Microsoft co-founder Paul Allen made $40 billion stock blunder

Microsoft co-founder and billionaire Paul Allen is accredited with a shocking investment error in the early 90s that ended up costing him a staggering $40 billion, as mentioned in his memoir Idea Man. Revealed through a review of the autobiography by The New York Times, Allen had amassed a stake in internet services company AOL which, upon Bill Gates recommendation, he sold. Gates reasoning was that AOL was no match for the mighty Microsoft.

While Microsoft is by all means the far, far larger company, a 40 billion dollar stock blunder is a huge one to make even for a billionaire like Allen. This isn’t the only major loss that Allen has suffered, as he confessed to losing $8b through investing in cable companies in the 2000s, and he also settled for a less than 50-50 split with Gates because Gates had apparently “done most of the work.”

This $40b mistake is a lot, but consder the rest of his amassed fortune: a personal wealth of US$13.5 billion, two professional sporting teams (the Seattle Seahawks and Portland Trail Blazers), 128 million Microsoft shares worth several billion dollars and his 414 foot (127m) yacht named “Octopus” which sports two helicopters.

Allen officially left his board position at Microsoft in November 2000, and now resides as chairman of his investment and project management company Vulcan Inc.

Report a problem with article
Previous Story

Coup d'etat at Anonymous: Ex-op hacks Anonymous domains

Next Story

Report: Playstation Network still has no relaunch date [Update]

21 Comments

Commenting is disabled on this article.

That's funny, people make these "blunders" everyday. I guess I made a multi billion dollard "blunder" because I didn't buy Apple stock when it went public, or Google. Please, that is what the stock market is all about, you make decisions and you can not dwell on coulda woulda shoulda.

Sorry guys. Updated the post to leave the judgment of "small amount" to you. Also, $40 billion is not a mistake (apparently, it does seem like a lot for AOL which made a ~$1b loss last year)

Would be nice if the article came up with an estimated figure for "his personal fortune and assets which include: a personal wealth of US$13.5 billion, two professional sporting teams (the Seattle Seahawks and Portland Trail Blazers), 128 million Microsoft shares worth several billion dollars and his 414 foot (127m) yacht named “Octopus” which sports two helicopters."
Then we could judge for ourselves if $40b is a small amount.

Yep, something does not add up here... unless 'billion' is an error, and what the article meant was '40 million blunder'.

He didn't lose it, he never had it to begin with. He clearly just missed out on making more money.

-T- said,
He didn't lose it, he never had it to begin with. He clearly just missed out on making more money.

I don't think you understand how this works.

He did have it to begin with...as in he owned the stocks, and then sold them. Those stocks are now worth $40,000,000,000.

If he hadn't of sold that stock he would have had that much. He sold the stock, which means he lost the opportunity to sell them and get that cash at a later date.

I get what you're trying to say, but it's not quite correct in how stocks work. He invested and missed out on a return because of bad advice.

In that regard, you can pick anyone else on the planet who invested into something many years ago, sold it, and compare it to a 20 year's later economy and say how much you lost. That's nonsense.

Mountain Dew said,

I don't think you understand how this works.

He did have it to begin with...as in he owned the stocks, and then sold them. Those stocks are now worth $40,000,000,000.

If he hadn't of sold that stock he would have had that much. He sold the stock, which means he lost the opportunity to sell them and get that cash at a later date.

I get what you're trying to say, but it's not quite correct in how stocks work. He invested and missed out on a return because of bad advice.

Mountain Dew said,

I don't think you understand how this works.


I think he understood perfectly how it worked. Yes, he wasn't a psychic, and didn't hold onto the stocks as much as he could have done for a better profit upon a later sale, but there's no "loss" involved in that. It's a choice that didn't give him as much as he could have earned otherwise, yes, I can agree on that.

harveyhanson said,
So really it was Bill Gates fault as he recommended he did it, nice one Bill ;-)

Bill Gates (Microsoft) sold Apple stocks they had, too soon, too. Could have made Billions.

"$40b mistake is a lot, but is still only a small amount compared to his personal fortune and assets which include: a personal wealth of US$13.5 billion"

This makes no sense. A $40b mistake is a lot...compared to his wealth of $13.5b.

dancedar said,
"$40b mistake is a lot, but is still only a small amount compared to his personal fortune and assets which include: a personal wealth of US$13.5 billion"

This makes no sense. A $40b mistake is a lot...compared to his wealth of $13.5b.

Maybe I should have made this more clear. He has $13.5b in cash (so to speak) plus billions of dollars in other assets that most likely exceed $40b

Oh BOO HOO rich person lost some money in a blunder but is still rich

Yes I'm jealous, and yes I'm feeling the pinch as much as anyone else atm

Sense of scale is completely lost with figures like this. $40 billions and it is only a 'blunder' ....

$40 billion must represent GBP of some countries ...