Pros
The best part about VALVE is by far the people who work there. For the most part, they are a brilliant, down to earth and fun group to be around. The laid back office culture is a plus, as is the flexibility to set and adjust your work schedule. The healthcare benefits are amazing and the fringe benefits are some of the best around (free onsite personal training sessions for employee and employee's partner/spouse, yearly all expenses paid trip to Hawaii, free food/snacks, lax control and encouraged use of corporate cards for socializing and team building, etc.) If you are a rock-star in the field that is currently the in thing with upper management, then pay and bonuses/options can be pretty generous.
Cons
For lack of a better analogy, I think VALVE can best be compared to a department store window display. From the outside, with your nose pressed up against the glass, everything on the other side looks amazing. It's full of new and exciting things, all perfectly arranged and spotlighted with the outside world in mind. From the inside however, behind the display, you soon start to notice the way things were hastily put together, or the items are for display only and don't actually work. The dust and decay is starting to build up in the areas hidden from view and you soon realize this one display window doesn't necessarily provide an accurate representation of the store behind it. While still working at VALVE, I had the opportunity to chat with a number of former employees (including those who left voluntarily and involuntarily) about the positives and negatives of working at VALVE. It's funny how when you are still an employee, you can brush off the critiques and convince yourself everything is great due to the fringe benefits and office environment. Working there, you almost train yourself to ignore your own gut feeling deep down that is telling you something isn't quite right here. Cons: Lack of senior leadership and strategic direction. Gabe Newell hasn't been actively managing the company for years. Besides playing DOTA games in the office and reversing a decision to ban the game Hatred from Steam, I can't think of anything else he has really done in the last few years. To be fair, I don't begrudge him for this and everyone deserves a break at some point, but stop pretending already and officially hand over the reins. Those currently "running" things don't have the qualifications or drive to do much more then let Steam continue to make money. Strategic goals or long term plans are ill defined or non existent. Those making decisions at Valve confused arrogance for brilliance sometime ago. Instead of making products that customers actually want, Valve jumps from new technology or idea to the next like a schizophrenic playing hop scotch. Expect nothing from Valve over the next few years but micro economies masquerading as games and hardware products nobody wanted or asked for. The project I saw the those at the top put the most amount of effort into was having new offices designed. I guess if you are going to show up to work and do nothing but play games and surf the web, your office should look cool at least. Compensation. Unless you are a rock star in the field Valve currently favors, don't expect "amazing" compensation. I understand the income disparity between top performers and everyone else is status quo in the tech industry, but for some reason this myth exists that VALVE pays everyone fantastically. It's not true. Especially if you are in a non-tech position, supporting a product or doing any other non-technical work your compensation will be just OK for the Seattle/Bellevue area. Also, if you fall into the latter category do not expect salary matching bonuses, and nobody will ever mention stock options while you are in the room. I think upper management follows the first rule of Fight Club when it comes to options, you do not talk about options. Lack of meaningful performance reviews. The peer review system is one of the worst aspects of working at VALVE. It's basically, stack ranking, but the results aren't based on meaningful data. It really is a popularity contest and who can portray importance/being busy the best. Results are then entered into a system and then stacked against everyone in the company, in theory. I say in theory because I saw the results for an entire group tossed and the previous years rankings used for no other reason then the man in charge was upset and decided to do it that way. So basically, at years end when bonuses are released, you are waiting for an email with a number and you have no clue what it will end up being. Lack of company employee protections and competent human resources department. I mention employee protection because there really is no standard process for termination at Valve. You want to avoid upsetting the wrong person or having a different opinion from someone in the good graces of upper management at Valve. Problem is, you don't always know who that is or who has say over your employment status. You can be fired by someone completely outside of your group if they have the ear of a senior leader. In regards to human resources, previous HR managers at Valve actually functioned as HR, providing feedback, acting as mediators and were generally a good resource regarding performance/standing. The HR team today at VALVE act as paper pushers and fill an office requirement. Since they aren't part of the hiring/firing process decision making, anything goes. Personally, after many years of employment, I was let go via a generic email following a group meeting with 1 days notice.