Jan 05 2014

Billion Dollar Video Game Company Runs on Voluntaryist Model


Imagine working for a successful, billion dollar company with no bosses, no hierarchy, and where all raises, bonuses, hiring, and firing is determined by a peer vote. Such a company exists, and it’s called Valve Corporation – the same company that is responsible for the known and loved video game titles Half-Life, Portal, Counter-Strike, and Left 4 Dead, as well as the Steam platform.

The company is based out of Washington state and was founded in 1996 by former Microsoft employees Gabe Newell and Mike Harrington. Their website boasts that they’ve been “boss-free” from the start. The belief is that such a structure allows employees to be more creative and more productive, because they are directly involved in decision making processes. They also take an open allocation approach, meaning team leaders are temporary, rotating, and members can move between teams at any time – made especially easy due to every Valve desk being on wheels.

Portal-2-Is-The-Best-Single-Player-Game-Valve-Ever-Made-2In a recent interview with the Library of Economics and Liberty, former economist-in-residence (Valve has its own staff economist) Yanis Varoufakis described the flat management model and how it has helped the company grow into a $4 billion organization with 400 employees. Varoufakis likens the organizational mechanics to that of anarcho-syndicalism – a theory that workers become truly liberated through direct and voluntary action, as well as free association.

The theory also posits that eventually, the traditional wage system will become defunct and wages will be decided directly by the workers – something Valve also aspires to in its own way. Salaries for Valve employees start at a minimum (the minimum is decided mostly by tradition), and pay raises occur through peer reviewed bonuses that could be as high as 10 times the base salary. Employees become eligible for bonuses through peer reviewed assessments – and the process of assessment, hiring, and firing, can begin with something as simple as a hallway conversation between two people discussing the achievements of another. The only catch is that someone cannot vote to give themselves a bonus.

1239872273_10xv8zn1So how does work get done? Varoufakis cites several free market economics theories, such as that of Adam Smith’s invisible hand, in which people naturally come together in a decentralized situation to provide for the needs and interests of the community, and as a result, provide for their own needs and interests as well. Quite plainly, it is what Milton Friedman calls “the possibility of cooperation without coercion.”

Despite the lack of hierarchical organization, Varoufakis states that the company runs smoothly and does not often run into problems, because all employees hold a belief in the voluntary norms that the company abides by. If someone disagrees with the structure of the company, or simply cannot function without receiving orders, they are free to leave at any time. “By the very nature of the beast,” states Varoufakis, “you don’t have people in there who try to create a smoke screen around the fact that they are not very good at what they do. All of the people there have been handpicked to be very excellent at what they do.”

For an even more in depth explanation of how the company runs, you can check out the Valve Employee Handbook here.


  1. Giacca Belstaff

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    [url=http://www.1aeg.com/]Giacca Belstaff[/url]
    Giacca Belstaff

  2. Tyler Jordan

    Gore Corp. has a similar structure and they have been, and continue to be, highly successful.

  3. Jeffrey Hunt

    LOL, ask Jeri Ellsworth how the Valve model worked out. The place with no bosses suddenly had one and asked her to leave AFTER begging her to come work for Valve and create hardware for them. It has worked out well for Jeri as her dim bulb, non-boss, gave her the rights to her prototype hardware and she’s formed her own company and is due to release her 3D system soon.

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