Allen, Paul G.

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Paul G. Allen

Paul G. Allen (born 1953) co–founded one of the world's most lucrative and influential companies, the Microsoft Corporation, in 1974. The company's products revolutionized personal computing and made founders Allen and Bill Gates billionaires. Allen left the company in 1983 due to illness, and has since invested in a wide variety of projects in the technology, entertainment, sports, and aerospace fields. In addition, he has contributed substantial amounts of money to various charities and research organizations.

Allen was born on January 21, 1953, in Seattle, Washington, and grew up in the nearby suburb of Wedgewood. His parents, Faye and Kenneth Allen, were both librarians at the University of Washington, and they introduced Allen and his sister Jody to a wide variety of cultural offerings, regularly taking their children to museums, galleries, and concerts. Allen's parents also encouraged his early love of reading and science, and his mother hosted meetings for his grade school science club. Allen melded these two interests in his avid enthusiasm for science fiction novels, including the Tom Swift series. "Tom Swift was very futuristic—he went to outer space, and there were rockets and submarines and all kinds of machines," Faye Allen told People magazine. "He was a role model for Paul."

In 1965, Allen began seventh grade at Lakeside School, a prestigious private school in Seattle. Three years later he met eighth–grader Bill Gates who, like Allen, spent most of his free time figuring out the inner workings of their school's new computer. "Our friendship started after the mothers' club paid to put a computer terminal in the school in 1968," Gates told Fortune in 1995. "The notion was that, of course, the teachers would figure out this computer thing and then teach it to the students. But that didn't happen. It was the other way around." The pair became so adept with computer technology that, while still in school, they were both invited to serve as amateur technicians at a local computer center in exchange for free computer time. "At the end of every school day, a bunch of us would take our little leather satchel briefcases and ride the bus downtown to the computer center," Allen recalled in Fortune. "Bill and I were the guys that stayed the latest, and afterward we'd go eat pizza at this hippie place across the street." Despite Allen and Gates' efforts, the center eventually went bankrupt and the pair cites the ensuing repossession activities as their early introduction to the realities of the business world.

Co – founded Microsoft

Allen graduated from high school in 1971 and entered Washington State University. That same year, he read about the Intel Corporation's 4004 chip, the first computer microprocessor. In 1972, he and Gates purchased the next generation of the chip, the 8008, for $360. The pair used the chip to develop a special computer that conducted traffic–volume–count analysis and started a company called Traf–O–Data, planning to sell the computers to traffic departments. Allen and Gates eventually abandoned the company, but applied the technology to their next venture. In 1973, they both took jobs at a company called TRW in Vancouver, Washington, where they used minicomputers to distribute power from hydroelectric dams.

In 1974, Gates left Washington to attend Harvard University in Cambridge, Massachusetts. Allen followed, dropping out of Washington State and accepting a job as a computer programmer at the Honeywell Corporation in Boston. Allen hit upon the seed for their next business move in a Popular Electronics magazine cover story describing the MITS Altair 8800 minicomputer. Recognizing that the computer would need a programming language, Allen and Gates set out to write a version of BASIC, a widely used computer language, specifically geared toward the Altair. Under the auspices of their new corporation, Micro–Soft, they convinced MITS to sell their programming language. According to the Fortune interview, the credit line in the source code of their first product read: "Micro–Soft BASIC; Bill Gates wrote a lot of stuff; Paul Allen wrote some other stuff."

Allen and Gates soon changed the company's spelling to Microsoft and moved their business to MITS' headquarters in Albuquerque, New Mexico. The young entrepreneurs launched quickly into the technology side of their new business; their management technique developed more slowly. They did not even incorporate their company until 1981. "Our management style was a little loose in the beginning," Allen recalled in Fortune, "We both took part in every decision, and it's hard to remember who did what. If there was a difference between our roles, I was probably the one always pushing a little bit in terms of new technology and new products, and Bill was more interested in doing negotiations and contracts and business deals." Gates remembered the work atmosphere as congenial. "We didn't have many major disagreements, but there was one tiny source of tension: I would always be calling Paul in the morning to tell him it was time to come work on this stuff," he said in the same interview. "He slept even later than me."

Returned to Seattle

Allen and Gates soon built up an impressive client list that included Ricoh, Texas Instruments, Radio Shack and another new startup, Apple Computers. MITS' business began to dwindle as Apple and other emerged as competitors, leaving Allen and Gates with no reason to remain in Albuquerque. In 1978, with sales already over $1 million, they relocated their company to Bellevue, a suburb of Seattle. There, they experienced significant growth, and by 1979 had hired more than 35 employees and a professional manager.

The company entered into one of the most significant business deals in its 25–year history in 1980. That year, InternationalBusinessMachines(IBM)approachedMicrosoft seeking a programming language for its new personal computer, secretly under development. That same year, Allen negotiated the purchase of Q–DOS, a little–used operating system produced by Seattle Computer. Since Seattle Computer was unaware of Microsoft's pending IBM deal, Allen was able to secure a low price for Q–DOS. "We were afraid they were going to find out the reason we wanted to buy it was because IBM was our primary customer," Allen told Fortune. "If they found that out, the price for Q–DOS would go way up." Microsoft paid $50,000 for Q–DOS and, in turn, licensed the product to IBM for use with its new PC.

In addition, Gates and Allen convinced IBM to allow other companies to copy the specifications of their PC, spurring the ensuing flood of PC "clones." The widespread availability of PCs necessitated compatible software programs which, in turn, required a universal operating system. In addition to Microsoft Disk Operating System, or MS–DOS, programmers had the option of using a competing system developed by Digital Research in Monterey, California. Gates and Allen urged software developers in both the U.S. and Europe to write to their specifications, however, and met with much success. As the PC, supported by MS–DOS, became the most widely used computer in the world, Microsoft became the domineering force in the computer programming industry.

Retired from Company

In 1982, Allen was diagnosed with Hodgkin's disease, a form of cancer. He continued to work part–time at Microsoft during 22 months of radiation treatments, but in March 1983 he retired from the company and spent the next two years traveling, scuba diving, yachting, skiing and spending time with his family. He retained a 13 percent share of the company and continued to serve on its board. "To be 30 years old and have that kind of shock—to face your mortality—really makes you feel like you should do some of the things that you haven't done," Allen told Fortune.

Although finances were not a concern—as of 2003, he was estimated to be the world's fourth wealthiest citizen worth $21 billion—Allen sought out new business and investment opportunities. Pursuing a notion of a "wired world" in which computers and related technology serve as the primary source of communication and information–gathering, Allen founded Asymetrix, which produced applications that allowed both programmers and non–programmers to develop their own software, and then Vulcan Ventures, an investment firm focused on technology. Allen also invested in numerous companies, including Ticketmaster, America Online, Egghead Software and the pharmaceutical company Darwin Molecular Corporation. Later investments focused on cable television, wireless modems, and Web portals. In 1992, Allen founded Interval Research, a think tank focused on the Internet and compatible technologies. "For years now, I've been interested in the information superhighway or whatever you want to call it," Allen told Fortune in 1995. "The approach I've chosen is to start companies or make strategic investments in companies I think are positioned to take advantage of that huge opportunity. I try to add value as an investor by building synergy between those companies." His ventures have met with varying degrees of success.

Supported Sports, Entertainment

Allen also began to channel funds into entertainment and sporting ventures. He purchased the National Basketball Association's Portland Trailblazers in 1988 and built the organization a $262 million sports and entertainment complex. He often flies the team to games in his private jet. In the 1990s, he purchased a reported 24 percent of the shares of the film and television studio Dreamworks SKG. He purchased the National Football League's Seattle Seahawks in 1997 and built that team a new stadium and exhibition center as well.

A longtime rock music fan with his own band, Allen channeled his love for guitarist Jimi Hendrix into the Experience Music Project, an interactive museum dedicated to rock music and especially Hendrix's work, which opened in Seattle in 2000. Allen celebrated an even earlier passion with his support of the Science Fiction Museum and Hall of Fame, which opened in Seattle in 2004. Allen further indulged his interest in the otherworldly with a $13.5 million donation to the Search for Extraterrestrial Intelligence and the provision of an undisclosed amount to fund SpaceShipOne, the world's first private spaceship. Allen also founded the $100 million Allen Institute for Brain Science in 2003. Additional charitable donations and foundations have funded hospitals, AIDS programs, cancer research, forest preservation, and the construction of a new library at the University of Washington in honor of his parents. Allen resigned from the Microsoft Board of Directors in 2000, but remained with the organization as a senior strategy advisor.