Paul Allen and the birth of the PC, Microsoft

Billionaire tech pioneer talks to "60 Minutes" about his relationship with Microsoft co-founder, early days of the company

Editor's Note: Paul Allen, the co-founder of Microsoft, died Monday in Seattle from complications of non-Hodgkin's lymphoma. He was 65. Below is the transcript of Lesley Stahl's story on Allen, originally aired April 17, 2011.


It's interesting how many big, hi-tech companies were started by two friends: like Hewlett and Packard, or Google's Larry Page and Sergey Brin. Microsoft was too. Bill Gates co-founded his company - one of the most important and successful in American history - with his high school buddy Paul Allen.

Today, Allen is known more for his mega-yachts and palling around with Brad Pitt and Angelina Jolie than for his revolutionary ideas in the company's early years.

But now Allen has written a memoir called "Idea Man," out this week, in which he not only gives an account of those ideas - he draws a dark portrait of his fellow co-founder and life-long friend.

As Allen writes and tells "60 Minutes" correspondent Lesley Stahl - in one of the only in-depth interviews he has ever given - he was too angry and proud to tell Gates point blank, "some days working with you is like being in hell."

"You describe Bill Gates in very harsh terms. You describe him as being quite abusive. I mean, it's not a pretty picture," Stahl pointed out.

"I felt like when I wrote it, I should just tell it like it happened in an unvarnished way, warts and all," Allen said.

"You know, here he is doing such great work. He's almost a saint now. And it seems like an odd time to write an unflattering portrait of him," Stahl remarked.

"The timing had nothing to do with the many wonderful things that Bill has done. But the timing was because I wanted to see if I could do it, and hopefully be alive to see it published," he replied.

No wonder he was concerned: when he started the book in 2009, he had Stage 4 lymphoma. The book goes back to the beginning. When Allen was 15, he met a boy at his private school in Seattle, two years his junior, named Bill Gates.

"Bill and I would actually dive in the dumpsters (at a local computer lab) to try to find listings of the secret inner code of the operating system," Allen told Stahl. "And try to figure out how it worked. That's how passionate we were."

They both became crack coders, but early on Allen emerged as a creative dreamer; Gates, a cold-eyed pragmatist.

"You write that when he was 13 years old, he told you, 'One day we're gonna start a company, run a company,'" Stahl said.

"He was saying, 'Well, imagine what it's like to run a Fortune 500 company.' I'm thinking, 'I have no idea.' You know, my parents were librarians!" Allen replied.

"You kept bringing him ideas. And, you write in the book, 'He was always popping my balloon,'" Stahl quoted.

"That's right. I mean, I would have, you know, ten ideas. And he would kind of pick them apart, one by one. And so then Bill would bring me back down to Earth," Allen remembered.

One of Allen's ideas Gates didn't shoot down would lead to the personal computer revolution and launch Microsoft. It was 1974. Allen was a college dropout working in Boston, and one day he spotted a magazine announcing a new small computer called the "Altair." He ran to show it to his friend Gates, then at Harvard.

"And I said, 'Here, look at the magazine! This is the computer we've been waiting for!'" Allen remembered.

"This is how the PC, the idea that we all have these computers, this is how it started," Stahl remarked.

"Yeah, and it's amazing to think back then nobody had personal computers. I mean, there were computers in universities and research labs and in corporations. But nobody had personal computers," Allen explained.

Allen's idea was to write software that would enable the "Altair" to work as well as those large computers.

"And so we called up the company that made it, and said, 'Well, we can demonstrate this software for you very quickly. Are you interested?' And, they said, 'Sure, if you can really show up and demonstrate it,'" Allen remembered.

But in truth, Allen said they had no software.

So they spent the next eight weeks at Harvard feverishly writing code, but without an Altair to test on.

Allen writes that because Gates looked like he was 13, they decided Allen should go alone to pitch their software. Sitting by an old original Altair, he showed Stahl how he fed the computer a paper strip with their code punched into it and typed "print 2+2."

"And then I hit return. And, lo and behold, it printed four," Allen told Stahl, as the vintage model printed out the number. "And a wave of relief surged over me 'cause I couldn't, I almost couldn't believe it had worked the first time. That night, I called Bill up and I say, 'Billy, it's unbelievable, it worked!!' And, we were just over the moon."

It was the beginning of the age of a computer in every home, on every desk. Almost overnight, people started buying these small computers and their software was in high demand. In 1977, Gates was even interviewed on a TV show.

"There's a lot of people who are forecasting that there'll be software stores just like there are record stores today and that there'll be thousands and thousands of those. And I think I'd have to agree with that," Gates said in the interview.

Allen writes that Gates had a rare gift for programming. He was also the shrewder businessman.

From the beginning, he demanded a larger share of the company: 60 percent, and then more. But Allen says he was the one who pushed through the company's big early break: developing an operating system for IBM's first personal computer in 1980.

Yet as the company soared, Allen didn't want to give up his whole life to Microsoft, the way Gates did.

"Well, I've always had so many different interests," he told Stahl.

"But do you think he came to think that you weren't working as hard as he was, and it became a source of resentment with him?" Stahl asked.

"Well, I think he was always pushing people to work as hard as they possibly could," Allen said.

"You included?" Stahl asked.

"Maybe me more than everybody else," Allen said.

"You describe Bill in this period and actually throughout as tough, a taskmaster. You talk about his yelling. Screaming!" Stahl said.

"There was a lot of yelling," Allen acknowledged.

A 1994 CBS News profile got a sample of Gates' management style, which Allen describes as "brow beating" and "personal verbal attacks."

"You had to fight back intensely to stand your ground and make your position and your convictions expressed," Allen explained.

"But he didn't like to back down, so these fights would go on, you said. They could go on for hours," Stahl said. "You're just screaming at each other for hours."

"And that's exhausting. It's exhausting. But that was Bill's style," Allen said.

Allen was miserable and felt he was being marginalized. And then things got a lot worse: he got cancer. One night he passed by Gates' office and overheard him talking with Steve Ballmer, who had been hired to help run the company.

"They were basically talking about how they were planning to dilute my share down to almost nothing. And it was a really shocking and disheartening moment for me," Allen remembered.

"And you were sick," Stahl said.

"I think I was still probably in the middle of radiation therapy," Allen said.

He burst in and interrupted them. He says they were trying to cut him out and rip him off.

Allen told Stahl Ballmer came over to his house later that night to apologize but that Gates didn't come. "He sent Steve," Allen said.

Shortly after, Allen left. But he got to hold on to all his shares. It's hard to feel sorry for him: he was 30, cured of cancer, and owned nearly a third of Microsoft.

After the company went public, Allen became one of the richest men on Earth, at one point worth an estimated $40 billion.

Gates would spend another two decades running Microsoft, launching MS Word, Windows, and IE Explorer. And once he retired, he devoted himself to eradicating global disease and improving education.

Allen has spent his wealth on a hodgepodge of many interests. For instance, he plays electric guitar, so he has his own personal rock 'n roll band to jam with, and he bought Jimi Hendrix's Woodstock guitar for $750,000.

He likes science fiction, and subsidizes an antenna farm listening for aliens. An avid reader, he showed us a Shakespeare Folio he keeps at his estate.

He likes football, so he bought an NFL team; he also likes basketball and bought an NBA team.

He's a movie buff, so he invested in DreamWorks, the Hollywood studio. He wants to travel, so he built himself a yacht longer than a football field, equipped with its own submarine.

He has spent over a billion dollars on philanthropy, including building an institute to study the brain, and, like Gates, he has pledged to give most of his money away to charity.

Gates got married, but Allen is not - yet. "I'm still optimistic. I still believe I'm going to meet somebody and that's going to happen," he told Stahl. "I want to have a family."

But he's often described as a recluse. Something struck Stahl when he showed her his collection of vintage war planes.

"I get this 'Howard Hughesy' feel: the planes, Hollywood. Do you think about that ever?" Stahl asked.

"Well, I hope I don't end up in a cinema by myself watching 'Ice Station Zebra' over and over again," he joked. "I think I've got such a diverse set of interests - movies, aviation, technology, sports teams."

"Howard Hughes!" Stahl said.

"Well, I don't know if Howard was involved in sports teams," Allen replied.

Allen's diverse set of interests also led him to invest in over 100 business ventures since he left Microsoft. Most of them were poorly managed or ahead of their time, so they flopped.

And he slid from being the third richest man in the world to 57th.

"Were you just too early? Or was it that you really needed a Bill Gates and didn't have that other person to push it through?" Stahl asked.

"Look in the Microsoft days, you had some great ideas and some great execution between me and Bill and many other people. You know, in technology most things fail. Most companies fail. But I had some whoppers," Allen said.

Some of his whoppers however produced numerous patents. Last year, in a move that angered Silicon Valley, Allen sued several giant companies accusing them of infringing on those old patents.

It's a long list, including AOL, Apple, eBay, Facebook, Google, Netflix, Office Depot, Office Max, Staples, Yahoo and YouTube.

"How do you argue that you had something to do with Google? It just seems so outlandish or kind of wacky," Stahl remarked.

"Look, Microsoft and Google, all these people, have patents of their own. They all enforce patents. They all charge other companies for patents. All I'm trying to do is get back the investment that I made to create these patents," Allen said.

We kept hearing that what he's really trying to do is gain recognition as a tech visionary. But with the book, he's being branded "a bitter billionaire."

"But what's your reaction to people saying it's kind of a revenge book, a bitter book?" Stahl asked.

"It's not about that," Allen said. "I just felt like it's an important piece of technology history, and I should tell it like it happened, and I hope people understand and respect that."

But for all the bad feelings Allen writes about with Gates, near the end of the book he reveals something that happened when he got cancer a second time in 2009.

"Bill came here to my house multiple times and we had some great talks. There's a bond there that can't be denied. And I think we both feel that," Allen said.

"Even after the book? I know he's read the book," Stahl asked.

"Right, no I'm sure at some point we'll sit down and talk about the book, which we haven't done yet," Allen said.

"You'll have a screaming match?" Stahl asked.

"Well, I don't know about screaming, but it'll be, I'm sure it'll be a heated discussion," Allen said.

"Do you think there's any reason that you're going to have to apologize to him now?" Stahl asked.

"I don't think so," Allen replied.

We asked Bill Gates for a comment, and while he declined, he has said that the founding of Microsoft was an equal partnership and Allen deserves more credit than he's often given.