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The quest for a legendary company structure!
by Steffen BaboonLord Kabbelgaard on 06/25/14 08:20:00 am   Featured Blogs

The following blog post, unless otherwise noted, was written by a member of Gamasutra’s community.
The thoughts and opinions expressed are those of the writer and not Gamasutra or its parent company.

 

3 years ago we formed a company, 8 months ago we got a success with our game FORCED and started structuring our company with the goal of achieving a creative momentum driven environment. Actually I think the best way to describe it is, that we want people to feel like they are partners and entrepreneurs rather than employees.

 
 
 
Based on that, our goals are to:
 
  • Make all information available to everyone internally.
  • Create an evaluation system that effectively estimates an individual’s value.
  • Create a transparent salary/bonus system, where everyone shares profits.
  • Establish a culture of agency and momentum, where people can take important decisions without needing vertical permission. So if someone wants to go to a conference, buy a new computer or purchase a marketing spot at a website etc. they should simply seek peer feedback from the most knowledgeable in that area.
There a more goals than these, but these should be enough to explain our vivid dreams for now.
 
So far we are iterating towards our goal and are basically on our second iteration since we started.
We spend a lot of time and money on it, as we find it important to shape our culture as early as
possible.

 

Let me jump right into our current iteration!

We’re 14 developers (2 founders, 7 employees, 3 interns and 2 contractors).
Everyone in the company including founders but excluding interns and contractors gets the same monthly salary of around $3k, but to make up for the low salary we have a very rewarding bonus structure.
The way it works is that every 3 months we have a financial status were potential profit is shared in
the following way:
 
  • 50% is divided among the employees
  • 35% is saved for our company
  • 15% goes to founders
 
The 50% team profit bonus is divided based on evaluations conducted by a varying part of the team,
who collects the whole team’s feedback on each individual as well as self evaluations.
So to be concrete, if we would have a $100k in profits in a given quarter, $50k would be divided
among the current 7 employees and so forth. However, our definition of profit is revenue that goes
above our “Goldmine capacity”. 
So when we started out on this approach we set that to around $500k, hence as soon as we obtain revenue that exceeds our capacity it will be divided in the aforementioned way.
 
Additionally almost any information in the company is available to any employee; hence if someone wanted to know how money is spent, he/she could go right ahead.

 

Now let me openly reflect on this approach

 

I constantly try to consider if our company would be a place I would be if I hadn’t founded it.
If possible I would like to be at a place where I felt like I could make a difference and where I felt that I
was a partner more than feeling employed. So I thought what can we do, so that everyone would feel
like partners even if we grew to the size of 100+ devs?
 
 

Open Information

When you’re a partner, information is rarely hidden from you, and you have a feeling of shared responsibility and care. Hence transparency is important to create trust, similar to relationships
between people.

I think we could make information in our company almost 100% transparent. I think that making visible how money is spend, who gets what in salaries, why a particular decision was made and so on, is possible and that it can create trust and motivation. 
 
I also recognize the challenge and frustrations however, it requires a huge amount of self-critique
and a very mature view to openly compare or even rank yourself among others.

This is a massive challenge in itself, that I might want to dedicate a whole blog post to in the future. 
So far we have evaluated each other two times. Each evaluation was different and I think we’ll keep iterating on the process for quite some time before we formalize it. 
The most challenging aspect is probably that you see your evaluation/salary relative to others,
which you rarely do in other companies. But if you are a partner you would want to know who gets
what and how you spend your companies’ hard earned money.
 


Sharing profit


When we made Forced, we divided 20% of the revenue (not profit) among the team, so it’s not totally  new to us with rev-shares/bonuses like that. 
 

I strongly believe profit or rev share is an important team ingredient. In my perspective, teams should experience ups and downs as a whole and everybody should understand the broader perspective of things and have responsibility. 
Right now everybody gets the same salary and when profits occur we share that cake together
based on how we have evaluated each other. When done with more than a few partners, that may
sound like an impossible ideal to achieve, but Valve’s structure would probably have been perceived
the same way when they started. 

Nevertheless I believe it worked out very well when we made Forced, except that we should have put more time into evaluations which we’re now doing.
 


Transparent salary


I like to compare a development team with a football team as the difference between success or
failure is in both cases very depended on the team dynamic. 

With that in mind it is however interesting how football players to a higher degree must deal with transparent value. Not all football players are worth the same and their value is often spoken about openly, but everyone on the field has important roles, and that must lead to a lot of conflicts. 
Yet it’s a culture that has been there for a long time, consequently football players even though many
of them might be big ego’s, must have learned to deal with it in some way. 
 

David Polfeldt (Managing director at Massive) used this analogy as well in a talk at the Nordic game conference 2014, he noted that the best football teams were those who were willing to sacrifice themselves for the team, i.e. not take a chance for a crowd/press pleasing stunt, but rather choose
the action with highest probability of team success.
 
I assume that if you’re part of one of the best teams and respect it, then being perceived as the
lowest ranking player on the team is still something you’re proud of – since you’re actually part of
that awesome team. That would be what we aim for at BetaDwarf.

 

Evaluation


The idea behind creating a transparent company, is to form a culture where we understand each 
others value, it’s important that we pay our tributes to high performers – otherwise their opportunity
cost might be too high for them to make their contribution meaningful. 
 

Additionally I believe that if such a culture is established, people feel much better paying great
salaries to great problem solvers, as they were part of that very decision. 

With an entrepreneurial view it is easier to understand why you would pay person X double the salary
of person Y. I.e. if you understand the need, you will better understand the cost. No two persons
would ever contribute the same value, just as there are no two similar persons in the world.
 
Overall we want to improve how precise we can evaluate people by making it a team task rather than
a “Founder/boss” thing. So instead of two founders evaluating with what little data or gut feeling we
might have while wearing a thousand hats, we want the team to be the main evaluation. However evaluating and value estimation is an expertise on its own, which is why I see it as something people should train themselves to be good at. Like everything else one will never perfect it, but one can constantly improve it.


--
If you’re are interested in this approach I would love comments i.e. suggestions, observations. Would this be interesting for you - why/why not? And is there anything you would like more info about?

Cheers!
@BaboonLord

www.baboonlord.com


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Comments


Adriaan Jansen
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Awesome post, thanks for sharing! (My coming comments represent my view only btw)

We have a very similar approach on how we do things (even the exact same way revenue was shared of our first product!) but I'm still not entirely convinced. I think our monks have different characters compared to your dwarfs. ;)

For example, I thought the revenue share model had (and still has) a limited effectivity. To 'feel' the motivating power of revenue share, you must be, well... a little bit of a wallstreet banker type. High level instinct, company/product vision, and hunger for success are pretty important. The traits aren't shared by everyone. I'm still strongly in favor of it, because it feels fair and is a gesture of appreciation and creates a positive and commited group. However, the efficiency of this measure depends strongly on character type. (Not work rate or skill!)

The other problem is that you're basically promoting everyone to lead. And some people just aren't lead types. They prefer to focus and improve on their field, or are blatantly uninterested in the most important company tasks, like finances or business to business. This structure can suffer from information bloat, making the evaluations more difficult and with us, it created some chaos in the team.

I love some of your approaches however. The football team analogy is exciting and pretty competitive, and the way profit is shared is also very interesting.

I also have some questions: are all people at BetaDwarf much alike? Like, are they often motivated by the same drive? Is creative vision very much shared? Does everyone share the ambitions of BetaDwarf on all levels? It seems that BetaDwarfs are very like minded people on most aspects of company and game building!

Besides that: how is authority distributed?
Looking forward to your answers!

Steffen BaboonLord Kabbelgaard
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Hi Adriaan, and thanks :)

Not all Dwarfs are alike, but the model has indeed been discussed in unison. As founders we basically sat down knowing we had a chance to build a company after the FORCED success, and then we considered the different options for company structures. We quickly realized that no structure is perfect, and then we agreed to aim at the most complicated but potentially most effective one which is indeed inspired by Valves approach.

Not everyone in our company is motivated by the same stuff I would think. Having a salary is new to us and it's greatly enjoyed. I think most of us wouldn't care much about high salaries, at least it wouldn't be a deciding factor I would think.

I certainly recognize that not all are motivated the same way, but everyone certainly care about their evaluation and recognition in general, maybe that's even more important than the salary. Also I dislike the tendency of rewarding the vocal/outspoken/extrovert people.
I think the structure we aim at, requires many years to grow, we have to write and read the approach on the fly which indeed invites mistakes.

Authority is evenly distributed based on knowledge I would say. People with a task is responsible for handling that task and if they are in doubt, they should ask others with knowledge in that area. If we reach a situation were no one can decide, either I or my tech partner would decide. Momentum is very important to us. Our aim is a culture were everyone is caring towards making the right decisions as fast as possible, and natural roles also emerge but they are never written in stone. We have a vision holder and we have someone caring much for the aesthetic values who could be considered an art director for our current project, but the roles are more naturally defined or at least not proclaimed.

Hope some of that helped :)

Lance Thornblad
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I've been thinking a lot about this, myself, and this sounds like a good approach. Thanks for sharing!

Benjamin McCallister
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Its fascinating to me to read an approach like this. I'm 100% set on the fact that if I ever became successful enough to run a company, I would probably run it 180 degrees different from this. Literally almost the polar opposite. Of course, I don't run a company yet and maybe never will, so this is the opinion of an an armchair quarterback. (Or worse, the internet message board equivilent)

I disagree with almost every single notion you have with regards to doing business, knowledge dissemination, wages, responsibility allocation, transparency, and wholeheartedly believe you're giving people far, far too much credit.

That said, best of luck, and if its already working smoothly for you, then, huge kudos to you!

sean lindskog
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I like it. Most importantly because it shows great respect and value for your team.

I would worry a bit about the "unsung heroes" of the team - the guys who aren't working on the flashy stuff, but quietly accomplish the grunt work and heavy lifting needed to build a game. Or that some team members might feel pressured to hype up their own contributions, since you are in direct competition against your teammates for the bonus cash pool. Still, maybe these are small problems in light of the giant motivational boost provided by the bonus structure.

John Maurer
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Your premise reminds me of Spark Unlimited, maybe have a look at how they do things

Andrea Di Stefano
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Hi! Thanks for the article.
I liked the specifics about the salaries and profit-sharing but I think the rest of the article lacks the same kind of precision.

At the beginning of the article you mention everyone getting the same base salary + profit share, right? And in the rest of the article you mention salary transparency as being a challenge...in what way exactly? Are you talking about different salaries based on seniority (either in-company or from previous experience)?

Some questions:

- How would you handle salary/benefits progress in the company in a mid to long-term view (ie. one employee sticks with you for 5 or 10 years, is he going to get the same base salary?).

- What's the direct outcome of the evaluation process?

Andrea Di Stefano
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Also, my 2 cents:

In my previous job we had a predefined salary chart, based both on salary and prior experience. Salaries would be raised systematically and predictably based on company seniority. All this was communicated to everyone in the company and was not subject to interpretation (you knew what you would get and when you would get it).
If someone wanted a raise, he/she would need to go up a step in their field ("junior artist" to "artist" for example).

I always found this approach quite solid and very effective as a base to promote a team-like philosophy and to prevent salary grudges among colleagues.
That said, some people were feeling not paid well enough compared to same-level but less-performing colleagues. We didn't really find a solution for that when I was there except for setting up evaluations, firing more aggressively (but fairly) and implicating employees in the evaluation process like you suggest.

This approach also didn't go down well with people finding higher salaries elsewhere...my advice is to make sure your salaries are competitive: even the most driven employee will feel the frustration creep in fast once the salary discrepancy becomes too important with competitors. Unfortunately, that's not always possible, especially for startups...no real solution there except being as transparent as possible and planning to reward the fidelity (and actually doing it!) if things get comfortable money-wise.

I also agree with some of the comments here. Some people will not be bothered by all the processes you set up and won’t care about the transparency. That doesn't mean they’re not valuable, but it probably means you won’t see meaningful contributions from them when discussing ways to improve your company and its structure.

Steffen BaboonLord Kabbelgaard
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Thanks for your thoughts!

First the questions.
1) There would be no bonus for staying here a long time, other than the fact that you should have a great advantage of knowing a lot about the company in comparison with a new crew member, and so your value contribution should hopefully show that.
Since we transfer such a big portion of our profits to the team, they should have already benefited greatly if they've been part of success. So yes that person would get the same base salary, and the same chances for further profits as anyone else, only difference would be the experience. I guess you could reward loyalty, but doing so would also punish a potential new crew member with far more experience just because that person chose to become awesome at some other studio before joining us.
I'd like to know what you think about that, would it be something you wouldn't want to take part in?

2)The direct outcome is a concrete score and critical feedback, such as suggestions for improvements and positive comments. An evaluated person would e.g. get a score of 182 points, which he/she would divide by the total number of points, thereby knowing their exact rev share.

Salary challenge)
We have a base salary which is equal to everyone and a bonus, the only thing that differs is the bonus, and that's where the challenge is when you know exactly what others on the team gets and you might disagree with some of it. But i'm pretty sure that is the case at any office, it's just more open here. I hope that by putting the problem in the middle of the room, we will learn to deal with it faster than only whispering about it in the corners. No matter what structure a company has, it has to face the problem of someone dictating another persons salary.

When talking company structures, I think it's always helpful to know that one is never aiming for a perfect system but rather a successful system, and determining success is probably easiest by comparing with other potential structures. I totally agree that not all crew members will appreciate the structure equally, and you are very right that not all will contribute to improving the structure, just as they wouldn't within another company structure.
I think what we are kind of investigating with this structure, is whether it's possible and beneficial to make everybody partners or keep the responsibility and decision making restricted.

Again thanks for caring, was hoping for feedback like yours, it's the main source for further reflections and important critique.

Cheers!

Andrea Di Stefano
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My pleasure, love the topic and what you're trying to achieve :)

About the seniority: I kind of disagree on this although your point makes sense.
Indeed no one should feel punished for having gained experience in another company. That’s what the grades for a specific job are for (example: junior artist, artist, senior, lead, director, etc.). The base salary varies based on the grade so if your experience warrants it, you could be hired directly as a lead.

That said, if you take two lead artists and one has been with the company for 1 year and the one for 10, it would feel nice for the latter to get some kind of seniority raise. It’s true that this person enjoyed 10 years of bonuses, but those bonuses could potentially amount to very little money.
The point is very debatable, that's for sure!

About the evaluations: I like the idea. It will definitely generate some hardship but it’s a good starting point. What I liked about our salary chart is that it was set in stone: if it changed, it changed for everyone. Basically it avoided the feeling of having someone else decide of your salary (except for the initial design of the chart of course).
It also limited the risk of having personal preferences, bad impressions nearing the evaluation (eg. if a usually excellent programmer makes a mistake and breaks a candidate build one day before the evaluation, it could ruin his/her “score”) directly affecting your salary.

I’m looking forward to reading how this worked out for you guys!

Daniel Pang
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I like the idealistic nature of this approach, but I actually really disagree with the disclosure of salary details, especially if individuals are allowed to critique each others' performances.

In my experience, it becomes far harder to work creatively or approach the ideas of others in an objective, critical light when money is up for grabs and your performance bonuses are tied directly to your relationship with others. You'd be far less likely to critically attack something you legitimately think is a bad idea if you know the originator of that idea will also be on your peer review staff and their opinion of you is directly tied to your bank statement at the end of the month.

What is crucial - even more crucial than income transparency - are people in charge who understand people. People who are not necessarily the best at coding or whatever skill is needed, but people who can lead, inspire, nurture and guide, as well as clearly be aware of what's going on at every level. This is far easier to do with small teams.

And as someone who does work in a creative field, I'd much rather not know how much people make. This would also color my opinion of them. It's far easier to work with a senior employee who sits on his ass and act as a gateway for your work if you don't know he's paid six figures. Whenever the subject of hard numbers comes up, the creative side tends to shut down. Many people working in the game industry are just happy to be working on games for a living, and the quintessential idea of the "garage developer" who lives off ramen and is maybe a thousand dollars from being evicted has seen a massive resurgence in recent years.

The world isn't fair and nowhere is this more apparent than the difference in salary between the top five percent and the bottom thirty.

I agree on performance bonuses, I agree on monetary incentives to perform better, I also agree on open disclosure of profits, as well as disclosure on how those profits are spent (with 'bonuses' lumped into one category so as to avoid naming specific individual gains). I also agree with the idea that employees should be encouraged to want their company to succeed beyond the immediate monetary gains - that kind of loyalty that breeds lifelong friendships and true creative partnerships cannot be bought.

There has to be a difference between capitalism (a system that shits on the entry level guy) and communism (a system that makes everyone dirt poor at the same level). Speaking personally, as someone aware of my status as a petty and nasty human being I'm perfectly happy not knowing how much Line Manager X makes. If he or she makes more than I do, I automatically hate the fucker. If he or she makes less than I do, I feel guilty about my position and how much I make relative to how much they make.

Steffen BaboonLord Kabbelgaard
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Great feedback, and it touches the complex challenge of salary which is a challenge for everyone as soon as it's on the agenda. It seems like many people would suggest the solution is to try to hide the details as best possible.

I've been very curious about this topic which has led me to ask a lot of studios how they're challenged with it. Most studios have had people complaining about their salaries, but it seems like the less the studios are talking about salaries - the less complains they have. That might be an effective solution but it just doesn't feel fair as it punishes the introvert spine of your company. Additionally many studios do tell that if they have employees who are interested in other peoples salaries they'll just ask them and so a lot people know about that, but it takes more effort which minimizes the transparency - maybe in an effective way.

We might resolve to such solutions one day, but first we do want to fight for a culture that is as motivating and precise as possible.
In our last evaluation we did something that changed it and made everything less tense, we had a conductor group that assembled the scores and delivered them to people. The difference being that if people wanted to see other peoples scores they needed to ask for it, and many didn't. Which lead to less debate and frustration I believe.

I also want to stress that a big part of the evaluation is being a team player, your score very much reflects how enjoyable you are on the team, making it a bit hard to be a calculating assassin.

Again I really, really appreciate these big replies, they really help me reflect and it's awesome that you take the time to care that much, i'm very grateful!

Daniel Pang
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Don't worry, it's hard to miss someone who has the middle name "BaboonLord".


If I find out you're not actually the Lord of Baboons, I may take offense for false advertising. I may also engage in the traditional masculine display of animal aggression required to challenge for the title of alpha Baboon Lord.

The key difference is trying to give your staff the impression that whatever review is being provided, it is as close to fair and objective as it is possible to be. A good manager sees everything - even those things people think are unseen, unappreciated and unnoticed - and acts accordingly. There's a Cantonese saying that literally translates to "when we talk of money, nobody is friends". This is why I've tried to never bring up the issue.

It's all good to talk of idealism and self-sacrifice and loyalty to the company's values but at the end of the day, it's work. It's the responsibility of those in command to provide the best possible environment for their employees to be productive in - and that includes monetary compensation for their work.

I once met one of the people who worked on Skullgirls. I do not have the liberty to disclose her name, but she remains extremely bitter about the experience, as apparently the people in control of development were completely aware that there was about a 95% chance they were not going to make their money back and that it was absolutely a passion project. We all know how that went - barely months after Skullgirls launched, the studio that created the game was shuttered and closed, and the people in charge turned to Kickstarter to raise money for additional characters and updates.

I feel like there is absolutely no problem chasing your dreams and making that passion project you've always dreamed of making, but as soon as you are put in a position where you become responsible for the careers of other people, there is an inherent responsibility of the company to do its best by the people in it - a responsibility that cannot be counted in money. For every indie success, there's a dozen who crash and burn along the way. I don't have a problem with that - that's the way it's been and that's the way it always will be. But whenever people drag other people down with them because they're interested in chasing their dream first, and those people are not similarly invested, I get extremely angry, as this is a massive shirking of responsibility.

Whenever you want other people to come work with you, you are making a contract between employer and employee. Beyond that, you are asking them to buy into your belief in the product. You are asking them to stake their careers on your business and whether or not you can keep it financially solvent.

If you want to be the Lord of Baboons and run everything like a co-owned fiefdom, then you'd better have a plan for when bonobo monkeys come around and start throwing their shit in your territory. Otherwise there's no point in people recognizing you as the Lord of Baboons.

Steffen BaboonLord Kabbelgaard
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I would say that chasing dream projects is about being transparent. Yes you might very well by chasing mainly one persons vision, but as long as that person is being honest about any questions and expectations, then it's very much up to the followers to judge whether that would be a good fit for them.

People should take care of their careers just as they should take care of their educations, if you aren't happy about the place you're at, then scout to see if you have better alternatives. The company would in my opinion only have the responsibility of being completely honest. It's the same an education if you don't become smarter at your education something is also wrong and it might very well be your own fault.

I don't agree that the manager is responsible for peoples careers, they are very much a vital role, but at the end of the day i'd say a person won't get anywhere if they themselves aren't the main caretaker of their career.

I do however agree that a company in one way or another should strive towards making as awesome a studio environment and vibe as possible, I just believe it can come from the team and not just the manager.

Thanks again, great comments.

Andrea Di Stefano
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Unless you apply it to a standard hierarchically-structured company, I disagree with this thinking. When disclosure and transparency work, it's simply great.

In my case, I'm NOT happy not knowing what my manager makes. I'm the kind of person who invests a lot in the company I work at and if I feel people are rewarded incongruously I want to be able to point it out. It can turn out to be positive and motivational (super great person earns more than me, maybe I can get there as well) or a matter to discuss with your management ("hey, this doesn't match the salary grid! wtf?").

When Daniel mentions that he'd rather not know about the huge salary of a colleague that sits on his ass all day, the problem is not with transparency, the problem is with the lazy colleague being there in the first place which is in conflict with the company model that you suggest. Eventually, the evaluation process (and the management of course) must be able to remove under-performing people in a natural way.
Ultimately, the main requirement of this model is to only recruit people that have a mentality that is compatible with it and are willing to participate in the debate.

Also, if your workforce is made of both "invested" people and "happy-not-to-care" people, there's a fine balance to be reached by having a transparent salary grid but not forcing anyone to look at it unless they're interested. This still means that the management needs to stick to it of course to avoid breaking the trust bond with the rest of the company (super important IMO).

John Owens
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Hi Steffen,

Thanks for the great article.

Have you ever had any months where the wasn't any revenue and therefore profits coming in so you had to pay everyone a basic salary and if so how did this effect the team?

Or was everyone basically working for free or a minimal amount before and that situation hasn't occurred yet with either the existing staff or in particular new staff?

Hicsy Australia
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In "His current iteration" Steffen claimed he pays a 'minimum wage' of about $3k monthly; besides contractors + interns, who are obviously budgeted individually from the "goldmine" and prior reserves


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