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KP decided to pass. Why? "Silicon valley had stopped believing in games," KP partner Bing Gordon tells us. I doubt that's the only reason there was to pass on

by trotsky 16y ago

KP decided to pass. Why? "Silicon valley had stopped believing in games," KP partner Bing Gordon tells us. I doubt that's the only reason there was to pass on Zynga. I'm sure Pincus gives off an odd vibe even to the money jaded sand hill road crowd. At some point, surely, a company segment can be defined by how they do business instead of what business they do. Just look at various multilevel marketing firms that are defined by MLM instead of their end products like beauty. If Zynga could be just as defined by their techniques - such as offer based revenues, don't innovate only copy, or abuse your users - as they can be defined by being in gaming - I wonder how fair it is to say they were getting passed over for their niche. And maybe KP would have been right despite leaving money on the table - surely at some point % return isn't the only metric. I'd assume that even if heroin became legal tomorrow they wouldn't be investing in heroin pushers at elementary schools.

neworbit 16y ago
You have a more charitable view of VCs than a number of us! But cynical commentary on ruthless VCs aside, I think "stopped believing in games" is probably accurate. Here's why. The gaming biz had largely stepped away from PC platforms in favor of consoles and decreased piracy. PC based gaming had bifurcated into two major areas: casual games (Bejeweled) and server-based games (World of Warcraft), with the original gaming market being a rather beleaguered middle ground. And various firms had tried to replicate success in these new areas. But as may be obvious, once WoW beat Everquest, nobody's been able to dethrone them. And casual games were... well, everywhere. Kongregate, MSN Games, Yahoo Games, Real Arcade, ad nauseum. No big differentiators. Easy to knock off. And not very lucrative without enormous scale. So when investors heard "new game company" their usual inclination was "nope, next". And venture capital is a business that ultimately doesn't thrive on risk but instead on as close as they can get to the sure thing, which is why you see so many clones of any business that seems to be doing it right... latest trend being Groupon. VCs are looking for a reason to say no early so they can get back to looking for other opportunities, working with their existing portfolio companies, or the other things that occupy their time (public speaking, golf, etc). There could be fabulous opportunities in a business but they are often dismissed as "in the wrong space" - regardless of the success of that firm - if that space is out of vogue.

by trotsky 16y ago

neworbit 16y ago

You have a more charitable view of VCs than a number of us! But cynical commentary on ruthless VCs aside, I think "stopped believing in games" is probably accurate. Here's why. The gaming biz had largely stepped away from PC platforms in favor of consoles and decreased piracy. PC based gaming had bifurcated into two major areas: casual games (Bejeweled) and server-based games (World of Warcraft), with the original gaming market being a rather beleaguered middle ground. And various firms had tried to replicate success in these new areas. But as may be obvious, once WoW beat Everquest, nobody's been able to dethrone them. And casual games were... well, everywhere. Kongregate, MSN Games, Yahoo Games, Real Arcade, ad nauseum. No big differentiators. Easy to knock off. And not very lucrative without enormous scale. So when investors heard "new game company" their usual inclination was "nope, next". And venture capital is a business that ultimately doesn't thrive on risk but instead on as close as they can get to the sure thing, which is why you see so many clones of any business that seems to be doing it right... latest trend being Groupon. VCs are looking for a reason to say no early so they can get back to looking for other opportunities, working with their existing portfolio companies, or the other things that occupy their time (public speaking, golf, etc). There could be fabulous opportunities in a business but they are often dismissed as "in the wrong space" - regardless of the success of that firm - if that space is out of vogue.