I hadn’t even considered the possibility that Gabe Newell would be joining us.
When Valve invited me to its office last week for a series of roundtable interviews, the company made it clear that I wasn’t going to learn about Half-Life 3. “No new announcements,” Valve communications boss Doug Lombardi explained to me in a message. What Lombardi didn’t have to tell me, however, is that I wasn’t going to get to speak with Valve founder Gabe Newell. I already knew that.
So I admit that when Newell walked into the large conference room that overlooks Bellevue, Washington at Valve’s headquarters, I was a bit surprised. And then I was even more shocked when he sat down at the table and prepared to field questions from me and a group of about a dozen other reporters as part of our session on Valve’s efforts with virtual reality.
Newell’s presence didn’t stun me due to his star power — although I think it’s fair to feel that way. The luminary founded Valve and led the teams that would create Half-Life, Half-Life 2, and the Steam PC gaming platform. That distribution service is now responsible for a significant portion of all PC gaming sales, and it generates billions of dollars in revenue for that market.
No, I was surprised because Valve is not a company that typically opens up to reporters, and it rarely offers Newell for interviews. It’s something of an old inside joke among journalists that reaching out to Valve for a comment is pointless. No one at the company is going to respond (although, to be fair, that’s not true in my experience despite this meme). So it’s already a big deal for Valve to open up and give reporters a chance to ask questions — and it’s something else entirely for Newell to join in on that.
But Newell did open up. And as I observed the industry veteran responding to questions or fiddling with a pen while other Valve employees carried on about the state of VR industry or the next generation of SteamVR controllers, I heard a number of open and plainly honest answers. And I learned a lot about this revered company and its enigmatic captain.
Valve knows you crave communication
For the last session of the day, Newell and long-time Valve employee Erik Johnson fielded questions about Valve as a company. And as he had done earlier as part of the VR panel, Newell dominated the discussion. But he opened this time by answering the question that I think all of the reporters in attendance were wondering: “Why did Valve invite us here for these interviews?”
Well, because of you.
“There was a bunch of stuff that we thought was not particularly interesting that clearly is interesting to [our customers],” Newell said in reference to a recent question-and-answer session he did with the public on Reddit. “So this was kinda like, ‘OK, well — maybe we should start also having conversations with you [reporters] more.’ And so, as always, this is an experiment.”
Newell also dispelled the notion that he avoids the press because reporters annoy him.
“To be honest, I kinda get bored listening to myself talk, so I assume other people are bored listening to me talk,” said Newell. “It’s not irksome at all. It’s a way of connecting with the customers, and that’s what pays the bills.”
But I got the sense while watching Newell answering our questions throughout the day that this roundtable didn’t happen just because Steam customers seemed enthusiastic during a Reddit AMA. Reading between the lines, I think Valve recognizes that it has transformed as a company over the years, and that transformation probably felt like a natural, slow-paced evolution inside the Bellevue headquarters. But for those of us outside Gabe’s walls who grew up on Steam, Valve feels radically different than the developer that made Half-Life 2.
And so this interview happened because enough people at Valve finally noticed the gap between the public perception of the company and the internal perception among employees. And someone at Valve must’ve felt that it was worth closing that gap either because it caused them distress or because they are so excited about how the company functions that they wanted to share that with you.
The time economy
Valve has an employee handbook that describes a flat corporate structure where no one has a title and no one is in charge of anyone else. That’s real, and it’s something the company takes seriously. So when I write that someone at Valve must’ve felt it was important to do this interview, I mean that someone must’ve felt strongly enough to convince everyone else participating that it was worth their time.
“Any time you have decision-making processes in an organization, you have to have some mechanism,” said Newell. “A lot of places have hierarchy. The person higher up the chain makes decisions that filter down. The problem with that is that it assumes data is flowing efficiently in the organization. Especially when you’re doing invention rather than command and control kinds of organizations. The information to make good decisions is actually relatively local. It’s distributed throughout your organization. So you actually want to push decision-making as far out into the weeds as possible.”
Essentially, Newell is explaining that if he wanted to decide what everyone at Valve should put their time and energy into, he would need all of the information that everyone in the company possesses. He argues that is wasteful, and he takes that to an extreme: Valve doesn’t have budgets.
Now, Valve is a company that can afford not to have budgets thanks to the insane revenues that Steam generates. But it’s not the only company in the world that has that privilege. It is, however, one of the few companies that actually acknowledges that money is not its scarce resource. Instead, Valve’s most precious resource is time.
“There’s not a group of people who say, this is how much money we’re going to make on this title, so that’s how many people we assign to that project,” said Newell. “That’s an economy based on the budgetary process. Our economy is based on people’s time. That’s the scarce commodity. If we could spend money to improve people’s productivity, there’s almost no case where that’s not a good tradeoff. The scarce commodity here is not money. It’s how many hours there are in a day.”
Valve expects its employees to take responsibility on voting where they should spend their time to best serve the company’s customers. According to Newell, not a single person at the company is working on a project because someone else told them it was important and they had to. He gave an example of how this can start from nothing and then snowball into a major project.
“When we started Dota , a bunch of people were skeptical,” said Newell. “This sounds stupid. Why are we doing this, giving a game away for free? There’s this economy aspect to it? User-generated content seems kind of wacky. Nobody was assigned to work on it. But after Adrian Finol, a week after he started, had the top-down camera working. Suddenly other engineers go, OK, there are other interesting problems in the space I can work on. Then more and more people pile on to the project as they think it’s interesting.”
This process might come at the expense of what you might expect from any other gaming publisher on Earth. Whereas you know Activision is going to have the next Call of Duty out this holiday, you don’t know when Valve’s next game will drop.
“Nobody’s working on yet another sequel,” said Newell. “Everybody works on what they think is cool. If someone thinks nothing we’re working on is interesting enough, they can always articulate what they think is an interesting problem. That’s how VR started. There was no top-down impulse behind VR. It came about because people said, I think these problems are tractable enough and we can add value in this space by doing X-Y-Z.”
It’s not all cozy engineers chasing their hobbies
As Newell fidgeted with his pen and explained the structure of Valve, it was obvious that he has faith in this system. Or, more likely, he has ample evidence that a flat hierarchy works because Valve has so many successful products. But the company understands that it’s likely that its customers may not share its confidence.
“We’ve talked about this stuff a lot, and we see our customers talking about it,” Johnson said. “There’s a detail, a bit of nuance in there, that’s usually missing from what customers think about how we work internally. When people are making those decisions, to work on one project or another, they’re conscientious about what customers want as well.”
Valve employees aren’t making their decisions in a vacuum based solely on what excites them. They take a lot into consideration, and that includes the desires of players.
“That’s the fundamental thing,” said Johnson. “It’s not this pure selfish: ‘I feel like working on this on Tuesday but not on Wednesday’ type of thing. They know, when they work on one product or another, the product they’re leaving has a void to fill. They’re moving and making sure our customers are still happy one way or another. It’s not this constant free-flowing thing. They have to consider all factors for all customers.”
But you might not agree that Valve is taking you into consideration. Maybe you think the company’s customer service stinks, or you’ve been screaming for a year that a Counter-Strike map is broken, or you just want to hear from the company why its servers are down. Chances are, if you’re a dedicated Steam user, you’ve found something that you think is busted, and it never seems like the company acknowledges that.
That’s probably not going to change. During a panel with the developers of Counter-Strike: Global Offensive, Dota 2, and Team Fortress 2, I asked about the view on community management and communication. I brought the subreddit for Counter-Strike: GO, which often has massively popular threads about Valve screwing up and then publicly acknowledging that.
And while Valve admits that its customer service is garbage — Johnson called it terrible — the company is probably not going to suddenly hire community communication specialists.
“We think it’s critically important for our products — for the people that are actually building things to be as close to customers as possible,” Counter-Strike developer Brian Leventhal explained. “We feel like it’s been successful in a bunch of areas. It has tradeoffs. But generally we want the person who’s going to have to make Dust 2 better have to be the person to defend those decisions to the community. That kind of applies to everything. We don’t think that adding a person in the middle of that process is going to end with — we would much rather fix the problem and tell them it’s fixed than have somebody say, hey, we’re working on it.”
Again, this is about the flow of information. Everyone on the Counter-Strike team is responsible for everything about the game, so they can’t pass off the responsibility of checking in on the community to someone else. And, in the end, the company thinks that it’s more important to solve problems than to have someone tell you that they’re solving them.
But the point is that Valve claims it’s listening, and it often decides to fix something specifically because of a thread on Reddit. Other times, the company make ignore a community outcry because the data shows that the audience actually wants something else, but Valve still argues that this is a form of listening.
I could see it in Newell when he spoke — all these points of data impacting what his decision about how to spend his time. It’s up to him to listen to you, to look at the user metrics on Steam, and to read the response to reporting like this to figure out what Valve can do and how he can help the company accomplish that.
Today, that information and Newell’s desires have ended up with him on the VR team. He sees a chance to give gamers something beyond mouse-and-keyboard experiences, and he understands how he can contribute to that. But in the past, he has worked on projects that weren’t necessarily about moving Valve or the industry forward. Instead, he focused his energies on building tools and hardware to insulate PC gaming from a potential threat when he thought that Windows 8 could lead Microsoft to close down the traditionally open personal-computing space. That led to Valve creating its SteamOS Linux-based operating system and the console-like Steam Machine PCs.
Neither Valve’s own OS or its PC gaming hardware have really taken off, and no one at Valve seemed that interested in talking about them anymore. And that’s likely because the fear that Microsoft was going to overreach has faded, and so the motivation to get traction with those products has faded.
“Being worried that somebody else is going to do something stupid and wreck the gaming community is a little less exciting than doing something more positive,”said Newell. “But it’s true on any project. Everybody knows you can’t eat marshmallows all the time. We’ve all been doing this a long time. Everyone’s pretty sophisticated. You can tell people in your own field, people who understand that to do what you do well requires you to have a lot of maturity and experience in order to make sure you’re doing both the glamorous, fun parts of your job and the not so glamorous, but equally important stuff.”
But for Valve, VR is glamorous, and the way Newell spoke about it, it’s clear that the company is not going to let it fade. SteamVR will either succeed or implode, but it won’t just quietly fall into the background. And that’s the difference of the motivation. When it’s something the customers are interested in and it’s something Valve employees are excited to work on, then the company will do everything it takes.
From zero to 100
The day I went to Valve, I woke up at 4:30 a.m. Mountain time. I got in my car while it was still dark, and I drove to Denver International Airport. By the end of that day, I had caught a plane back home and got back to my car in the airport parking lot by 11 p.m.
It was odd to go from having a minimum amount of contact with Valve on the drive to the airport that morning to having hours worth of conversations with some of the company’s most important people to think about on the drive home. That whiplash in going from zero interaction with Valve to 100 was overwhelming because now that I had access, I was discovering a million new questions I wish I would’ve had them answer.
It’s also bizarre to have an opinion on Gabe Newell beyond his persona as an internet meme. A handful of hours aren’t enough to get to know anything, but my first impression gave me enough time to at least notice some interesting things about the way he speaks. He seems to have all the thoughts in the world swimming around in his head all at the same time. It takes him a sentence or two to get that information sorted out in a way that makes sense. And then he also often uses example quotes to illustrate his ideas. It’s a style that’s very unlike some of the more precise and computational orators in the gaming industry, like John Carmack or Tim Sweeney.
But I found his speaking style refreshing. Inside his head, he has all of this data, and it’s all bursting to get out at once. And you can sense that when he’s speaking.
My biggest takeaway from visiting Valve, however, is that the company is confident in how it approaches making products for gamers. Everyone was on board with the ideas of a flat corporate structure and having the responsibility to pick what they work on. Valve thinks this is the best way it can serve gamers, and it thinks most gamers would agree if they understood that.
And I think that’s why the company invited me. Newell and his team all think they’re doing what’s best for gamers, and they are looking for new ways to communicate that to gamers.