Last updated: March 31, 2011 12:53 am

Microsoft memoir tells of Gates ‘rip off’ plan

Bill Gates drove a tough bargain with his Microsoft co-founder Paul Allen, at one stage even discussing what amounted to “ripping off” his partner at a time when he was undergoing cancer treatment, according to claims in a memoir by Mr Allen due to be published in April.

Mr Allen’s account of his early days with Mr Gates, up to his 1983 departure from Microsoft, is set to add a controversial twist to one of the most prominent business partnerships of modern times. Like others who have worked with Mr Gates, Mr Allen depicts the long-time head of Microsoft as aggressively competitive and demanding of employees to the point of demeaning them, though his account of his personal dealings with Mr Gates raises fresh questions about business ethics.

Mr Gates declined to comment on the specific claims but in a general statement on the book, he said: “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.”

One person who knew both men said it appeared that Mr Allen was hoping in his memoir, Idea Man, to win extra recognition for his contributions to early success of the company, although another said Mr Gates went out of his way to credit to his former partner.

Now 58, Mr Allen is fighting another bout of cancer, and was last year ranked by Forbes magazine as the world’s 37th richest person, with a $13.5bn fortune.

In his book, Mr Allen said that while he had assumed that the two founders would split ownership of their company 50/50, Mr Gates had first mounted a strong argument for taking 60 per cent, and then later pushed for a revision of their agreement to raise his stake to 64 per cent.

“I’d been taught that a deal was a deal and your word was your bond,” Mr Allen wrote in the book, an extract of which was published in Vanity Fair. “Bill was more flexible; he felt free to renegotiate agreements until they were signed and sealed.”

Casting doubt on Mr Gates’ openness, Mr Allen said he only learnt from a letter found by another employee in the company’s word-processing system that his partner was planning to offer better terms to lure Steve Ballmer to the company than the two founders had agreed.

Mr Allen said he was passing Mr Gates’ office on another occasion when he overheard his partner and Mr Ballmer complaining about his declining contribution to the company during his cancer treatment, and discussing ways to dilute Mr Allen’s shareholding in the company.

“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,” Mr Allen wrote. “It was mercenary opportunism, plain and simple.”

In a draft of the book seen by the Financial Times, Mr Allen also issued a damning critique of how Microsoft has lost direction since the start of the last decade, when Mr Ballmer took over as CEO. The company’s core reliance on business customers has always made it ill-suited to dealing with consumers, he said, and its culture, based on rapidly copying rivals, has failed it in the new era of smartphones and Web services.

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