
Several out of work as Valve makes 'large decisions' about its future - pjmlp
http://www.gamasutra.com/view/news/186592/Several_out_of_work_as_Valve_makes_large_decisions_about_its_future.php#.URwJ8WckT8n
======
MarkMc
Interestingly, Valve's hiring policy is that you should aim to hire someone
who is better than you. But what if you hire someone who is better than you,
then Valve has a round of redundancies and you're the one who gets the axe?

Here's what Valve's employee handbook [1] says on the matter: '"With the bar
this high, would I be hired today?" That’s a good question. The answer might
be no, but that’s actually awesome for us, and we should all celebrate if it’s
true because it means we’re growing correctly. As long as you’re continuing to
be valuable and having fun, it’s a moot point, really.'

Well, not so moot now.

[1]
[http://assets.sbnation.com/assets/1074301/Valve_Handbook_Low...](http://assets.sbnation.com/assets/1074301/Valve_Handbook_LowRes.pdf)

~~~
justin66
> Interestingly, Valve's hiring policy is that you should aim to hire someone
> who is better than you. But what if you hire someone who is better than you,
> then Valve has a round of redundancies and you're the one who gets the axe?

Given what we know about human nature, it probably doesn't work this way. The
person who ostensibly worked to hire people better than themselves probably
mutters "well, the manual doesn't say anything about firings" and swings the
axe, being careful not to cut themselves.

~~~
mesozoic
Yeah Valve's company policies are kind of like Santa Claus I really want to
believe in them but find it hard.

The whole hiring someone better than yourself idea is great and sounds great.
However has been pointed out it may not be the best policy for people
especially now that Valve has shown a chink in their armor.

Hiring everyone better than yourself is great for you if you have a nice chunk
of equity in the company but when you're just an employee the benefits are
much smaller.

~~~
Evbn
Bar raising "policy" like that is a morale gimmick, not reality.

------
cobrausn
In a company with a well known lack of traditional corporate hierarchy, who
does the firing? I'm genuinely curious. None of the reports I've read have
mentioned it, which leads you to assume Gabe. This would imply an informal
hierarchy.

~~~
LandoCalrissian
I recall reading a while back that they have a procedure for this. I think
they actually decide it through group consensus, so I would imagine the
reasons for being fired would have to be pretty real.

~~~
mercuryrising
That kind of sucks actually... If I was getting fired from a job, knowing that
more than half (or whatever percent) of the people felt I was incompetent and
should be fired would really rock the friendships I made.

Having a manager fire you gives you a lightning rod to point the feelings at,
rather than an entire group of people.

~~~
michaelochurch
Firing by group consensus is, I agree, not tenable. This is one point in time
where the CEO needs to step up and take a "buck stops here" attitude.

There are generally 3 types of job loss:

1\. People who are unethical or obviously toxic. Here, management can step in
and fire the person without much blowback. If someone steals, or is a direct
threat to your culture (e.g. he starts playing politics and trying to set
himself up as the executive empire-builder you don't want) then it's not very
controversial.

2\. Good employees who run afoul of political nonsense or parochial managerial
politics. This is what companies like Valve are trying to avoid, because it
poisons the culture.

3\. Layoffs for economic reasons.

I assume this is a case of #3. The CEO needs to explain what happened, why it
happened, take responsibility for the decision, and assure people that the
company will be better after the change than before.

~~~
x3sphere
Doubtful. Valve has higher revenue per employee than Google or Apple. If
there's anything Valve lacks, money is last on the list.

~~~
michaelochurch
Economic reasons != money problems. It seems possible that there's a long-term
strategic change going on.

------
trdtaylor
Jeri Ellsworth (<https://twitter.com/jeriellsworth>) was the name that caught
my eye. I watch her youtube's, and her life story is a good read.

She took her pinball machines when she left Valve.

~~~
moot
That's a huge bummer. Jeri is amazing.

~~~
ChuckMcM
I expect her to land on her feet, I keep wondering about Abrash, is he still
there? See <http://news.ycombinator.com/item?id=3838880> which was about 9
months ago.

Given that Abrash is (was?) working on something Occulus Rift like, I wonder
if they just decided "Hey we can use O.R. and not bother with this home grown
thing." ?

~~~
paragraft
He's still at the top of the Valve staff page.

------
danso
Kotaku reports that Jason Holtman, Valve's director of business development;
animator Bay Raitt, and programmer Tom Leonard, are no longer listed in the
company directory:

[http://kotaku.com/5984057/layoffs-rumored-at-valve-
business-...](http://kotaku.com/5984057/layoffs-rumored-at-valve-business-
director-no-longer-with-the-company)

------
trotsky
1756 paid games in the windows store as of today, ouch. granted, none of them
seem to be AAA titles, but I'd assume they hear footsteps.

I assume this is probably a driving factor behind project green light? While a
heavily curated store made a lot of sense when valve launched steam, with
their major competitors now os vendors with light curation can valve really
afford to turn away indies? It's not like their store is still browsable or
doesn't have a lot of crap in it already.

~~~
wlesieutre
They've since come out and said that Greenlight as a system isn't solving the
problems that they wanted it to, and they're going to try and reduce the
barriers to getting games on Steam.

My assumption there is that with the saturation of the games market
(especially the "casual" variety) means that it's impossible to pick which
horses to bet on. Steam doesn't want to be left out as the only missing
platform when the next Angry Birds rolls around, and the obvious solution is
to do minor quality control but let everything into the storefront.

------
gcp
_Affected employees were asked not to speak about specifics, but the
impression we get is that these cuts were driven more by company challenges
than by individual performance issues_

This is a bit surprising, I'd have thought Valve was trucking in money by the
boatloads.

~~~
eertami
With Dota 2, I think they are set for life.

~~~
gcp
It doesn't generate any income by itself, though. Dota2 and TF2 seem more like
tools to drag people into Steam and then sell them other publishers' games.

------
modeless
Is Valve doing poorly, as the article suggests? I thought Steam was incredibly
profitable for them. Could this be more about canceling projects that weren't
going anywhere?

~~~
x3sphere
They aren't doing poorly at all, whatever the cause of these departures is
it's not money related. Being private they don't release hard figures but
Newell has said they make more money per employee than Apple or Google. Steam
itself is not expensive to run either.

------
joezydeco
They let Jeri Ellsworth go, which is pretty surprising considering she was
apparently involved in controller design for the Steam Box.

~~~
clavalle
Perhaps they are retreating from the Steam Box?

Preparing for an acquisition of something more in line with their traditional
delivery but aimed at more casual gamers? Or planning on building something
new along those lines themselves? Threatened by other players in the console
space with retaliation?

The possibilities are almost endless.

~~~
sogen
Certainly the iPad with its casual gaming (read: free) changed the landscape.

Even Nintendo cut its forecast for WiiU:
[http://www.guardian.co.uk/technology/2013/jan/30/nintendo-
cu...](http://www.guardian.co.uk/technology/2013/jan/30/nintendo-cuts-sales-
forecast-wii-u)

------
zdw
So, what's the large decision?

I'm betting on close work with Sony on the PS4. Valve has been hostile to MS
for quite a while, and friendly to Sony. This would include further Steam
integration with Playstation consoles, which started with Portal 2.

This change would exclude hardware people, as Sony/AMD are doing that portion
of the design, explaining that area of layoffs.

No inside information here, just trying to read the tea leaves, as Sony's PS4
announcement will be on the 20th.

~~~
dclowd9901
My memory's pretty shit, but didn't Gaben at one point say something like,
"the Playstation is the biggest piece of shit ever made"?

~~~
jerf
A quick google turned up this: <http://www.1up.com/news/shock-awe-gabe-newell-
doesn>

Soo... there's still a lot of console fanboyism going around even now about
this generation, and it's hard to be objective about the hardware without
getting yelled down by people shrieking "Cell! Cell! Cell!", but, based on the
games that have come out, how they compare with the XBox 360, the hype, and
all the breakdowns I've read about how the internals of the PS3 work,
basically Gaben here is all but objectively correct. The PS3 is a very poorly
balanced machine; it is full of bits and pieces that have a lot of power, but
it's virtually impossible to actually hook them all up to each other and have
them all firing at full power at the same time. All the powerful parts are
crippled by lack of bandwidth to move data in or out of them.

None of this looks like bitterness or permanent anger, so if Sony builds a
better-engineering PS4, with a focus on real performance over benchmarks and
marketing hype, there's nothing in that rant that would preclude working with
them. I hope Sony has people internally who understand the PS3 to be less than
the sparkling gem of design that the marketing department wanted people to
think it was.

------
bane
My guess is that there have been long festering barriers in the company
direction.

Let's lay out the cards:

Character Designer for HL2 and TF2, Hardware Designer, Director of BD,
3xSenior Animators, senior tech dev for HL2 ep1 & 2 and L4D, One of the
original Portal devs, Senior QA and an Engine Dev...In a Jack Welch-esque
move, Valve fired about 10% of their staff. Welch did this to eliminate the
"bottom 10%". How employees are ranked depends on how you want to rank them.
There are lots of senior old-timers in this list.

Valve hasn't been exactly putting out lots of their own games recently.

Maybe 1 game per-year? For a company of around 400 with essentially zero
effort/free publishing model that's pretty poor.

Portal 2, while an excellent game, was not exactly the kind of AAA bit mover
that a Half-Life game (on a new bloody engine) would be. And while it moved
quite a few copies (something north of 4 million copies), NPD claims Mortal
Kombat overtook it in week two of sales. At $20/copy Portal made about $80m.
Not bad, but again, that's about a year's salaries. Let's also not forget that
it's an IP that was introduced just a few years prior as a student project!
(Halo 3 moved twice that many and Halo 4 has already matched Portal 2)

I may be living in a cave, but CS:GO isn't exactly lighting up the internet,
and it's a sequel to a 12 year old game that was also one of their hottest
properties. Why so long?

Valve is letting their most valuable IPs, HL and CS languish.

HL2:E2 came out _5_ years ago. That's long enough to spin up a new game from
scratch for a team of this size. HL2 proper is _8_ years old.

Non-windows Steam software hasn't exactly been taking the world by storm.

If the numbers are right, between 25-30 employees, that's ~$5m-$6m/year
savings, but against around $80m/yr in salaries is just a haircut.

Source is getting _old_. There's some engine devs that were cut there. I have
a feeling HL3 and a new engine are caught up in sequelitis-ville someplace.

The Steambox is cool, but getting into the hardware console market is HARD.
Like Elon Musk balls of molten iron hard. Turns out it's just a PC hooked to a
TV with an expensive in-house controller to replace the 360 controllers
everybody else is already using and happy with?Plenty of other folks are
selling those, why take the business risk?

I feel like there's a pattern emerging, I don't think the decision was because
of hard-times, but on frustration with corporate direction. Most of the people
let go were pretty senior, killing off the old-timers is a time-honored way to
move things forward. Hardware is a low-margin suicide business to get into,
better to work with partners that'll take that risk and flood the market with
fairly cheap, reasonably powerful consoles built with off-the-shelf parts.
Moving to Linux kills off most of their library, and indie games aren't the
money makers that Valve needs or wants. The "work on whatever you feel like"
system hasn't turned out to provide the productivity or direction they want
either.

Predictions:

1) Valve is going to build a new cross-platform engine, or modify an existing
one (e.g. id Tech 5 or Unreal Engine). They needed to clean house to focus on
this. HL3 will be the showcase for this engine. Anything less than 6-7 million
sold across all platforms will be considered a disappointment. It'll quickly
be followed by Portal 3 or possibly an all new L4D game built with the new
tech. They'll refocus to releasing 2-3 games per year.

2) Valve is going to partner with hardware manufacturers for TV connectable
PCs sold with dual stick controllers and perhaps a cross-license with the
Oculus Rift as the market differentiator, this will ultimately be
disappointing as traditional consoles will be cheaper and have better
libraries for console gamers and PC gamers don't want to use a dual-stick
controller.

3) Valve's ultra-flat org structure will not survive this.

4) Valve will not enter the mobile game market in any significant way. Their
dev cycles are too slow, and he mobile market doesn't generate the kind of
revenue they need.

5) Valve will stay independent, not looking to be acquired any time soon.

~~~
yannickt
"Maybe 1 game per-year? For a company of around 400 with essentially zero
effort/free publishing model that's pretty poor."

One game per year is actually pretty good for studio of Valve's stature,
especially if you consider that many of those 400 work mostly, and maybe
exclusively, on Steam. It is not uncommon for highly profitable studios to
release just a few games each decade, especially if they are independent. So
it is important to keep things in perspective. Half-Life 2 was released in
2004. Per Wikipedia, this is the list of games developed by id Software (200+
employees) since 2004:

 _\- Wolfenstein 3D Classic (2009)_

 _\- Doom Classic (2009)_

 _\- Quake Live (2010)_

 _\- Rage HD (2010)_

 _\- Rage (2011)_

 _\- Doom 3 BFG Edition (2012)_

Of those, probably only Rage sold a significant number of copies across all
platforms. id Software also published the following games in the same time
frame:

 _\- Doom 3: Resurrection of Evil — Nerve Software (2005)_

 _\- Quake 4 — Raven Software (2005)_

 _\- Doom RPG — Fountainhead Entertainment (2005)_

 _\- Orcs & Elves — Fountainhead Entertainment (2006)_

 _\- Enemy Territory: Quake Wars — Splash Damage (2007)_

 _\- Wolfenstein RPG — Electronic Arts (2008)_

 _\- Doom Resurrection — Escalation Studios (2009)_

 _\- Wolfenstein — Raven Software (2009)_

Of those, my guess is that only Quake 4, and maybe Wolfenstein, sold in
significant amounts.

Since 2004, Valve has shipped HL2:EP1, HL2:EP2, Portal, Team Fortress 2, L4D
1, L4D 2, Portal 2, Alien Swarm and CS:GO. While none was the hit that HL2
was, few studios have achieved that level of success in the same time frame.

Or take a look at Blizzard. They have at least five, maybe ten times as many
employees as Valve, but have released "only" five or six games since 2004,
most of which were WoW extensions.

My point is that if Valve is not shipping games at a faster pace, it's because
they can afford it. Steam is probably printing enough money that they can
afford to spend as much time as they want iterating on their engines and
games. I would be very surprised if you were right about the motivations for
the layoff.

"Valve is going to build a new cross-platform engine [...] HL3 will be the
showcase for this engine."

This isn't much of a prediction. HL2 was released on multiple platforms, and
it is reasonable to assume that HL3 will follow suit.

Edit: Gabe Newell has addressed the speculations.
[http://mobile.theverge.com/2013/2/13/3986540/valves-gabe-
new...](http://mobile.theverge.com/2013/2/13/3986540/valves-gabe-newell-
addresses-layoffs-we-arent-canceling-any-projects)

~~~
mwilcox
Why is everyone leaving out Dota 2? Sure it's not technically 'released,'
arguably to successfully scale to a point they can open the game up to China,
but it's the most popular game on Steam, with a huge following growing every
month.

~~~
yannickt
I left it out because its release date hasn't been announced yet.

~~~
mwilcox
They've considered it as being released since they launched the Dota 2 store.

------
ddunkin
I kind of saw this coming when they announced the Xi3 last month as being a
Valve hardware platform. Originally when I saw Jeri Ellsworth hired, and some
of the secrecy behind it, I felt they were trialing something out, because I
sure didn't expect any sort of hardware to come out of it. If they found a
small form-factor device already on the market, what good are the engineers
they brought in to develop hardware for them?

------
reiichiroh
A partial comparison of before/after on the staff listing page.

~~~
reiichiroh
I guess I need to include the link: <http://www.diffchecker.com/h14Uhs74>

~~~
james4k
Going by that, they had to fire ten guys so that they could hire Chris Welch!
:)

~~~
photon137
And he worked on Tintin (which they label as Tin Tin - which makes me cringe
like anything!)

------
franciscoap
OK, speculation time.

My view: Valve is retreating from building the Steambox in-house.

Gamasutra mentions that the layouts might have affected the Android and
Hardware divisions the most. The Valve Employee Handbook states that the ideal
employee is t-shaped, which, I assume, might not fit the profile of someone
hired to do Steambox engineering and prototyping.

Exciting times. I really didn't expect Valve to do something like this. Will
be following developments closely.

~~~
batgaijin
I mean you can imagine valve probably got a huge concession from
microsoft/sony if they had that system as a bartering chip.

------
daemin
Could it be that the people 'let go' are actually leaving to form their own
studio, so more like they jumped rather than being pushed. Or a combination
thereof.

------
Havoc
Its telling that gamasutra can write a paragraph about each one of them -
meaning they weren't exactly code monkeys. Valve on CV and some random website
knows enough about you to write a paragraph. They'll be fine.

Also, I count 10 not 25. So someones numbers are wrong.

~~~
beering
Might want to reread the article... I believe the paragraphs on each person
were pulled from the company directory, and not everyone does up on the
directory.

------
michaelochurch
This is a really sad day, because Valve is known for its culture and it's very
hard for a company to have a layoff at this scale (almost 10%) and keep its
culture.

That said, layoffs are a fact of life in business. It seems to me that this is
an obvious case of a layoff for economic reasons. I have no idea what those
reasons are.

It would be interesting to know how the culture there evolves after this
happens.

~~~
jfoutz
I wonder how much they thought about a 10% company wide paycut. The "we're all
in this together" can (imho) protect a lot of that culture. I can imagine
people leaving anyway. But they would leave because they're shutting down
specific platform development, not that there's no room for them to
contribute.

Layoffs are crushing regardless. I hope for the best for everyone involved.

~~~
michaelochurch
I wondered about that, too. That's what HP used to do: pay cuts offset by time
off (with top brass taking the cut but working a full week). It seems like it
would be better.

~~~
erichocean
I think that's only viable when the reason for the pay cuts can be blamed on
forces outside the company (slowing economy, competition from other segments,
etc.).

When it's internal, the people who _aren't_ the problem are, rightly, pissed.
With the kind of employees Valve has, I'd be surprised if they didn't lose 10%
anyway, except they'd be losing their _best_ , not the ones they actually want
to go on without.

~~~
michaelochurch
Fair points.

I find this whole thing confusing and shocking. It's really unclear that their
strategic goal is.

