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It's fascinating to see on HN (where people should know better) how many companies people go "how can they possibly need that many people" and even better "i kn

It's fascinating to see on HN (where people should know better) how many companies people go "how can they possibly need that many people" and even better "i know what will make them successful -- laying off a bunch of people!"

humbleMouse 11y ago
So are you going to address the question of why Zynga needs to employ 2000 people to run a game company or not? I am actually asking and would be grateful if you could enlighten me.
- hluska 11y ago
  I'm not answering your question, just adding another point of data. But, at one point, they had more than 3400!!
- goldbrick 11y ago
  It's the same reason you need trillions of cells to leave your insipid comments on the internet.
hluska 11y ago
In Zynga's case, their market cap is actually less than the value they attach to their assets. This is particularly interesting because of these two numbers from their 2015 balance sheet: - Goodwill - 657,671,000 - Property, plant and equipment - 273,221,000 The 273 million in PP&E is interesting because that is essentially the purchase price on their headquarters building (or $340 per square foot). Office space in San Francisco is going for around $800 per square foot now. Since investors know about that potential large gain, they are effectively saying two things: 1.) They do not trust that Zynga will ever deliver profits. 2.) They value goodwill at zero. In a case like this, honestly, laying off people is one of the more palatable tools in their box. A round of layoffs would: a.) Drop their annual operating loss (they lost about $45m in 2015 and if their headcount stays the same and they lease space in the building they currently own, they can expect that loss to rise in 2016.) b.) Cut the amount of space that they need to lease. c.) Streamline the company. Of course, it could also: a.) Kill morale. b.) Encourage everyone left to dust off their resumes and stream for the exits while the job market in San Francisco stays strong. Either way, Zynga is in a tough spot. Investors have ultimately valued the company at assets + zero and show little faith that the company will ever be profitable again. Layoffs are a tough thing and they often backfire, but strategically, they aren't unthinkable.

humbleMouse 11y ago

So are you going to address the question of why Zynga needs to employ 2000 people to run a game company or not? I am actually asking and would be grateful if you could enlighten me.

hluska 11y ago
I'm not answering your question, just adding another point of data. But, at one point, they had more than 3400!!
goldbrick 11y ago
It's the same reason you need trillions of cells to leave your insipid comments on the internet.

hluska 11y ago

In Zynga's case, their market cap is actually less than the value they attach to their assets. This is particularly interesting because of these two numbers from their 2015 balance sheet: - Goodwill - 657,671,000 - Property, plant and equipment - 273,221,000 The 273 million in PP&E is interesting because that is essentially the purchase price on their headquarters building (or $340 per square foot). Office space in San Francisco is going for around $800 per square foot now. Since investors know about that potential large gain, they are effectively saying two things: 1.) They do not trust that Zynga will ever deliver profits. 2.) They value goodwill at zero. In a case like this, honestly, laying off people is one of the more palatable tools in their box. A round of layoffs would: a.) Drop their annual operating loss (they lost about $45m in 2015 and if their headcount stays the same and they lease space in the building they currently own, they can expect that loss to rise in 2016.) b.) Cut the amount of space that they need to lease. c.) Streamline the company. Of course, it could also: a.) Kill morale. b.) Encourage everyone left to dust off their resumes and stream for the exits while the job market in San Francisco stays strong. Either way, Zynga is in a tough spot. Investors have ultimately valued the company at assets + zero and show little faith that the company will ever be profitable again. Layoffs are a tough thing and they often backfire, but strategically, they aren't unthinkable.