Valve Interview: Gabe Newell Isn't The Boss of Me

The employee handbook that hit the internet earlier this year pulled the curtain back on Valve, suggesting staff float about the company's Seattle offices working at desks made of gold and sitting on chairs made of clouds.

Games seem to emerge from the bowels of Gabe Newell's tower not because someone decided they would be a good thing to do and then told others to make it happen, but because someone decided they would be a good thing to do and others heard about it in the kitchen or toilet and thought, that sounds like fun, I'll help out, I've always fancied making augmented reality glasses that know when I'm happy or sad.

When business development director Jason Holtman took to the stage at the Develop conference in Brighton last week, I expected him to say something along the lines of, yeah, it's not quite like the way the handbook describes. That bit about us not having any bosses? That was a joke. Yes, we like to do things a bit different, but if we operated exactly how it's described in the handbook, there would be chaos.

Turns out, that's exactly how Valve operates.

So, as I sit down with Holtman for an interview following his presentation, the first question on my mind is: surely Gabe Newell, one of the richest men in video game land, the founder of the company that made Half-Life, is the boss. I mean, really.

Yes, really.

Your bossless structure sounds great. But I put myself in the shoes of someone who's trying to tell Gabe Newell what to do and I think, that's not going to work. Surely he is the boss.

No. No, he's not. You're laughing...

You can understand why that sounds amazing to a lot of people.

It does. He's super smart. He's a visionary. He's a great contributor to the company. He's the founder of the company. He's incredibly valuable. But if you were to say you were bossless, but you really did have one, you're deluding yourself or it's a bit of marketing. It's honestly not the case.

One of the interesting things is, people like Gabe, they're very good at their jobs. You have to fight against the tendency to have those people treated as bosses sometimes. Not that they even want to, but it's natural for a new person to come in and say who is the leader? You have to fight against that. And as you fight against that, it tends to work.

You opened by asking, I'm putting myself in those shoes and saying no to Gabe. People would be surprised if they could be a fly on the wall to see what meetings look like with him. Or even how it works. He sits with groups. Gabe moves around in groups and sits with us and talks with us. He goes to meetings with us, solves real problems with us, and has ideas and his ideas are like other ideas. You can easily say no, or tell more data on that and he'll work with you.

If you're going to be bossless, you really have to be bossless.

I just think as a new employee you'd need quite a lot of courage to do that. As you say, there's a degree of un-learning.

Yeah, people when they join go through it. We have in our culture and our culture of business a lot of ideas about what it means to work and advance and have groups. It's tough doing something different or doing something new. It's worth it, though. It's totally worth it.

And you're showing that with your success. You've mentioned that perhaps one of the negatives of this structure is you don't have someone saying you must do X by a certain time. It strikes me that this is what contributes to this concept of Valve Time.

I don't mean not having a mandatable structure like that is a big negative. What I meant instead was that's something you lose that may be valuable in some instances when you have people who are not used to a system of flatness or bosslessness.

We get groups around things, and they sort of organise themselves. The idea of somebody saying, there's time pressure on this, or we need to ship this now or we need to ship this before Christmas - that still happens. It's not as if we're all waiting around and just waiting for it to organically emerge. People will emerge as leaders and take on the function of leadership. If you've got 40 people working on something, leaders will have to emerge. They're not bosses. They're just people who can help you with this.

That person may be the person who's looking around saying, there are external forces that would probably make us want to ship. And then what will happen is people will balance those off and say, is that person right or wrong? Or, is that group right or wrong?

It didn't mean we never have somebody going we need to ship. What it meant was, in other types of structures sometimes it's really easy to just look at one direction everybody else is looking at and say, oh, what is that person saying? Let's go that way. Sometimes that just means you can move very quickly in that direction.

We spend more time sussing it out, or changing that role of leadership. But we think those dialogues are valuable.

So that's where Valve Time comes from?

You just want to know where the Valve Time thing comes from.

Yeah. I'm not saying it's a negative, because you always produce wonderful products. But it would be great to get insight into what you guys think of it.

Valve Time is an interesting piece. To my mind, an interesting thing about being on the inside of Valve and working there quite a while is we're always concerned with doing what's right for the customer; doing what's right for the product. And people get an idea of Valve Time because they're very used to how maybe other people work or bring things out. Other people have much more formalised schedules. They have dates they have like lines in the sand because of their structures.

When we get up to that, we may fully say at an E3 or a GDC here's a game coming out and here's when we think it is. And then it doesn't come out for a year. Or it doesn't come out in the fall, it comes out in the spring. Hence we get tagged with Valve Time.

The reason for that is because it's odd. It's an oddity. In other cases what it means is people are usually slipping and it drives people nuts, because they're so used to being able to predict when that comes out. In our minds we say, that's not important. It's actually not super important if this thing comes out on the Christmas where we said it would come out last year and we thought that's when it was. What's actually more important is we build it right and it comes out in spring.

The idea of Valve Time is charming and it is this compliment. You're asking me and you're smiling at the same time. And we like it. We also value it. If the end result is, we get tagged a little bit of like, we can't tell when you're coming out or you take longer, that's okay with us. Because we're trusting the fact that when it takes longer, it will be better. The thing that is ultimately consumed and played with, customers will like it better - like it better than the thing we could have shipped them a year ago.

We would infinitely rather have happy customers for decades than a happy batch of customers at one Christmas.

"Gabe moves around in groups and sits with us and talks with us. He goes to meetings with us, solves real problems with us, and has ideas and his ideas are like other ideas. You can easily say no, or tell more data on that and he'll work with you."

It's almost a sign of quality, a rubber stamp.

We try as hard as we can to make the best thing possible in the right time frame and get people content they want to consume. And if that takes longer, that's fine.

Sometimes - you never see this because it's not fun to see it - sometimes it takes us less time. Sometimes we'll have a feature and it'll surprise us how quickly we can get something built and out to the community, or get an update out and out to the community.

So there's no mandate of like, we're just going to take longer. Everything takes longer. Like a fine wine mandate in the old commercials. I don't think that's what it is at all. What we're just saying is, we're going to do it when it's ready, and we're going to do it when we think you're going to like, and we're going to do it when we think it's best. Hence Valve Time.

Whenever we cover anything about Valve, the first comment is always, great, where's Half-Life 3. Then, many more comments saying the same thing. Does it grind you down?

It's a high compliment. Having customers consistently look at our property or something you've done and saying, can you give me more? Can you do that thing again? Every time we hear it we say thank you. I don't think it grinds us down at all. We're constantly saying, are you happy? Are we making the best things we can? Are we working with the best partners to bring you what you want?

When people keep saying, yeah I want that too, that's how we hear it. We hear it as, that is people saying they want tickets to their favourite concert. They want to see that again. We hear it all the time. I don't think it grinds us down at all. I do think we take it as a very serious, very heartfelt compliment from folks. They're cheering for us. That's what that is.

So what's taking so long?

No. See now I'm being cagey.

I have to ask.

Then you can say you asked.

Valve is 300 people. Given the number of products you do, that seems a little less than I expected. Do you scale up or down depending on what's going on?

300 feels like the right place to be right now. Our hiring doesn't slow down or speed up or change much. We're constantly on the look our for the best people we can find. We strongly rely on localised decision-making from peers. So we're constantly trying to find those people to add to that equation.

It's not like we have a game coming out and we go hire up a bunch of people, or we have a new initiative and we have a headcount to go fill, to find 200 people to do this or that role. That's not how we function at all.

But 300 at this point feels like the right place to be. And the way those folks are made up, like who's in that group, feels right. Because we can do multiple things and work together that's sustainable. And the interest and the passion of all the people given the space to do what they want to do, that's what makes it sustainable.

Steam has 40 million users. What's the chief factor behind its success?

There's a few. I do think it's pretty complex. The first and foremost is customers. They like it, they wanted it, they use it, they give us the right feedback. They are making it the success. That's how you get that count and that's why people use it. That's a big piece of it.

Another big piece of its success has been all the partners we work with. The people who bring the content on it. We have our own content - it's great to have Counter-Strike and Half-Life and Portal and all those things work wonderfully on Steam. But hats off to a bunch of our great partners, all the way from established partners such as Square Enix and 2K and THQ, to indies that have put out fantastic products and the content that keeps our customers going. So, that combination of the customers and the folks supplying the content is making it a place folks want to go.

And then the third piece is we've put an awful lot of work into making it a valuable, feature-filled platform. It's not just a shop. It's not just a chat-room. It's not just a match-making facility. We're trying to do all of those things so it's interesting. So the engineering and the technology and the work we've put into it has hopefully made that a success, too.

But that's reflected in the fact that partners want to use it to bring their content and customers want to use it over here.

Origin's David DeMartini said Steam's "random deep discounting", its 75 per cent sales, "cheapens intellectual property". What do you think about that?

Ask our partners. Ask the large to the small and see what they think about that. Putting it all in the bucket of, it's all about the discounts, I don't think that's everything about it. Discounts serve a lot of functions. Highlighting serves a lot of functions. The qualities of the games serve a lot of functions. Everything we've seen, PC games and IP and all those franchises are more valuable today than they were four or five years ago.

If this were all about a cheapening and somehow lessening the money out there or somehow customers don't want to pay any more, they think everything should be like a used car lot - sticker price is not the real price - you'd feel that and you'd get real reinforcement of that. We don't see any of that. We see people buying a lot and enjoying it and playing a lot.

Discounting is one small function of what we do. It's one small function of our market and our store. It certainly doesn't seem to be anything that cheapens IP.

We do it with our own games. If we thought having a 75 per cent sale on Portal 2 would cheapen Portal 2, we wouldn't do it. We know there are all kinds of ways customers consume things, get value, come back, build franchises. We think lots of those things strengthen it.

DeMartini suggested gamers are so familiar with your discounts that they don't buy games when they release, instead they wait for a game to go into sale, and he suggested this has a negative impact. But what do you think?

If we were somehow on a cycle where you could see it, you wouldn't see us repeating it. We wouldn't repeat it with our own games. We wouldn't repeat it with partner games. Partners wouldn't want to repeat it.

"Interestingly, people tend to like to talk in dichotomises, or revolutions. Like, replacements! And, this is going to be the future for everything! That's never panned out in our industry. Nothing ever fully revolutionises anything, or overturns stuff."

Actually everything we see is to the contrary. It's funny, when you look at the data, things come out and they make you scratch your head for a little bit, and then you're like, that kind of makes sense.

For instance, if all that were true, nobody would ever pre-purchase a game on Steam, ever again. You just wouldn't. You would in the back of your mind be like, okay, in six months to a year, maybe it'll be 50 per cent off on a day or a weekend or during one of our seasonal promotions. It's probably true, but our pre-orders are bigger than they used to be. Tonnes of people, right? And our day one sales are bigger than they used to be. Our first week, second week, third week, all those are bigger.

That points out that what's happened with those sales is, you've probably caught somebody and introduced them to a game when they haven't had it, and they've played it, and the next time the franchise comes out or the next move from that publisher, the next move from the partner, they've just become more avid gamers.

The trade-off they're making is a time trade-off. Maybe one of the logical ways to think about it might be in terms of how we think about movies and the fans. Following that argument, nobody would ever go to a first run movie ever again. Even now, as DVDs come out even faster, you'd just be like, heck, I'll just wait and get the DVD and me and 10 friends will watch it. But people still like to go to theatres because they want to see it first, or they want to consume it first. And that's even more true with games.

If you're a fan of a game or a property, and you want it when it comes out, you want it. It's very valuable to you because you're a fan. You want to play it then, just like you want to see your favourite rock back when they come around.

If you want to wait and get a discount later or find a sale or promotion, that's also super valuable for you. But all of those pieces, what they're adding up to is, more people are playing games, more people are engaged and they're making choices all along that spectrum of, yeah, I want that game when it comes out and, oh, I used to buy that game and now I'll buy it a year later. That's fine too.

The nice thing is buying a year later at some discount or special promotion, those things used to be really hard to find. It used to be, if you didn't get a game in the first three months it was around, you were out of luck because you had to find a copy of it. You had to find a box where it was stocked.

Now you can do things like say, I never did own XCOM. Maybe I should buy that for $2 or $5 and pick it up. Or I didn't get that triple-A game from three years ago, maybe I'll pick that up on a promotion. And that's making people happier. And it's making them more willing to even buy the first time release.

And that's what we're seeing in our data. Tonnes of people are still pre-purchasing games and getting them when they come out.

Dota 2 is free-to-play. Team Fortress 2 is now free-to-play. I know you have to pay for Counter-Strike: GO...

Did I tell you about the Half-Life free-to-play?

...Wow, you almost blew my mind.

I know. That was fun. You did stop! You should have been drinking water!

You guys can have a lot of fun with that. Wait for someone to have a sip of water. You'll get some great reactions.

If I can get an interview to do that I'll blame you. That was courtesy of Eurogamer. Take that!

Sorry! Ask your question.

"We would infinitely rather have happy customers for decades than a happy batch of customers at one Christmas."

Yes! De-railed. So, you're going big on F2P with micro-transactions. There's lots of commentary about how F2P is the future. How does Valve intend to make the most of this new way?

It is a very exciting new thing. It's a very exciting way to bring things out rapidly to customers, get them what they want. It's got elements of being able to customise and have a very deep experience for the game. So we're very excited about it. You can tell, I mean, we're doing it.

Interestingly, people tend to like to talk in dichotomises, or revolutions. Like, replacements! And, this is going to be the future for everything! That's never panned out in our industry. Nothing ever fully revolutionises anything, or overturns stuff.

A good example, take the last three or four years and everybody's saying multiplayer is where it's at. It's all connectivity. It's all people playing with each other. And then you have something like Skyrim come out. Single-player, awesome, and people just go to it in droves. That is not a multiplayer game. It's not an indie. It's not a social game. It's not from Zynga. It's everything that looks like what we think of as an older game. What you find out is, that's just an awesome game. And people will consume anything as long as it's good. Things will all stand together.

The neat thing about our industry now is you're going to have all of those things happen and customers will have, not choices among them as if, like, I'm a free-to-play player and therefore I don't play games like Counter-Strike and Skyrim and Minecraft. That's not true. Everybody plays all of those. People play their RPGs. They play social games. They play F2P games. That's what's exciting about it. They don't have to replace each other. It's making a new, different thing for talented folks to explore.

How does Valve decide on a business model for each of its games?

It's a part of what the game teams do as they're building it. And it can actually change. There's no mandate. It's not as if the next thing we will do is build a F2P that fits this mould, or the next thing we will do is build a single-player that fits this mould. What's happening is content is getting made, products are getting made, and then the team that's making it is starting to think, how do my customers want to consume this? Are they going to want to buy it all at once? Will that work right? Or are they going to want to pay a little bit and maybe then have DLC when they feel like it? Or are they going to want to have a F2P? They want blends of all those things.

Each new product is getting those questions asked of it. And each new product is dictating how it comes out. We would never force a model and say, oh that's great, but we're only making F2Ps now. Or, that's great, where's the multiplayer component? The teams are making those decisions.