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Paul Allen, Microsoft co-founder and billionaire investor, dies at 65

Paul Allen, Microsoft co-founder and billionaire investor, died from complications with non-Hodgkin’s lymphoma on Oct. 15. He was 65. (Video: Reuters)

They were teenage computer geeks, bespectacled kids from Seattle who taught themselves programming from a Teletype terminal, learned the basics of business from Fortune magazine and dreamed of “a computer in every home and on every desk.”

Paul Allen was the self-described “idea man,” the shy son of librarians. Bill Gates was the business-oriented partner who brought the ideas to life. And in 1975, when Mr. Allen was 22 and Gates was 19, the friends formed a company that became known as Microsoft and unleashed a personal-computer revolution that made both men fabulously wealthy.

Mr. Allen left the company after only eight years, amid a bout with Hodgkin’s disease and a deteriorating friendship with Gates. But he remained a powerful force in technology and philanthropy for decades, investing his billions in an eclectic array of businesses and charitable efforts while acquiring sports teams, discovering World War II shipwrecks and backing aerospace ventures that drew on his childhood fascination with ad­ven­ture stories and science fiction.

He was 65 when he died Oct. 15 in Seattle. The cause was complications of non-Hodgkin’s lymphoma, according to a statement from his family. Mr. Allen had battled the disease in 2009 and announced earlier this month that his lymphoma had returned.

When Mr. Allen and Gates founded their company, computers were bulky and expensive. Microprocessors had been invented just a few years earlier, and most monitors showed nothing but green or white characters on a black screen.

Technology companies were primarily interested in hardware — developing computers that were faster, stronger and smaller than anything that came before. But Mr. Allen and Gates, before most of their peers, realized that the programs a computer ran were just as consequential as the chips and wiring inside the machine. By the late 1990s, Microsoft operating systems would run on nearly 90 percent of personal computers in the United States.

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Mr. Allen had left the company by the time Microsoft unveiled its Windows operating system and before it released ubiquitous programs such as the text-editing software Microsoft Word. But he helped oversee the development of groundbreaking products such as the early operating system MS-DOS, which launched Microsoft to national prominence through a partnership with IBM, and took credit for devising the two-button mouse and the company’s name, short for microprocessors and software.

Microsoft’s success earned him and Gates tens of billions of dollars, and by 1992, a Wall Street research firm estimated that at least 2,200 Microsoft employees — nearly one-fifth of the company’s workforce — had become millionaires. The company’s co-founders, business journalist Brent Schlender wrote in Fortune magazine three years later, had created “more wealth than any business partners in the history of American capitalism.”

Gates, who served as the company’s chief executive until 2000, has a fortune of about $90 billion, second only to founder and Washington Post owner Jeffrey P. Bezos. Mr. Allen, who retained a sizable stake in Microsoft after leaving the company, is personally worth $21.7 billion, Forbes reported in March.

Both men insisted that they worked together on nearly every project in the company’s early years, to the point where it was all but impossible to distinguish authorship. “Our great string of successes had married my vision to his unmatched aptitude for business,” Mr. Allen wrote in a 2011 memoir, “Idea Man.”

But as Microsoft took off in the 1980s and ’90s, Mr. Allen encountered mixed success as an investor, leading critics to question whether he was not an “accidental zillionaire” whose wealth was “a lucky trick of time and place,” as Wired magazine wrote in 1994.

Through Vulcan, an investment company he named for the Roman god of fire and creation, he pursued a vision he dubbed the “wired world,” in which cable, satellite TV and the Internet played increasingly central roles in popular culture and commerce. But while Mr. Allen was correct in anticipating an era in which news stories were read on a screen, not solely in print, he struggled to reap the financial returns.

He leveraged his Microsoft holdings to acquire Charter Communications for $4.5 billion in 1998, but the company filed for bankruptcy protection in 2009, resulting in an estimated $7 billion loss for Mr. Allen. Skeptics also pointed to his 25 percent stake in America Online, which he sold for $140 million in 1994 after unsuccessfully trying to convince the company to sell him more shares. At the height of the tech bubble, Reuters reported in 2013, “those shares would have been worth more than $40 billion.”

Despite the occasional downturn, his Microsoft stock holdings formed the bedrock of an investment portfolio that sometimes left him in shock, marveling at his good fortune. “At some point there is so much money, what do you do with it all?” he told the Los Angeles Times in 1995, explaining that he had just invested half a billion dollars into the newly formed Hollywood studio DreamWorks SKG.

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Mr. Allen’s billions enabled him to play guitar with Stevie Wonder in a jam session on his yacht, hold a masked ball in Venice, build a $100 million pop music museum and acquire sports teams near his hometown of Seattle, including the Portland Trail Blazers, Seattle Seahawks and a share of the Seattle Sounders soccer team.

His 414-foot yacht, named Octopus, cost $200 million and featured a recording studio, helipads and two submarines, according to Forbes. Using his yacht and submersibles, he located World War II shipwrecks including the Musashi, a Japanese battleship, and the Indianapolis, a U.S. Navy cruiser that sank in shark-infested waters in 1945.

He also funded SpaceShipOne, which became the first private aircraft to put a civilian in suborbital space, and licensed its technology to Virgin Galactic, the space effort founded by Richard Branson. In 2011, Mr. Allen announced the creation of Stratolaunch Systems, a project to develop a new aircraft — considered the largest plane ever flown — that is supposed to launch spaceships into orbit.

But he was also an early signer of the Giving Pledge, an initiative led by Gates and investor Warren Buffett to encourage wealthy individuals to donate the bulk of their fortune to charity. By Mr. Allen’s count, he gave more than $2 billion to causes that included an effort to battle poaching in Africa with an armada of drones; research to cure ebola; and the Allen Institute for Brain Science, which completed a map of the human brain in an effort to understand the origins of consciousness and diseases such as Alzheimer’s.

Paul Gardner Allen was born in Seattle on Jan. 21, 1953. His mother was a schoolteacher, and his father was a librarian at the nearby University of Washington. Both parents encouraged a love of reading that led Paul to engross himself in the Tom Swift Jr. series of science-fiction books, which described futuristic inventions such as the underwater helicopter and nuclear-powered aircraft.

Mr. Allen’s favorite device was the computer, which he began tinkering with for the first time while in 10th grade at the private Lakeside School, where a mothers’ club installed a Teletype terminal linked to a distant mainframe.

“The Teletype made a terrific racket, a mix of low humming, the Gatling gun of the paper-tape punch, and the ka-chacko-whack of the printer keys,” he recalled in his memoir. “The room’s walls and ceiling were lined with white corkboard for soundproofing. But though it was noisy and slow, a dumb remote terminal with no display screen or lowercase letters, the ASR-33 was also state-of-the-art. I was transfixed. I sensed that you could do things with this machine.”

Mr. Allen fell in with a few other tech-savvy students, including Gates, who quickly became a business partner. The two earned money devising a computerized class-scheduling system for Lakeside, and started a short-lived company, Traf-O-Data, to sell custom computers to traffic departments as an analytical tool.

They continued to work together while Mr. Allen studied at Washington State University in Pullman. When Gates moved to the Boston area in 1974 to study at Harvard, Mr. Allen joined him, dropping out of school to work as a computer programmer for the manufacturing conglomerate Honeywell. At the same time, he was trying to convince Gates that they should design software for personal computers — an idea that seemed far-fetched until December 1974, when Mr. Allen came across a copy of Popular Electronics at a newsstand in Harvard Square. On the cover was a picture of the Altair 8800, effectively the world’s first personal computer.

Mr. Allen, according to a 1994 account in the New Yorker, purchased the magazine and hurried over to Gates’s dorm. “Look!” he told Gates. “It’s going to happen! I told you this was going to happen! And we’re going to miss it!”

The mail-order computer needed a programming language to make it accessible to ordinary users. Mr. Allen and Gates, bluffing, told Altair’s manufacturers they had already developed such a product, based on the programming language BASIC. They created it in eight weeks, and Mr. Allen flew to Albuquerque to successfully pitch the software to the Altair’s manufacturer, MITS. To demonstrate that it worked, he typed “PRINT 2 + 2.” The machine printed a single character: “4.”

Mr. Allen and Gates considered calling their business Allen & Gates before deciding it sounded too much like a law firm, and they settled on Micro-Soft. They later dropped the hyphen, and in 1979 moved their company from Albuquerque to Bellevue, a Seattle suburb. Gates, who ultimately dropped out of Harvard, insisted on a 60-40 split of the profits before upping his share to 64-36 after the company made its first sale, according to Mr. Allen’s memoir.

“Our management style was a little loose in the beginning,” Mr. Allen told Fortune. “We both took part in every decision, and it’s hard to remember who did what.” Gates focused more on the business side, getting help from his lawyer father in drawing up contracts; Mr. Allen’s primary interest was in developing new products.

As Microsoft grew to several dozen employees, working with clients including Ricoh and Texas Instruments, it caught the attention of IBM. In 1980, it approached Mr. Allen and Gates about developing an operating system for a first-of-its kind product, the IBM Personal Computer, for launch the following year.

Rather than develop something on their own, Microsoft acquired a product known as QDOS (Quick and Dirty Operating System) from Seattle Computer. Mr. Allen concealed the fact that Microsoft planned to license the product to IBM, and he bought the software on the cheap, for $50,000. It went on to be used in millions of IBM PCs and in millions more clones, establishing Microsoft as the world’s leading software creator.

Mr. Allen was traveling in Europe, meeting with potential Microsoft clients in 1982, when he fell ill and was diagnosed with Hodgkin’s lymphoma. He spent about two years away from the company, traveling with his family and undergoing radiation therapy, before recovering from the disease and deciding he wanted to do something different.

He went on to found organizations including Interval Research, a $100 million lab designed to find the next big thing in technology, and invest in companies such as Ticketmaster.

In Seattle, he established the Experience Music Project — a music museum that grew to include a science-fiction hall of fame and is now known as the Museum of Pop Culture, or MoPOP — as well as museums for World War II-era aircraft and early computers, and a new stadium for the Seahawks and Sounders. He also developed an entire neighborhood north of downtown, which now serves as the headquarters for Amazon.

Mr. Allen was sued for sexual harassment in 1998, when Abbie Phillips, a former business partner, said she was fired after rejecting his sexual advances two years earlier. He denied the harassment and retaliation allegations, saying Phillips had resigned after being accused of embezzling company funds, and the suit was thrown out by a Los Angeles judge.

For many years, he lived on a six-acre compound on the Seattle suburb of Mercer Island, where his mother and sister also had homes. A complete list of survivors was not immediately available.

Mr. Allen served on the Microsoft board until 2000, when his and Gates’s former business manager — Steve Ballmer — was named the company’s chief executive. By then, he and Gates had reconciled, and their company’s success had gone far beyond anything the founders had ever envisioned.

In a 2011 interview with the Guardian, he recalled one early conversation with Gates, from around 1974: “We said, ‘Hey, if we’re really successful we could form a company that could grow to around 35 employees.’ Microsoft is today north of 90,000 employees. So obviously we blew through our initial hopes and dreams there.”

Correction: An earlier version of this obituary incorrectly referred to the science-fiction book series Mr. Allen enjoyed as a child. It was the Tom Swift Jr. series, which featured inventions such as the underwater helicopter and nuclear-powered aircraft, not the earlier Tom Swift series, with inventions like the portable movie camera and electric locomotive. The story has been updated.

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