Here's what Valve's employee handbook  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
Well, not so moot now.
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.
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.
Having a manager fire you gives you a lightning rod to point the feelings at, rather than an entire group of people.
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.
Comment sections are essentially infinite, and if the comments are good, I don't see any reason to tell him to stop. However, if the comments are not insightful/interesting, that's another story.
Another element to the art of layoffs is that you get about one shot every 5 years. One large cut can be painful, but it's not damaging to morale if it's well-justified by business or economic concerns. If you do a series of small cuts, that's when you get people paranoid and the alliances and intrigues start to form.
So, I think the best way to do a layoff in a Valve-style corporation is this:
(1) Fair severance, including career support (positive reference, right to represent self as employed). People will find out what kinds of packages people are getting.
(2) CEO communicates the decision to the whole company and takes full responsibility. No mystical "calibration scores" or HR indirections. He gets up and says, "This is what I did, and here's why I had to do it." I'm not talking about traditional hierarchy, but "buck stops here" leadership. That's needed when layoffs are happening.
(3) Unless the people actually are being fired, explain that it is a layoff and that the people will be eligible to re-apply when you start hiring. (Most won't come back, but this lets the rest of the team feel better about the whole thing.)
(4) Err on the side of a larger layoff, because a series of small cuts is more damaging.
(5) Impose a hiring freeze externally, but keep internal mobility as it is. Many companies impose internal hiring freezes during layoffs and that's actually more damaging.
(6) Make it very clear that these aren't performance-based firings. The worst is when a company tries to depict a layoff as performance-based. Layoffs are understandable, but trying to depict one as a performance-based firing is being a dick.
She took her pinball machines when she left Valve.
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." ?
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.
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.
This is a bit surprising, I'd have thought Valve was trucking in money by the boatloads.
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.
Even Nintendo cut its forecast for WiiU:
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.
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.
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.
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.
Valves games are becoming vehicles that consumers can use to create more games and sell through valve. If/when HL3 sees the light of day, its innovation will be to better emphasize this.
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.
They don't need to worry about making games to keep their company going, because steam.
The cuts they made are probably to keep the company's visionary approach in top shape.
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.
Also, I count 10 not 25. So someones numbers are wrong.
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.
Layoffs are crushing regardless. I hope for the best for everyone involved.
In a way it's the worst with well-run teams that gel. The ideal situation is that everyone works out what they're good at and develop a bit of a rapport. But then if you fire one of the team members, everyone else on the team has a quite first-hand reason to believe the now-fired person was valuable.
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.
I find this whole thing confusing and shocking. It's really unclear that their strategic goal is.
Perhaps more problematic, there's an incentive to try to get yourself into an "indispensable" position that's core to operations. My read of the existing Valve policy is that they wanted you to ignore those kinds of jockeying-for-position considerations and pick something you were passionate about & good at, as long as it was helpful to Valve somehow.
That's why it's imperative that there be only 1 round of layoffs every 5 years or so.
One round = shit happens, this sucks, but it's impersonal, so let's get back to work.
2+ rounds = people get paranoid, and typical corporate politics set in.
Can an open-allocation philosophy really work if you can be fired for choosing an allocation that turns out to be the "wrong" one?
Open allocation doesn't mean "people work on whatever they want". It means they're individually responsible for making their work useful to the company, and choosing projects that have this effect. It shuts down the traditional middle-management extortion of "you work for me or you don't work here" and gives everyone the same "freedom of the castle" in their choice of projects, but it's not a free-for-all.
suddenly people are back to feeling like they have bosses and assignments they need to fulfill to keep their jobs, only it's even worse because those aren't transparent...
Actually, that's a false security, in that you can do all your assignments well and please your boss and still get laid off... I know what you mean, though. I agree with you: it's going to be hard for Valve to preserve its culture. These are the kinds of times that test people.
I've never seen that happen before, but I also mostly have information about more bureaucratic companies (especially my dad working for a top-100 global conglomerate as I was growing up), so Valve might do it right. One reason to think they might is the lack of lots of layers of management: multiple layoff rounds are often due to trying to cut the least possible to fulfill a target, but using the most optimistic assumptions, so finding out a few months later that, surprise, it wasn't enough.
I also agree that one round is pretty much the max you can explain away. Once you've gone to two, nobody believes that this is the last one.
Ultimately, companies have to do this. Businesses can't expand indefinitely and, at some point, contraction becomes part of the process.
The hard part, assuming the best of Valve, is how it will describe what it did to preserve its culture while being respectful of those who are affected.
Acts like these remind me of the old courts held by Kings during the medieval times.
Having a person who knows they will be fired roaming the halls, poorly motivated is an obvious risk for the morale of the remaining employees. And it just drags out the pain of separation, even if the separation is otherwise amicable.
Second, there is some risk, no matter how generous the severance package, that the employee will become disgruntled and desire to harm the company. Even if it's a 1 in 1000 chance, the damage that a disgruntled insider can wreak is enormous. Huge downside, very little upside.
Finally, if they stay, they are now effectively temps. They can't be used in anything but short-term work because you don't know when they'll get the magic offer and be out the door.
A good severance package (say 2 months of salary, plenty of buffer to find a new job) costs just as much as keeping them on for two months after a warning, but has none of the downside risk. The only thing you lose by doing this is the very marginal short-term work you could allocate to them in the interim, which they would be poorly motivated to execute to the top of their ability.
You do want people out of the office once you deliver the news, because even if you fire people fairly, they're not going to be doing useful work. Otherwise, I agree 100%.
Many companies use PIPs instead of severance offers in order to build a "performance"-based case against an employee. (This is sometimes part of a layoff being dressed up as a performance-based cut, and sometimes not.) That works out horribly. It's actually cheaper, considering morale issues, to cut a 3-month severance than to put someone on a 2-month PIP, because most people turn toxic during the "walking dead" period of the PIP. What PIPs are about is externalized costs: the HR office claims it "saved money" on severance payments, but the team and manager have to deal with a walking dead employee for 2 months.