Valve is one of the few companies regularly seen on HN where the headline is something like "[company] is secretly doing something really great" as opposed to "[company] is secretly doing something evil"
The major reason is they are a private company with good business. The don't have a need to keep adding to shareholder value ie stock price instead just need to generate a yearly income. We have reached a point where the shareholders are a companies real customers and that is who they all try to attract.Everytthing else a company does is just to attract shareholders
There's a little known alternative: Steward-ownership [1]. It's the kind of structure used by Novo Nordisk, Bosch or Patagonia.
LLM summary: "Steward-ownership is a model where a company’s control stays with long-term stewards (founders, employees, or a mission-aligned foundation) while profits are limited and the company cannot be sold for private gain. The goal is to protect the mission permanently."
The key, if I understand properly, is that these company cannot be sold (not even by the founders), so there is no "shareholder value" per se to maximize. It is also probably not a good way for founders to maximize their net worth, which is probably why it's not more popular...
The comment you replied to was just pointing out that, like how a founder-held company can get stuck pursuing the founder's obsession, a stock market held company can also single-mindedly pursue quarterly gains to the detriment of long-term health.
Plenty of countries have corporate laws that are less shareholder focussed than those of america. In the Netherlands for example boards are obligated to take into account broader sets of interest such as employee in their decisions and this is enforceable in court.
This model, unfortunately, often leads to a "well, we might as well spend the extra profits on executive benefits"-issue. Whenever you have money without oversight, you always face a moral hazard.
If the company makes a profit and there aren't shareholders there to keep the stewards in check, excesses can and do develop.
I get the first point, but having shareholders doesn't solve that in any way. Shareholders would just give themselves payouts instead of letting the execs take everything as bonuses. And unlike the execs, whose bonuses could be limited by charter and who could be chosen on the basis of trust, shareholders are "whoever has the most money to throw around", so there's no mechanism to align them with company values.
So it's not perfect, but it sure as hell beats having shareholders.
Precisely, in the form of the #1 trend of public companies, stock buybacks! I've seen aggressive buybacks take a company with a ton of money in the bank and a profitable business and drive it right to Chapter 7 bankruptcy in just a few short years.
I'll make you a deal. You agree to give me a trillion dollars, but only if I make you 8 trillion dollars.
I don't think he'll deliver and I think it's based on fantasy economics, he's been really losing it recently, but as a deal it's not entirely irrational if he could make it happen.
The thing is, the compensation is only based on it happening, not on him making it happen. “I make you 8 trillion dollars” rests on a strong assumption that it all comes from the CEO.
This particular CEO is on the more influential end of the spectrum, but I think executives generally get too much credit for outcomes. If this does happen, it won’t just be because of the CEO, but also because of ~100,000 other employees. Their contribution might be smaller, but comparing compensation, I don’t think it’s proportionally smaller.
Speaking honestly as a foot soldier employee, I look around myself and I think you could swap out most of the people around me, including me, for most other people in our industry and the company would continue just fine. In fact that happens naturally over time anyway. The work we do is essential, but as individuals we are not essential. If I quit and move on, how many investors will reconsider their position in my company? Give me a break, and they would be right to not care.
It's about leverage. It's all about where you stand and how long your lever is. Musk stands at the top and he has a very long set of levers. He's also much more closely personally involved in engineering aspects of a company that most CEOs know little to nothing about. Sometimes that's good, sometimes it's bad, because his decisions have massively outsized effects because of this. Leverage.
If Musk makes good or bad decisions over the next few years, that matters much, much more than the decisions of anyone else at Tesla, especially because he hires and fires everyone else at Tesla. They're all only there, as individuals in particular, because of him anyway.
As it happens I think his decision making has deteriorated significantly recently, in some respects but not all. Also Tesla just doesn't have the magic special sauce SpaceX has had since they developed reusability. There's no special engineering insight in the Tesla architecture. Other vehicle manufacturers already caught up. That catch up is happening in space tech as well with BO's recent booster recovery, but SpaceX still has a very significant lead there, based on a truly revolutionary concept (which Musk championed personally) that they had exclusively for 10 years. Starship still doesn't work though, so we'll see.
I can't help but notice you said you could swap out most of the people around you, not all. Yeah, some random salesperson is not contributing enormously to the company's growth and could be replaced without much difficulty. But that's not true of everybody. The CEO is not uniquely special in this regard.
I agree that the CEO is typically the most important in this respect, especially this particular CEO. I just think that giving him an additional 1/8th of the company's entire market cap growth, on top of the roughly 1/8th he already has, is highly disproportionate.
Clearly the shareholders disagree, and that's entirely their right. And I'm not surprised, CEOs are greatly overvalued in general.
Steward-ownership is a philosophy more than an actual structure, my understanding is that each such company is in practice structured somewhat differently.
For Patagonia a trust owns 100% of the voting rights, while a charity collects 100% of the dividends. I don't doubt that there are ways the structure could be subverted, but it's a far cry from "money without oversight".
Do you have examples of Steward-owned companies that ended up with "well, we might as well spend the extra profits on executive benefits"-issues?
(I personally think Steam should go in that direction, otherwise I'm afraid enshittification is unavoidable once Gabe Newell is no longer at the helm)
Huh, fascinating.
The Patagonia structure is actually strikingly similar to the Bosch model - non-profit owning the shares, but no voting rights, trust having voting rights but no shares - just taking it to the logical 100% conclusion without the residual influence of the Bosch family (having retained a few percent in both).
The model has worked well for many decades for a 100 billion$ revenue company like Bosch, good to see others taking a cue from them.
(Also goes to show that even constructs like these are not safe from corporate fuckups - see the emissions scandal...)
Shareholders are not an effective check in most cases. They are with private companies where individual shareholders have a lot at stake - its their money that is being wasted.
If they can just easily sell the shares they will do that instead.
I find it a touch strange, in the abstract, that a corporation being public is a bad thing. On paper it should be a good thing; being publicly owned should mean that your corporation has turned from a private business venture into effectively public infrastructure that's impossible to boycott and depended on to some extent by everybody. As a result, financial statements should be (and are) public and transparent, and the company should be able to be externally steered via regular elections in a manner that benefits the public and not just its founders.
The issue really lies in the fact that the (long-term, majority) shareholders aren't much, if at all, related to the customers or employees of the business, but first the founders, and then parties who are merely interested in rising stock prices and dividends. It feels like the solution here ought to somehow desegregate voting rights from how many shares are owned, instead of dismantling the concept of public ownership entirely. (Or, perhaps, allow the general public to proxy vote via their 401(k) index funds?)
(There's also strange situations like Google/Alphabet, which is publicly owned, but effectively does not allow shareholders to vote on anything.)
The wealthiest 10% of Americans own like 90% of stocks, and the top 1% own 50%. While the poorest 50% of the population own about 1% of the stock market.
So "publicly" traded (the term public ownership can be confusing because it can also mean state control) just means it's open for the elite to invest in.
Could you link to how that measurement was taken? Because I very much want to know whether it counts things like mutual funds, or whether it only measures direct ownership of stocks. E.g. I have a bunch (though not all) of my retirement savings in an index fund that owns partial shares of the top 500 US companies (as listed by Standard & Poor's). So depending on how that S&P 500 fund is measured in those statistics, I either own shares in the top 500 companies, or I'm counted as not owning any shares. The latter would produce a very misleading statistic, because I am very much not the only person who invests in the stock market via mutual funds.
So a link would be much appreciated, in order to judge the quality of the info. As it is, I'm skeptical that the info is accurate, precisely because mutual funds are so wildly popular among the middle-class people I know (none of whom are in the top 10%, though most of them would likely be in the top 50%).
Well, considering that it doesn't seem to be an accurate statement, it shouldn't be so amazing that people don't "get" it.
By far, the largest shareholders in most publicly-traded firms are "institutional investors", but those are themselves in turn usually acting as middlemen managing mutual funds, most of which consist of ordinary folks' 401(k) plans and pensions.
What? "Doesn't seem to be an accurate statement"? What part? Those numbers are actually conservative. According to Yahoo Finance[0], it's actually 93% of the stock market is owned by the wealthiest 10% of American households. And the bottom 50% of Americans own ~1%. You "seem" to be mistaken and you're talking out of your ass.
The article you're citing doesn't link to its sources, but seems to be talking about direct stock ownership by households, and not explicitly stating how it's accounting for investment funds.
Have you considered the possibility that 401ks and pension funds etc are included in those numbers?
Open for the elite in the way that everyone else don't have enough money to matter.
The richest people are so much richer than everyone else that there's no comparison. You could grab a million average people off the street and all of you combined probably wouldn't be richer than Jeff Bezos. Think about that. This one guy is wealthier than a million other people combined, literally wealthier than an entire small country or large city, and he's not alone. There's more of them.
Those guys rule the world, everyone else are passengers.
Not sure what does that mean.
Americans poor and wealthy are in the top 10% of the world wealthiest and own a huge part of the world stock value accordingly.
That's simply capitalism, money is spread unevenly across everyone, that does not make everyone an elite
Is that a bad thing? Why would I want someone who can't even manage their own money to manage my life savings?
If anything I'd expect a company where the decisions are in the hands of 99% John Smiths and 1% Warren Buffets to be even more short sighted, *especially* when it comes to splurging on dividends.
"The major reason is they are a private company with good business..."
This is unquestionably, undoubtedly incorrect. It is a really low information meme that's racing around the Internet right now. If you want a contemporary counterexample take a look at NASCAR. They're also not publicly traded, they're family owned, yet they are abusive toward drivers, teams and fans, and they're gradually ruining the sport that made them rich. We know all of this because it got so bad Michael Jordan decided to sue them and there's a ton of information coming out in discovery at the moment.
The real reason Valve are being the "good guys" at the moment (not really, but yes they're doing some amazing stuff for Linux) is because they feel threatened by Windows and Microsoft, they perceive a long term competitive threat to Steam. Competition makes businesses both private and public work for your dollar. The US economy has been characterized by a decrease in competition and an increase in monopolies for decades now which is the root of many price hikes and anti-consumer practices.
>The real reason Valve are being the "good guys" at the moment
Ok, but this “at the moment” has lasted at least since 2011. Basically my whole adult life Valve gas been a pretty great company delivering value and not being annoying.
> The real reason Valve are being the "good guys" at the moment
Yep. Valve is seen as virtuous because Microsoft is greedy and the default Windows 11 install is generally viewed as a tire-fire of an OS
Are they doing good things for Linux? Absolutely. As a long-time Linux user I am over the moon that we are where we are. But the general populaton only gives a shit because Microsoft is abusive.
I do overall agree that Valve is only situationally the good guy here, but they do also have a sustainable approach to business and growth which I think helps this.
Monopolies need to be restricted by regulations. In micro economics there is a term marginal cost, and economy of scale. In the software as a service era, the cost of serving one extra customer is minimal, so it make economic sense for such companies to grow infinitely. This is why our current system do not work. As the best strategy is to become as big as possible and capture the entire market.
There is a bit of a debate about what to call the American economic system these days, but I think we should all agree it's not a capitalist one. It's not one that Adam Smith would look at, approve, and say oh yeah baby that's exactly what I was writing about in Wealth of Nations.
It looks a lot closer to the economic policies of the most successful fascist regimes - the best term for modern American economics might be "democratic fascist." There is a facade of a market economy, but there's heavy intervention to privilege not just domestic businesses, but a specific set of big ones that have close ties to the ruling party. This is not much different from how Hitler and Mussolini approached economic policy. Basically have your system revolve around private ownership, pretend to have a market economy but actually make very centralized decisions and execute them through a small number of private oligarchs you're buddies with. The uniquely American flavor is that there are two parties which do this instead of one (but three would be unimaginable), and you can choose which pack of bandits you signal loyalty to without being executed.
I find it interesting that this "feature" of the US (having those big monopolies) is often mentioned as a "weakness" of e.g. Europe, where companies cannot get as big (I guess partly due to regulations).
And in turn, when US companies "lose" against, say, Chinese companies, they will say it's because they get help from their authoritarian system (through the government). Which is a bit ironic given that the US monopolies do exactly that to the rest of the western world, right?
On the spectrum of authoritarian oligarchy of the type you describe, from 0 (liberal democracy with well regulated free market capitalism) to 100 (totalitarian oligarchy), where would you put: The USA; The average EU country; Russia.
I think there should perhaps be a law that any corporation automatically has a new class of un-tradeable VOTING shares, worth 50% of the overall vote, held by the employees. Everybody with an employment contract with this company is entitled to 1 vote, no more, no less; whether they're the janitor or the CEO.
Employees of a company are the ones who are the most affected by the company's decisions, it's only fair that they have a say.
How much is a vote worth in dollars? Because there would be a market for those votes, not just a spot market for dollars or internal market using vacation days, it would be reflected in salary and benefits and company policy etc.
Couldn’t you just make the voting anonymous to make sure that buying votes isn’t possible? Why wouldn’t I just take your money and still vote however I like?
A law like this just means getting full time employment becomes that much more difficult and the vast majority of people working for a company will be non-voting contractors without benefits. The existing employees would even vote for changes that make full time hiring more difficult in order to avoid diluting their own votes.
It would obviously need to be accompanied with rigorous enforcement of employee classification. I know there would be a bunch of possible ways to game this, so there are a lot of other rules we'd need to add but I didn't want to make my comment too long.
Also, I wouldn't necessarily make a distinction between the full-time employees vs the part-time ones.
I think you’ll find that won’t actually work in practice. Many contract workers are not independent freelancers but actually employees of a different company who contracts the work out as a whole.
For example, a courier company like UPS employs all of its workers but the packages it delivers are for other companies who contract with UPS to do the work. If you force all businesses to employ their own couriers then UPS can’t even exist as a company and small businesses that depend on courier services would simply be unable to function at all.
You can at least in part blame Milton Friedman for this mess. His reframing of ficudiary duty as profit maximisation in his "shareholder theory" has done a tremendous amount of damage. The wariness of people when it comes to public companies is a direct consequence of this.
>and the company should be able to be externally steered via regular elections in a manner that benefits the public and not just its founders.
Why would anyone believe that this means an organization is well run, or to everyone's benefit? Here in Germany we're notoriously unfriendly to public companies, most of the (well functioning) Mittelstand is private and family owned. And I pray to god it stays that way because I'd rather trust a company whose leaders have their family name and reputation staked on it for the next three generations than I do the amorphous blob called "the public". As Kierkegaard said, in the crowd nobody is responsible.
If you want to see what happens under public ownership visit a public bathroom. I don't want anything externally steered by nobody in particular, I want something steered by a handful of people with names and addresses.
My understanding of the contemporary argument against publicly traded companies, though I'm not completely convinced of them personally, are that the fiduciary obligations inevitably drive those bad behaviors, and/or that shareholders often demand short term returns at the expense of long term value.
As far as "fixing" the problem, I think it would be important to expand voters' influence over the company in addition to voting changes like you described. I don't know how to make it feasible, but IMO voters should be able to influence or directly decide much lower level business decisions than they currently do
It's a common pattern. If you're in their service area compare both the food served by, and the employment practices of In-n-out Burger (private) vs McDonald's (public).
> (There's also strange situations like Google/Alphabet, which is publicly owned, but effectively does not allow shareholders to vote on anything.)
You mean the special class B shares that gives 10 votes per share, right? It isn't just Google though. Facebook and Snapchat also do the same thing, iirc?
Share classes can be very varied(such as preferred shares that get what's left after bond debt is paid off on bankruptcy) but generally what he's proposing(a coop-style one-head-one-vote class) is not common. Not sure if it's legal for US corporations or not(I could swear it is but in any case it's exceedingly rare).
The usual principle is one-share-one-vote.
Not really. Most people have terribly low time preference. Democracy for example is a very bad idea when you account for that (read Hoppe for a detailed explanation). Public company ownership is much better because it doesn't suffer from one vote per person, but still susceptible to much of the same management problems, specially in a society that already favors lower time preference by other means.
I do not deeply disagree with your statement but I do not see the two as exclusive.
I think distributed public ownership placed in a corporation ruled as proposed here provides a chance to harvest residual good decisions from a citizen/shareholder who cares as opposed to having a single decision derived from some other issue a majority of citizens favor.
Unless you're talking about doing away with any kind of voting but Communism doesn't exactly have a stellar track record.
fwiw, Hoppe has become a darling of the extremist authoritarian "alt-right" (curtis yarvin, etc) but has been rejected by more mainstrean thinkers including most libertarian factions.
Yes, exactly. It's kind of a wink-wink nudge-nudge at this point. A company citing "public good" under the guise of "shareholder value" is not actually supporting the public good at all.
Not that I condone capitalism, or socialism, or communism, or fascism, or any ism for that matter. Ism's in my opinion are not good. A person should not believe in an ism, he should believe in himself.
But a private company, at this point, can arguably affect the greater good just as much as a public company. The rich are getting richer, and the corporate model is just there to support that transfer of wealth.
>We have reached a point where the shareholders are a companies real customers and that is who they all try to attract.
We currently have a handful of AI companies who make no profit, have revenue far below operating costs, their entire business runs on investment and they're posturing themselves for IPOs. Meaning that the reason they can keep the lights on solely comes from attracting investors (and will likely be that way for the foreseeable future).
While AI is an example, it's an extreme one - the uniqueness here is that the AI companies have very large spend commitments that exceed expected cash generation, even under presumption of no faults and very strong revenue assumptions because infrastructure costs outpace revenue by a significant margin.(1)
This differs quite a bit from a typical venture-backed or boot-strapped entity, which has a realistic pathway to profitability.
Please just talk about capital and leverage like an adult. Do you expect a CFO and their team to look at the math and say, "Well, we figured out that we can speed up adoption and bring forward billions of dollars of revenue by spending fewer billions from capital injection and debt deals this year" and then not do it?
Adults tell jokes too, especially gallows humor, and to great effect.
Ergo I propose grandparent commentator inject more humor in their clear understanding of leverage and debt to widen your, my, and their audiences' understanding regarding debt and leverage beyond your proposed metaphor of the toddler CFO failing the marshmallow challenge.
What doesn't work are the predictions of Uber's collapse, of which there were many, cheered on by a great deal who still gather here looking for the next things to see through.
I am personally betting on Uber’s collapse for the obvious reason: it won’t compete with robotaxis and AV companies would rather have customers on their own apps rather than Uber’s platform.
If you want to be specific that general idea could be elaborated as "private ownership by people that only need the C-suite salary, instead of needing a C-suite plus a fat % RoI on the company's entire valuation because that's how much they just put down as a sunk cost."
In that regard "bought by PE firm" (or most any prospective buyer, really) is functionally equivalent to an IPO. Selling out is, in fact, selling out.
Furthermore, PE ownership generally means (a) achieving ROI as quickly as possible (including by dismantling the company and/or mortgaging its assets), (b) installing leadership who has no ties to the business, and (c) cutting costs to the bone.
It's not just functionally equivalent to an IPO... it's an IPO if all the buying new shareholders were sociopaths.
(Yes, there are the PE companies who run businesses better like Berkshire, but that's far from the most common type of PE)
Private ownership is a necessary, but not sufficient, condition to have a business which has a healthy relationship with its customers. You also need the owners to be people of reasonably good character who understand that the best way to run a business is a win-win approach on both sides, not people who see nothing wrong with extracting maximum profit from the business no matter whom it hurts. The PE horror stories you hear are cases where the owners are in the latter group.
You hypothesis then is that there is not a _single_ public company that has a healthy relationship with its company? Not one, in the entire global public space?
When does this relationship with customers happen? Is it at the IPO? When they file the paperwork? When they contemplate going public for the first time? Or is it that any founder who might one day decide to contemplate going public was doomed to unhealthy customer relations from birth?
The obvious next thing we in society should do is abolish public equity as a concept as a customer protection mechanism?
It is genuinely hard to think of one. I treat all companies as adversarial relationships, where I fully expect them to treat me as disposable at least over any time horizon greater than 1-2y. There are certainly some companies that are more likely to find a mutually beneficial equilibrium. I think of Target, IKEA, sometimes Apple. But I don’t trust any of those companies to take care of me in the future. But I also wouldn’t be the least bit surprised if my next interaction with any of those companies was bad. I just typically expect it to be more mutually beneficial than Comcast, Hertz, or Verizon.
Sure, but very modestly due to scale, not core institutional morals. Go to your average small business with 10 or so people and ask the staff how they are treated and paid, and you'll get an answer not much different than the level of employee satisfaction for Fortune 500 companies. Look a their customer reviews... are small restaurants for instance an order of magnitude different that megacorp chains? In an economy with regulatory capture and highly unequal distribution of wealth, the wealthy set the tone across the board.
From what I can see, it's often when the founder loses control of the company (either voluntarily (e.g. retirement) or not) and it falls to the board (representing the shareholders) to appoint the CEO. At that point it's at best a toss up whether they'll appoint someone who actually intends to create value or someone who intends to extract value.
> The obvious next thing we in society should do is abolish public equity as a concept as a customer protection mechanism?
Abolishing public equity is quite drastic, but there are lots of other things we could (and IMO should) be doing to protect society from the negative externalities it causes. For example:
- Mandating worker representation on company boards. So shareholders still have some power, but less.
- Progressive corporation tax (larger companies pay more tax). This would bias the economy towards smaller companies which generally have less problematic externalities.
It's not instant (well, sometimes it is), more of a slow but inexorable push down a hill. Some public companies are farther along the path than others, but if the company continues to exist and profit it's inevitable. For example, there are no S&P 500 companies with healthy customer relationships.
It's not impossible to run a publicly owned company in the US that isn't insanely hostile towards it's customers or employees... it's just really damn difficult because of bad legal precedent.
Dodge v. Ford is basically the source of all these headaches; the Dodge Brothers owned shares in Ford. Ford refused to pay the dividends he had to pay to the Dodge Brothers, suspecting that they'd use the dividends to start their own car company (he wasn't wrong about that part). The Dodge Brothers sued Ford, upon which Fords defense for not paying out dividends was "I'm investing it in my employees" (an obvious lie, it was very blatantly about not wanting to pay out). The judge sided with the Dodge Brothers and the legal opinion included a remark that the primary purpose of a director is to produce profit to the shareholders.
That's basically become US business doctrine ever since, being twisted into the job of the director being to maximize profits to the shareholders. It's slightly bunk doctrine as far as I know; the actual precedent would mostly translate to "the shareholders can fire the directors if they think they don't do a good job" (since it can be argued that as long as any solid justification exists, producing profit for the shareholders can be assumed[0]; Dodge v. Ford was largely Ford refusing to follow his contracts with money that Dodge knew Ford had in the bank), but nobody in the upper areas of management wants to risk facing lawsuits from shareholders arguing that they made decisions that go against shareholder supremacy[1]. And so, the threats of legal consequences morph into the worst form of corporate ghoulishness that's so pervasive across every publicly traded company in the US. It's why short-term decision making dominates long-term planning for pretty much every public company.
[0]: This is called the "business judgement rule", where courts will broadly defer the judgement on if a business is ran competently or not to the executives of that business.
[1]: Tragically, just because it's bunk legal theory, doesn't change that the potential and disastrous consequences of lawsuits in the US are a very real thing.
It is not broadly believed in corporate governance circles that there is a legal requirement to maximize shareholder value. Nor will you find court judgements that require it.
If anything Milton Friedman is more responsible for this idea that shareholder maximizing is the corporate goal. That is an efficient market argument though not a legal one and he framed it long after the dodge suit. He needed to frame that argument because so many firms were _not_ doing that.
But just because a Chicago school economist says something about governance doesn’t mean it’s broadly applicable in the same way an Austrian economists opinions about inflation aren’t iron rules about monetary policy.
Could also consider: employee ownership and public ownership
People complain about the latter because they have higher expectations because the institution is supposed to serve them and often has all the diseases of true scale without being able to pick and choose customers. Private industry skates by because people assume it's out to screw them and they can cherry pick.
The difference is that PE firms own firms as investment vehicles, while Valve is owned by people who see making games as their calling.
No, I don't think Gabe's averse to the nice checks, but he is in a business he deeply cares about on an emotional level. He doesn't just want to milk it to the last drop, he wants to leave his mark on gaming.
This is the problem of governance by “the good king”, and no, there isn’t a clear succession plan, so things will probably get worse in a post-gaben world
If you IPO but the founders still have more than half the voting rights, you can fully ignore the public in all your decision making and there is nothing the other shareholders can do.
Only kind of. The most obvious examples are big tech companies such as Meta or Alphabet. But they pay their employees in RSUs. If the stock price falls employees make less money and can be lured away.
But thats the point, Valve IS maximizing profits. If they treated their customers like Epic does, do you think people would still be using Valve when Epic is generally a bit cheaper?
The entire point of this thread is that there are many things that Valve could do to increase its profits over the short, intermediate, and long terms... that it doesn't (presumably because that's not the kind of company it wants to be).
As the simplest example, they could have stamped HL3 on a third party game and made several millions of dollars with only a minor hit to their brand (in 5 years, "that bad HL").
In more realistic terms, they could have built proprietary, closed source emulation packages (they are funding a lot of development, apparently) to give themselves a unique advantage.
If they were a publicly traded company, they probably would be doing all these things.
I don't see a problem with the first, if they want to outsource HL3 go ahead. Consumers can decide if they want to buy it when it releases, that's just normal economics.
As for the 2nd, that's sort of what Epic does, yet Valve's store revenue is 10x Epic. So if enacting these anti-consumer practices were actually more profitable, why is Epic doing so shit? Not even in terms of absolute numbers but in terms of growth, Epic store isn't growing at all. Epic can't hit even a fraction of Steam's numbers despite giving away hundreds of games.
Developing open source emulation is essential to their success - no developer would build and verify for Steam OS and Proton if it were closed source and only available on a single device (lol). Steam being very pro-consumer is what makes them successful.
> So if enacting these anti-consumer practices were actually more profitable, why is Epic doing so shit?
Because it is "common wisdom" even if the wisdom is short sighted and doesn't always amount to increased profits.
See Netflix removing the ability to cast, because fuck you. How much of the current growth is borne out of that crackdown on people using all their profiles they pay for?
There currently isn't a "good guy" so they can keep turning those screws and force some extra growth. Being anti-consumer would be beneficial for Valve because they are currently the only good guys.
That doesnt explain their surge in growth only in recent years, its not like gaming is new. No, its all the new features they are offering and goodwill they have engendered.
I think the point was about publicly traded companies becoming inevitably evil due to shareholder expectations, not about private companies being inherently ethical.
This is a pretty serious problem, since we would like lots of companies to participate in public markets so that regular people can gain some of the upside and so there is transparency and increased oversight.
I find it so weird that you say public companies being 'evil' (which is to turn a profit) is a problem, yet you also say you'd like for companies to exist on the public market so that the public can access some of the upside.
Attributing it to private company behaviour really minimises what Valve chooses to do. Per your counter example: Epic Games has been having a very public meltdown this week regarding Steam's inclusion of Gen-AI labelling - here we have two private companies, with two very different priorities.
It's also worth reminding ourselves that Epic settled with the FTC for over half a billion dollars for tricking kids into making unwanted purchases in Fortnite.(1)
Epic also stonewalled parents' attempts at obtaining refunds, going so far as to delete Fortnite accounts in retaliation for those who arranged charge backs.
Furthermore the FTC's evidence included internal communications showing that Epic deliberately schemed and implemented these dark patterns specifically to achieve the fraudulent result, even testing different approaches to optimise it.
I don't really get it myself. I personally don't give Steam credit for weakly saying 'hey you need to label something'. Let me know when really enforce it. Heck, let me know when they at least add a filter. That's when you can really impact the behaviour (or prove consumers really don't care).
But yew ,both private companies do their own forms of evil.
Yeah we also need to get out of the dichotomous thinking that companies are either all good or all bad.
Companies will do things that represent their interests, sometimes their goals align well with their customers, or the greater good, and sometimes they do unpopular things where they believe the profitability will outweigh the blowback.*
It's a lesson in not being too attached or needlessly loyal - our connection to a business is not a personal one.
*The Epic example is useful because their actions represent a steady pattern of deceptive conduct.
They seem to have a high ownership, consensus driven organizational structure. The only time I'm aware the consensus model was violated was when Gabe overruled a veto to ship Steam with half life 2.
It's very interesting to me because it seems to operate similarly to a lot of anarchist shit I've been involved in, but at a highly effective level. And they make oodles of money.
this is widely known (been discussed on here many times) that the employee handbook was marketing apparatus and doesnt reflect how the business actually works day to day, and never did
Really? It aligns with what I've been watching employees say in various interviews, such as the recent half life anniversary series of interviews. Would love to read more if you could point me in the right direction.
They're the #1 most profitable per employee. There are plenty of companies more profitable than Valve, but they have more employees. Valve could hire more employees.
Valve is estimated to make $16.2 billion from Steam alone in 2025 [0], and CS:GO loot boxes only netted them ~1bn in 2023 [1] (and CS:GO player count is only slightly higher now compared to 2023, so I expected the income number is similar).
Why don't they just take a 6% pay cut and make sure there is nothing to criticize them about :/
There's an argument that loot boxes that give you cosmetics just aren't that big of a deal, at least if we're talking about adults.
Especially since Magic the Gathering and similar card games are very normalized, and have a straightforwardly more evil monetization strategy, since you need to do gambling there to even play the game, it's not cosmetic.
There's always this question when Valve comes up of, "why are people more upset about gambling for cosmetics in a game than gambling for power/features in a game?" It's a clear double standard, and I've never heard an actually good explanation for it that makes it sound justifiable.
edit: The other thing is that the people blowing money on cosmetics gambling fund the game such that all the core gameplay stuff in Dota and CS and be totally free for the average player, and that's pretty great for a lot of consumers.
It's not exactly the same yet since Deadlock isn't being monetized yet, but I've spent hundreds of hours in the game having a blast for free, I can't give Valve money even if I want to, and that buys a fair amount of goodwill from me.
>There's always this question when Valve comes up of, "why are people more upset about gambling for cosmetics in a game than gambling for power/features in a game?"
Aren't people upset about both? The whole "gamble for features" is pretty much why the mobile market and console market are divorced in audiences (or at least, community).
People are "more" upset about Valve here because this is in the console space. They've long dismissed the mobile scene as lost.
I'm sure a few people are, but typically no. People are aware that trading card games can be a monetary black hole, but Magic and similar games usually don't take the same heat for the business model that Valve does for loot boxes, even though they're actually worse on paper.
> They've long dismissed the mobile scene as lost.
I'm not talking about the mobile market. Are you not aware that Magic the Gathering is a physical card game? (though it does have some digital implementations too)
Yes, I'm calling that questionable. Says who? TCGs have entire formats designed in opposition to the high cost random booster shit. I think that's pretty good evidence that there's high negative sentiment.
Valve is simply larger and took legal heat for people misusing the API.
There's plenty of outrage about paid loot boxes and viewing them as terrible, terrible gambling that exploits consumers and ought to be regulated/banned. Not everyone agrees with this take, but it's still fairly widespread.
Now, you do see people pointing out that trading card games are basically still gambling -- and no one really disagrees with that -- you just don't see the same level of outrage about it. What you usually see is grudging acceptance, ala "what're ya gonna do, that's just how these card games are".
Oh you're talking about trading card games? I thought we were comparing to the gacha/lootbox market.
I think the simplest fact is that most people online don't think about offline product. Out of sight, out of mind. It's also an interesting market where WotC and Co. Actively try to avoid the resellers market. They don't want any risk in valuing individual cards themselves, so they stick to boosters.
For digital stuff, you are inherently the market itself. So it's hard divorce yourself when you are the one who implemented trading and controlling rarities and drops.
Very few people have a problem with just paying for cosmetics in a game. The main issue here is that it's gambling for cosmetics, rather than straightforwardly purchasing specific items.
Most people do have an issue with it, because every game that's replaced loot boxes with discrete cosmetics purchases has to then massively increase the price of them. For 20 bucks in Overwatch 1, you got (afaik) 10 loot boxes which all had 4 random items. In Overwatch 2 20 bucks barely gets you single good skin.
It's very much a grass is greener type of situation in my experience, having been part of communities of both types of games.
> There's always this question when Valve comes up of, "why are people more upset about gambling for cosmetics in a game than gambling for power/features in a game?" It's a clear double standard, and I've never heard an actually good explanation for it that makes it sound justifiable.
The closest I've heard to something compelling is that the digital goods aren't the same as actual physical goods, and that somehow that makes it worse, but I still don't find it particularly compelling; I've heard people (often lovingly) refer to trading cards as "cardboard crack" explicitly to joke about how ridiculous it is to be paying for stuff that's essentially just ink and paper.
> There's always this question when Valve comes up of, "why are people more upset about gambling for cosmetics in a game than gambling for power/features in a game?"
Do you have a link to this sentiment anywhere? It's the first time I'm hearing about it.
> Especially since Magic the Gathering and similar card games are very normalized, and have a straightforwardly more evil monetization strategy, since you need to do gambling there to even play the game, it's not cosmetic.
I'm not sure what you're calling "gambling" here, but the way I understand it, it's not merely "a game of chance that you pay money to play". A fundamental feature of it is that the odds are set deliberately so that you're statistically guaranteed to suffer a net loss to the other betting party ("house"). That's not quite the case for tradable items when the "house" doesn't control the price you might sell your item for; the market is the one responsible for setting the price. Note that I'm not saying that's necessarily always better -- there are lots of ways to financially screw people over besides gambling -- I'm just saying it's not gambling, and so it makes sense that people react to it differently.
For items that you can't trade (like where the platform prevents you), that's more similar to gambling in that respect, I think. But then it's less similar from the standpoint that there is zero financial redemption value for the items you win, so it's s arguably still not gambling.
I'm using "gambling" the same way it's typically used in these discussions. If you'd like to convince the rest of the internet that it should only apply to more traditional things like Poker or slots, where the house has some edge, be my guest.
I'd guess that there's markedly different margins on lootboxes versus running the entire steam store.
I'd be surprised if lootboxes only earned them 6% of profits, I'd guess they're something like 10% or more, assuming that they're like 90% margin and the regular steam store side is more like 50% margin (which is still absurd, for what it's worth).
It was getting out of control when tiktok "investment guides" were instructing people who don't even play the game to start buying CS skins to make a profit.
Disagreed. Games like Fortnite and League of Legends went down this road and ended up at even more unfathomable $500 microtransactions. The only issue with skin trading is that people will take it more seriously than it is, which is a problem with all cosmetic systems.
Valve selling skins is just so trivial relative to dopamine-inducing doom-scrolling, social media in general, the toxicity of the news cycle, I can keep going.
It would be super democrat-american to address valves loot boxes before, say, fucking healthcare.
We need a government priority Jira board of things that need to be addressed. Loot boxes _might_ make the backlog.
Sure but it's just being morally lucky. They found themself in a situation where there was temporary and situational alignment, why give them any credit for that? They didn't create that situation.
It's like AMD open sourcing FSR or Meta open sourcing Llama. The outcome itself is good, but if they ever become leaders in these verticals, they will pivot to closed source quicker than you can blink, because the reason they're doing it is just coincidental to the public good, not because of a genuine motivation to do good.
No, it's not. They're choosing the path that builds user trust and positive sentiment for long term success, rather than choosing to fleece their customers and not worry about whether people hate it.
Other corporations in a similar spot for games and game platforms could choose to make the same type of choices, but they'd rather boost next quarter's profits, even if that means pissing off their userbase with consumer-hostile policies.
No one forced Valve to have a great form of family sharing. No one forced them to have generous policies around generating Steam keys. No one forced them to invent remote play together. They do these things because they're nice features that are useful for players and make people stay engaged on Steam, and more positively inclined towards Valve.
I am “morally lucky” because every decision I make is to ensure I can always be morally lucky, 10 years later. I take certain kinds of jobs in certain kinds of industries.
It’s my same approach to reducing stress or getting things done. I never get a parking ticket not because I’m amazing — it’s because I know if I have to go out later and move my car, I’ll forget, so I’ll just park right the first time. 10 years later and no parking tickets and no stress — if someone tells me “oh you’re just lucky,” I can only chuckle.
I don't see it as an "approach", I see it as a description. If the FSR upscaler becomes better than DLSS, then my description leads to the prediction that AMD will make FSR closed source. The prevailing camp that says AMD are exercising their moral compass will predict that AMD will keep FSR open source. We'll see who has a description that aligns with reality if that day comes.
Why not give them credit for that? There is no moral rule that to be virtuous, it has to be self-sacrificial. If you narrow a commendable course of action to some sort of ascetic vision of martyrdom and self-punishment, then yes everybody and everything is evil.
So they may pivot to closed source when the circumstances will benefit it, or they may actually not do that. They have no shareholders that force them to squeeze the bottom line. The perceived benefits may just be slight and their culture will push them to stay the course on the long term, where other companies will do the reverse. Maybe if their survival is at stake, but wouldn't anyone faced with existential danger do anything to stay alive, including the worst imaginable?
Within certain commercial boundaries that keeps the business profitable, companies can and do make all sorts of decisions based on values and visions that are more than just economical, especially companies not beholden to shareholders that only care about short-term profits. Even the economical decisions aren't purely rational and often done from some kind of cultural bias.
Valve predates Google by two years (at least per the wiki), and was started by Microsoft employees who didn't particularly like Microsoft's operation. Hoping Valve has a long future ahead of them :)
Valve has had all the triggers and opportunities to change for the worse and it didn't. Short of Gabe Newell not controlling it anymore, I don't see what would ruin it now.
You can argue they did, depending on what you value. If you loved valve as a premier developer discovering unique experiences and narratives, thars been gone for 14 years now. If you valued not having your software locked down to middlemen or preferred physical media, Valved killed those off in the PC market. If you are a dev and wanted to set your own prices, Valve is current under litigation for price parties.
Its not all sunshine and windows.
>Short of Gabe Newell not controlling it anymore, I
In the same way Bill Gates did not force you to use Internet Explorer, yes. Both are free applications with alternatives. Let's not forget our history.
Sure, Valve may turn bad after Gaben. It is also possible that he thought of something for the long term that will prevent enshittification. Some companies have managed.
Your argument doesn’t make any sense. What does this have to do with supporting Arm chips? It’s not like AMD and Intel are waging a war against Valve. If anything Steam helps them by strengthening the PC gaming market, leading to higher CPU/GPU sales.
Slowly getting their stuff independent of wintel gives a lot of flexibility. And the big gaming market's on phones / tablets. A steam controller could find itself paired to an iPad running steam in a year or two.
The only play I see here is a legitimate Valve console to take on XBOX and Sony. Plus Arm on a Steam Deck would improve the battery life considerably (assuming they are able to integrate with some powerful GPU solution).
> Windows is closing in on them: stricter kernel access (tougher time for anti-cheat)
Why would Microsoft not work with leaders of a multi-billion dollar industry they benefit from to develop anti-cheats that work with whatever limitations they put on kernel access? Also isn't stricter kernel access in part being done for anti-cheat and related measures?
> Encouraging users to use the app store, or more accurately: discouraging users to install from binary
Why would this threaten Steam? Unless you're suggesting they can't just distribute Steam through this app store?
> They threaten Valve's business model, and Valve is responding with proton & SteamOS
You didn't even mention Game Pass or their store, which are actually more of a threat!
Microsoft's a competitor. And they have a reputation for being the first ally to stab you in the back (e.g. SGI / DirectX). You don't want to depend or trust them when they like the market you're in.
I don’t see it. Stricter kernel access is pressure on game devs, not Valve. And I don’t see MS booting steam off windows any time soon.
It’s more about Valve having complete control over the stack and being able to vertically integrate, something they will never have with windows, especially as it continues to enshittify
GOG has a strong anti-DRM stance, but unfortunately not all of the games GOG sells are truly DRM-free if you consider things like online services and online service requirements and live patching/live service. Often considered the worst offender is Sony published games with some of the worst root kit anti-cheat installs still bundled in the GOG edition, with mandatory online "data collection" for the game to run, even for single player games.
GOG will still give you an offline capable installer file for that game, and hasn't entirely compromised its values on that aspect of DRM-free, but the game won't boot up offline and/or without agreeing to the data collection terms and installing the rootkit.
I like GOG and the criticisms here are only because I'd love to see GOG do better, but I also know GOG alone can't fight "the cloud" and even single player games from major publishers having "required" online services. It's a DRM of a different sort (and remains a long term archival issue, because few of the companies like Sony will ever unlock the game or open source the service at the end of the games' commercial lives and would seem to prefer to just leave those games unplayable).
Wine wrapped installers for ... which distro? They ship a shell script that extracts the linux game binaries to user's home dir. Works on all linuxes.
GOG ships what's available. If game devs never made any linux binaries, then there won't be any linux binaries. What? You expected GOG to make a linux port of the game?
Games with wine don't require any special installers. Just open the wine desktop and install the windows game from there, like any other windows program you use in Linux. If you think that's too hard, then get a PS/Xbox and see my original reply, the one with the "we're doomed".
BTW, you can set up your linux to directly execute Windows binaries using binfmt_misc, but that may also be too hard for some...
I don't see why that should matter. It's games, you'd practically have to ship your own libraries anyway.
>If game devs never made any linux binaries, then there won't be any linux binaries. What? You expected GOG to make a linux port of the game?
Personally I couldn't give less of a shit, I'm an adult and have better things to do than play videogames.
I certainly do think it's not an unreasonable wish, and it wouldn't even be particularly hard. If GOG wanted to, they could provide pre-configured wine-wrapped installers for games that just work.
I do not know whether or not this would make financial sense for them, but Valve seems to think so, and I suspect GOG could do with a few cheap European software engineers wrapping games for them. Hell, they could even cut costs further by just open-sourcing their wrappers and largely relying on user-submitted patches for maintenance.
>Games with wine don't require any special installers. Just open the wine desktop and install the windows game from there, like any other windows program you use in Linux.
If you'd ever used Wine you'd know how fiddly it is, there'd obviously be a lot of value in having someone else handle that fiddling for you.
> If you think that's too hard, then get a PS/Xbox and see my original reply, the one with the "we're doomed".
I don't know if GOG shares your poor attitude, but that certainly wouldn't be a good way to run a business. Try coming out of the basement every now and then.
The question for grown-ups with things to do in their lives is usually not whether or not something is too hard, but whether or not it is worth spending their time on. If I ever wanted to play a game, looking up some workaround for a wine-related crash is the last thing I'd want to spend my time on.
They even seem to be on of the rare companies that recognized the issues of this and massively pulled themselves BACK from these dark patterns. They seem to have major restraint and working to undo the evil..... imagine if a Activision blizzard had something like the steam market place for cards and gifts..... They would be full face in the cocaine to make it all WORSE and more egregious
We really shouldn't let perfect be the enemy of good here. Of course they have their faults, but I'll take Valve over any of the other players in their market all day every day without even thinking twice.
EDIT: You're absolutely right, is what I'm trying to say.
I still put them in the same box as Apple until they fix the price parity and/or adjust their cut. Even Apple is finally having their hand forced there.
They are relatively better, but we still need to keep monopolies accountable. Valve is just smart enough to remember what worked 30-40 years ago compared to the rampant greed these days.
Technically 3. Not much different from the Desktop situation. Just replace Microsoft with Google because Microsoft had the grace to bow out early.
Similar to desktop, I choose the middle ground between true freedom and walled garden. At least you Can de-googlefy 95% of Android. More than you can de-microsoft Windows.
I've never understood this argument. Dopaminergic and attention pathways/systems are under full assault from every angle, and parents give their 6 year olds phones, and people take a moral stance against... loot boxes?
Thats like taking a moral stance against flavors in alcohol. I kinda think youre missing the point.
It's an interesting case study. They're essentially another 'App Store middleman' raking in a huge 30% cut for selling games digitally. But they do enough really good stuff to keep both gamers and developers generally very happy.
The difference between Valve and the other app stores with an actual user base (i.e. not Microsoft's Windows Store) is that PC gaming isn't tied to a single app store.
To be fair, neither is Android, but Steam actually gets real competition from GOG. The Amazon App Store was never really popular and the Epic Store doesn't seem to contain anything interesting if you're not playing one or two popular Epic games. Small projects can use itch.io. Large companies build their own launchers.
With the Steam Deck and now the upcoming new Steam hardware, that may change, depending on how hard Valve makes it to integrate with Steam's UI. Right now, Heroic works fine, from desktop mode, but if a company like GOG would like to actually take part in SteamOS, they'd need some kind of integration capability.
So far, nobody but Valve seems to have even considered supporting Steam and Linux' market share is small enough that it barely affects the gaming market, but if their Steam Machine explodes in popularity and they make mistakes, they can end up on many people's bad side just as well.
I have plenty of complaints about them.
The highly addictive gambling mechanics in their games,
the extortionate cut afforded them by their dominant market position
or the very rough UX in many parts of the Steam client (takes forever to startup, shows pop up ads on startup, is quite the resource hog, the store that is a pretty poorly optimized website and a lot of cruft in the less well trodden areas).
But they do make some very nice open source contributions.
If you're a dev and think their cut is too high, you can generate infinite keys for your game through Steam for free and sell them through third parties - Valve doesn't even police this.
The fact that people still tend to buy throught Steam shows their cut is worth it.
Steam is also a launcher and when I use it as a launcher I don't want to see ads for the store and burying a setting to turn if off in the settings is not sufficient.
At the very least let me turn it off on the pop up.
Describing those 'ads' as "abusive" is quite a stretch. It's like going to the store page itself and complaining they're telling you about products they sell.
Particularly when you can easily disable them. No other game client I know of offers that.
Advertising in general is absolutely abusive. I like to think of advertising as mind rape: it forcibly inserts brands and trademarks into your mind while you're trying to read or watch something.
On the other hand, I don't classify what Steam is doing as advertising. When I open the Steam store, it's because I want to see the games it has on sale. It's not advertising, it's the exact information I asked for. It would have been advertising had it kept spamming me with game deals while I'm watching a film or something.
Just because most advertising is abusive doesn't mean that all of it is. The popups that Steam shows when you open it are definitely still advertising, as are the recommendations for other games and things like that.
Ironically, this is exactly the reason why most other ad networks go to such lengths to track you, because they think they want to show you ads you'd find relevant and thus worthwhile to click on.
Unfortunately, the way the ad networks go about doing this means that they're actually incentivising making money by any means necessary over actually showing relevant ads, so you get ads that are psychologically abusive, full-screen ads that pop up in the middle of a game, ad networks selling off the data they have on you, etc.
That is why I will permanently have an adblocker - since this is how things work now - but why I don't care nearly as strongly about the Steam ads.
We don't disagree. It's just that I have a funny definition of advertising. It's more narrow than what people usually mean. Basically, if I asked for it, then it's information, not advertising.
For example:
> as are the recommendations for other games and things like that
I asked for this when I opened the Steam store. It's not advertising, it's just the exact information I wanted. I went to the market to see products, and they showed me products.
If they start bringing the products to my home by plastering ads on billboards all over the place then it's advertising and abusive.
> That is why I will permanently have an adblocker
They are also surprisingly effective because they often show things that I might actually buy (especially when it's on sale, which is precisely when they show ads for it).
No, that's not an excuse because Steam is also a launcher to play your games. If the store was completely separate then sure it would be OK to promote games being sold in the store there.
What are you on about? The steam store is pretty much always fast, efficient, and has lots of little touches that increase information density. It is one of the last remnants of the web from the good old days.
The steam store used to burn CPU on Windows until at least up to 2017 (on fresh install it would a strong PC stutter on startup). It tries to kill your DNS resolver on linux when downloading games (~20 requests/sec when) which actually decreases your download speed by a bunch. This bug has been documented in 2014, and was still present last time I had to debug this a year or two ago.
I measured an LCP or 3.5s + significant layout shift.
The images are poorly optimized jpegs, instead of WEBP/AVIF.
The start page takes a cool 6MB.
A games page clocks in at around 12MB before the video starts loading including a whopping 4MB JS.
None of the links appear to utilize preloading and it's and old school multi page app, so navigation takes a long time.
I don't have a way to measure it, but subjectively it performs worse in the Steam client than in a browser.
"We will make linux a viable gaming before we increment that number to 3!"
But I totally agree, I still install windows for gaming on my machine, but it looks like that for my purpose of gaming I can stay with Linux (I play mainly older games or indie games).
It genuinely makes me see the value in private companies. Public companies must grow. They're accountable to so many different interests. Private companies can be happy sitting at whatever profit level they want. They can take time to tinker on something that they care about. If it doesn't pay off, that's fine.
I think I would say it this way: private companies can be good or bad, but public companies must ultimately become bad.
I feel like many other companies would have bought out the technology and then applied for patents to stop anybody else from developing similar things.
This is what you get when you go completely the opposite direction, and it's wonderful.
That's more a property of the community than of the company. If the community were differently inclined then the comments would be about how Valve is making money by addicting children to gambling and so on and so forth.
I strongly feel it’s because Valve is not a publicly traded company where they’ll eventually give up their values to meet Wall Street analyst quarterly targets.
