary opportunism, plain and simple.”  Later that night, Allen says, Ballmer called and asked if he could pay him a visit.

“ 'Look, Paul,' he said after we sat down together, 'I'm really sorry about what happened today. We were just letting off steam,' " Allen wrote. "'We're trying to get so much stuff done, and we just wish you could contribute even more. But that stock thing isn't fair. I wouldn’t have anything to do with it, and I'm sure Bill wouldn't either.' ”

Several days later, Allen says, Gates apologized for the incident in a six-page, handwritten letter, which Allen says “offered a revealing, Bill's-eye view of our partnership: 'During the last 14 years we have had numerous disagreements. However, I doubt any two partners have ever agreed on as much both in terms of specific decisions and their general idea of how to view things.' ”

In the excerpt published by Vanity Fair, Allen says that Gates was indeed correct on that point.  “Our great string of successes had married my vision to his unmatched aptitude for business," Allen explained. "But that was beside the point.… Bill's letter was a last-ditch effort to get me to stay, and I knew he believed he had logic on his side. But it didn't change anything. My mind was made up.”

The excerpt also outlined a later attempt by Gates to purchase Allen's stake in the company for $5 per share, an offer Allen declined.  “As it turned out, Bill's conservatism worked to my advantage,” Allen wrote. “If he'd been willing to offer something close to my asking price, I would have sold way too soon.”

Allen would eventually resign from Microsoft in February 1983, but would hold his seat on the company's board of directors as a company founder.  Gates has so far declined requests for comment on Allen's memoir.