Gearbox's President and Director Randy Pitchford has taken his company a long way since the Plano, Texas firm's 1999 founding, from work on Half-Life expansions and conversions, through Halo's PC version all the way to the company's current flagship Brothers In Arms WWII FPS franchise. The company shipped Brothers In Arms: Earned In Blood for PC and current-gen console last holiday season, and is currently working on Brothers In Arms 3 for next-gen consoles using Epic's Unreal Engine 3.

Nowadays, he comments that his job is to “worry about a little bit of everything, mainly business and our relationship with our business partners, along with the quality of our games”, and he kindly sat down with Gamasutra to relay the history of the company – but disappointingly, though his official bio reveals that he “was a professional magician in Hollywood occasionally performing at the famous Magic Castle between classes at UCLA”, he didn't make any elephants disappear. But he did reveal a great deal about why Gearbox operates the way it does.

GS: Tell us a little about the background of Gearbox as a company.

Randy: We created Gearbox in Jan. 1999, with just a few guys and I that worked together before. I had made games before and had worked with a company called 3D Realms. While I was there, we made a game called Duke Nukem. 3D Realms was also were I worked with a guy that happens to be next door here named Brian Martel. When he first came to 3D Realms I got to know him pretty quickly, I kind of played the whole “grill the new guy” when I was interviewing him, you know the whole “why should you be here” kind of talk. I kinda had an ego back then.

But then he started talking about how he had worked at Microprose, and the last title he had worked on before leaving there was Civilization II. He then started going through this whole list of games that he had worked on, which were all great titles, until he arrived at the very first title he had worked on, the original Civilization, which was one of the first three games ever to break the million unit seller on the PC platform. It also happened to be a main reason why college took me a lot longer then normal. So in the beginning I was sort of grilling him, and at the end I was really bowing down to him. But we started talking about our experiences with other companies and we kept coming back to this idea about how the quality of the product is about the people doing it, and all the places we had been didn't really believe that fundamentally.

For example, when Duke Nukem shipped almost everyone on the project quit - I think right now there is only one guy that still works [at 3D Realms] that worked on Duke Nukem 3D. Some of those guys that quit actually formed a company down the street called Ritual, and also another company by the name of Ion Storm. In fact, even the Id guys used to work for 3D Realms. And a lot of that was because they didn't have the philosophy that it wasn't the talent that mattered - it was the direction and leadership. So we wanted to create a flat kind of system that was based more on responsibility, and where the rewards were being shared.

So we sat down and created this absurd model with respect to profit sharing, where it has nothing to do with merit, but more about objective metrics.

GS: How exactly does Gearbox's metrics system work?

Randy: Well, basically, metrics usually work when human beings sit down and decide how much somebody else is worth compared to others. So for example, at 3D Realms who got what of the royalties was basically decided by George, who runs the games at 3D Realms. So the problem with that was that every single person was unhappy about that. So even if you got the most, people still tend to think of themself as worth a bit more.

So at Gearbox we basically created this objective system so that subjectivity doesn't really play into it, which means it's basically set on time. This includes time with the project, time with the company, and lots of other little buckets where it all works out. The idea is that everyone in the company is tied into the feedback loop, meaning that when we're successful, everyone feels successful, and when we're not, everyone feels that. This helps us learn from our decisions, and hopefully make better ones along the way.

Another thing is with this whole objective matrix - we don't have to second guess our entitlement to our share of the royalties, and that means we also know relatively how much we're going to get compared to everybody else. On a side note, I'm in the same bucket system for royalties as everybody else, which means there about 20 other people making about as much money as I am.

GS: How does management tie into this?

Randy: So that settled the rewards standpoint of it, but the other part of it would be where responsibility lies. The idea was that we weren't going to have a very strong management structure, which we were hoping would get people involved that were self-motivated and capable, and trust them to find their way. This has worked out quite well, because it motivates people to always try to get better. But the downside is when we get new people into the company, they really don't know if they're doing a good job, because of that weak feedback loop.

So while the management is not telling you what to do every day, it's also not telling you what it feels about what you've done. Over time, though, this creates a culture of self-leadership, motivation, and trust. While this doesn't work out in every case, these two crazy ideas overall have helped us a lot as a company. We have very good talent here at Gearbox, and along with that we have almost no turnover (except for maybe one or two guys). So if you compare us to the industry norm (which includes both developers and publishers) of 20%, we have a really low turnover, being more along the lines of 4%. I think this says a lot about how people generally feel about working for Gearbox. It also helps that we've made some pretty good games, and over time our games have gotten better and better.

So for example, our royalty bonus is basically fixed at about 40% of our profits, and when our first game, Opposing Force, shipped, we had somewhere around 1 or 2 million dollars worth of bonuses that we were able to [divide among] everybody in the company. But then last year, we were able to give out over 5 million dollars in bonuses, and I anticipate in the next 3 years or so that figure is going to more then double, and I'm really looking forward to that.

GS: Of the original creators of Gearbox, how many are still around?

Randy: Well, on day zero our first team consisted of 5 people and every single one of them has stayed with Gearbox. Gradually of course we grew to about 16 before we shipped our first game, and of that group, only 2 have left the company.

GS: Gearbox worked with the History Channel U.S. cable network to bring the story of the 101st Airborne division during their mission on D-Day using your game – how did that come about?

Randy: How this happened was, 19 or 20 months ago, there was an idea that came from a journalist that had seen some of our work, even prior to Road to Hill 30 coming out, and knew enough about the subject to know that what we were trying to do was different (trying to rebuild real places, instead of just using themes). So I started going to different people and talking about production.

Basically, what happened was that a lot of people were making the same connection, but when came down to it, I ended up working with the guy that the initial reporter trusted. So that production company and I then started going around to all the different television stations that might be interested in this. Obviously the History Channel ended up being the most interested, not only that, but they came to us with a different path to the same sort of idea. The idea was that we could take virtual reality to recreate something that happened a long time ago and use it to look at history in a different way. So it was kind of destined to happen.

So Colonel John F. Antal began to work with the production company, using all of his contacts to help them bring this together. You know the movie A Few Good Men with Jack Nicholson? Well his character was a colonel, and they're pretty powerful. The only rank above colonel, in fact, is general. So Colonel Antal is not only a colonel, but a historian and author as well. He has actually written a stack of books almost as tall as me about military history. Colonel Antal was able to get us face time with dozens of guys that were actually there - he also helped us get support with some of the leading historians who specialized in this time of history.

In fact, one of the guys in the show was a guy named Mark Bando, and he's pretty much the leading historian of the 101st Airborne. He used to be a detective, and so he has used that approach in researching the 101st Airborne. Mr. Bando also has interviewed more people that had connections to the event then anyone else on the planet. Another guy, George Koskimaki, who wrote Hell's Highway (and a number of other books) about the paratroopers. In fact, he actually was a paratrooper in the 101st Airborne, and his experiences are what he wrote his books on. So all of these guys got involved, including some museums in Normandy, and the show ended up looking pretty neat. I liked the fact that I just worked on it from an executive level and didn't really drive it to completion, so I got see the finished product without actually having been a part of it; that was especially neat. While that may sound kind of unimportant, it just means I was able to actually watch it as a viewer and get a better understanding of what our audience sees. This went off really well, and I think we'll probably see more of this.

GS: What's your current and future staffing plans for Gearbox?

Randy: Right now we have 72 full time employees at Gearbox, and there are a number of contractors we work with. That number, of course, fluctuates, depending on what we're doing, from one or two, to several dozen. We also have a Quality Assurance team that is led by 5 managers, and a department head. Those guys are permanent staff, but when we're doing final assurance for a product, it can grow to be as large as 30 or more people. As far as growth goes, we are actually growing very steadily, I'm thinking we'll probably grow between 4-6 people in the next 6 months.

GS: What's your impressions on the future of digital distribution?

Randy: It's really interesting at the moment, - on one hand I can see it being convenient for some users, but on the other, not so much. Music is really great for digital distribution, because it's going to relatively stay the same size (between 3 and 5 MB), so my bandwidth and hard drive have gotten a lot bigger, but my music hasn't, and that's really good. So iTunes is really good, because they make that accessible to a lot of people, even those that don't know a lot about computers, and they also made it legal.

Digital distribution for video games offers some of these things, but we still have the problem where our games are going to get bigger and bigger. Even when we reach photo fidelity, the scope and content of our games will continue to grow, which is going to ultimately slow down digital distribution. Ten to twenty years from now, whatever bandwidth or hard drive space you've got, we will fill it up, I promise you.

The other thing is that the world is not ready to buy things online yet - it's getting there, but the world isn't ready. There are some percentages in Western cultures that can do this, and iTunes is probably the best example. Proving that people are willing to go to a virtual place and pay to receive virtual content may take a few more years, especially before it becomes a real significant part of our business. Though the best case we've seen so far is Half-Life 2, which, if I had to guess (there isn't definitive data, because Valve hasn't released it) it's probably around 10% of their total sales through Steam. For most people, like us, it's a lot worse then that. For example, there was a digital version of Road to Hill 30 - there wasn't one for Earned in Blood. I don't regret that at all, but it cost more to do it than we got off of it.

GS: Would you ever want to make a content delivery system?

Randy: Well, what I would like to see is something standard and convenient. Soon we'll have Windows Vista, which - I don't know if anyone knows about this yet - but there is the equivalent of Xbox Live built into Vista. On the Xbox 360, there's this thing called Marketplace, which allows users to browse digital files and buy the media directly off of their Xbox 360. It's effectively the same thing as digital distribution, except that it's more convenient; not only is it accessible to developers but to the audience as well.

I don't believe what Valve or EA is doing to be the ultimate answer because it is so fragmented. I can only get EA stuff from EA's client, and the same for Valve. If you extrapolate that out, then you'll have a lot of clients. But companies like EA and Valve are really interested in you getting that client because then they're able to advertise other products for you to buy. The other way to go about this whole digital distribution is programs like [IGN's] Direct2Drive, which push that sole product to you. That's fine, because you don't have to download a client - you can just click and download my one product. Ultimately, I'm looking for a more universal solution (such as Xbox's Marketplace) to be the real answer.

GS: What do you think of the continuing political controversy over games?

Randy: Fundamentally, what we have here is something really ironic; video games are the new rock 'n' roll. The thing that's interesting is the people that are worried about this are the same people the defended rock 'n' roll from their parents 40 or 30 years ago. I find it really funny that lessons like that haven't been learned yet. The few laws that have been passed by a legislative board have been broken by a judicial examination of the constitutionality of the law. It will of course be an issue for politicians, and it will cost the taxpayers money while they argue, but eventually what's going to happen is that the old people will die. The new people play video games: 95% of school-age children choose video games as their #1 choice for entertainment.

When people grow up playing video games as a kid, they tend to play video games as adults, and that's why we have M-rated games right now. We don't have M-rated games for kids, they're for adults. We understand that we're not going to play GTA and then go out and kill everybody. That's a pretty good thing, because it would be really bad out there if video games actually made us do bad stuff. The fantasy for us is probably even less solid then in film, only the experience is different because we're interacting with it, instead of just watching it.

GS: What training or education did you have before starting up Gearbox?

Randy: Before I started up Gearbox, the experience I had was industry experience. But when I got in this industry there really wasn't a curriculum. So, most of us back then would study computer science, or some other people I know of that are level designers got architecture degrees (but that's sadly obsolete now for a level designer). The reality of the situation, though, is that we were all self-motivated and self-taught. Most of us that pioneered this industry didn't learn what we did from college or from experience, but learned as we went.

GS: What do you think of academic courses for games in general?

Randy: Well, it's pretty amazing really, and I'm quite excited by it. Our industry is a lot like film as far as this goes. The inventors or pioneers such as Carl Laemmle (who founded Universal), and John Ford sure as hell didn't go to school. These guys just had some land, and took pictures of guys riding on horses playing "Cowboy and Indians." There was no model or industry - they had to figure out how to distribute their product and actually turn it into a business. But after it becomes a business, the industry gets supported by the rest of the world, and academia follows.

Then through academia, you get guys like George Lucas (who went to USC film school), Steven Spielberg, and Francis Ford Coppola, who are considered some of the best film makers around, who didn't have to invent stuff from scratch, and were able to be educated and brought up to speed more swiftly. That is what is now happening in the video game industry - the first instances of academia creating our future game makers.

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