EA: Zynga will lose staff following IPO
Harsh employee conditions could lead to talent drain once stock options become liquid
Gabrielle Toledano, head of human resources for Electronic Arts, anticipates an exodus of Zynga employees following its imminent IPO.
Speaking to the New York Times, Toledano explained that Zynga's harsh data-driven reputation could motivate key staff to leave once their stock options become liquid.
"I expect a lot of game and tech companies will begin recruiting Zynga's talent after their equity becomes liquid," said Toledano. "Competitors will make the case that they offer much more compelling opportunities for creative people."
"We've learned that when companies treat talent as a commodity, the consequences are severe. It takes years to repair a reputation."
The article is informed by the testimony of "several former senior employees," who warn that the "messy and ruthless" internal culture that fueled the company's early success could soon become a liability.
The article suggests that rumours of poor working conditions prompted PopCap to reject a $950 million cash bid in favour of Electronic Arts. Allegedly, Rovio rejected a cash and stock big of $2.25 billion for similar reasons.
"Zynga should be an example of entrepreneurship at its best," added Roger McNamee, co-founder of the VC firm Elevation Partners.
"Instead it's going to be a Harvard Business School case study on founder overreach - this will be a cautionary tale."
With the IPO expected in the near future, one recruitment company apparently sent "cookie baskets" to around 150 Zynga employees this month alone.
The Wall Street Journal recently published an article accusing Zynga CEO Mark Pincus of taking stock options back from a number of employees. In an internal memo acquired by the paper, Pincus dismissed the accusations as, "based on hearsay and innuendo."
However, Zynga has been unable to respond officially to these issues due to the mandatory period of silence preceding the IPO.