Zynga: Know Your Goal
“Reality is broken. Game designers can fix it.” - Jane McGonigal
Social gaming grew into a movement that connects people — regardless if you’re interacting with people you know or playing with people from all over the globe. The Internet helps people connect, and so do the games.
Social gaming became one of the key trends in the gaming industry in the last year and is expected to expand in the metaverse. Despite being a recently growing craze, the industry has been on the market for over 2 decades. And Zynga Inc., by way of Zynga games, is one of the pioneers.
Mark Jonathan Pincus, a founder of Zynga, had a big dream — to connect people globally through games. He, along with Eric Schiermeyer, Michael Luxton, Justin Waldron, Steve Schoettler, and Andrew Trader, became leaders in social game development, resistant to challenges that came on the way.
A Mix of Entrepreneurship and Expertise
Mark Jonathan Pincus is a Jewish man from Chicago born on February 13, 1966, in Chicago’s Lincoln Park neighborhood. His dad Theodore Pincus was a business columnist and a public relations advisor to politicians and CEOs, which might explain where Mark got his ambition. On the other hand, his mom, Donna, was an architect and an artist who helped Mark acquire a broader approach to life.
From preschool through the 12th grade, Mark studied at the Francis W. Parker School and graduated in 1984. He graduated with a Bachelor of Science in Economics from the Wharton School of the University of Pennsylvania before attending Harvard Business School, where he co-founded the Communications Club and later received an MBA.
Pincus entered the field of entrepreneurship in 1995 when he founded his first start-up, FreeLoader, the first web-based push service. In less than a year, he sold it for $38 million.
This first success encouraged him, so he moved to San Francisco, where he founded two other companies, Support.com, an automated tech support service, and the social network Tribe.net. The success of the first company was not repeated; however, Pincus stood true to his vision to create a brand that would be recognizable worldwide.
Another entrepreneur with a philosophical background is Eric Schiermeyer. His career started in 1999 as a co-founder of Dvwave, an e-commerce company specializing in DVD sales. He continues his journey by co-founding eUniverse, an Internet marketing firm, and Luminary, a company in the field of game makers.
The first success of entrepreneur Andrew Trader was with Coremetrics, a company that he co-founded and, in 2 years, was acquired by IBM for $380 million.
Michael Luxton joined eUniverse as a senior developer three months after Eric founded the company. However, Michael worked for eUniverse for less than a year before moving to NetApp, where he was a NetCache and WAFL engineer for nearly 7 years.
Justin Waldron comes from Connecticut and has been a computer geek since he was a kid. He programmed his first video games and websites when he was only 11.
Steve Schoettler was the last, sixth co-founder who brought solid managerial and engineering skills. Before they formed the company that is today known as Zynga, he gained administrative experience in firms such as GO and General Magic for almost 7 years.
The First Success - Zynga Poker
Zynga was initially Mark Pincus’ project, a wish to create a social poker game for Facebook’s platform. Pincus founded Zynga with Eric, Michael, Justin, Steve, and Andrew in San Francisco, in January 2007, with headquarters in the “Chip Factory.”
As planned, the first game, Texas Hold’Em Poker, now known as Zynga Poker, was launched in the first 6 months of the company as the first social online poker game. What made the game remarkable were the real faces of the people playing the game online. Zynga Poker became vastly popular, and in 2009, Zynga became a Facebook app developer with the most active users.
FarmVille and the Rise of Zynga
And their success didn’t stop there — next was the famous FarmVille created by MyMiniLife. In June 2009, Zynga acquired the company, and the same year FarmVille became the first Facebook game that reached 10 million active daily players. By February next year, FarmVille exceeded 80 million monthly players.
This remarkable achievement ended with a 5-year contract with Facebook.
The Platform’s Speedy Growth
A year later, CityVille, another game of the Ville family, reached 61 million active monthly users and surpassed FarmVille. It became the fastest-growing game in history.
Zynga became one of the fastest-growing consumer internet companies in Silicon Valley, collecting $1 billion in annual bookings and reaching 3,000 employees in only 4 years.
In the next 3-year period, from 2010 to 2012, they had 6 acquisitions, Conduit Labs, Challenge Games, DNA games, HipLogic, A Bit Lucky, and OMGPop.
Zynga aimed to connect all its players across different platforms, announcing the network Zynga With Friends. With the ambition to increase mobile device presence, the company announced three new partnerships.
Challenging Times and Changes
However, these initiatives were not enough for the continuous growth and profitability of the company. In 2012 Facebook changed its home navigation, which made it more difficult for players to find older games.
Zynga started losing users, and investors decreased Zynga’s valuation. As a result, in June 2013, they announced layoffs of 520 employees and an additional 300 next year. Offices in New York, Los Angeles, Dallas, and Maitland were closed.
The company's fall was the reason for the changes in leadership positions. Andrew left the company in 2010, and Steve and Eric did the same a year after. Pincus hired Don Mattrick from Microsoft, but he left two years later, in 2015.
Finally, in 2016 things changed. Frank Gibeau was engaged in the CEO position and succeeded in leading the company through the transition period. Frank recruited a world-class management team, and under his leadership, the company has nearly tripled its market cap thanks to live services optimization and fortifying its portfolio.
The company continued with successful acquisitions and, in 2019, was positioned among the fastest-growing public gaming companies worldwide.
Zynga Funding & Acquisition
In the first year of its establishment, after the first round of funding, Zynga acquired $10 million. In 2008, Zynga received $29 million in venture finance from several companies, including Kleiner Perkins and IVP. Fundraising continued; in 4 years, Zynga raised $854 million.
In 2011, Zynga filed with the US Securities and Exchange Commission to raise $1 billion in IPO offerings in July. In December 2011, it began trading on NASDAQ. The last round post-IPO was in December 2020, when $762 million were raised.
In January 2022, the public was surprised by the largest deal in this sector when the acquisition by Take-Two was announced — a total of $12.7 billion.
Take-Two is a leading developer, publisher, and marketer in New York City, designing products for console gaming systems, PC, and mobiles. After this move, Zynga joined the Take-Two family.
The way to success was not always upward, but Mark’s Zynga adopted and completed the bold mission to connect people worldwide through games. Gaming became a mass market activity and part of the daily lives of millions of players.
Today, Zynga is one of the biggest developers of mobile games, with more than 183 million monthly active users. After Take-Two’s acquisition, the best-in-class intellectual property was put together, which made the company a market leader with a diversified mobile publishing platform. In 2022, Pincus, Michael, and Justin are still in the company.
Time will tell whether the acquisition will allow Zynga to expand further in the field or if it will take it in a new direction.