Gabe Newell Talks Valve’s Budgeting

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. That’s an economy based on that budgetary process. Our economy is based on people’s time. That’s the scarce commodity.

Gabe Newell

It appears that it is not about the money here. In fact, the main constraint here is the work time.

The scarce commodity here is not money — it’s how many hours there are in a day. 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 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.

Gabe Newell

The whole situation looks weird, right? No budgeting process? That’s a complete madness for most of the game development companies. Publishers and studios need some strategy to rely on, most of the time. So, it’s hard to embrace Valve’s ideas.

I talk with other people at other companies and they just… I’ll talk to another CEO and they’ll say, ‘you don’t have a budgeting process?’ And they’ll say, ‘you are lying. There’s no way a modern company could work like that. Either that or you’re incredibly unprofessional, and you guys will eventually implode.’ And we’re like, no, actually this system works.

Gabe Newell 

One of the reasons for this budgeting chaos is the company’s decentralized structure. No titles with everyone accountable to nobody and everybody at the same time. 

One of the things that you don’t really care about is, you don’t care about information flowing to me. Right? If there’s information I need, I should go and hunt it down. And that’s true for anybody. If Erik needs to know something to get his job done, he goes and gets it. 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.

And I’m a really good information hunter-downer. If there’s something I need to know, I can find out about it. And information is pretty freely available inside of the company. It’s just not hard to, if there’s something you need to know, to find out about it. But there’s no — you pull your information. There’s no push towards you.

Gabe Newell