5 ms·

Not to speak too poorly of Mark, because he's just human and I'm sure he makes many tough decisions under stress, but I was just thinking today about how he rep

by pvnick 12y ago

Not to speak too poorly of Mark, because he's just human and I'm sure he makes many tough decisions under stress, but I was just thinking today about how he represents how not to found a company. Particularly his approach to equity and trying to prevent early employees from getting rich if he felt they didn't contribute like he wanted [1]. That is, trying to prevent a Google scenario where the chef got a $20 million payday on ipo. I don't know about you guys, but the chef at my old company was pretty spectacular. If it were up to me and my company went public, it would be very important to me that all the early guys got big paydays. [1] http://www.businessinsider.com/mark-pincus-to-zynga-employees-you-dont-deserve-to-be-rich-2011-11 http://www.businessinsider.com/mark-pincus-to-zynga-employee...

gavanwoolery 12y ago
You make several good points, I would add: I've seen the inner workings of a few situations (not Mark's though) - all I can say, as a general statement, is that one person is rarely responsible for all a company's problems (especially a company as large as Zynga). It is easy to pin something on a CEO, but you also have to realize that a CEO typically reports to VCs and VCs report to the bottom line on their portfolios. In turn, only a few people report to the CEO and there can be a lot of mismanagement that is out of the CEO's governance. Again, this is a general statement - I can't say anything more about Mark's situation without having been there. Well, now I guess he has all the money he needs and does not have to report to anyone - whatever he does next should be the true judge of character :)
FD3SA 12y ago
Zynga is a perfect case study for everything that is wrong with the modern VC funded, Wall Street bailed-out pyramid scheme known as a "startup". The smart folks have realized that going public is where the money is at. And you don't need to produce value to go public, you just need to get Wall St. to be your evangelist and convince ignorant investors that your company's shares will be worth more than their IPO price at some uncertain point in the future. Does this sound familiar to anyone else? Yes indeed, its the same old "Penny Stock" scheme that common folk fall for (see: Wolf of Wall St.). This well oiled money printing machine evolved out of the Dot Com boom, wherein it existed in a functional but crude state. It has since been perfected. So, what is a start-up? Is it a vehicle to solve a problem? Or a marketing-based ponzi scheme designed to pump and dump stock after stock in IPOs, making the "investors" unfathomably wealthy at the expense of common folk through zero-sum wealth transfers? This is the real question Sam Altman and PG have to answer. Because it seems to me for every Elon Musk, there are hundreds of Mark Pincus clones, just itching to ride the next wave all the way to the bank.
- pfraze 12y ago
  There's maybe some truth to what you're claiming, but I think you're describing something overly-nefarious. Startups are inherently risky for their investors. They're going to try to market themselves well to cover up that risk. That seems like the entirety of it. People played the heck out of Farmville, and I'm certain Zynga has had other successes. It's not like they don't produce some value. EDIT: I guess to elaborate, what I need to hear from you is evidence of deception before I can accept your claim.
  - josho 12y ago
    Zynga showed very little ability to reproduce their success in Farmville. Meanwhile Facebook had changed their policies making Zynga's viral growth more difficult to obtain for their next games, and they hadn't proven any success in mobile. So, for those that understood the market Zynga hadn't proven a sustainable business model. However, the Wall Street drumbeat was quite a different story. In my opinion Zynga didn't need the cash that the IPO offered to re-invest in their business, it was simply a vehicle to cash out investors. So, evidence of deception? All I can provide is that as a solid investment opportunity Zynga was anything but, as a well sold story that wall street spun, perhaps so.
    - pfraze 12y ago
      That's a pretty fair view in my mind. Games companies are always troubled by sustainability, so I don't think Zynga's problems are unique - and that's a problem. Their stock would've only been worth buying if they had cracked sustainability, and their early success seemed a bit dressed up to act like they had.
    - stratagerm 12y ago
      > Meanwhile Facebook had changed their policies making Zynga's viral growth more difficult to obtain for their next games Don't forget that this viral growth was achieved through unethical methods. [1] In the fall of 2009 a number of articles appeared calling out the unethical behavior which changed the climate and forced Facebook to alter its policy: Scamville: The Social Gaming Ecosystem Of Hell [2] Scamville: Zynga Says 1/3 Of Revenue Comes From Lead Gen And Other Offers [3] Zynga CEO Mark Pincus: "I Did Every Horrible Thing In The Book Just To Get Revenues" [4] [1] http://en.wikipedia.org/wiki/Zynga#Scam_ads http://en.wikipedia.org/wiki/Zynga#Scam_ads [2] http://techcrunch.com/2009/10/31/scamville-the-social-gaming-ecosystem-of-hell/ http://techcrunch.com/2009/10/31/scamville-the-social-gaming... [3] http://techcrunch.com/2009/11/02/scamville-zynga-says-13-of-revenue-comes-from-lead-gen-and-other-offers/ http://techcrunch.com/2009/11/02/scamville-zynga-says-13-of-... [4] http://techcrunch.com/2009/11/06/zynga-scamville-mark-pinkus-faceboo/ http://techcrunch.com/2009/11/06/zynga-scamville-mark-pinkus...
spbaar 12y ago
I've read quite a few articles about that incident but I still don't get it. One said that it was people who had been promoted then demoted but kept their stock? Here it says they 'negotiated' to keep some stock? Isn't that what a vesting schedule is for? In the worst case scenario it appears that Pincus and the board saw the writing on the wall that their earnings would (and did) drop after the ipo. Rather than make drastic changes or pursue new strategies rather than farmville clones (which, to be fair, while profitable, apparently have a shelf-life of around 5 years, after which the audience got tired of them and left), they decided to focus on avoiding a bad story. Their priority became stopping a google chef story from happening at the same time their earnings failed to meet expectations. That still doesn't explain it, however. Google chef and microsoft secretarey becoming millionares is a story. Sub-par engineer/business analyst/game designer becomes millionare after ipo is not. Looking at the small number of people affected and assuming they didn't clawback much more than half the stock, there's no way they got much more than 50m back. Then the only explanation becomes that they REALLY wanted to give the stock to attract new talent. "Come work for stock we clawed back from the last guy who already vested" is the least appealing job offer I've heard of that doesn't involve poisonous snakes. Then the only explanation becomes that they were vindictive and did not want someone to profit a lot when they thought they contributed a little and in reality probably did a medium-quality job. Looking at some rants on quora, it seems like they spend a lot of money on a lot of unnecessary things and are just looking to scapegoat at this point. I still don't really understand, though, and that bothers me.
georgeecollins 12y ago
What I think is a bit ugly about a stock claw back, at least in theory, is that the employee accepts a position with a lot of work and low pay, and takes the risk that the stock will be worthless. Later, when the stock is known to be valuable there is the threat that someone will decide you are no longer "worth" your options. Who is going to reduce your options for a worthless stock? It seems like a one way street.

by pvnick 12y ago

gavanwoolery 12y ago

You make several good points, I would add: I've seen the inner workings of a few situations (not Mark's though) - all I can say, as a general statement, is that one person is rarely responsible for all a company's problems (especially a company as large as Zynga). It is easy to pin something on a CEO, but you also have to realize that a CEO typically reports to VCs and VCs report to the bottom line on their portfolios. In turn, only a few people report to the CEO and there can be a lot of mismanagement that is out of the CEO's governance. Again, this is a general statement - I can't say anything more about Mark's situation without having been there. Well, now I guess he has all the money he needs and does not have to report to anyone - whatever he does next should be the true judge of character :)

FD3SA 12y ago

Zynga is a perfect case study for everything that is wrong with the modern VC funded, Wall Street bailed-out pyramid scheme known as a "startup". The smart folks have realized that going public is where the money is at. And you don't need to produce value to go public, you just need to get Wall St. to be your evangelist and convince ignorant investors that your company's shares will be worth more than their IPO price at some uncertain point in the future. Does this sound familiar to anyone else? Yes indeed, its the same old "Penny Stock" scheme that common folk fall for (see: Wolf of Wall St.). This well oiled money printing machine evolved out of the Dot Com boom, wherein it existed in a functional but crude state. It has since been perfected. So, what is a start-up? Is it a vehicle to solve a problem? Or a marketing-based ponzi scheme designed to pump and dump stock after stock in IPOs, making the "investors" unfathomably wealthy at the expense of common folk through zero-sum wealth transfers? This is the real question Sam Altman and PG have to answer. Because it seems to me for every Elon Musk, there are hundreds of Mark Pincus clones, just itching to ride the next wave all the way to the bank.

pfraze 12y ago
There's maybe some truth to what you're claiming, but I think you're describing something overly-nefarious. Startups are inherently risky for their investors. They're going to try to market themselves well to cover up that risk. That seems like the entirety of it. People played the heck out of Farmville, and I'm certain Zynga has had other successes. It's not like they don't produce some value. EDIT: I guess to elaborate, what I need to hear from you is evidence of deception before I can accept your claim.
- josho 12y ago
  Zynga showed very little ability to reproduce their success in Farmville. Meanwhile Facebook had changed their policies making Zynga's viral growth more difficult to obtain for their next games, and they hadn't proven any success in mobile. So, for those that understood the market Zynga hadn't proven a sustainable business model. However, the Wall Street drumbeat was quite a different story. In my opinion Zynga didn't need the cash that the IPO offered to re-invest in their business, it was simply a vehicle to cash out investors. So, evidence of deception? All I can provide is that as a solid investment opportunity Zynga was anything but, as a well sold story that wall street spun, perhaps so.
  - pfraze 12y ago
    That's a pretty fair view in my mind. Games companies are always troubled by sustainability, so I don't think Zynga's problems are unique - and that's a problem. Their stock would've only been worth buying if they had cracked sustainability, and their early success seemed a bit dressed up to act like they had.
  - stratagerm 12y ago
    > Meanwhile Facebook had changed their policies making Zynga's viral growth more difficult to obtain for their next games Don't forget that this viral growth was achieved through unethical methods. [1] In the fall of 2009 a number of articles appeared calling out the unethical behavior which changed the climate and forced Facebook to alter its policy: Scamville: The Social Gaming Ecosystem Of Hell [2] Scamville: Zynga Says 1/3 Of Revenue Comes From Lead Gen And Other Offers [3] Zynga CEO Mark Pincus: "I Did Every Horrible Thing In The Book Just To Get Revenues" [4] [1] http://en.wikipedia.org/wiki/Zynga#Scam_ads http://en.wikipedia.org/wiki/Zynga#Scam_ads [2] http://techcrunch.com/2009/10/31/scamville-the-social-gaming-ecosystem-of-hell/ http://techcrunch.com/2009/10/31/scamville-the-social-gaming... [3] http://techcrunch.com/2009/11/02/scamville-zynga-says-13-of-revenue-comes-from-lead-gen-and-other-offers/ http://techcrunch.com/2009/11/02/scamville-zynga-says-13-of-... [4] http://techcrunch.com/2009/11/06/zynga-scamville-mark-pinkus-faceboo/ http://techcrunch.com/2009/11/06/zynga-scamville-mark-pinkus...

spbaar 12y ago

I've read quite a few articles about that incident but I still don't get it. One said that it was people who had been promoted then demoted but kept their stock? Here it says they 'negotiated' to keep some stock? Isn't that what a vesting schedule is for? In the worst case scenario it appears that Pincus and the board saw the writing on the wall that their earnings would (and did) drop after the ipo. Rather than make drastic changes or pursue new strategies rather than farmville clones (which, to be fair, while profitable, apparently have a shelf-life of around 5 years, after which the audience got tired of them and left), they decided to focus on avoiding a bad story. Their priority became stopping a google chef story from happening at the same time their earnings failed to meet expectations. That still doesn't explain it, however. Google chef and microsoft secretarey becoming millionares is a story. Sub-par engineer/business analyst/game designer becomes millionare after ipo is not. Looking at the small number of people affected and assuming they didn't clawback much more than half the stock, there's no way they got much more than 50m back. Then the only explanation becomes that they REALLY wanted to give the stock to attract new talent. "Come work for stock we clawed back from the last guy who already vested" is the least appealing job offer I've heard of that doesn't involve poisonous snakes. Then the only explanation becomes that they were vindictive and did not want someone to profit a lot when they thought they contributed a little and in reality probably did a medium-quality job. Looking at some rants on quora, it seems like they spend a lot of money on a lot of unnecessary things and are just looking to scapegoat at this point. I still don't really understand, though, and that bothers me.

georgeecollins 12y ago

What I think is a bit ugly about a stock claw back, at least in theory, is that the employee accepts a position with a lot of work and low pay, and takes the risk that the stock will be worthless. Later, when the stock is known to be valuable there is the threat that someone will decide you are no longer "worth" your options. Who is going to reduce your options for a worthless stock? It seems like a one way street.