Report: Zynga's aggressive corporate culture bleeds talent, risks company future

With Zynga's IPO expected to finally go live, reports suggest the company is at a crossroads that may negatively impact its future.

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A report from The New York Times suggests that the same aggressive corporate culture that has been at the root developer Zynga's success could be a serious liability for its future.

Dozens of internal, companywide emails shared with the newspaper reveal frustrated workers have grown tired of Zynga's "long hours and stressful deadlines." One employee even admits plans to "cash out" and leave the company once Zynga's stock goes public, leading some to believe a mass exodus by employees with vested shares may follow the company's $1 billion IPO. Wall Street Journal reports Zynga management have demanded "a small minority" of certain employees surrender some of its unvested shares or be fired. The report notes that Zynga's chief executive Mark Puncic was known for "generously giving shares," rather than offer higher salaries to keep top talent within the company during its early days.

According to the report, the Farmville creator failed to finalize large acquisitions, including a cash deal worth $950 million for PopCap Games. After weeks of acquisition rumors, PopCap Games was sold to Electronic Arts for $650 million cash, plus $100 million in EA common stock "certain stockholders" of PopCap. The deal also included an additional $550 million if certain earnings goals were met.

Zynga also failed to purchase Angry Birds developer Rovio this summer, reportedly offering the company $2.25 billion in cash and stock.

"Zynga should be an example of entrepreneurship at its best," Roger McNamee, co-founder of venture capital firm Elevation Partners, told The New York Times. "Instead it's going to be a Harvard Business School case study on founder overreach--this will be a cautionary tale."

Sources for The New York Times indicate that Zynga's management--specifically citing "a professed data obsessive" Pincus [pictured above]--focuses heavily on data metrics to carefully track the progress of all company employees. Employees "are constantly measured and game designers are pushed to meet aggressive deadlines" the report notes, adding that some staff find this work environment "crushing."

Rewards for achieving goals can be lavish, but "those who do not perform can perish."

But Zynga has attempted--and still is attempting--to change its ways, adding data centers and expanding teams to "ease the burden on its engineers." Pincus himself has attempted to "soften his managerial style." There is fear, however, that potential talent will decide to avoid Zynga due to its reputation, which could hurt the company over time as it attempts to grow beyond its roughly 3,000 employees.

Electronic Arts suffered similar problems in the past, having dealt with highly publicized employee dissatisfaction, resulting in a number of lawsuits. "We've learned that when companies treat talent as a commodity, the consequences are severe," Gabrielle Toledano, EA's head of human resources, said of the Zynga situation. "It takes years to repair a reputation."

Xav de Matos was previously a games journalist creating content at Shacknews.

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  • reply
    November 28, 2011 3:15 PM

    Xav de Matos posted a new article, Report: Zynga's aggressive corporate culture bleeds talent, risks company future.

    With Zynga's IPO expected to finally go live, reports suggest the company is at a crossroads that may negatively impact its future.

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      November 28, 2011 3:37 PM

      [deleted]

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        November 28, 2011 3:43 PM

        They make soooo much money, they can afford it

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          November 28, 2011 3:53 PM

          They don't make money, they raise money.

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            November 28, 2011 4:05 PM

            They are selling virtual goods man, they have been super profitable for some time.

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            November 28, 2011 4:32 PM

            no

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          November 28, 2011 4:20 PM

          [deleted]

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            November 28, 2011 4:24 PM

            They have 33 active games and 21 that have been discontinued. They have yearly revenue on the order of $800 million dollars. Profit for this past year was something tiny like $10 million, but that appears to be primarily due to buying a shit ton of companies. As of July they had bought 15 companies in 13 months, and they've likely bought more since.

            http://en.wikipedia.org/wiki/Zynga

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        November 28, 2011 3:57 PM

        I'm having a hard time figuring out why they need 3000 employees.

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          November 28, 2011 4:30 PM

          [deleted]

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            November 28, 2011 9:44 PM

            And you didn't even touch on what is probably the largest single segment of their employee base: in-house customer support representatives. The games that Zynga makes live and die by the quality of the moment-to-moment customer experience, particularly for high-value (whale) customers. When your games are reaching 150+ million unique users, and when some of those users are spending thousands of dollars a month on any one game, the customer support requirements are massive.

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      November 28, 2011 4:04 PM

      I just cannot believe how many people are so addicted to these "games," where essentially if you put more money in you can beat the next guy...so basically it ends up being a cash arms race

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      November 28, 2011 4:36 PM

      @andrewbusey
      Andrew Busey
      I was part of the 99% and then I worked my ass off.

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      November 28, 2011 7:59 PM

      I don't see why monitoring your employees is made out to be tyranical. OH NO, MY BOSS IS MAKING ME WORK HARD FOR MY PAY INSTEAD OF LETTING ME SLACK OFF.

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        November 28, 2011 8:01 PM

        It implies a level of distrust, and of course there are privacy concerns.

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      November 28, 2011 8:18 PM

      When it came out that they were taking away promised stock options before they go live because they felt 'they were giving too much money away', it sealed my opinion on them being evil.

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      November 28, 2011 8:42 PM

      bleeding taint

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