Bill Gates Pulls a Gingrich on Paul Allen

Windows XP Launch

What? Is Bill Gates running for the White House? I thought Newt Gingrich had the Be-A-Jerk-To-People-With-Cancer nomination locked up, but Bill Gates is giving him a run for the money, if Paul Allen is to be believed…

Bill Gates schemed to take shares in Microsoft Corp. from his co-founder during the early days of the software company following his partner’s treatment for cancer, according to a new memoir by the billionaire co-founder, Paul Allen.

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.”

(click here to continue reading Microsoft Co-Founder Hits Out at Gates – WSJ.com.)

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and from the aforementioned Vanity Fair excerpt, Paul Allen writes:

After resuming the radiation, I was in Bill’s office one day talking about MS-DOS revenues. Our flat-fee strategy had helped establish us in several markets, but I thought we’d held on to it for too long. A case in point: We’d gotten a fee of $21,000 for the license for Applesoft BASIC. After sales of more than a million Apple II’s, that amounted to two cents per copy. “If we want to maximize revenue,” I said, “we have to start charging royalties for DOS.”

Bill replied as though he were speaking to a not-so-bright child: “How do you think we got the market share we have today?” Then Steve came by to weigh in on Bill’s side with his usual intensity; it would have been two on one, except I was approximately half a person at the time. (Microsoft later switched to per-copy licensing, a move that would add billions of dollars in revenue.)

Not long after that incident, I told Steve that I might start my own company. I told Bill that my days as a full-time executive at Microsoft were probably numbered, and that I thought I’d be happier on my own.

One evening in late December 1982, I heard Bill and Steve 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.

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.” 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.

I replayed their dialogue in my mind while driving home, and it felt more and more heinous to me. 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. It was mercenary opportunism, plain and simple. That evening, a chastened Steve Ballmer called my house and asked my sister Jody if he could come over. “Look, Paul,” he said after we sat down together, “I’m really sorry about what happened today. We were just letting off steam. 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.”

I told Steve that the incident had left a bad taste in my mouth. A few days later, I received a six-page, handwritten letter from Bill. Dated December 31, 1982, the last day of our last full year together at Microsoft, it contained an apology for the conversation I’d overheard. And it 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.”

(click here to continue reading Microsoft’s Odd Couple | Business | Vanity Fair.)

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