Paul Allen
The billionaire co-founder of Microsoft was a rock music lover, sci-fi enthusiast, sports teams’ owner and philanthropist
PAUL Allen, who died last Monday aged 65 from complications of non-Hodgkin lymphoma, was the co-founder with Bill Gates of Microsoft, on the strength of which he became one of the world’s richest people.
His wealth, estimated at more than $20bn (about €17bn), allowed him to launch a private asset management firm, Vulcan Inc, which backed more than 50 businesses; to set up philanthropic ventures; to own several sports teams; and to collect gigantic yachts as well as science fiction and rock and roll memorabilia.
Paul Gardner Allen was born in Seattle on January 21, 1953 and grew up in Wedgwood, a suburb of the city. Both his parents were librarians at the University of Washington, and Paul and his younger sister grew up in a house filled with books (Paul was especially keen on science fiction).
The children were also regularly taken to concerts, plays and museums, and Paul studied classical guitar. But his growing interest in technology and an obsession with Jimi Hendrix soon put paid to the likes of Segovia and Rodrigo, and with a soldering iron he converted his acoustic guitar into an electric one.
He attended the private Lakeside School, where he was two years ahead of Bill Gates. In the late 1960s, the school acquired a teletype terminal connected to a remote mainframe, and the two boys became fascinated by the machine. When Paul went on to study at Washington State University in 1971, he and Gates set up a company called Traf-O-Data, which planned to build computers to analyse traffic volumes.
They immediately saw the usefulness of the Intel 8008 microprocessor that was released the following year, and which, for a fraction of the cost of conventional electronics, provided them with the means to produce a number of traffic-counting computers which they sold to several cities.
It was a modest success, but it convinced Allen and Gates that they had a future as entrepreneurs. It had also given them experience in rewriting software — they had modified the computer language Basic for the Traf-O-Data machines — which was to prove vital in their later ventures.
In 1973 they turned their attention to computerising the control of a hydroelectric dam at Vancouver, Washington. But Gates then took up a place at Harvard. Allen, meanwhile, had become bored with his studies; he dropped out of university and moved to Boston, where he took a job as a computer programmer with Honeywell.
He pestered Gates to continue developing their business ideas, but it was not until the beginning of 1975 that a real opportunity presented itself. The announcement that a computer called the Altair 8800, which used the Intel 8080 microprocessor, was to be released at a cost of $400 (€350), made personal computing an affordable option for enthusiasts.
Allen and Gates realised, however, that any prospective customer for the machine would also want software — without it, the ability to make use of personal computers would be constrained by the owner’s ability to devise commands for its operation.
The pair proposed writing a version of Basic for the Altair and worked round the clock to complete it. In eight weeks they had produced a demo for the Altair’s manufacturers, Micro Implementation and Telemetry Systems (MITS), which was based in Albuquer- que, New Mexico. The firm agreed to distribute Altair Basic, though Allen and Gates also retained the right to sell it on their own.
By the middle of 1975, Gates had dropped out of Harvard and moved to Albuquerque; Micro-Soft (as it was originally called) was registered as a business the following year. The Altair proved a great success, and Allen and Gates soon realised that each computer manufacturer would need a slightly different variant of Basic. As the market for microcomputers expanded rapidly, they found themselves inundated with work.
“Our management style was a little loose in the beginning,” Allen later said. “We both took part in every decision, and it’s hard to remember who did what.”
In general, however, it was Gates who handled contracts and business negotiations, while Allen, the self-described “Mr Slow Burn, like Walter Matthau to Bill Gates’s Jack Lemmon”, concentrated on ideas for new technology and products. In that area, he demonstrated a fair degree of prescience. Allen told Fortune magazine that he could remember “talking about the fact that eventually everyone is going to be online and have access to newspapers and stuff ” as early as 1973.
In 1979 Microsoft, as it was by then, moved from New Mexico back to Washington state, setting up offices in the Seattle suburb of Bellevue. By then it had 12 employees, and was not unlike a good many moderately successful businesses doing reasonably well out of the boom in microcomputers. The next 18 months changed everything.
IBM had decided to enter the personal computing market, and had brought in Gates as an adviser in 1980. In August 1981 the company asked if Allen and Gates would be interested in producing its operating system. Although the previous year they had released (through licence — it was never sold to end users) a variant of Unix which they called Xenix, the pair had never really developed an operating system. But they could see the potential and agreed.
Two days later, from a company called Seattle Computer Products, Allen acquired a CP/M (Control Program for Microcomputers) clone which ran on a “Quick and Dirty Operating System” (Q-DOS) called 86-DOS. He paid less than $50,000 (€44,000), in what has subsequently been called “the deal of the century”. Allen and Gates’s modification of 86-DOS became MS-DOS, the default operating system for the vast majority of personal computers.
Allen and Gates advised IBM on building its first PC, incorporating PC-DOS (as it was at first called) as the operating system. “By the end,” Gates said, “Paul and I decided every stupid thing about the PC.” The company had by this point restructured, and was incorporated (as Microsoft Inc) in Washington state in 1981, with Gates as president and chairman of the board, and Allen as executive vice-president.
After release, the IBM PC sold briskly, and dominated the market within a year.
Crucially, Microsoft’s deal with IBM allowed them to retain control of MS-DOS, and the company marketed it aggressively at the range of machines which cloned the IBM PC. In 1983, with the release of Microsoft Mouse (a driver for the peripheral which became standard for PCs) and Microsoft Word, which rapidly established itself as the most popular word-processing program, the company had already begun its spectacular rise. It was later estimated by Fortune that Allen and Gates had created “more wealth than any other business partners in the history of American capitalism”.
In 1983, however, Allen was diagnosed with Hodgkin disease, and underwent months of radiation therapy and a bone-marrow transplant. Though he maintained his formal links with Microsoft, he also reassessed his priorities, and decided “to step away from Microsoft and be closer to my family, and do some travelling and some other things I’d always wanted to do. After that two-year period, well, I just didn’t want to go back to work. I went to Bill and said: ‘I just want to do something different’”.
He spent time scuba diving and playing the guitar in a rock band, and in 1988 he bought the Portland Trail Blazers basketball team for $70m (€61m).
By the early 1980s, Allen was, thanks to his stock holding in Microsoft, the third richest American (after Gates and the fund manager, Warren Buffett), with a fortune which was estimated at $30bn (€26bn) in the late 1990s. In 1992, he founded Starwave, which packaged information electronically and became a leading provider of online content; the following year he bought 80pc of Ticketmaster.
The year after that, AOL set up a “poison pill” defence to prevent Allen from acquiring a quarter of its shares; he sold off those he already owned (for which he had paid $9m (€7.8m) for a profit of $30m (€26m). He invested $500m (€435m) in DreamWorks, the animation film studio, in 1995 and was the sole investor in SpaceShipOne, which in 2003, on the 100th anniversary of the Wright brothers’ historic flight, became the first privately funded project to put a civilian into space, and won the Ansari X Prize of $10m (€8.7m).
He added to the Trail Blazers by buying the Seattle Seahawks American Football team in 1997 and was later the principal shareholder in the Seattle Sounders soccer team.
Allen’s long-standing plans to provide a museum devoted to Jimi Hendrix eventually expanded in 2000 to become the Experience Music Project, an interactive museum designed by Frank Gehry and located next to the Seattle Space Needle. As well as a huge quantity of rock and roll memorabilia, the museum has a wing housing the Science Fiction Museum and Hall of Fame.
Allen had a number of large motor yachts; the biggest, Octopus, launched in 2003, was the world’s eighth-largest, at 416ft long; it accommodated two helicopters, two submarines, a cinema, a music studio, a basketball court and a swimming pool.
In November 2009, Allen’s sister announced that he was undergoing treatment for Non-Hodgkin lymphoma.
Paul Allen remained on the whole a private figure, though in 2011 he detailed the tensions in his creative partnership with Gates in a gripping autobiography, Idea Man. When not travelling, he lived in a compound on Mercer Island, near Seattle, close to his mother, who died in 2012, and his sister.
He was linked with glamorous actresses, and with the tennis player Monica Seles, but he never married.