Lessons from Valve: Why Your Next Startup Should Be Flat

If you’re in the process of organizing a group of people around a common purpose, I’d highly recommend skimming through the employee handbook at Valve before assigning yourself or your team members a role.

Valve is the gaming juggernaut behind Steam, and games like Portal, Half-Life, and Counter-Strike.

Some key takeaways:

Structure

Hierarchy is great for maintaining predictability and repeatability. It simplifies planning and makes it easier to control a large group of people from the top down, which is why military organizations rely on it so heavily.
But when you’re an entertainment company that’s spent the last decade going out of its way to recruit the most intelligent, innovative, talented people on Earth, telling them to sit at a desk and do what they’re told obliterates 99 percent of their value. We want innovators, and that means maintaining an environment where they’ll flourish.

Serving Customers

A flat structure removes every organizational barrier between your work and the customer enjoying that work. Every company will tell you that “the customer is boss,” but here that statement has weight. There’s no red tape stopping you from figuring out for yourself what our customers want, and then giving it to them.

Working Hours

While people occasionally choose to push themselves to work some extra hours at times when something big is going out the door, for the most part working overtime for extended periods indicates a fundamental failure in planning or communication. If this happens at Valve, it’s a sign that something needs to be reevaluated and corrected. If you’re looking around wondering why people aren’t in “crunch mode,” the answer’s pretty simple. The thing we work hardest at is hiring good people, so we want them to stick around and have a good balance between work and family and the rest of the important stuff in life.

Picking Projects

We’ve heard that other companies have people allocate a percentage of their time to self-directed projects. At Valve, that percentage is 100. Since Valve is flat, people don’t join projects because they’re told to. Instead, you’ll decide what to work on after asking yourself the right questions (more on that later). Employees vote on projects with their feet (or desk wheels). Strong projects are ones in which people can see demonstrated value; they staff up easily. This means there are any number of internal recruiting efforts constantly under way.

Leads

Often, someone will emerge as the “lead” for a project.
This person’s role is not a traditional managerial one.
Most often, they’re primarily a clearinghouse of information. They’re keeping the whole project in their head at
once so that people can use them as a resource to check
decisions against. The leads serve the team, while acting
as centers for the teams.

Mistakes

Nobody has ever been fired at Valve for making a mistake. It wouldn’t make sense for us to operate that way. Providing the freedom to fail is an important trait of the company—we couldn’t expect so much of individuals if we also penalized people for errors. Even expensive mistakes, or ones which result in a very public failure, are genuinely looked at as opportunities to learn. We can always repair the mistake or make up for it.

Growth

We do not have a growth goal. We intend to continue hiring the best people as fast as we can, and to continue scaling up our business as fast as we can, given our existing staff. Fortunately, we don’t have to make growth decisions based on any external pressures—only our own business goals. And we’re always free to temper those goals with the long-term vision for our success as a company. Ultimately, we win by keeping the hiring bar very high.