Pros
Valve hires very smart people with a shared core set of expectations about communications and problem solving. Individuals and groups at the company act with customer goals identified, and sort tasks and product choices accordingly. The employee handbook and occasional articles about how the place runs are true. There are no bosses. No one, including Gabe, has the authority to tell someone else what to do. Proponents must recruit people to projects by explaining why the task is important and how it is important, and convincing people to share time or prioritize over other competing needs. The lack of hierarchy and titles is a conscious design to minimize bureaucratic resistance to getting work accomplished (and bureaucratic authority to get the wrong work accomplished). It's also a design to keep valuable employees indefinitely. No one has to leave because a peer got a promotion into a job he/she though he/she deserved. No one has to become a manager because it's the way to get paid more. Individuals can get more and more valuable over years and decades of work, get rewarded as such, and have no particular forcing functions to trigger them to leave. Great to individual and company. The scarce resource at Valve is people's time. Capital is available for most any purchase need, if you can make the case for what you're doing and why. Routine purchasing decisions are devolved to employees. This system, hiring great people, giving them resources and great colleagues, and getting out of the way between them and their customers, has produced a lot of value for customers and the company. Last pro: Valve takes good care of employees and their families. Benefits are generous and sometimes astonishing. Most anything that can keep employees happy and productive will be considered.
Cons
To succeed at Valve, you have to be a self-starter. No one will tell you what to do -- if you ask, people may give you an opinion about what they think you should do, but no one hands you a list of your five most important tasks for the next review period. Beyond being a self-starter, you have to come up with ways to judge yourself, or to gather feedback from customers, partners (developers/publishers/vendors), or other employees. I think the comp system works reasonably well, but the feedback system has never functioned well for all employees. When an employee is having trouble, the system (which is really just a group of peers, sometimes guided by HR or more senior colleagues) is more focused and effective at gathering and communicating specific feedback for people. Some people are just driven nuts by the uncertainty of this kind of management and feedback system. Some people thrive and delight in the absence of semi-annual self-evaluation forms. At Valve, it's hard to get a grand project started. It's easy to get a clever, valuable, smaller project started. Turning the latter into the former requires great communication skills or a clever plan of laying out small projects to take the company in the direction you think is smart (and which is confirmed by the outcomes of prior small projects). There are no patrons to make things happen for you. I disagree with a few other (typically former employee- ) reviews that suggest there is secret management structure that controls everything. There are certainly more senior people (who may or may not be more experienced by years of work) who can give great feedback on what is worth doing, or how to do something. But there is incredibly little control, and shadow management is just not true. I think that is often a projection by people who can't believe the uncertainty of radical freedom.