Paul Allen's tell-all book paints Microsoft's Gates as an ogre. Can he be believed?

By Preston Gralla

Paul Allen's memoir about his founding and helping run Microsoft paints Bill Gates as an unprincipled shark, conniving to get Allen to give up a sizable percentage of the ownership of Microsoft, and constantly bullying employees. Can Allen be believed? And if so, does Gates' later life as a philanthropist make up for his youthful behavior?

Allen's memoir, "Idea Man: A Memoir by the Co-founder of Microsoft," doesn't paint a pretty picture of Gates. In an excerpt published today in Vanity Fair, Allen charges that Gates, several times, schemed to get Allen to give Gates a larger piece of Microsoft than he deserved.

The two co-founded Microsoft, and Allen said he always assumed they would split ownership 50-50. But at some point early on, Gates told Allen that Gates should get 60%, while Allen should only get 40%, because Allen was working for another company in the earliest days of the company's founding and had a salary, while Gates was working for free.

Allen agreed to the split. Then later on Gates again said that he should get a larger percent of the company, 64% to Allen's 36%. Allen says Gates told him:

"I've done most of the work on BASIC, and I gave up a lot to leave Harvard. I deserve more than 60 percent."

Allen once again agreed. 

When the two formalized their partnership, the agreement had several unusual provisions, including one that would allow Gates to force Allen to leave the company if there were "irreconcilable differences" between the two of them.

Allen also portrays Gates as a bully and a cruel, very hard taskmaster. Worse still, Allen says that Gates connived to dilute the value of Allen's shares after Allen was diagnosed with Hodgkin's lymphoma. In an evening in 1982, he says:

I heard Bill and Steve (Ballmer) speaking heatedly in Bill's office and paused outside to listen in. 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, for once, stood up to Gates, and the plan didn't go through. 

Did any of this actually happen? There's no way to know. But having covered Gates and his sometimes cut-throat business practices through the years, I can't say that any of this would surprise me. During his younger days, no one would ever have accused Gates as having a particularly sensitive soul, or being interested in anything beyond Microsoft's and his own personal success. The landscape was littered with the virtual bodies of companies that Microsoft destroyed under Gates' leadership, and it was no secret that he was a harsh boss.

Allen, clearly, was a gentler sort who disliked confrontation. No one forced Allen to give up portions of the company to Gates. Gates was more willful and more aggressive, and he used that to his advantage. Allen was easy mark for a shark like Gates.

However, there's something very important missing from Allen's portrayal of Gates --- what happened after Gates left Microsoft. He has become the world's pre-eminent philanthropist through the Bill and Melinda Gates Foundation. Not only is he giving away billions, but he's convinced others, such as Warren Buffett to do it as well, as well as many other of the super-rich.

So in one of life's greater ironies, all the harsh things that Gates did to others in his youth are helping better the world when Gates aged. Countless people throughout the world are better off because of the money Gates donates --- and many more will be better off in the future. If Gates had been any less cut-throat in his dealings, he wouldn't have had as much money to donate.

Does that excuse his treatment of Allen when he was young, if Allen is to be believed? No, not at all. But it ended up being for the greater good.

Copyright © 2011 IDG Communications, Inc.

  
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