Allen, Paul

(1953-)
Paul Allen Group

Overview

Paul Allen cofounded Microsoft Corporation with his childhood friend Bill Gates. Together, they built Microsoft into a multibillion-dollar empire by developing software that revolutionized the world of personal computing. Allen left the company in 1982 due to ill health and has subsequently pursued investments in high technology, entertainment, and sports.

Personal Life

Paul Allen was born January 21, 1953 in Seattle, Washington. His parents, Faye and Kenneth Allen were both librarians. They helped him develop a wide variety of interests, taking him and his sister, Jody, to museums, galleries, and concerts.

Allen showed an early interest in science. When he was 10, his mother hosted meetings of his grade school science club. In 1965, Allen entered the seventh grade at Seattle's Lakeside School. Three years later, Allen met an eighth-grader named Bill Gates. The two shared an intense interest in computers and quickly became friends. Gates and Allen became so proficient that they helped teach computer courses at Lakeside while still students. In 1971, Allen graduated from Lakeside and enrolled at Washington State University. Over the next decade Allen collaborated with Gates on several business ventures, including the founding of Microsoft Corporation.

In 1982, Allen developed Hodgkin's disease, a cancer of the lymphatic system. His illness dramatically changed his life, causing him to leave Microsoft. Never married, Allen spent more than two years traveling and enjoying time with his family during his recovery. He also used his time away from work to pursue his many interests, including art collecting, basketball, and music. An avid electric guitar player, Allen emulates his musical idol Jimi Hendrix in his rock band called The Threads.

Career Details

Even while attending college, Allen was eager to start his own business. He had read about Intel Corporation's 4004 chip, the very first computer microprocessor. In 1972, Allen and Gates purchased the next generation of the chip, the 8008, for $360. It was the main component of a special computer they built to measure traffic volumes for cities. Gates and Allen formed the Traf-O-Data company to sell the machines. The venture was short-lived but gave the duo important experience running a business and writing a special version of BASIC, a simple, interactive computer language designed in the 1960s.

Allen left Washington State University in 1974 to accept a job as a programmer with Honeywell in Boston. Then came a major turning point for Allen. He read a magazine article about the Altair computer kit, the world's first "minicomputer." Inspired, he convinced Gates that they should write a BASIC interpreter for the machine. An interpreter is a program that executes a source program (such as BASIC) by reading it one line at a time and performing operations immediately. The Altair was produced by the MITS company of Albuquerque, New Mexico. MITS hired the pair and made Allen their director of software; he and Gates moved to New Mexico. While working for MITS, Gates and Allen formed their own company to develop and market computer languages. They named their company "Micro-Soft." In 1976 he left MITS to work full time for his new company. The company's name was later altered to Microsoft.

Allen's success with Microsoft was rapid and enormous. Microsoft developed software for Apple and Radio Shack, makers of the best-selling personal computers of the day. Other early contracts were for Texas Instruments and Ricoh. In 1978, Microsoft sales went over the $1 million mark, and the company moved to the Seattle suburb of Bellevue, Washington. Microsoft grew quickly, forcing Allen and Gates to hire more employees, delegate authority, and buy software when they did not have the time to develop it themselves.

The turning point for Allen (and Microsoft) came in 1980 when he was approached by computer giant International Business Machines (IBM). IBM was secretly developing its own personal computer and needed to purchase programming languages for it. IBM bought virtually every program Microsoft had. In addition, Allen acquired a program from nearby Seattle Computer, reworked it with Gates, and sold it to IBM as the Microsoft Disk Operating System (MS-DOS). Gates and Allen convinced IBM to allow other computer manufacturers to copy the specifications of their Personal Computer (PC). The resultant flood of PC "clones" encouraged software developers to write programs compatible with these machines. The PC, using MS-DOS, became the dominant computer platform in the world.

In 1982, Allen discovered he had cancer. He took a leave of absence, and eventually left his position with Microsoft. When he returned to work, Allen took his career in a dramatic new direction. Although his illness ultimately led to a positive change in his life, he was initially forced to leave the company he founded just as it was poised to conquer the world market.

In 1985, Allen founded Asymetrix, a company devoted to producing computer applications to help programmers and non-programmers develop their own software. A year later, he formed Vulcan Ventures to research and manage investments. This endeavor marked the beginning of Allen's new career as an investor, following his vision of a "wired world."

Over the next decade, Allen invested well over $1 billion in a wide variety of companies, including Ticketmaster, America Online, Inc. (AOL), Egghead Software (a retail chain), and many lesser known technology firms. In the early-1990s, he invested heavily in new media and entertainment ventures. These included companies to provide entertainment and information for the Internet as well as Dreamworks SKG, a movie and television studio. Among the technology firms in which Allen has invested are the Seattle companies Cell Therapeutics, Inc., a biotechnology developer, and the biopharmaceutical company Darwin Molecular Corp.

To make his vision of a "wired world" a reality, Allen created his own think tank, Interval Research, in 1992. Allen provided funding for 100 scientists for ten years to create a facility similar to the Palo Alto Research Center (PARC) funded by Xerox Corporation in the 1970s. Its purpose is to imagine future uses for the Internet and compatible technologies. He subsequently formed the Paul Allen Group to encourage cooperation among his numerous investments. As an investor, Allen looks for projects that combine his many interests, such as sports, art, and music, with emerging technology. His massive fortune allows him to take risks and be patient with his investments.

By 1996, Allen had amassed a fortune of about $8 billion, making him one of the three wealthiest people in the United States. Even after leaving Microsoft, he kept his seat on the board of directors and remained the company's second largest stockholder. His enormous wealth allowed him to pursue his "wired world" vision as well as other interests. He bought the Portland Trailblazers of the National Basketball Association in 1988 and housed them in a state-of-the-art arena. He also acquired the right to buy the National Football League's Seattle Seahawks in 1996.

Allen's sometimes risky investment strategy has occasionally led to setbacks. Some analysts believe he has paid too much for his investments, and some of his companies have gone bankrupt. In addition, America Online rejected Allen's attempts to form a close alliance after he acquired 18 percent of the on-line service.

Social and Economic Impact

By cofounding Microsoft, Allen profoundly changed the lives of people everywhere. MS-DOS revolutionized personal computing, eventually selling more than one hundred million copies. Allen also played a major role in other breakthroughs, including the Microsoft Mouse, a device to input data, and the evolution of graphical user interfaces (GUIs), which had first been conceived by PARC researchers and which led to the development of Microsoft Windows.

In the early days of Microsoft, Allen and Gates did the vast majority of work themselves, employing a tiny staff and checking every line of computer programming themselves. Although they conferred on virtually all decisions, Allen said the pair played different roles in the company, "I [Allen] was probably the one always pushing a little bit in terms of technology and new products, and Bill [Gates] was more interested in doing negotiations and contracts and business deals." As an investor, Allen still prefers generating ideas to managing the daily operations of his companies. He delegates executive duties to a small number of trusted aides and gives them a great deal of freedom to make decisions.

As a high school student, Allen had relentlessly sought ways to spend more time working with computers but was frustrated by the high cost and limited access of the emerging technology. Allen and Gates looked to a time when every person's desktop would have a computer. With Microsoft, they began to see their vision become reality.

Since leaving Microsoft, Allen has followed his personal vision. He anticipated the coming of the "information superhighway" as a young man and has worked to create a "wired world," as he calls it, in which personal computers can link people to "content sources," such as newspapers, libraries, data bases, shopping outlets, and more. His motivation, according to an interview in the Seattle Times in 1992, stems from "a desire to do new and creative and exciting things with technology—products that people can use and really enjoy and hopefully enrich their lives."

Chronology: Paul Allen

1953: Born in Seattle, Washington.

1968: Met Bill Gates.

1975: Cofounded "Micro-Soft" with Gates.

1982: Diagnosed with Hodgkin's disease.

1985: Founded software developer Asymetrix Corp.

1986: Formed the management investment firm Vulcan Ventures.

1988: Bought the Portland Trailblazers of the National Basketball Association.

1992: Created the think tank Interval Research.

1994: Won Lifetime Achievement Award from PCMagazine.

1997: Given Lifetime Achievement Award by the Software Publishers Association.

Allen has made many charitable contributions, mostly to institutions in Seattle and the Pacific Northwest. He and Bill Gates donated a science and math building to Lakeside School in 1987. Allen also funded a library at the University of Washington to honor his father's work at the school. Since 1986, he has created five foundations devoted to charity, the arts, medical research, music, and forest preservation. The Experience Music Project, which includes a museum dedicated to rock guitarist Jimi Hendrix, supports "education and creative innovation in American popular music."