Bill Gates schemed to take shares in Microsoft Corp. (NASDAQ:
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The allegation is part of a critical portrait in the book of Mr. Gates, with whom Mr. Allen formed a friendship in grade school that evolved into one of the iconic partnerships of American business. The book, "Idea Man: A Memoir by the Co-founder of Microsoft," is scheduled to go on sale on April 17. A draft of the memoir was viewed by The Wall Street Journal. An excerpt of the book appeared on Vanity Fair's website early Wednesday.
The book gives a revisionist take on some details of Microsoft's history and the relationship between Mr. Gates and his former partner, the two of whom have long been viewed as cordial if not close friends. The book has created a rift between Messrs. Gates and Allen, say people who know both men. In the book's acknowledgments section, Mr. Allen thanks Mr. Gates along with 17 other people for "general and logistical assistance."
The book is "a very balanced portrayal of their relationship," said David Postman, a spokesman for Mr. Allen. "Paul clearly values the input and the ideas and energy of Bill Gates."
"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," Mr. Gates said in a written statement.
Mr. Allen's unflattering account of Mr. Gates in the book is already making waves within the tight circle of early Microsoft alumni, with several people who know both men privately expressing confusion about Mr. Allen's motivations for criticizing his old business partner and questioning the accuracy of Mr. Allen's interpretation of certain events. 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. Mr. Postman said that he isn't aware of any errors in the book.
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. Woven throughout the book is a bitterness Mr. Allen expresses for not receiving more credit for his work throughout his career and more shares in Microsoft.
Mr. Allen became one of the world's richest people from the success of Microsoft under Mr. Gates's leadership, with the vast majority of his wealth created in the years after he left the company.
"I am surprised that Paul would have felt that it helps his legacy to express dissatisfaction with the share of Microsoft he received," said Carl Stork, who joined Microsoft in 1981 as a technical assistant to Mr. Gates and worked there for two decades. "While all of us considered Paul a friend and valued his contribution, there is no question that Bill had a far larger impact on the growth and success of Microsoft than did Paul."
Much of the book focuses on the philanthropic and entrepreneurial efforts of Mr. Allen since he left Microsoft as an officer in the early 1980s. His early stake in the company created one of the world's greatest fortunes—he ranks 57th on Forbes magazine's list of billionaires, with an estimated $13 billion fortune—and funded everything from his acquisition of multiple professional sports teams to a successful quest to win a prize for building a reusable spacecraft.
Throughout the history of the technology industry, one co-founder often plays an outsized role in the success of their companies. Mr. Gates, Apple Inc.'s (NASDAQ:
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"I'm not sure Bill would ever have dropped out of Harvard if it wasn't for Paul," Mr. Yoffie said, referring to Mr. Allen's role in encouraging Mr. Gates to leave college to start Microsoft. "I don't know whether Steve Jobs, without Wozniak, would have ever gotten things together."
Messrs. Gates and Allen were widely thought by associates to have a warm relationship in the years since Mr. Allen, 58 years old, left Microsoft. Even Mr. Allen says Mr. Gates was one of his "most regular visitors" when Mr. Allen was recovering from chemotherapy two years ago from non-Hodgkin's lymphoma, describing him as "everything you'd want from a friend, caring and concerned."
Yet, in the book, Mr. Allen also reveals that his decision to leave Microsoft was prompted largely by his growing disenchantment with the behavior of Mr. Gates, whom he portrays as a confrontational taskmaster who clashed with Mr. Allen's low-key style. Past histories of Microsoft have said Mr. Allen's departure from the company was sparked by his first brush with cancer in 1982, when he was diagnosed with Hodgkin's disease.
In that year, Mr. Allen says he eavesdropped on a discussion in the Microsoft offices in Bellevue, Wash., between Mr. Gates and Steve Ballmer, now the company's CEO, in which he heard the two men talking about Mr. Allen's recent lack of productivity and how they might dilute his equity in the company by issuing options to themselves and other shareholders. Mr. Allen said he burst into the room and confronted Messrs. Gates and Ballmer, both of whom later apologized to him and backed down from their plan.
"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," he says in the book. "It was mercenary opportunism, plain and simple."
A spokesman for Microsoft said Mr. Ballmer had no comment.
Earlier efforts by Mr. Gates to whittle down his partner's stake in Microsoft were successful though, according to Mr. Allen. In the mid-1970s, when the two college dropouts were based in New Mexico, Mr. Allen says Mr. Gates asked for 60% of their partnership because of his greater contributions to the creation of software for running the BASIC programming language on an early PC, the MITS Altair 8800.
Mr. Allen says he had assumed that their partnership was evenly split, but he agreed to Mr. Gates's request.
Several years later when Messrs. Gates and Allen established Microsoft as a formal partnership, Mr. Gates asked to change their respective shares in the business to a 64-36 split, a demand to which Mr. Allen again agreed. But in the early 1980s Mr. Gates rebuffed Mr. Allen after the latter man asked for an increase in his own Microsoft shares after his work on a successful Microsoft product called SoftCard, Mr. Allen writes.
Mr. Allen was deeply disappointed in the response from Mr. Gates, whom he had known since Mr. Allen was a tenth grader and Mr. Gates was an eighth grader at a prestigious private school in Seattle.
"In that moment, something died for me," Mr. Allen writes. "I'd thought that our partnership was based on fairness, but now I saw that Bill's self-interest overrode all other considerations. My partner was out to grab as much of the pie as possible and hold on to it, and that was something I could not accept."
Mr. Allen said he sucked it up and thought, "OK…but one day I'm out of here," the book says.
Mr. Gates's attempts to lower Mr. Allen's stake in the company reflected concerns that Mr. Allen wasn't working hard enough and wasn't commitment to the company, say people familiar with the relationship. That was one reason, these people say, that Mr. Gates put a provision in their first partnership agreement that would allow him to buy out Mr. Allen if he thought there were "irreconcilable differences" between the two men.
Mr. Allen mentions the agreement in the book, without saying why Mr. Gates inserted the clause.
As Microsoft grew, it attracted more people like Mr. Gates who were single-mindedly focused on building Microsoft. They were willing to work around the clock, sleep in the office and battle each other over strategy and technical decisions. Mr. Allen, these people say, grew increasingly tired of that life and lagged the rest of group, they said. He gradually lost interest in remaining at the company. In the book, Mr. Allen says that fights with Mr. Gates took a toll on him. "My sinking morale sapped my enthusiasm for my work, which in turn could precipitate Bill's next attack," he wrote. He noted that Mr. Gates tried to keep him at the company.
Mr. Allen has spent the decades since his departure from Microsoft using his wealth to carve a somewhat whimsical path for himself. Many of his business investments, like the cable company Charter Communications (NASDAQ:
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News), software company Asymetrix Corp. and set-top box maker Digeo Inc., have either flopped or fared poorly for him.
Mr. Allen devotes portions of his book to investments like the Portland Trailblazers NBA franchise and the Seattle Seahawks NFL team. He financed the creation of rock n' roll and science fiction museums in Seattle designed by architect Frank Gehry, while he invested $100 million in 2003 to form a non-profit organization called the Allen Institute for Brain Science to study how brains work.
Even before Microsoft made him wealthy, it appeared to people who knew him that Mr. Allen had broader interests than running a software business. David Bunnell, who worked in New Mexico in the 1970s with Messrs. Allen and Gates at the pioneering PC maker Micro Instrumentation and Telemetry Systems, better known as MITS, said Mr. Allen was more passionate about music and culture than his business partner.
"He was more interested, in a broader sense, in the world," Mr. Bunnell says. "I think Bill is more single-minded."
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