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Valve economist breaks down hiring, firing and in-between
Valve tends to keep as hush-hush as possible on a number of things, not least of which are matters of personnel. So EconTalk's chat with the company's economist, Yanis Varoufakis, in which he explains in elucidating detail how the company hires, fires, and pays its employees, is particularly enlightening. It's Valve's "flat hierarchy" approach which makes these processes interesting, and more than a little unconventional, as Varoufakis demonstrates when discussing the studio's hiring policy."The way it works is very simple," Varoufakis told EconTalk. "Let's say you and I have a chat in the corridor, or in some conference room, or wherever, and the result of this chat is that we converge to the view that we need an additional software engineer, or animator, or artist, or hardware person, or several of them. What we can do is we can send an email to the rest of our colleagues at Valve, invite them to join us in forming a search committee that actually looks for these people without seeking anyone's permission in the hierarchy, simply because there is no hierarchy."This results in a free-for-all interview process, first by Skype, then "if they pass that test" in person, with anyone who wants to participate able to. After that, a consensus is eventually reached, and the hire is made.Firings at Valve came under scrutiny recently after the company laid off an undisclosed number of employees, including hardware engineer Jeri Ellsworth. Varoufakis noted "in many occasions" it's a failure to adjust to the company's lack of hierarchy that leads to an employee's dismissal, with a similar consensus reaching the final decision. This Online MBA video and article from earlier this year neatly summarizes Valve's consensus-driven but case-by-case approach to firing.The rewards for remaining employed by Valve, however, can be lucrative, as company bonuses don't have an upper limit. "Bonuses can end up being five, six, ten times the level of the basic wage," Varoufakis said.Varoufakis goes to into greater detail on these processes and a lot of what's in between in the EconTalk podcast.
Valve economist examines TF2's 'sophisticated' barter system
We're not sure why Valve's economist is concerned with the finances of prestigious Covenant Elites in Halo, but the first publication from Yanis Varoufakis on Valve Economics is about exactly that. Only he spelled "Arbiter" wrong like 20 times.Oh, he's talking about "Arbitrage," the practice of capitalizing on the price difference between two or more markets, and its place in the Team Fortress 2 economy. That makes more sense, barely, but between the specialized equations and graphs Varoufakis offers some plain insight into the world of digital economies.For example, Varoufakis calls the TF2 barter economy "peculiarly sophisticated," noting that Steam's support system allows players to side-step the introduction of currency, operating solely on a "double coincidence of wants." This is something that civilizations for centuries have not been able to support for any protracted period of time, and its complexity is the reason we now have money, rather than things to trade with.The isolated nature of digital economies lends itself to intriguing happenings such as that one, as Varoufakis explains in great detail, we assume because he's thrilled to be able to calculate the exchange rates of laser guns and hats rather than boring old dollars and cents.
Valve has an economist now
Economist Yanis Varoufakis was analyzing the financial crisis in Europe, focusing on Greece, when he got a proposal seemingly out of nowhere. Valve co-founder Gabe Newell saw similarities between the situation in Europe and Valve's troubles with its own virtual economies (for DOTA 2 and Team Fortress 2, presumably.)"Here at my company we were discussing an issue of linking economies in two virtual environments (creating a shared currency), and wrestling with some of the thornier problems of balance of payments," Newell said in an email to Varoufakis, "when it occurred to me 'this is Germany and Greece', a thought that wouldn't have occurred to me without having followed your blog. Rather than continuing to run an emulator of you in my head, I thought I'd check to see if we couldn't get the real you interested in what we are doing."Varoufakis stopped by Valve HQ during a speaking tour and became excited about the possibility of researching a digital, fully recordable economy. "Think of it," he said, "An economy where every action leaves a digital trail, every transaction is recorded; indeed, an economy where we do not need statistics since we have all the data!" And now he's writing a weekly blog called Valve Economics. Unless, of course, he decides to do something else.
