Gabe tells it this way. When he was at Microsoft in the early 90’s, he commissioned a survey of what was actually installed on users’ PCs. The second most widely installed software was Windows.
Number one was Id’s Doom.
The idea that a 10-person company of 20-somethings in Mesquite, Texas, could get its software on more computers than the largest software company in the world told him that something fundamental had changed about the nature of productivity. When he looked into the history of the organization, he found that hierarchical management had been invented for military purposes, where it was perfectly suited to getting 1,000 men to march over a hill to get shot at. When the Industrial Revolution came along, hierarchical management was again a good fit, since the objective was to treat each person as a component, doing exactly the same thing over and over.
Consequently, Valve has no formal management or hierarchy at all.