Valve co-founder and president Gabe Newell spoke with Gamasutra this week about how the company handles budgets and financial planning, or more accurately, doesn't do either of those things.
"At Valve, we don't have a budgeting process. There's not like some group of people who go off and say this is how much money we think we're going to make on this title, so that's how many people we're going to assign to work on that project," said Newell. "That's an economy based on that budgetary process. Our economy is based on people's time. That's the scarce commodity."
Whether it's something specific to the economist-built financial models Valve introduced to its games--the commoditization of user-made cosmetic assets, an open user-to-user marketplace from which Valve takes a cut, or generating a huge amount of desire and demand for hats--or simply that Valve was in the right place at the right time, is not clear. What is clear, however, is Newell and presumably Valve have so much money, allowing the company to focus on its customers first, rather than the overheads that plague most modern companies of its size.
"The scarce commodity here is not money -- it's how many hours there are in a day," Newell continued. "So everybody is expected to essentially vote on what is most important to our customers by the projects that they work on. So none of the people you saw today [folks who worked on Steam Support, VR, CS:GO, Team Fortress 2 and Dota 2] are working on those projects because somebody else told them to work on them. Everybody's working on those projects because they thought they could make the largest contributions to our customers by working on them. People move around all the time."
The flat management structure at Valve is a well-worn topic, with some singing its praises, and other accusing it of feeling "a lot like high-school." To hear Newell tell it, though, the methodology is idyllic, and abolishes the need for regular reporting. " But there's no monthly reports. Nobody says 'I have to update Gabe on the progress of X.' The reality is, they have to update their customers on the progress of X. That's way more important than updating me."
Read the full interview over at Gamasutra.
Newell recently did an 'Ask Me Anything' session over at Reddit, personally and publicly answering community questions.
Could this be why Valve stopped making console games?