Gabe Newell explains why Valve never goes public: We don’t want third parties interfering in our decisions

Recently, an earlier interview in which Gabe Newell discussed Valve's corporate structure has drawn renewed attention. In it, Gabe Newell explained why Valve has continued to stay private, and shared some of the company's core ideas about talent, decision-making, and organizational structure.

Gabe: When we first designed Valve, we kept coming back to one basic question: How do we attract and retain the most productive people in the world?

Because if our judgment is right, then those talented people are where we create the greatest incremental value.

For a period a few years ago, a lot of companies were trying to find lower-cost content producers in places like India, while we were doing exactly the opposite.

Our view is that if someone working in film production in New Zealand makes $200,000 a year, then if they come to Valve, they should be able to make $500,000, or even $5 million—provided they really create that much value.

Of course, these choices also come with some consequences.

One of them is that Valve is not a publicly traded company.

Going public would bring a whole lot of trouble, and it wouldn’t actually help us solve any problems.

That means third parties would start to become involved in decision-making and control.third parties

For developers at Valve—or anyone building a product—the people you're dealing with are users, and they're the ones you really want to satisfy.

From the moment you make a change to the product, in the worst-case scenario, users can be using that version about 15 minutes later.

There isn’t much of an approval process here.

If you make a bad decision, you can fix it 15 minutes later.

You don’t have to run off to attend a board meeting and have the board discuss what investors are worried about, what to do about equity dilution, or whether certain targets have to be met.

And no distribution channel is going to come over and say, "We happen to need a product right now, and it has to be slotted into this specific spot at this exact time."

The point of staying a privately held company is to remove another layer of “noise” between consumers and the people making the product.

Also, we believe that people who are truly suited to this model don’t really need any job titles.

In fact, titles can actually work against them, rather than making them more productive.

Because each generation often solves problems in ways that are completely different from the one before it.If you lock an organization into a clearly fixed structure through job titles, you actually reduce the chances that people will come up with new ideas and create the next generation of truly interesting things.

Half-Life is a great example. The person who designed the skeletal animation system at the time also had a bachelor's degree in fine arts and was able to create environmental art.

So some of the things you experienced in Half-Life happened entirely because the people responsible for solving problems could adjust the environment, change the code, or tweak the animation based on the actual situation, and choose whichever approach was the easiest way to solve the problem.

Job titles within an organization often stop people from thinking about the problem itself and solving it in the most efficient way.