I think Valve does have a reputation for having this type of model. They've famously expressed an intention to not go public or sell the company to anyone else. This is also what leads to them being a fairly small and selective company that can afford to cherry-pick employees, and that also has an allegedly more employee-friendly culture than others. Just like the recollection in the original post, they might have that "infinite abundance" mindset - their initiatives in game development, hardware and VR are probably subsidized by Steam many times over.
I would argue that they made a really good early bet with Steam which rakes in enough profit that they can keep this (or whatever) mindset. They never really had competition in the PC space. If they would need to come up with new and better products each fiscal year they would look very different.
I feel like you could have said the same about google or facebook. They made a dominant early platform and could have comfortably lived off that success?
There are a bunch of companies trying to compete with valve. They are not behind any more of a moat than anyone else.
> There are a bunch of companies trying to compete with valve.
What strikes me as a bit odd with relation to specifically competitors to the Valve client (essentially a game library and store rolled together), the competitors that come to mind are...
* EA/Origin
* Epic
* Ubisoft
EA and Ubisoft are only selling games they publish, IIRC. Epic sells games from other publishers, but always gives Fortnite preferential treatment (and has the Unreal Editor in its own tab in the client, or did last I paid attention).
Valve is still by a large margin the only one that comes to mind that feels as close to a neutral store/library as you can find (even when they released Artifact and Alyx, neither of those were permanently pinned to the top like Fortnite is in the Epic store). Of course, developers can still buy preferential treatment, but it at least feels like you're competing with other developers and not "the house".
I'm not making an argument that Valve's being anti-competitive here, just it's surprising to me how hard these competitors -aren't- trying to be a real competitor. I expect due to internal pressures from their respective game publishing branches.
Ah, of course, I knew I was forgetting one. They did start that way although they've branched out since then. For example they sell Everspace 2, which is a much newer game.
They actually might be my favorite since all the games they sell are DRM-free. You can download the installer of every one of their games locally and they'll run "forever" without any dependency on GOG or their Galaxy library app (unlike Steam). Though their selection is more limited since IIRC they manually review every game they list.
However, even they tend to favor their "in-house" games (they're a sibling company of CDPR which developed the Witcher games and Cyberpunk 2077 and you'll frequently see those featured prominently there). Not as bad as Epic, though. More in the style of how Steam advertised Half Life 2 and Portal in the early days of Steam.
I'd dare to say that Google is very bad at doing products. They tried so many times and almost always failed, the list of products killed by Google is huge, They really succeeded in search, maps and gmail; all of these products are engineering-first products, created in the early days.
One might argue that YouTube and Android should go in that list, but I disagree.
YouTube was acquired and it never managed to become something really big (it failed to compete with Netflix for video streaming, with Spotify for music and with TikTok for social network).
Android also, was acquired and without a pletora of hardware vendor supporting it, it would have failed too (I'd say that Android without Samsung is nothing -- of course, it's big on embedded things, like cars or TVs, but it's not a world-wide product like gmail).
And likewise it is failing in AI, against OpenAI, which looks like another engineering-first product.
It's not that it's not big. It's that it's not as big as it could be. It's not gmail-big or maps-big, at least for me. It is outclassed by many other, in their respective niches (video streaming, music, and social networking), and despite the huge efforts, Google never managed to turn it into a subscription-based service.
It's not that it's not big, it's that it is not on the same level than maps or gmail, IMO.
Atleast according to average daily watch time reported in 2019, Netflix was at 164 million hours and YouTube was at 1 billion. I doubt that ratio has changed much since then
How do you think YouTube failed? If you tried to get someone to name a search engine that's not Google, they could maybe think of Bing or DuckDuckGo or something. If you tried to get someone to name a email service that's not Gmail, they could maybe say Outlook or Yahoo if they're older. But try to get someone to name a user-generated video platform that's not YouTube? YouTube has comparable revenue to Netflix. And Netflix has direct competitors -- such as Hulu, Amazon Prime Video, Disney+ to name a few that are pretty big on their own right.
I don't know about that, they made some good products, or invested in ones that already existed.
I don't consider creating a product, and then retiring a product after many years a failure myself. Its more like a nuanced then, some producdts don't change with the times, and others dont work.
I did watch that TV series on how some people at google did some unethical things to incorporate the maps idea from a German company. Not sure how true that is, but if it is, then google is just like any other corrupt establishment, willing to do shady things at the expense of the original inventors.
I strongly believe that Google Video would have been killed by Google long ago. They bought YouTube because they couldn't create it themselves. And they never managed to turn that into a real product, IMO.
Did Google or Facebook do anything that is not "living comfortably off early success"? AFAIK they had a very poor track record in monetizing anything they built in the last ten years or so.
I think that's their point. If Google or Facebook had stayed with a Valve-sized team and stuck to their knitting, would they really have made any less money?
Would this preclude buying Instagram? That was considered expensive at the time, but I think was a great buy for them and is a significant part of keeping Facebook competitive now and for the next half-decade.
Facebook marketplace and groups are other successful (IMO) sub-products that might not get built if "stick to your knitting" was the mantra.
both had slump but I think Facebook has been much better shape after Zuck did layoffs and pivoted away from metaverse. Llama and Meta Smart Glasses both feel like groundbreaking products.
Steam doesn’t exist without Valve’s catalog of games and especially Half-Life 2. Its continued success can’t be simple luck given how much competition they have, although at times it does seem like Microsoft, Google (Stadia), Epic, Ubisoft simply want Steam to win.
And yet they crank out new and innovative "products" every 4 years. So much so that they were essentially doing 90% of what Meta is trying to do now with 100x less people and budget.
I think the real answer lies in the fact that at a public company, you will need to answer to shareholders, but at Valve, you actually need to answer to the whims of benevolent dictator Gabe Newell.
> yet they[Valve] crank out new and innovative "products" every 4 years. So much so that they were essentially doing 90% of what Meta is trying to do now with 100x less people and budget.
Innovative products every 4 years? Lol, if Facebook waited that long at any point in time it'd have died.
Comparing Valve to Meta head-to-head is simply ridiculous. I'm not even sure which specific products you had in mind. Did you mean "Meta Quest"? Literally, each division within Meta is fighting in a different sector
Valve has been operating in the same market for 27 years and has consequently built a loyal and enthusiastic fan base.
Even if you believe Meta is directly competing with Valve, it's embarrassing for Valve, as someone in their position should be undisputed in their niche and have the market in deadlock.
> Even if you believe Meta is directly competing with Valve, it's embarrassing for Valve, as someone in their position should be undisputed in their niche and have the market in deadlock.
Meta can tap a billion people to play social games.
To play devil's advocate for my own point, Michael Abrash was swiped from Valve by Facebook. The dude is a hardcore hacker. Even the rendering code in Age of Empires II owes him credit for performance optimizations!
Not only not working there, but distinctly said he left because he complained that too much money was being sent down the money hole and productivity per capita was abysmal
Same can be said for a company like Microsoft or Google. They have their core products and milk cows for years.
And Valve had plenty of competition and they knew their audience pretty well to make digital purchases something to consider for many. Plus, they simply have the better product.
Mullvad ( a much smaller company) seems to have a similar set of goals and values. Not everything needs to be under the umbrella of a 800lb gorilla multinational. I hope that some of those entities can learn to be more creative rather than trying to reduce everything to something bean counters who need to report quarterly gains or get fired. It disincentivises taking risks at all.
Valve had the advantage of Newell/Harrington starting the company with a pile of money from being former MS staff, which gave them the ability to say "when it's done" for their first game. As the resulting first game was a hit and they didn't owe much (if anything) to their publisher Sierra [1], from that point on they've kept rolling the success forwards. Being a private company there's no details I'm aware of on how much has been taken out of the business, although Harrington left not long after Half-life.
[1] I vaguely remember a legal dispute when Valve did release steam years later as Sierra were being cut out.
I remember the forums (and slashdot comments) just hammering valve for thinking of creating steam and introducing DRM to their games, and that they would never, ever use it because of that.
But Valve has had an awesome record of using it responsibly, and its kind of amazing I can log in, click and 60 seconds later be playing a game I bought in 2003.
> I wonder if there's a way to prevent the growth at all costs that is demanded by the financial markets.
My grandfather founded a construction company that became quite successful and remained privately owned by him. When it was time for him to retire, he sold the company to the employees who turned it into a worker cooperative. They have since seen wild success and many dozens of people have made some incredible amounts of money. The culture my grandfather established remains present. I believe the key was never going public and therefore avoiding being controlled by external investors with no stake in the company’s culture.
Bingo - you hit the nail on the head. Keeping the investor pool small and close-in is how you avoid this. If you go public, eventually you will succumb to this "growth above all" mindset, even if your culture was set up to resist it.
I appreciate all that publicly-traded companies have contributed to society, but rarely is "going public" ever not the first sign of an objectively downward trend of the company trajectory.
> I wonder if there's a way to prevent the growth at all costs that is demanded by the financial markets.
Google (and Facebook etc) are controlled by their founders (some even as majority shareholders). There's no blaming financial markets here.
Facebook was even happy to set fire to a giant pile of cash in pursuit of the 'metaverse', a project that approximately no investors wanted, but that was dear to the heart of their founder.
Their employees and executives make the majority of their income from RSUs. You can't exactly run a company if your entire workforce gets a huge pay cut each year from a poorly performing stock.
That’s a great point as well. People blame investors but at FAANGs the workforce itself are investors and very important ones since they’ll bail if the stock stops going up.
> Facebook was even happy to set fire to a giant pile of cash in pursuit of the 'metaverse'
I always saw it more as priming the market. Throw out this idea, with the apparent weight of Meta behind it, and see how the market jumps on it (or not). If it goes well, Meta as initiator can easily ensure they stay in the lead, gobble up startups and such.
I see it them taking a risk and while I thought it was a silly idea, I applaud them for trying. It's hard to imagine Google taking a risk like this, which is the crux of this post and these threads.
I'm really surprised that SideFX has only 169 employees.
It's biggest competitor, Autodesk, has 13,700 employees.
Of course Autodesk has a lot of products and SideFX has practically one so it's not a very fair comparison. But my point is that SideFX is a living evidence that if you want to stay reasonably small you can. SideFX was been existed for 28 years, so we can safely assume it has a positive cash flow.
It’s not the “growth at all costs” mindset at all.
It’s growth period.
It’s easy to have a “hire smart people to do whatever” culture when the money is coming in hand over fist. Your investors don’t care.
But when the goose that lays the golden egg dies, nobody is going to hand over money to get a 2% return. Might as well just buy treasuries with zero risk and a higher return.
You’re flipping the cause and effect. It’s not the demand for growth that changes a company, it’s the companies business changing such that the money doesnt come in via fire hose any more.
That demands culture change to show that you actually are doing something productive.
There is actually evidence that the market doesn't demand growth - https://fred.stlouisfed.org/graph/?g=JpB4 suggests that the market is chasing the base rate of monetary creation.
If a company isn't "growing" at ~5% p.a nominal, it isn't tapping into the money hose. What would be the point of owning it?
[ In July 2021, the Wall Street Journal reported that the semiconductor giant Broadcom was in talks to acquire SAS.[37] In a July 13, 2021 email, SAS CEO Jim Goodnight stated that the company was not for sale.[38] ]
>I wonder if there's a way to prevent the growth at all costs that is demanded by the financial markets.
>>SAS Institute (well-known maker of statistical and other software) did, for many years, last I checked. Don't know if they still are that way. Update: Looks like they are:
No... SAS Institute actually wanted to go public earlier in 2020 and then 2024 but they've now pushed the timeline back again to 2025 because of market conditions:
https://www.google.com/search?q=SAS+Institute+ipo+2025
Instead of a "no growth" philosophy, the founders Goodknight and Sall have been trying to spread the narrative about SAS's "recent growth" after losing money in 2020 so potential investors will be receptive to an IPO. : https://www.prnewswire.com/news-releases/sas-charts-path-to-...
If SAS is the paragon of a company not pursuing growth at all costs, then maybe we do need to start looking at quarterly metrics. As a customer their business model sucks and they are doubling down on "either we're a solution for your whole enterprise or else."
Little capacity for code sharing and lack of reasonable tools to do so. That and the fact that newer statistical / ML techniques are extremely expensive mean that if you wanted to do e.g. a transformer you'd have to either pay out the nose or roll your own from scratch.
That and my department of about a dozen can't justify the cost to upgrade to their more enterprise focused, cloud ready new version Viya, but there's not really an upgrade path for 9.4 other than minor maintenance releases. Since no young new hires come in with SAS experience and the whole thing seems like a ticking clock, we decided just supporting Python for new development is a better plan.
I think you have to have a separate entity(ies) that is strictly eggheads trying new shit. They need a big budget and have to keep the bean counters away, otherwise they will steal all the soul out of the enterprise. That's why so many thing come out of places like universities and NASA, you don't have bean counters killing the soul of the engineers/scientists. I'm not saying that situation is always possible, just putting out a theory. Also a lot of the low hanging fruit in science and math has already been discovered/invented, so it gets harder. This is where I hope AGI comes in, even if it's risky.
Financial markets in general do not demand this. As someone else said, the return expected is just a basic risk-free rate plus some compensation for the added risk of owning equities instead of treasuries, which isn't nothing but it doesn't mean you need to double in size every year indefinitely.
The problem for FAANGs and Tesla is their valuation was predicated on indefinite rapid growth. Once you have that valuation, the only way to keep it is to actually grow at the rate the valuation priced in. If you don't, the price will drop and all of the various directors and high-level employees whose compensation is largely in the already heavily-priced stock will lose a lot of net worth. This isn't a problem for all publicly-traded companies. It's a problem specific to a very small number of extremely highly-valued companies whose value was based upon the expectation that they would grow very rapidly.
Venture capital is another matter entirely. Being far riskier than owning publicly-traded equity shares, they do demand outsized growth from every investment. But venture capital is hardly ubiquitous. Outside of software devs, all small business owners I've ever known would not have even tried to consider it. If they need money, they ask their parents or a bank.
The massive return on investment that VCs aim for comes from the public market valuing the VCs shares of the company much higher than what the VCs paid for it when they invested. How do you replicate that without going public?
It takes a super special set of conditions to be able to bootstrap a >10 billion dollar company like Valve. Most >10b companies need immense capital injections to work
Maybe become profitable and pay off the VCs then don't go public?
Then you can resist the pressure for growth quarter by quarter, and remain the 'right size' that your internal culture demands.
Did Valve corporation do something like that?