Good, I hope the man goes down with his ship and loses every dollar he's made off of the company. These in-app-purchase types of games are bad, but Zynga is one of the worst.
These games don't strive to solve any problem, and in fact don't strive to make anyone's lives better. They essentially run an extortion game: "pay us to scratch the itch we give you."
And god forbid they get access to the gambling markets, because suddenly they will descend like vultures onto a group of people who lack the self control to spend their money.
They don't strive to make people happy; explicitly they make the most money when people are nervous that they might lose the hours/days/weeks of "work" they put into whatever this app is. They strip-mine people's souls for cash. I hope Zynga, King, et al. nothing but the worst. I don't like them, I don't like their leadership, I don't like their investors and I don't like the employees that work knowingly taking advantage of people (psychology majors who actively exploit people's base instincts for the explicit purpose of extracting money with no positive side effects).
Their games are the online equivalent of an emotionally abusive boyfriend or a drug dealer. They draw you in under the auspices of fun & cheeriness, but it quickly devolves into a quagmire of dependency.
As a quick disclaimer, I've never worked for a game company, never mind any of the one's I've mentioned. I think Pincus is a scumbag businessman for many reasons, some of which I listed here and some of the reasons that others have listed (i.e. stock take back, spyware bundling, game stealing, pump & dump (I know it's not the textbook term for it)).
Pincus to a U.C. Berkeley business school audience in 2009: "I knew that I wanted to control my destiny, so I knew I needed revenues right fucking now. Like, I needed revenues now. So I funded the company myself but I did every horrible thing in the book to—just to get revenues right away. I mean we gave our users poker chips if they downloaded this zwinky toolbar which was like, I don't know, I downloaded it once and couldn't get rid of it. [laughs]"[1][2]
This was probably one of the most misunderstood stories of recent memory.
Anyone who has built a company of scale knows what Mark was dealing with: An employee who was given an outsized grant that far exceeded the contributions of the employee. Grants last 4 years, and sometimes you make grants with the expectation that an employee will grow into their grant.
Typically you have two choices in this scenario: Fire the employee, or suck it up. He invented a third, re-negotiate the options package.
It's really not as horrible as it was made out to be.
I know I'm going to get voted way down for this, but until you've been in those shoes, it's really hard not understand why he did this instead of firing the people... which is what usually happens when this situation comes up.
No, what happened was that early employees got equity grants that seemed reasonable when they were hired. When Zynga became a smash hit, those unvested options became very valuable.
Then, Zygna's board decided to try and weasel out of paying the options. They made up the excuse that the employees were "underperforming", but really they just didn't want to give some low-ranking employee the $1M+ payday they had earned by being an early employee of a successful startup.
Instead of outright firing the employee (a downside of "at-will employment"), they instead pressured the employees to give back their unvested options.
That breaks the startup social contract. If the company is going to try and weasel of its options when they are a unicorn, why would any employee accept equity as compensation?
I.e., you hire an employee and give them $50k of options. Suppose the business is a 1000x unicorn, and those options are now worth $50M. Why pay a software engineer $50M? So you ask the employee to give back his unvested options, because his "fair share" was only $50k and not $50M.
Also remember that, if the employee is fired, they have 60 days to exercise, come up with the strike price, pay a huge tax bill, for shares that may not be liquid (or ever worth anything). So the employer does have leverage over the employee, because they're forced to exercise and pay big $$ if they're fired. It's unethical to exploit that leverage.
The idea that an employee does not deserve a major payday for being an early employee at a startup misses the entire point of the practice: by substituting options for cash, the employer shifts a quantifiable risk from itself to the employee.
Stock options aren't simply an alternative/substitutable form of payment; an employee who takes options at a startup over cash from Google/Apple/etc takes a gamble. By "re-negotiating" the stock options, Zynga pulled the proverbial carpet out from under the employees who stood to lose the most. They were effectively punished for betting well.
It wasn't an employee, it was many, and executives mentioned that they specifically wanted to avoid a 'Google Chef' situation:
"Zynga executives said they didn't want a 'Google chef' situation, said a person with knowledge of the discussions." [1]
And options, as I understand it, are rewards for early entry; if you think someone hasnt contributed, you should talk to them or fire them, not pull back options on the eve of an IPO.
My impression is that labor laws don't work that way.
If a person meets expectations for the current role then the company cannot fire them simply because they are over-compensated -- I think the employee would have the right to file a wrongful termination suit if that were the case, even if it is "at-will" employment. To prevent this liability the company would likely have to go through the "gestures and motions" of a performance improvement plan before firing said employee (even if behind the scenes the true reason was purely to reclaim over-allocated equity).
Now I'm sure Marc consulted lawyers before rolling out this re-negotiation plan but this seems like gray area to me.
Why wouldn't you be able to fire someone because you think they cost too much money? This is a perfectly acceptable reason to fire someone under at-will employment. It's probably also one of the most common reasons.
There are very few reasons that don't fly for a firing under at-will employment. Discrimination against a protected class is the big one, and companies do the performance plan thing so that they have something objective to point to should an employee ever try to claim they were discriminated against. The thing about performance plans is they take 3-6 months to mature into a full firing. If a company needs to clear out an employee quicker than that, they'll forgo the performance plan.
The handful of other reasons you can't fire someone are things like the FMLA and retaliation for good-faith reports of harassment or violations of labor law. Pretty much any other reason will probably work.
I Am Not a Lawyer and This Has Not Been Legal Advice (tm). Everything I've said is probably wrong.
Really? If the person isn't performing, you have to let them go. In what world is a startup being so generous as to give new employees options that they "grow into"?
Essentially what you are saying is that the company has every right to act generous until it actually matters (you know when people finally get paid). Very classy /s
I think "Suck it up" is certainly the easiest ethical path. I've always taken this path.
But one could argue that it's unfair to other employees who are performing, to allow an under-performing employee to continue to vest just because things aren't so bad that you would fire the person.
One key problem here is that the business wasn't particularly reliable, so even if Pincus had a reasonable measure of employee performance, there was undeniable uncertainty in what realizable monetary value that performance actually had.
If you have an employee who is underperforming but you can't find cause to fire them, then you as a manager screwed up. You matched them with the wrong role, failed to develop them, or maybe you (or the employee) just got unlucky and it's really true that some unexpected event prevented healthy employment. Then execute a layoff if you really have to. Invoking a poorly understood clawback measure only further demonstrates managerial incompetence.
It just so happens that I use your company's product. Given your comment, should I expect that you'll renege on your commitments to your customers when it becomes inconvenient for you?
Of course not. But I prevented sales from signing a 5-year contract last quarter because I didn't want to be committed to the terms of a specific deal for 5 years. The most we'll do is 3 years just so that I don't get put into a position of supporting a customer who is no longer a customer we want to serve.
But we have let customers break contracts over small things in the past. Contracts are only as good as the people behind them, and we think we're good people. It happens. We always strive to do what's right for our customers.
Also -- I've never done what Marc did, I'm just saying I can sympathize with the desire and that I think most of the press took a very slanted view of it, because it's the easy way to view the situation.
My point was that I think the reality is more nuanced. I don't know Marc. Maybe he's an asshole. Maybe he's a great guy. Or maybe he thought this was a way to keep people on the team in a way that made sense to him.
As I understand it from the WSJ article, Zynga signed a contract with some employees, giving them X number of RSUs. Later, before these RSUs vested, they threatened the employees with termination unless they gave back some of those RSUs. Coercing someone via threat into modifying a contract is, literally, a Darth Vader tactic ("I am altering the deal. Pray I don't alter it any further.")
I understand that, from Pincus' perspective (1) these employees didn't turn out to be as critical to the company as their initial grant might have suggested, and (2) the equity was needed for other purposes. However, that's the risk that Pincus took in signing these contracts in the first place. My understanding is that when you sign a contract with someone you are required to act in good faith to see that all parties receive the benefits agreed upon in the contract. Threatening to fire someone unless they give up a benefit is not acting in good faith.
But the reality is that this happens all the time, and people just fire the employee. He was trying to reconcile the "need" to fire the person for being compensated above their actual performance vs. wanting to simply renegotiate the compensation in light of their performance. And worth pointing out, every article highlights it only applied to UNVESTED stock... whatever they already vested was theirs.
My point is that it is nuanced. He was retroactive in the sense that he wanted to re-offer them their UNVESTED stock, but he never requested anything already vested. And there are lots of reasons why this would happen. Historically the choices have been "fire" or "suck it up" and he looked for a third. I just don't think it's as heinous as people have made it out to be.
It feels really insensitive and almost gordon gecko'esque, and maybe it was, I'm just pointing out there could be more considerate points of view that recognize the challenge of having an overpaid employee who isn't performing, but you don't quite want to fire. If you fire them, maybe they can't afford to exercise their options and are left with absolutely nothing. In that scenario, simply renegotiating unvested options and letting them continue to be employed so they aren't forced to exercise is SO MUCH BETTER for that employee.
It's unclear who was actually affected (I believe only two PM-level execs attempted to file lawsuits), and there's some mention that Pincus cited underperformance as a warrant to the action. There's a bit too much controversy to do much more than speculate or editorialize just how bad the action was, but there are a few pieces of evidence that speak for themselves:
* The Zynga earnings statements. The business model wasn't reliable, and yet Pincus remained deeply convicted.
It's somewhat important to distinguish between the party lines "Pincus and co tried to rob their employees!" with "Pincus and co were dangerously incompetent professionals!". The latter has more evidence. Furthermore, while we might one day forgive and forget incompetent, it's important to isolate the clawbacks as precedent of exactly what NOT to do when leading a young company. (We probably didn't need to learn this lesson, but now we did and have it in writing).
It's not Mark's or the executive team's fault! zTrack, the analytics engine, told them that screwing over the early employees would be the most profitable thing to do, and they always follow zTrack's instructions precisely and without question.
Also back in the day we didn't have access to the massive amount of information about these people we do now. Back in the day we'd never see that Zuckerberg quote because he'd have said it in person or in a letter which probably got burned or tossed soon after it was read. The Pincus quote is pretty baldfaced, but so is Zynga's business strategy - I don't know the context but I can see that being an answer to the question "What the fuck is Zynga doing!?".
Isn't this the very literal definition of hustling, before the startup crowd decided they could rehabilitate the word to bring it in line with what football coaches mean when they say it?
I'm having a hard time parsing this comment. It is one of the two important definitions of hustling ("making money quickly with short cons"), the other being the thing football coaches are talking about. And the distinction is important, because the football coach definition is a virtue, and the Pincus definition isn't.
hustling/hustling hacking/hacking are examples of an energy vector dotted with a moral compass. When the dot product between the energy direction and the 'good' direction is positive you get improvement in "good" when its negative you get improvement in "bad" :-)
Quite synonymous with the word hacking as well. My feelings are equally synonymous. Especially with those who implore "growth hacking" techniques that otherwise are not very virtuous. Where do you draw the line?
This assumes that people don't grow & change. We should not only accept that people grow, but actively encourage them to have an opinion & give them enough room to change & grow.
No. But at the same time 2008 was a very different time for startups than 2015, and Zynga's business model has always been rather exploitive of its users (milking the obsessive-compulsive 1%).
Down from 2.90 to 2.60 after hours on the news. I wish them well but I think it will be a tough road ahead.
I worked for a company called Corel in early 2000. We had some really great people but the biggest drag on us was the fact that in the late 90s Corel released some really shitty versions of their software.
it was tough to come back from that and I fear this is the same issue that Zynga faces. Once you've obtained a negative image in peoples minds its very tough to change that perception.
Looking back on what Zynga did, it looks like early apple. They had a first mover advantage in a growing market, and just couldn't make the transition from their earliest products to new streams of revenue very efficiently.
So I guess this places them in a position close to the late 80s apple.
In my opinion Zynga has 2 big issues:
1) What does Zynga do now that Facebook has cut off their main driver for viral growth
2) How do they get back the large group of people who have been introduced to casual gaming and then left after their first year.
I am surprised Don Mattrick would be let go, especially since most of the projects he oversaw have not been released yet. But given that we're dealing with Mark Pincus, the founder famous for wanting control, I guess this was expected.
To those who are unaware, Mattrick was primarily let go for his failure with Zynga Poker. The updated version killed user engagement so badly, the game may never recover. Zynga Poker is one of the company's most interesting assets, given that online gambling will be legalized in the next few years.
Mattrick represented a shift in Zynga: instead of low-brow clones of competitors, Zynga would focus on high-polish triple AAA games. It was a daring strategy, since Zynga's reputation single handedly scared away many amazing game designers. You can copy a farming game easily and get decent results if you have a team of data analysts. It is quite difficult to copy a great hardcore RTS and get good results. Zynga spent 500 million USD to buy NaturalMotion, an excellent game developer in this space. They spent a ton of money on their slots game, acquiring valuable IP licenses + great slot designers. They spent a ton of money getting the Tiger Woods license. Etc etc.
Pincus has never shown the ability to manage high quality game designers. He has only showed the ability to manage MBA-types, who aren't considered the most creative of the bunch. Mattrick would have been a better leader in this vertical. Any midcore/hardcore gamer would rather want the XBOX CEO over Pincus.
What does this signal for Zynga's future?
1) All of Mattrick's high-polish products are now under the leadership of someone who isn't as geared towards this vertical.
2) Increased importance for social casino and real money gambling for the company- The fact that this is the main reason why Mattrick got fired highlights Pincus' goal of dominating real money gambling.
#1 is a negative signal, #2 is a positive signal. I'd agree with the rest of the market and say this is a net-loss for Zynga.
I take this as another example of a pivot that never made sense. It's like Mc Donalds trying to sell high end food under their brand. Why not start a separate daughter company for that? In most industries this is a common practise, it seems like Gaming still has to learn that.
I seem to remember seeing this someplace before, where an executive on the upslope is fired and the new guy gets the credit for good new projects soon to release.
Exactly. If I were Pincus and was a rational self-interested agent, I would've gotten rid of Mattrick at this time, and then reap the benefits of Mattrick's game end of the year. If they succeed? Pincus is a genius. If they fail? Mattrick was an idiot. Can't lose.
You know you're going through hard times when your future business plan involves bringing back Mark Pincus. This guy is the cancer of the business world. The shady tactics that Mark used to get Zynga to the stage where it was once at the top of the gaming world before it crashed and burned would make even the most rogue leaders blush.
I've always found the story of Zynga to be entertaining and fun to watch. Mark Pincus is a refreshingly down-to-earth leader. He takes a lot of shit, and his company is the butt of a lot of jokes (probably doesn't help having a huge office right next to caltrain as a constant reminder). Despite this, Pincus always has a smile on his face and an air of confidence to him. I respect this.
Pincus is a hustler. He built Zynga from the ground up, leveraged it into massive investment, but unfortunately was a little too early to the mobile gaming party. Zynga got screwed because it depended on facebook platform, and new apps emerged that did not. Supercell showed how to profit from mobile gaming and avoid platform lock-in. iOS and Android also dominated Facebook platform so any game depending on Facebook lost to competitors who built around iOS/Android.
The early moves of Pincus were very impressive, and if he can replicate that execution, I bet he can also bring Zynga through a strong recovery. I respect his confidence and leadership. Seems like a cool dude.
His early moves were deplorable. He cloned-- pixel by pixel-- emerging games built by small developers, then seeded them with traffic from other Zynga games.
If he really cloned games pixel-for-pixel, wouldn't the original authors of those games have a good copyright claim? It'd be hard to fight their lawyers if your case is iffy, but if the violation is as flagrant as you say, I'm sure the aggrieved could find a firm that would want to relieve Zynga of some of that VC money. Even if Zynga made some changes, it's likely the original authors would still be able to make the case that Zynga's product was a derivative work. The fact that this hasn't happened makes me skeptical of such claims.
If the copy wasn't close enough to be considered a copyright violation, then what's the problem? Everyone takes inspiration from others. We're all standing on the shoulders of giants. There's nothing wrong with deciding you want to compete with someone and making a similar product. Not every idea for a new company or product has to be (or even can be) completely original.
Zynga has strong lawyers. They would force small devs to take them to court, if they could afford the legal fees, then settle if they had a strong case. By then Zynga's game went viral and the smaller devs lost their first mover advantage. The SF chronicle wrote a great piece about these tactics a few years ago. The article showed how they cloned FarmVille, then settled with the victim for 11 million (FarmVille would make a billion in rev that year). im on mobile and can't search for the article rn
It shouldn't be difficult to find someone willing to help you fend off their lawyers if you have a compelling case. Again, if the violation is really this flagrant, the party alleging infringement would be calling the shots and Zynga would give them any reasonable figure to prevent the case from going to trial. Obviously it's not reasonable to hand over a year's worth of revenue.
Everyone did. Developers he stole from stole it from someone else, the whole social game space was a clone war. But Zynga was consistently succesful in it.
Do you remember the tower-breaking game on Kongregate and iOS that Angry Birds cloned? Or Backyard Monsters that was the original Clash of Clans?
That's the point: every game idea was a clone of a clone of a clone, and on each copying something changed, but not significantly enough to call it a new one. However, the emd results differed from the originals drastically.
I suppose this goes against the common idea here on HN that the idea doesn't matter and you should share it with everyone, even during the early stages of a startup.
Zynga shows me exactly why I don't share my ideas early on: A company with more money and more resources can bring the idea to market much faster than a 1 or 2 person shop.
I think the people that keep spreading this idea have the resources and money to 1) create their own ideas quickly and 2) take someone else's idea.
At some point you have to put your ideas/implementation/whatever out into the open (you might even have to advertise its existence). At that point, anyone better resourced than you can probably just mimic your work.
Crush the Castle! I used to play that game during classes on my netbook back when WebOS was still a thing. Is it even possible to be nostalgic about something that happened 5 years ago?
Crush the castle wasn't even the original version of the game. It's actually inspired by another flash game called Castle Clout which almost nobody has heard of. (The developer of Crush the Castle listed the attribution in the first game's description on Armorgame's)
Morality is not the point of the argument. Commenter above said that “original moves were impressive”, and I completely agree with him — HOW Zynga cloned games was really effective, unlike all other competitors on the market.
Isn't the usual refrain "the idea is useless, it's the execution that matters"? Or does that only apply when it's a startup and not a big evil company?
That doesn't really apply when the execution is cloned as well. This phrase typically implies that there is a way to make a mark on a product beyond the initial idea. Marketing and leveraging existing user base is not a laudable contribution.
I didn't say his execution was a laudable contribution. I said it was impressive. Although if it's true he cloned other companies, why did Zynga beat them in revenue and investment? Clearly something was different with Zynga.
They were lucky to get big takeup on one of the properties that they then leveraged into the clones. "Behind every great fortune is a crime," and Pyngus' crimes in user-exploitation and idea-theft are well-documented.
Funny, when Zynga first grew it was remarked as being dominant because of the tight Facebook partnership. When Zynga and FB broke up it's now pointed that it's because Zynga got to the dance too early.
The greater context is that all these coin-op arcade companies fizzle, leading all the way from Atari down. What happened to Rovio? To King? Likely the same ending for Riot to Supercell.
You get 2 to 3 years, maybe 5 tops, then you get replaced. The real game is figuring out how to grab as much cash off the table without looking as cynical and jaded and greedy as you really are.
Wow. I wish Mr. Pincus all the best and hope he can pull off a Steve Jobs - esque "job" and revive a company from the clutches of death.
It is quite possible that he can try to do something really innovative and pivot to a complete new direction. He certainly has the funds to do something big, given he was an early investor in facebook.
Pincus is no Jobs. He "pumped and dumped" Zynga, he'll be out of Zynga in less than a year. But I'm sure he'll make a lot of money off Zynga in the mean time ,like he did before.
Unfortunately it looks like longbets have to be at least 2 years. I routinely make wagers like this and always pay up if I lose (though my opponents sometimes welch). I'm super easy to find on the internet.
Is anyone else reminded of 3M by this? Also, Apple had Steve Jobs leave, company founder, then Jobs returned & Apple was swell. Similar situation. Maybe it's the grandpa in me but I feel like one gets a sense of that 'CEO feeling' at any company.. that is is why they're called the CEO.
This comment page is dominated by substantive negative comments. Negativity isn't against the guidelines, nor is bias. The problem is insubstantial negative comments. For the comments you believe to be insubstantial: write a substantial comment pointing out why. Or use the downvote button.
Positive lessons to be learned from an objective analysis Pincus and Zynga:
- Do not mislead, abuse, or harmfully exploit your customers as Zynga did in the early days through tricking them into installing malware or pressuring them into abusing their social connections for in-game currency.
- Do not make exact replicas of competing products and leverage your popularity, financial situation, and legal team to crush them.
- When your company somehow manages to survive despite the previous points, do not claw back the stock options that the people who built your company earned fair and square.
Follow those three points and you just might survive long enough to be the next lucky mobile game startup that Zynga decides to clone verbatim!
This man is cancer. The fact that he is back at Zynga shows just how far they've fallen. They've lost all of their good execs - people from ea, from google, etc and now it's just the dregs. And the bung hole plug has finally returned, but after the keg has drained.
edit: sorry, but I thought about it some more and Zynga is probably hopeless without someone aggressive like Pincus at the helm. However, I don't think he's going to be able to hire anyone good after the disaster of the last few years.
They'll have to start over. He can hire some new talented people. Rebuild their marketing team, hire some good engineers, and then when they're on the verge of making it big fire them all and take their options while hiring big names from bay area companies...
These games don't strive to solve any problem, and in fact don't strive to make anyone's lives better. They essentially run an extortion game: "pay us to scratch the itch we give you."
And god forbid they get access to the gambling markets, because suddenly they will descend like vultures onto a group of people who lack the self control to spend their money.
They don't strive to make people happy; explicitly they make the most money when people are nervous that they might lose the hours/days/weeks of "work" they put into whatever this app is. They strip-mine people's souls for cash. I hope Zynga, King, et al. nothing but the worst. I don't like them, I don't like their leadership, I don't like their investors and I don't like the employees that work knowingly taking advantage of people (psychology majors who actively exploit people's base instincts for the explicit purpose of extracting money with no positive side effects).
Their games are the online equivalent of an emotionally abusive boyfriend or a drug dealer. They draw you in under the auspices of fun & cheeriness, but it quickly devolves into a quagmire of dependency.
As a quick disclaimer, I've never worked for a game company, never mind any of the one's I've mentioned. I think Pincus is a scumbag businessman for many reasons, some of which I listed here and some of the reasons that others have listed (i.e. stock take back, spyware bundling, game stealing, pump & dump (I know it's not the textbook term for it)).