Is Zynga's 'Evil' Corporate Culture Now a Business Liability?

Categories: Business, Tech
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Doing evil?
In a business sector known for cutthroat, amoral maneuvering, social-game developer Zynga stands out as, well, particularly cutthroat and amoral. At least that's the view of many of its competitors and former employees, some of whom we interviewed for a September 2010 SF Weekly cover story, "FarmVillains."

As one former senior Zynga employee told us at the time, workers at the company behind such hit Facebook games as FarmVille liked to joke that their unofficial motto was "Do Evil" -- a playful twist on Google's "Don't Be Evil." Back in 2010, this looked like a recipe for runaway entrepreneurial success. Now it's starting to look like Zynga's toxic corporate culture might be imposing limits on its potential for continued dominance of the social-gaming marketplace.

That's the gist of a New York Times story, published yesterday, asserting that Zynga is facing an imminent talent drain because of employees' dissatisfaction with CEO Mark Pincus' tough management style.

The Times reports:

Led by the hard-charging Mr. Pincus, the company operates like a federation of city-states, with autonomous teams for each game, like FarmVille and CityVille. At times, it can be a messy and ruthless war. Employees log long hours, managers relentlessly track progress, and the weak links are demoted or let go.

But that culture, which has been at the root of Zynga's success, could become a serious liability, warn several former senior employees who agreed to speak on the condition of anonymity because of fear of reprisals.

As the discord increases, the situation may jeopardize the company's ability to retain top talent at a time when Silicon Valley start-ups are fiercely jockeying for the best executives and engineers. It could also hamper deal-making, a critical growth engine for Zynga, which has spent about $119 million on acquisitions in the last two years.

The newspaper quotes venture capitalist Roger McNamee opining that Zynga will be a "cautionary tale" and "case study on founder overreach."

Zynga has come under serious scrutiny as it prepares for its IPO, with observers of the tech industry questioning its sky-high valuation and declining customer base. The latest grumblings from within the company could further shadow the IPO, with the Times reporting that workers are planning to cash out and depart once the company goes public.

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4 comments
Badassfiretiger
Badassfiretiger

I can confirm R.L.L. Lynch's point.I recently exited an MMO (cost me a grade point in one of my classes at the time).At some point I just plain quit.  It had stopped being fun days before, but I decided to quit because the logical part of me finally took over.  I realized that "the fun" won't return and that if I'm going to grind (gamer slang for work), I should at least be paid to do so.

These games are designed for those that don't have that logical part.  How can you play a game you don't enjoy?  Because you feel you're accomplishing something.  Exact same mechanism as gambling.However, I disagree that it's not profitable.  People do some pretty goofy things and if Zynga wants to cash in on that, well, as long as it's legal, it's game.  I'll be keeping my eye on it.  You go back to buying Sear's Stock.  That's always a "safe" harbor.  (Sarcasm)

Thomas Zell
Thomas Zell

Well, people spend a lot of money on their products regardless.  These customers have the right amount of intelligence (and disposable income) to invest in this company.  

Plus, you must admit, they have an ironclad business strategy.  They spend next to nothing on game development, therefore their revenue is almost all profit.  Investing in Zynga is like investing in a money printing machine.  It is every businessman's wet dream to start a business that makes billions without contributing anything to society.  

MrEricSir
MrEricSir

Their shitty "games" are more of a liability than anything. Why would anyone invest in a company that makes such inane, useless products? How stupid would you have to be?

R.L.Lynch
R.L.Lynch

These 'social games' function by tapping into the same psychological levers that create compulsive gamblers. When players play things like Farmville, they feel like they are getting exponential returns for their investment in time. In reality, players are getting declining returns. The impatience that these declining returns cause motivates players to pay into the micro-transaction system to make their 'exponential returns' grow faster.

Combine this with the fact that these games can be played in short, 5-15 minute intervals (which captures a larger segment of the population than 'hardcore gamers', who devote and hour or more of their time to gaming), and the social aspect (alcoholics want others to drink with them to justify their addiction), and you have a machine that prints money from addiction but isn't taxed to high heaven like gambling and nicotine.

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