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EA: Zynga will lose staff following IPO

Mon 28 Nov 2011 11:09am GMT / 6:09am EST / 3:09am PST
BusinessSocial NetworkPublishing

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.

8 Comments

Rick Lopez
Illustrator, Graphic Designer

1,205 817 0.7
Zynga simply copied everyone elses games, bought up all the companies that could compete against them, could never put out any game that didnt involve farming or, buying stuff to level up to buy more stuff. Zynga was good at business, not at making games. However they rose fast and I expect them to fall just as quickly.

Posted:2 years ago

#1

Bruce Everiss
Marketing Consultant

1,716 598 0.3
The Chinese MMORTS companies are even more cynical. But if large numbers of the public are happy to use their discretionary spend on these forms of entertainment it just shows that the rest of us have failed to offer something more compelling.

Posted:2 years ago

#2

Raf Keustermans
CEO, co-founder Plumbee

29 2 0.1
I really don't think EA is in a position to preach about 'retaining key talent'...

Posted:2 years ago

#3

Tom Pickard
Lead Environment Artist - Campaign Map

308 382 1.2
@raf - I don't know, I think EA are the perfect people to be talking about it, seeing as they had this horrendous reputation for how staff were treated and new management has generally got it looking alot better in the past 3-4 years. They if anyone knows that a tough working conditions reputation effects your ability to hire quality staff and retain people throughout projects.

Posted:2 years ago

#4

Raf Keustermans
CEO, co-founder Plumbee

29 2 0.1
@Tom - Good point. My comment was more related to people leaving after their options vested (cash out and leave): they are talking about companies hiring from Zynga soon, but the same is happening with some of the studios EA recently acquired, including in their new shiny digital businesses. It's a bit arrogant to comment about Zynga staff planning to leave post-IPO if the same is happening in your own acquired studios post earn-out/vesting... Pot/kettle.

Posted:2 years ago

#5

Jason Sartor
Copy editor/Videographer

105 33 0.3
@Bruce: It is not because developers are not offering more compelling experiences (they are), it is because the level of entry into games is so high now.
Everybody could play Q-Bert, Pac-Man, Breakout, Pong and Frogger because it had just a joystick. Having one button also worked for Donkey Kong and Space Invaders. Adding one button to jump and one for actions like Elevator Action, Super Mario Bros. Rampage, etc. was fine too.
Then the Genesis/Mega Drive added a third button, the SNES upped it to six and now the modern controller features four face buttons, four shoulder buttons, two analog sticks, a digital pad and use R3 and L3 by pressing on the two analog sticks. It overwhelms a lot of people from the very start, not to mention opening menu screens, scroll wheels and HUDs that feature 60 different pieces of information.
Lastly, developers not putting in complete control remapping is just inexcusable. If a new player is used to clicking a mouse or face buttons and is now required to use shoulder buttons and play in an unfamiliar, uncomfortable or unknown way that also becomes a barrier to playing.

Posted:2 years ago

#6

Tyler Moore
Game Designer & Unity Developer

51 14 0.3
Lemons mature in 2-3 years, the real opportunities mature in 6-7+ (or so says my business-flavoured education). Although I didn't know Zynga was having internal problems relating to how they treat the staff. That is heartbreaking and sad to hear.

Posted:2 years ago

#7
Potatoe, potahto...the proper balance will eventually find its level and equilibrate. Meanwhile, popcorn time...

Posted:2 years ago

#8

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