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Why Valve? Or, what do we need corporations for..
- cs702 14y agoGreat article. Anyone who has worked for a large, established corporation knows from personal experience that internally they are a lot like the Soviet Union, with a hierarchical structure of bureaucrats and their apparatchiks making decisions for everyone at the company. Despite having grown to around 400 employees, Valve is evidently not like that. The author, Yanis Varoufakis, makes a compelling case that future companies may look more like it than like the traditional hierarchical corporations of today. -- PS. As someone who regularly reads the author's economics blog at http://yanisvaroufakis.eu http://yanisvaroufakis.eu, finding him on Valve's corporate blog was the source of quite a bit of cognitive dissonance for me. ("What the...? Why is Varoufakis showing up on Valve's corporate blog?" was my immediate thought.) I had to do multiple double-takes before it dawned on me that, yes, he somehow works at Valve!
- vitorbal 14y agoyou can read the story about how he started working with valve on this post: http://blogs.valvesoftware.com/economics/it-all-began-with-a-strange-email/ http://blogs.valvesoftware.com/economics/it-all-began-with-a...
- ralfn 14y agoOne has to wonder why "large" companies even exist in the first place. Why a building full of freelancers could not do the exact same thing. And then it dawned on me: Valve is providing a "firewall" to unfair competition, financial insecurity, brand awereness, and legal risks. And then it just gets out of the way. Maybe, the pure existence of large corporations, is a sign of capitalism failing. Being large should not give an advantage: yet it allows for a reportaire of anti-competitive behavior. Maybe they should do a nation wide experiment, in smaller country: what happens if you take away the legal standing of all "companies" and "employment". What if all economic relationships can only exist between individuals? Im not suggesting its some kind of magic bullet, i just wonder how competitive it would be. Will such a system adapt (to changes in the market) and optimize (cutting out middlemans) more quickly? Will it be truly bottom-up?
- seiji 14y agoTake a look at http://en.wikipedia.org/wiki/The_Nature_of_the_Firm http://en.wikipedia.org/wiki/The_Nature_of_the_Firm Given that "production could be carried on without any organization [that is, firm] at all", Coase asks, why and under what conditions should we expect firms to emerge? Since modern firms can only emerge when an entrepreneur of some sort begins to hire people, Coase's analysis proceeds by considering the conditions under which it makes sense for an entrepreneur to seek hired help instead of contracting out for some particular task.
- jseliger 14y agoThis is an excellent answer. Peter Thiel uses some similar ideas in his answer about why people form companies: http://blakemasters.tumblr.com/post/20400301508/cs183class1 http://blakemasters.tumblr.com/post/20400301508/cs183class1 : If we want technological development, why look to companies to do it? It’s possible, after all, to imagine a society in which everyone works for the government. Or, conversely, one in which everyone is an independent contractor. Why have some intermediate version consisting of at least two people but less than everyone on the planet? The answer is straightforward application of the Coase Theorem. Companies exist because they optimally address internal and external coordination costs. In general, as an entity grows, so do its internal coordination costs. But its external coordination costs fall. Totalitarian government is entity writ large; external coordination is easy, since those costs are zero. But internal coordination, as Hayek and the Austrians showed, is hard and costly; central planning doesn’t work. The flipside is that internal coordination costs for independent contractors are zero, but external coordination costs (uniquely contracting with absolutely everybody one deals with) are very high, possibly paralyzingly so. Optimality—firm size—is a matter of finding the right combination.
- toddh 14y agoThis is pre information revolution thinking combined with ideas generated by the fears of an age when socialism/communism was really was competing with democracy as a form of social organization. This muddled thinking makes no sense presently, especially given Corporations are purely creations of the government monopoly of power and should be anathema to any free thinker. For those not fighting the last war led by generals like Hayek, all coordination costs follow the technological cost curve as there is no longer a difference between internal and external actors.
- sophacles 14y agoRegarding your PS: Valve hired him as "cheif economist". This article explains it all: http://blogs.valvesoftware.com/economics/it-all-began-with-a-strange-email/ http://blogs.valvesoftware.com/economics/it-all-began-with-a... I seem to recall an HN discussion about it, but am too lazy to track it down :).
- cs702 14y agoThanks. Also a great post.
- nodata 14y agoI'd like to see if Valve's model scales to a much larger number of employees.
- DougWebb 14y agoIt may not need to; they could take the approach of splitting the company into several smaller companies that are each an ideal size for this management style. I don't recall the name, but there is a manufacturing company (clothing, I think) that does this. Collectively the company has thousands, maybe tens of thousands of employees, but they're organized into independently run shops with around 500 people each.
- carterschonwald 14y agoGore dOes this
- clarnet 14y agoMaking the parallelism of firms as federations (not sure if is a correct assumption), this can surely relate with Proudhon's ideas about federations and confederations: http://www.ditext.com/proudhon/federation/federation.html#7 http://www.ditext.com/proudhon/federation/federation.html#7
- Qworg 14y agoMorningstar Farms does this as well.
- einhverfr 14y agoHow big is much larger? 9k employee businesses exist on this model. The scale issue is NOT number of employees. It is breadth of focus. You could have an operating system company, or an office productivity business, or a video game console company, but it is hard to see people organizing Microsoft in a bossless company without breaking it up first.
- DanielRibeiro 14y agoThis part is particularly enlightening: The idea of spontaneous order comes from the Scottish Enlightenment, and in particular David Hume who, famously, argued against Thomas Hobbes’ assumption that, without some Leviathan ruling over us (keeping us “all in awe”), we would end up in a hideous State of Nature in which life would be “nasty, brutish and short
- AndrewDucker 14y agoFascinating stuff! I am very curious as to whether Valve is scalable to either very large companies, or companies composed of mere mortals.
- alenox 14y agoSomething about this article reminds me of a post-scarcity future star trek paradise where everyone works on whatever gives them joy. At Valve, your basic needs are taken care of (a paycheck, healthcare, etc), and you produce the things you love to produce. If this works on the level of a firm, would it work on the level of a whole society?
- sageikosa 14y agoHow about the Star Trek: TNG episode with the game that directly accessed the pleasure centers of the brain, and everyone quickly became addicted to throwing little virtual chips into little virtual holes...except for Wil Wheaton!
- alenox 14y agoI bet that episode is ripe with animated gif fodder. They always got that weird self-satisfied look on their face when they were playing.
- mikecarlucci 14y agoI hope someone creates a version of that game for Google Glass. Or a Glass parody video acting out similar poses.
- king_jester 14y agoDon't forget his love interest, played by Ashley Judd, who also resisted the game: http://en.memory-alpha.org/wiki/The_Game_%28episode%29 http://en.memory-alpha.org/wiki/The_Game_%28episode%29
- johnbellone 14y agoI am sure this is everyone's ideal job, but I do think that there are many people that simply just _don't want to work_. In the case of Valve (and software development), I think creative juices tend to flow more easier and creates a harmonious vibe that you don't always find with other professions.
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- onitica 14y agoI just did a quick skim of the article, and call me naive if you want, but in the theory of spontaneous order why is Valve necessary? Obviously, the time and labour of Valve's employees is worth more than what Valve is paying them, otherwise Valve would not be turning a profit. I'm assuming that employees really have 100% work time for their projects as you claim. Then in essence Valve is providing facilities and connections (to other smart employees) in return for the lion's share of the labour profit. Is that really worth it for the employees? Once they have the connections wouldn't it benefit them more to split off their own companies, in a co-op horizontally structured company? Don't get me wrong, I think traditional corporate structures are often abominations and I think Valve is a great company. It just seems to me that if you take the spontaneous order philosophy to the extreme than corporations in general just become unnecessary overhead.
- algorias 14y agoValve provides the connections and environment of trust without which spontaneous order can't occur. It also flattens peoples risk profile (lower risk, lower reward), which is actually quite desirable for most human beings.
- meric 14y agoEconomic profit is a function of land, labor and capital. Taking out profit from labor still leaves the other two; You still need shareholders to finance the initial purchase of land and capital, and the shareholders still demands compensation for risk. The corporation becomes unnecessary overhead if the company is owned by the employees, but then you have issues of what happens to the equity when an employee retires, and thus having an employee become a shareholder. I think the word I'm looking for is a collective, and looking into the past, despite Valve I still don't think it works. The very idea has caused the deaths of millions of people implementing it. I think Valve is a great idea; the idea being, the employees of the company get to decide everything in the company besides a few hard rules. Example: Rule 1: shareholders get 50% of the profit. Employees can decide how much is spent on profit-sharing schemes and salary versus how much to save for the company, to invest in new equipment, whilst following the rule. Employees dictate all aspects of business strategy. Failure to abide the rule simply ends in the shareholders dissolving the corporation. Ideologically it doesn't differ much from corporations you see today. The CEO, an employee, typically has free rein over the company until he does something really stupid, in which case he gets fired by the board. This "new idea" is simply making a hierarchical organisation a horizontal one, i.e. all employees are now co-CEO's. You still have leaders but they are distinguished neither by status or wealth.
- Spooky23 14y agoCapitalism doesn't require corporations. Corporations insulate capital from liability. In the early 1800's in the US, you needed a act of the state legislature to form a corporation. This was difficult and came with other baggage (putting politicians on payroll, etc) so many more businesses were partnerships. Being a partner means that as you invest, you gain more equity AND more liability. It also means that governance becomes difficult as the partnership grows. As the industrial revolution brought about massive, more capital intensive businesses (railroads, steel, etc), the corporation become necessary to function. If Hacker News was around in 1880, we'd be talking about corporate bureaucracy as a great innovation. It made sense. I think what you're really seeing with Valve is a sort of modern partnership. I've seen similar sounding small businesses (farms, mostly) where running of the business is more consensus-driven or there is a "spontaneous" hierarchy that develops over time.
- snowwrestler 14y agoThere's not really much of a connection between the ownership structure--corporation vs. partnership--and the management structure of a company. In Valve's case it is probably organized as a corporation, but it actually has only a few owners. It could easily be organized as partnership. Either way, what makes it special is that the employees (who are not owners) are allowed to self-organize. But that could happen under any ownership structure.
- einhverfr 14y agoWell, if you define Capitalism as Capitalists hiring Labor, then yes, it does. A market economy could exist in ways organized through divisions other than Capital/Labor and as such the market does not need Capitalism to continue.
- deleted 14y ago[deleted]
- clarnet 14y agoSomeone that is somehow renegade is Pierre-Joseph Proudhon. And it's quite possible that his thought is way better fitted here. Of course, he's another non-authority thinker but with a quite different perspective and way to think the world, the society and men. Take some of your time at gutenberg.org: - What is Property? by P.-J. Proudhon http://www.gutenberg.org/ebooks/360 http://www.gutenberg.org/ebooks/360 - System of Economical Contradictions; or, the Philosophy of Misery by P.-J. Proudhon http://www.gutenberg.org/ebooks/444 http://www.gutenberg.org/ebooks/444
- jacques_chester 14y agoValve is a single data point. A single data point that has several massively profitable ventures feeding its bottom line. I'd be wary of drawing sweeping conclusions about political economy from a single example.
- BadassFractal 14y agoI think this is a key point. While the Steam cash cow is generating enormous profits, they have a lot of freedom to experiment. They have an almost complete monopoly of the digital game download world. It's to some extent reminiscent of the freedom that Google had early on when they were absolutely dominating search, and they weren't trying too hard to attack other fields. It remains to be seen if that's the only reason why their current structure is working, but that's at the very least a valid hypothesis.
- jacques_chester 14y agoJust about any system works in times of great plenty. The real test of Valve's model will be when things aren't so good.
- darkarmani 14y agoGore and Morningstar farms are two more data points in very different markets.
- wtvanhest 14y agoValve is a "hit business" meaning that they need to produce hits to be profitable. In the short run they have been successful, but over the long run, they may run in to problems and if it does, this business model will look foolish (rightly or wrongly). The reason, I and others on HN don't like BigCo, is because we feel stifled, but that doesn't mean that it isn't the most efficient business model.
- stripe 14y agoValve is by no means in the "hit business" anymore. They moved on and provide service and content. From the stereotypical hat in games to deliver content from other creators. Not just other developers but players that create content. Parden my language, but srsly, in the long run? What the heck? Steam is now running since ~2004 while being a provider since 2005/6? That are six years of being successful and there is no sign of steam dying anytime soon. "In the long run", like what, 20 years?
- angersock 14y agoValve has moved quite far beyond "hit business". Consider how much commerce happens on Steam, and what their cut of that action is. They're really more of a distribution service with a sideline in game development to keep honest. Also, re: BigCo--that also doesn't mean that it is the most efficient business model.
- jebblue 14y agoValve's move to Linux was inspiring. He referenced Marx, I'm now starting to wonder about their wisdom in general. Why can't they just make a great game platform and stay out of politics.
- engtech 14y agoIn the context, Marx isn't about politics. Marx is about economics. Talking about economics without referring Marx at all seems disingenuous. The article is a post from the Valve's economies blog.
- angersock 14y agoYou're an idiot if you take a completely reasonable assessment of various economic theories as "politics". This article is an exploration of where Valve's corporate structure and soul fit into the spectrum of ways to interact in a market. Don't let the names of leading thinkers in a field scare you off because of some bullshit brainwashing.
- Spooky23 14y agoWhy? Marx is one of the more influential figures in modern history. In this case, the reference to Marx was basically saying that corporations pay you a fixed rate for your time, but must extract a larger value than what they pay you. Reading this won't make you start hymning the Soviet national anthem.
- HotKFreshSwag 14y agoEconomics used to be called political economics. Why Valve can't stay out of politics is because a lot of things worth doing are political in nature or related to politics. Politics is not a different sphere from everyday life.
- brown9-2 14y agoI don't see any place in the article that places a value judgement on Marx's beliefs or positions, just sections that outline what questions he asked and what his ideas were. Can you point out what I am missing?
- deleted 14y ago
- bryanlarsen 14y agoIn many ways, I think that a worker's cooperative is a much better legal structure for a software firm than a corporation. I assume that Valve generously grants stock options to its employees, like most other Silicon Valley firms. This, combined with its interesting management structure, makes Valve a worker's cooperative in practice but not by law. I suspect that if Valve lived in a jurisdiction with legal protections for worker's cooperative, that it would be one.
- bryanlarsen 14y agoIf I would have finished reading to the end before commenting, I would have had my questions answered. Valve does not grant ownership to employees. However, excess profits are distributed to employees for the most part, which does make Valve a de facto worker's cooperative. Yanis does discuss the standard arguments against a worker's coop: malfeasance, access to capital, and scalability. I grew up in an area (Saskatchewan), where for a long time the largest "company" was a cooperative. Access to capital is probably the main reason why Silicon Valley firms are not worker's cooperatives. But that can be solved by granting worker's cooperatives the same legal privileges as corporations. Instead of selling shares, they sell "bonds" which do not pay interest but instead pay a fraction of profit. This is in practice no different than buying insubordinated shares, like those sold by Facebook or Google. Such shares do not give you a "proper" shareholder vote, voting shares are held by the founders.
- bryanlarsen 14y agomissed the edit window. It's "subordinated shares", not "insubordinated shares".
- roguecoder 14y agoI find it really interesting how communist many start ups are, especially considering so many of them involve libertarians.
- ericd 14y agoI think the command economy part of communism (the governance form) is probably the biggest problem libertarians have with communism. I don't think they have anything against equal partnerships between large numbers of people.
- ianbishop 14y agoValve's organizational structure has always been of great interest to me from an idealistic point of view. There have been a lot of articles written recently that cover nearly all aspects of this interest-based economy for developers, artists and so on. Other companies, such as Github, seem to have adapted similar models. Regardless of the article though, one detail always seems to slip past me. Who answers the phones?
- saraid216 14y agoThe person who was called?
- guscost 14y agoValve sounds like it might be the only other company I'd ever want to work for.
- InternetPerson 14y agoDoes anyone else hear the sabers? There seems to be a lot of noise about Valve these days. Some examples: the "Windows 8 is going to be a catastrophe" thing; the "we're hiring super elite Linux developers" thing; the "our engine is faster on Linux?!" thing; and now this navel-gazing self-congratulatory gobbledygook. Sudden Clarity Clarence asks, "Is Windows 8 going to have an app store? Could that be a threat to Steam? Is all this noise just saber-rattling?"
- heretohelp 14y agoKeep the meme crap out of HN.
- engtech 14y agoValve's statements about Windows 8 usability were mirrored by Blizzard. The source engine is faster under OpenGL on Windows as well, not just Linux. So It's an OpenGL vs Direct3D debate, not Windows vs Linux. "Is all this noise just saber-rattling?" All this noise is branding/promotion of the Valve brand, and would likely be going on even without Windows 8. But I agree that Windows 8 will likely try to copy Apple's iTunes success and that Valve needs diversify. I'm hoping they do a console running Linux at some point.
- InternetPerson 14y agoThanks for not calling my comment "crap". "Valve's statements about Windows 8 usability were mirrored by Blizzard." Might Blizzard not feel similarly threatened by Windows 8? "So It's an OpenGL vs Direct3D debate" I slightly misspoke, but the example still holds: an attack on Direct3D is an attack on Microsoft. (Do I need to back that up? Could anyone conceivably disagree?) "All this noise is branding/promotion of the Valve brand, and would likely be going on even without Windows 8." Good point, and I agree. But what would it be like if Windows wasn't pushing an app store? Would they still be calling their main platform a "catastrophe"? (Maybe, maybe not.) So I guess I should have asked, "How much does Valve fear a Windows app store?" And also, "Doesn't it kinda seem like Valve is attacking Microsoft?" Sometimes it seems like "Hooray for Valve/Steam/Gabe" are three of the internet's favorite topics. I get the impression that the Venn diagram of people who love memes and people who love Valve probably looks like a circle. How does Valve manage to get so much love from the internet? Sometimes I think they must have a small team dedicated to feeding social news sites. For example, "Hey look guys, a new Team Fortress comic!" Or, "Here's some fancy talk about how enlightened we are! P.S.: Give us your money." Aren't there better-loved companies that receive much less internet-love? According to the internet, Valve is not just a company, it's a hero. And Valve clearly feeds this idea. For example, this very article. Valve doesn't just want your money, it wants your love. Is this dangerous? Is this effective? How much does internet-love translate to real dollars?
- mhartl 14y agoI appreciate the insight in the OP, but I'm frustrated by the imprecise use of language. Valve is hierarchical. The hierarchy is simply informal and spontaneous based on the attributes of individual team members. (The OP hints at the distinction with the occasional modification "authoritarian hierarchy", but this line is often blurred.) In addition, the notion that Valve is "bossless" is disingenuous. For every person at Valve, there is some other person (or persons) who can fire him. If you worked at Valve, that person could in principle tell you what to do. That he doesn't have to is a product of the kind of people who work at Valve, not any radical innovation in corporate structure. Although its organization may be relatively flat, Valve is strictly hierarchical by any sensible definition of the term. Valve's model reminds me of the old Costco vs. Walmart debates. Costco, we are told, get lots more productivity out of its workers by treating them well—good pay, generous benefits, etc.—while Walmart suffers by comparison. What this analysis ignores is that the people are different. Costco has discovered that it can thrive by compensating disciplined, productive people well. Google does the same. Apparently so does Valve. But not all people have such discipline or high productive capacity—you couldn't just swap all Costco employees for the same number of Walmart employees and expect to get the same results, any more than you could with Google or Valve. The miracle of Walmart (or one of them, at least) is that they manage to thrive using the labor of people whose productivity is often marginal by the standards of Costco or Valve. Arguably, that is even more impressive, and perhaps more laudable. Unsurprisingly, Walmart's corporate structure is very un-Valve-like.
- dgreensp 14y agoIndeed, every person is different, and every job is different. Corporations already create a huge diversity of jobs that can't be equated across companies. I can hire 100 programmers and say "your job description is to do whatever you want," and there is nothing inherently anti-capitalist or post-capitalist about my company. If I can make it productive by virtue of cultural and social pressures alone rather than bossing people around, that's great. As the OP points out himself, corporations are "islands" as far as the larger economic system. There aren't really inherent constraints on how you organize them internally. There are handed-down "best practices" for management that are probably long overdue for rethinking; for example, perhaps the notion of today's "boss" or middle manager will come to seem antiquated. But no company runs like a free market. The OP spends a lot of time identifying "traditional capitalist corporation" with bosses and hierarchy in order to paint Valve as less capitalist, but really it is just less "bossist." To say Valve is "more radical" than a co-op with distributed ownership is ridiculous, and misses Valve's own hierarchy (as my parent points out). Owning and running a company is not just a matter of telling people what to do. It includes hiring and firing, leading through culture and other channels, making executive decisions and generally keeping the lights on. As a Valve employee, can you fire the janitor if he isn't doing a good job? If the building is hit by a tornado, is it your responsibility to get it rebuilt and eat the cost? Being an owner isn't all peaches and gravy. Could you decide you want a non-wheelie desk or to telecommute full-time from the beach? Hopefully you don't want to. Could the owner decrease your compensation or relocate the company offices to Kalamazoo? Hopefully he doesn't want to. The best management is invisible.
- aytekin 14y agoThere are some activities that always needs to be taken care of in time. Such as customer support. I wonder how do they do those tasks. If there are no excepted level of work, some tasks might go undone.
- saraid216 14y agoThis is the mild version of the "If there wasn't a God and a Bible and a Hell, we'd all kill and steal from each other all the time" argument. 1) People do exist who like to do customer work and want to do customer work. If they're sought out and given internal support--and it's not really that hard to convince decent engineers to provide that on their own initiative--they will handle it fine. Same goes for things like office management. 2) If some tasks go undone, it's because no one was interested in producing a finished, polished version of the product into which those tasks contribute. If no one is interested, then the product is far less likely to be worth producing.
- aytekin 14y agoI am one of those people. I like helping our customers. But, liking something and working on something when you feel like it is very different than having a consistent support response time of 15 minutes.
- saraid216 14y agoDoes Valve make a promise of having a consistent support response time of 15 minutes?
- guelo 14y agoAwesome read. It's hard to find accessible well-reasoned anti-capitalist literature outside of fringe radical contexts. Although, as he himself admits, holding up Valve as the ideal model for post-capitalist society seems like a bridge too far.
- smsm42 14y agoIt's also hard to find well-reasoned anti-mathematics literature or well-reasoned anti-genetics literature or well-reasoned anti-vaccination literature or well-reasoned anti-industry literature outside of the radical fringe. For the same reasons, probably - there just aren't much of persuasive arguments that weren't thoroughly disproved by both theory and practice. Valve is an interesting experiment in self-organisation, but I don't see how it's in any way anti-capitalist, unless one thinks capitalism is identical to Goldman Sachs. It is not. Capitalism is about freedom to pursue every option and to succeed and fail independently. It is completely wrong to assume capitalism mandates some kind of specific company structure - on the contrary, the whole point of it is to organize the economy and the society in a way that you can try any organisation and structure (or no structure at all, if you prefer) and let the evolutionary processes to lead the ones that are more successful and adaptive to survive, while wasteful and ineffective perish (yes, I know in reality it's not ideal at all, other factors often intervene and screw up the picture, but that is the basic idea). If it turns out Valve model is superior and brings immense success, people start to follow it and there will be hundreds and thousands of companies built like that. If it turns out it's not as great as it looks, Valve followers will fail and nobody would do it anymore. In both cases, it is entirely what capitalism is about!
- aero142 14y agoDoes this flat structure apply to the entire company? Who cleans the floors, does QA, decides when to release a product, does the accounting, waters the plants, answers support calls? Can all of these people move their desks or is it only the developers that are free to move within development to development related tasks? If the accountant decided that they wanted to do art design, would they do so and then likely be evaluated by their peers and possibly fired(assuming that they are not a talented art designer in addition to being good with the books)?
- laserDinosaur 14y agoI suggest reading this previous blog post: http://blogs.valvesoftware.com/abrash/valve-how-i-got-here-what-its-like-and-what-im-doing-2/ http://blogs.valvesoftware.com/abrash/valve-how-i-got-here-w...
- codexon 14y agoThere is a serious flaw with this model. The flaw is that no one wants to fix anything because fixing things is boring and usually results in lower peer reviews than building a new feature or game. Anyone who has daily exposure to Valve's infrastructure will notice the flaws. - Credit card breach http://www.theregister.co.uk/2011/11/13/steam_confirms_credit_card_database_attacked/ http://www.theregister.co.uk/2011/11/13/steam_confirms_credi... ending up in foolish security measures like encrypting your password with RSA in javascript on top of SSL. - Power outage of a single datacenter leads to Steam going down. http://kotaku.com/5884430/power-outage-knocked-out-valve-steam-all-services-being-restored-%5Bupdate%5D http://kotaku.com/5884430/power-outage-knocked-out-valve-ste... - Weekly unplanned outages of Steam Community and the Valve master server. - Crashes and game breaking updates in nearly every TF2 patch. http://www.mail-archive.com/hlds@list.valvesoftware.com/index.html http://www.mail-archive.com/hlds@list.valvesoftware.com/inde... This interview from Gabe shows that he knows there is a problem with this, but he doesn't realize how bad it is: Newell: A lot of times people will want to complain. The first time somebody complains, you say, “Okay, fix it.” You just say, “I don’t know what you expect to happen now, but you’ve just given yourself a job.” Fries: Does that train them to complain less or to fix things more? Newell: If you hired the right person, it trains them to fix stuff. If you hired the wrong person, they’ll say, “Oh, this is mean.”
- kvnn 14y ago"This interview from Gabe shows that he knows there is a problem with this, but he doesn't realize how bad it is" That is an incredibly arrogant statement.
- pfraze 14y agoMaybe there could be a rotation of the sacrificial fixer. Every month, one dev is given perks (private office, free food, a really big chair, ...) while they handle the back-log. They work under the guidance of the last fixer, to make the transition smooth.
- halter73 14y agoWhen I toured Valve last summer, there were quite a lot of large empty offices. Everyone's desks were on wheels, and the workstations were set up to make them extremely easy to move. Naturally, with no management structure, anyone was free to take up an office, but hardly anyone wanted to. The receptionist who was giving the tour, indicated that Valve had constructed more offices than people actually wanted to use, so they were considering tearing many of them down. Most employees preferred working in more open areas in the midst of the rest of their "cabal". As far as other perks go, Valve employees already have a nice selection of free snacks, drinks, in-office massage sessions, etc... I'm sure there are ways to incentivize Valve employees to do less appealing work, and I wouldn't be surprised at all to hear that they already do this on an ad hoc basis, but they would have to go a little bit beyond your traditional office perks.
- larrys 14y ago"Yanis Varoufakis is an academic economist, an author, and a prominent contributor to the debates on the recent economic crises in Europe and the United States. Born in Athens, 1961, he moved to England to read Mathematics and Statistics and holds a PhD in Economics from the University of Essex. He is currently Professor of Economic Theory at the University of Athens and Visiting Professor at the Lyndon B. Johnson Graduate School of Public Affairs at the University of Texas at Austin. His previous academic appointments include the Universities of Essex, East Anglia, Cambridge, Sydney and Glasgow. His books include:" Let me boil this down a bit. Heads in the clouds. So using Valve, with it's particular product (games) and it's type of employee (young) we are going to construct an argument that ends in: "and it so happens that it constitutes the reason why I am personally excited to be part of Valve: The current system of corporate governance is bunk. Capitalist corporations are on the way to certain extinction. Replete with hierarchies that are exceedingly wasteful of human talent and energies, intertwined with toxic finance, co-dependent with political structures that are losing democratic legitimacy fast, a form of post-capitalist, decentralised corporation will, sooner or later, emerge." One wonders if people who write things such as Yanis, well, if they've every done anything outside the academic world and pure theory relying on what appears to be on the surface well written arguments that would probably go over the head of Sam Walton or Warren Buffett.
- jacobquick 14y agovalve's people aren't very young, mostly they hire senior people. the narbacular drop kids were an exception.
- Schwolop 14y agoIndeed. I know several young developers and designers whom any games company worth its salt would hire on the spot (and actually, they're all employed by such) who have "come back and talk to us in two years time" memos from Valve. They don't just want great people, they want great people who can self-direct.
- stcredzero 14y agoCorporations reduce the transaction costs between many actors, allowing large projects to be done with greater economic efficiency. This is also true for Valve. For a company their size, my guess is that they've found a much better way of collaborating efficiently than hierarchies.
- ricardobeat 14y agoReduce? The larger the corporation, the larger the overhead introduced, and less efficient it becomes for intellectual work. Your thinking only applies to manufacturing.
- stcredzero 14y agoWell, note that the size of Think Tanks is a lot smaller than the auto companies. However, there are still some things to be gained from the pool of talent at Valve. Gearing up a new team doesn't involve hiring. There's no paperwork. There's a lot of communicating (a good thing) and moving some desks.
- casca 14y agoIf anyone is interested in hearing more from Ronald Coase (and you should be), he was on the excellent Econtalk Podcast earlier in the year: http://www.econtalk.org/archives/_featuring/ronald_coase/ http://www.econtalk.org/archives/_featuring/ronald_coase/ The topic is "Coase on Externalities, the Firm, and the State of Economics", well worth the time if this topic interests you.
- yochaigal 14y agoThis article was absolutely fascinating, in particular because it compared traditional worker co-ops with Valve's unusual horizontal-style organization. I'm a former worker-owner at a tech startup (we were organized exactly as he described traditional co-ops, basically we all owned the firm but were hierarchical) and based on my experiences there I think the only way a truly spontaneous structure such as Valve' could work is in the high-tech or "professional" sector; I think the average person (especially those lacking college education) has a very difficult time deciding how to best be productive. I'm not saying they couldn't co-own a business - on the contrary, I think it is the way many businesses should be run! But a strict managerial structure is essential in organization differently-minded individuals (in my experience).
- crazygringo 14y agoSo there are two things that remain unclear from this analysis: 1) Moving between Valve projects may be like a "market" where the "buzz" around a project is like its "price"... but then the analogy breaks down, because in a real market, you'd have to pay to be on the hot team. But at Valve you don't, so in this case, why doesn't everyone just drop their project and move to the hottest, most interesting team? Obviously in real life not everyone will, but if a team only needs 5 people, and 50 people want to join, who determines who really joins? Well, the project manager will have to choose, and now we're just back to managers choosing. Or am I missing something? 2) There's a lot of grunt work in software development. Bugfixes to maintain a year-old product, writing documentation, etc. If nobody wants to do the grunt work, then who does it? Because there's usually more grunt work than people who want to do it. Everyone wants to work on the new exciting sexy stuff, but that's not always what generates revenue and pays people's salaries.
- BadassFractal 14y agoI've been wondering about the same questions as well. I hope someone can answer.
- tikhonj 14y agoOne thing to consider is that the teams may not be totally ordered by "buzz". So everybody won't naturally gravitate towards the team with the most "buzz" because no team has the most "buzz"! There are also other factors: everyone has different preferences and teams are interesting not just based on what they do but on how they do it and on the people comprising them. There is, of course, a decent amount of grunt work. However, a lot of programmers don't just enjoy programming as such but also enjoy making something cool. I know I'm certainly willing to spend time ironing out the bugs in my hobby projects because having something that works well is just as fun as writing something novel. Also, I suspect that everyone at Valve puts effort into minimizing the grunt work as much as possible, meaning they probably have far less really boring things to do than most other companies. So a bit of cleverness and forethought combined with a passion of creating something of quality can get good programmers to do the grunt work.
- 14y ago
- inopinatus 14y agotl;dr synopsis of this management style: * Hire great people, * Give them goals and the resources they need, and * Get the hell out of their way.
- grellas 14y agoIt is a dubious proposition, in my view, that a "boss-less" company can or should replace the traditional hierarchical corporation of today as the normative form of business organization. Here are my reasons for saying this: For all of the economist's sagacity that the author has and evidently brings to this piece, the author's underlying case against modern hierarchical corporations seems to boil down to a populist analysis that is not so much a proof as a set of ill-developed assertions. The author claims (a) that hierarchical managements lead to "corporate serfdom" and to "Soviet-like" dominance within the framework of the corporation itself, thereby crushing creativity and wasting resources, (b) that all this is made by possible by "toxic finance," and (c) that it is all "co-dependent with political structures that are losing democratic legitimacy fast." Corporate serfdom? Toxic finance? Co-dependent on illegitimate political structures? This lumps every early-stage startup with every mega-corporation that has ever existed and, in effect, calls them all illegitimate. And that is a political assumption about "corporations" in the abstract, not an empirical analysis, because it cannot possibly be defended as an empirical analysis. Is it serfdom to join a YC company as a founder or an employee? Is YC a toxic funder? If the answer to both is no, does all this change once startups get bigger? How about a startup that purports to offer a different form of corporate culture ala Google? Are there serfs working at Google? Is their funding toxic? Or does this just apply to a Walmart or a Standard Oil or other mega-corporation that does not specifically do creative work in the tech field? Does hierarchical management consist of simply having the normal forms of corporate government - a board of directors and corporate officers - or does it come about only when people are given authority to hire and fire, to supervise the employment of others, and to direct them in what to do in their jobs? Is this all good, efficient, and respectful of human talent and creativity when the organization is small but soulless and deadening and even "Soviet-like" only when the corporation becomes large? If there is such a distinction, where is that line crossed? And does this mean that the corporate form is not innately evil but that a large organization of whatever type, organized hierarchically in its management structure, is what brings in the evil. What, then, does Valve offer that makes it different? It too is a corporation. It is privately owned by a few persons who have had the luxury of screening all employees so as to hire only very bright, highly self-motivated persons to do predominantly creative forms of work. Working with such employees, Valve has been able to build a successful model by which these bright, motivated employees get to choose 100% of their projects and have complete freedom on how they manage their own time and on what results they seek to achieve. It all sounds like an amazing work environment but how many businesses get to focus in this way on creative forms of work or get to screen carefully to make sure they only hire self-motivated employees? And how many businesses have the luxury of doing this without needing to raise outside capital through their early stages? Moreover (and the author himself raises this point), to what extent can this scale? Can such a model work if the company grows a thousandfold and suddenly has 40,000 employees? Of course, the model inevitably breaks down at some point along the way because the environment in which the Valve employees currently function is highly unusual if not unique. Unless human nature should radically change owing to technological progress (a dubious assumption in my view), we can continue to expect that, in any large group, there will always be those who fail to carry their weight, those who seek to take advantage, those who are incompetent, and those who are plain bad actors making life difficult for those around them or trying to cheat the company or steal from it or whatever. A hands-off management that lets all such persons do whatever they want will very quickly find itself immersed in problems and, ultimately, some mechanism needs to be put in place by which employees are managed, are disciplined, are rewarded, are redeployed, etc. in ways that conform to the goals of the organization and not necessarily with those of each individual actor within that organization. Every form of business organization needs people with a vision to set its model and its goals and to direct people and resources in a way that maximizes the opportunities of successfully reaching those goals. In some situations, some or even all of the impetus for this can come from those who work in common without an overriding authority. Those situations, though, are by definition highly unusual at best. Valve may be one of them and even then it has to managed at some level even by its benign oligarchs who own it. And, even if technological progress could someday supplant the need for corporations, this piece does not make the case for how that will ever be possible. It is, then, an intriguing piece (with thought-provoking elements) but suggestive and incomplete at best in its main argument about Valve and marred by populist assumptions in its broader themes about corporations generally. Yes, this is written from the standpoint of a startup business lawyer who has dealt with corporate forms of organization for some three decades now. This may give my views an inevitable bias in that direction but it also gives me a close familiarity with how such corporate forms work. From that perspective, what the author says just doesn't ring true. Business organizations generally aren't places where free-flowing creativity will hold sway above all else. The Valve model may be great but I just don't see it being made broadly applicable to the vast majority of businesses as they operate today or as I can even conceive of them operating in the future.
- michaelochurch 14y agoI really, really hope Valve succeeds and gets this vision through. It sounds like a great company. His insight about corporations being Soviet in nature is spot-on. Corporatism is neither capitalism nor socialism, but a hybrid system to give a well-connected elite (~0.5%) the best of both systems and the other 99.5% the worst of both worlds. Look at air travel; that's about as Soviet an experience as one gets, but the pricing is aggressively and mean-spiritedly capitalistic. Or consider suburbia as a microcosm. The rich live in places like the Hamptons and have both rural and urban amenities, while the poor live in depressed, polluted exurbs that combine the worst of city and country life. What Valve sounds like to me is a post-scarcity capitalistic model where there's still inequality of results (as, IMO, there should be) but there isn't pain or poverty. In our current world where there is a lot of scarcity (even though it's outmoded and artificial in the US) people work a certain way, and give up too much power, because the alternative is risk of economic misery. In a post-scarcity world with more of a safety net, people probably would "wheel their desks" to other projects, companies, and opportunities (or split their time among more than one, rather than lingering in this undiversified full-time thing) more freely. That's what we're starting to see in technology, as the demand for programmers increases and the stigma against changing jobs frequently (assuming there's upward progress and learning) goes away.
- sopooneo 14y agoWhales are big and fleas are small. The optimum size of an organi(sm|zaton) depends on environment and niche.
- Tycho 14y agoThis reminds me of Iain M Bank's Player of Games in which the hero finds a winning strategy in an elaborate StarCraft style board game by decentralising the production and strength of his ranks, so that his territory was a sprawl of self sufficient mini-empires. I think Banks meant it as an allegory for Islamic/Persian/Asian empires being eventually swept aside by Western civilisation, but it seems relevant here. However one factor I generally find missing in a lot of economic analyses is that no matter how 'feudal' or 'hierarchical' an organisation may be, workers choose whether to work there or not. The classic characteristic of soviet states was that you couldn't leave even if you wanted to...