So heartbreaking. The front-line folks at Zynga were worked to the bone, by so many insider accounts. Now all the stock they were counting on has had most of its value evaporate.
But that's life, right? Counting on equity is, simply, a gamble.
Except when you've rigged the table, as Pincus and his cronies have.
They got to play by different rules than the folks whose hard work got them to IPO. Instead of being subject to lockup, like the rest of Zynga, they got to cash out early, before the true state of their company was fully appreciated by the market.
So what's the lesson?
Don't trust people willing to fuck people over to make a buck. You're not special. If there's a buck in it, you'll get fucked too.
Is it really heartbreaking that some Silicon Valley developers, one of the highest paid professions in one of the highest paid areas of the world, only made a decent salary instead of a fantastic total compensation package?
It's unfortunate, sure. And quite a few parts of the Zynga story are downright distasteful, especially the options clawback last year.
But let's not get hyperbolic - they played the startup lottery hoping to get rich, and lost.
Any developer with a moderate amount of common sense who chose to work for Zynga should've seen this coming. Zynga has been criticized for its business model and the way it treats its employees for a long time now.
It's heartening that their business model is failing. I hope it means that it keeps ever more developers from falling into that short-term trap of extracting value through psychological manipulation instead of creating things that are useful or enriching.
Heartbreaking? I feel about as bad for people working at Zynga, where they spend day and night copying other web properties, as I do for those working on the Death Star when it exploded.
This is like feeling sorry for people who work overtime for telemarketers. Oh poor them. Zynga was a cheesy business to begin with, and absolutely every employee there knew it.
I don't find it heartbreaking at all, actually. While it may be a bummer for those who lost the gamble; it was probably a valuable life lesson. Surely they'll think twice about buying into unfounded hype, and depending on the promise of a paycheck later, someday.
Do you find it heartbreaking when a fool throws down $50k on red at the roulette table, and loses?
I've heard from a lot of people that your reputation means everything. It's a shame that Pincus's didn't catch up with him sooner, since he hardly deserves anything he's getting.
Anyone worth their salt could've Googled their leaderships history of creating big IPOs that end up crushing and burning. Most were complicit in it, or just rationalized it to themselves that it was different.
Second, the people who make the company - the early people - are on better terms. The guy who got hired the month before IPO shouldn't be expecting much.
I'm curious. It's been a long time since I visited San Francisco, so maybe things have massively changed, but I recall that it used to have things like coffee shops, restaurants, fast food places, bookstores, groceries, movie theaters, and all the other kinds of things you'll find in pretty much any city in the US.
These places employed baristas, waiters, bus boys, burger flippers, sales clerks, stock boys, and such. Such people typically work fixed shifts, and so unlike many developers have time to find people to start families with and have children.
Based on some of the comments here, it would seem that getting by on just a developer's salary in San Francisco is near impossible--you have to have stock money to keep you afloat.
So how come waiters, sales clerks, etc., can work in San Francisco and make ends meet for not only themselves for for a family, but single developers making more than the combined income of that entire working class family cannot? One comment mentioned that the developers might have student loans to pay off, but that's countered by the working class family might have to pay a lot to add their kids to their health insurance.
Same question for New York, and any other place where people consider $100k/year too low to be a living wage for a programmer.
When your income increases your spending increases, more like you get tempted to spend money buying things and that temptation then turns in an habit. Then what happens is law of diminishing utility kicks in. You just get used to things and it becomes a norm in your life.
After this if your income tanks, it hurts hard.
You can very well travel by bus for 20 years of your life, travel a day by car and it will make you feel awesome. Then travel 10 years by car, it just feels normal. Then when you go through a difficult financial, which forces you to take a bus again- This time you will feel like crap.
People whom you are talking about are addicted to changing phones/tablets twice an year. Buying developer toys because they like it, drink latte every 45 mins just because they can. I can go on and on, but if you sit down and jolt down list of things that we do and spend money on, you will realize We are basically addicted to spending money
We just keep buying things. We are told to not do so means not doing better compared to your peers. We are told living frugal means living like a loser and spending money on fun/experiences/<whatever you call it> is what makes you successful.
Net-Net you end spending a lot more on things you don't at all. And expenses go up real high.
I've seen this among my rich friends as a kid, mysteriously they couldn't even live without things which I didn't even know about.
The people at Burger King spend two hours getting to work on public transportation and two hours getting back home. And you have six people in a two bedroom apartment.
Not sure if the parent comment is tongue in cheek but I genuinely wonder this myself. I don't know that this is the answer but San Francisco seems to be committed to offering lower income earners more affordable housing through rent control. Since housing is often the biggest expense this may explain why a barista making $25k and a developer making $80k may live in the same city, happily.
Broader economic arguments aside, I think this diversity is a good outcome and makes urban living more interesting.
because how a barista lives is not how a well paid programmer lives. Yes, you can exist on $15k/year, but if you're used to living on $100k/year it may as well be homelessness. If you're someone that provides value to a company you come to expect to live like you provide value. Quality of life matters, a lot.
I really really hope that results like this will serve as a wake-up call to the community that is the valley. We've gone from creating microchips, putting a PC on every desk, opening up and connecting the web to the whole world with pioneers and visionaries, to nowadays creating low-quality browser games which are used to scam users out of private information/money led by ex-wall-street banker deploying sweatshop-like environments, and stealing stock back from employees while scamming public investors at the same time.
Allowing things like this to happen, accepting that this kind of behavior is okay and enabling these kinds of characters to thrive is exactly why the valley has become so frothy. The transformation of Silicon Valley into Hollywood, where anyone with a big enough mouth and large enough ego can thrive is nearly complete. But I'll sure fight tooth and nail until the day I get squeezed out of this place - voting with my dollars and my labor, and a small but convinced voice in what is right and what is wrong.
Book value (all assets - all liabilities): $2.46 per share
Book value less expected write off of $90M: $2.34
Book value less all intangibles: $2.01
Current Assets (essentially cash) less all liabilities: 0.78
Current market value: $2.35
So, the market is valuing it at exactly next quarter's expected book value. This means that they still believe there is some value in the intangibles (I don't) or the business (I don't).
For giggles, here are the some numbers for Research in Motion.
You don't perceive value the business? They still generate $300M in revenues per quarter. That sounds more like an emotional valuation rather than an objective valuation.
I read HN all the time, but I have never commented before. I am a (relatively new) Zynga employee and I wanted to add my thoughts.
Personally, I am stil very happy to be working at Zynga. I enjoy my work and my team, and I am compensated very well. Also, all of the benefits from working at Zynga (the food, the atmosphere, the very good health benefits, etc.) are still available. The only negative I see is that this job might not last for more than a year, and my stock isn't worth very much.
As for everyone hating all of the Zynga employees: everyone I have met and whom I have worked with in my two months at Zynga has been very smart and very nice and incredibly fun to work with. I don't understand why people on Reddit and HN love to demonize the employees of Zynga. I would feel very sad if my friends or I were to be laid off.
> " I don't understand why people on Reddit and HN love to demonize the employees of Zynga."
I apologize if I give offense while attempting to shed some light on why people have a problem with your company (and those who choose to work there). It's difficult to be honest about this question without coming across as mean, but I will try.
2) The game mechanics of Zynga games often hinge on what might be viewed as "bad" use of psychology -- manipulative, addictive, and in a sense abusive of the friends functionality of facebook. It's hard to respect someone who knowingly treats people so callously.
3) Common opinion is that the games themselves range from mildly awful to completely terrible, and are successful almost entirely due to the "bad" psychology above. It's easy to respect someone like notch, who got rich making an awesome game. It's hard to respect people like Pincus, who got rich by making games that are fundamentally lame.
Again, no offense meant to you or your friends. Maybe you're on a team that doesn't do any of the above bad stuff. But the parts of Zynga most of us are familiar with do all of that bad stuff. I hope this helps clarify why you might see so much hate directed that way.
That statement is pretty much true for everyone everywhere. People like to pretend that it isn't, but people like to pretend lots of things that give them comfort.
Well put. It's good to hear you're enjoying your time, and tempering it with some pragmatism probably helps a lot. I'd rather be working for a well-known company in a bit of trouble than one in trouble for fostering a hostile work environment.
I'm glad you've found a pocket of the company that you enjoy working in. But the CEO is a sociopath, and that's bound to cause some trickle-down unpleasantness in the future. It already has, the company just changed its ways when it got bad press.
Could someone who didn't see this coming please explain to me how there was another outcome for this company?
I'm being completely serious. When I read headlines like this I just assume this happened at least nine months ago. I'd like to hear some reasoned defense of how this company was going to survive.
Yep. And maybe a few hundred devs will struggle to pay their mortgage.
Yes, Zynga has many issues. But before we get all cold-hearted and rejoice at the wonderful invisible hand that will correct all, can we for a moment remember that it's going to affect mostly the people in the trenches? Who often had little to no say in the outcome?
Aren't they something like 15% of FB's revenue, and FB is more like 85% of theirs? Seems like FB would just keep on screwing with their visibility on the site to drag their numbers down to the muck, then buy Zynga with change they find between their couch cushions.
Troubles seem to be following the struggling game maker, Zynga Inc
(NASDAQ:ZNGA), this time now with the exit of Laurence “Lo” Toney, an executive
who oversaw the company’s hugely popular online poker game.
Tony’s exit was revealed via his LinkedIn profile, where he changed his current
profession to “mentor at MuckerLab,” a Los Angeles startup accelerator, and
lists Zynga Inc (NASDAQ:ZNGA) among his previous professions.
[...]
Tony now joins the list of top-level executives who left Zynga Inc
(NASDAQ:ZNGA) in the past couple of months. In September, Chief technology
officer Allan Leinwand and chief marketing and revenue officer Jeff Karp
resigned, while in August, chief operating officer John Schappert and chief
creative officer Mike Verdu left the company. Not only this, but the game maker
also witnessed the exit of two vice presidents, Bill Mooney and Brian
Birtwistle, at the end of August.
Why is there no discussion of obligations? A company could have a lot of cash and real estate, but debt obligations could wipe out a ton of that value. I realize the discussion is about Zynga's deteriorating future but it seems that in order to draw any conclusioons from the stock price being lower than cash+real-estate a discussion of obligations is required.
... according to one analyst. Paraphrased from the article: J.P. Morgan analyst Doug Anmuth wrote (Zynga's) assets are worth $2.46 per share... In afternoon trading Friday, Zynga stock was at $2.35.
fitting fate for the CEO, Mark Pincus, whose been quoted as saying he "doesn't want to fucking innovate. You're not smarter than your competitor. Just copy what they do and do it until you get their numbers."
Worth a read. I think Pincus' overall approach is actually dominant right now in tech, not an outlier. Most people just aren't so crude about discussing it.
Should FB buy them? Much of Zynga's trouble has been that their interests and Facebook's didn't align.
My first thought was "Why bother? FB can just wait and pick up the good staff in the wind down." But the exact opposite of that logic has led to acquihires.
they said the same with Nokia about valuation.
They were saying only it's patents are worth 7 B ... but at some point all NOK was valued at 6.1 B . It has recovered since, but the idea is that you can burn your cash real quickly if you're not earning new income
It is baffling that analysts can essentially divide their guidance by 2 overnight. With such "guidance", it's easy for small investors to get fleeced. And with everyone in the industry gloating about how we saw it coming, it's only going to make us all look a little less trustworthy. It's a shame too, because many called out Zynga's business model as unsustainable, even though that didn't get much coverage in the financial or mainstream press.
[+] [-] danilocampos|13 years ago|reply
But that's life, right? Counting on equity is, simply, a gamble.
Except when you've rigged the table, as Pincus and his cronies have.
http://www.forbes.com/sites/nathanvardi/2012/10/05/zynga-kee...
They got to play by different rules than the folks whose hard work got them to IPO. Instead of being subject to lockup, like the rest of Zynga, they got to cash out early, before the true state of their company was fully appreciated by the market.
So what's the lesson?
Don't trust people willing to fuck people over to make a buck. You're not special. If there's a buck in it, you'll get fucked too.
http://techcrunch.com/2009/11/06/zynga-scamville-mark-pinkus...
[+] [-] reitzensteinm|13 years ago|reply
It's unfortunate, sure. And quite a few parts of the Zynga story are downright distasteful, especially the options clawback last year.
But let's not get hyperbolic - they played the startup lottery hoping to get rich, and lost.
[+] [-] w1ntermute|13 years ago|reply
[+] [-] rockarage|13 years ago|reply
And let's not forget.
“I did every horrible thing in the book just to get revenues,” -Mark Pincus
It's unfortunate the empolyees were not paying attention to what their CEO and Company was saying and doing.
[+] [-] madrona|13 years ago|reply
[+] [-] astrodust|13 years ago|reply
[+] [-] jfb|13 years ago|reply
[+] [-] dj2stein9|13 years ago|reply
[+] [-] SeoxyS|13 years ago|reply
Do you find it heartbreaking when a fool throws down $50k on red at the roulette table, and loses?
[+] [-] tylermenezes|13 years ago|reply
[+] [-] uvTwitch|13 years ago|reply
[+] [-] jarvuschris|13 years ago|reply
I think this article makes it clear that the market has _no clue_ what the "true state" of the company is...
[+] [-] lrobb|13 years ago|reply
http://uptownalmanac.com/2012/10/nerds-gone-wild-day-san-fra...
[+] [-] witoldc|13 years ago|reply
Second, the people who make the company - the early people - are on better terms. The guy who got hired the month before IPO shouldn't be expecting much.
[+] [-] D3|13 years ago|reply
[deleted]
[+] [-] tzs|13 years ago|reply
These places employed baristas, waiters, bus boys, burger flippers, sales clerks, stock boys, and such. Such people typically work fixed shifts, and so unlike many developers have time to find people to start families with and have children.
Based on some of the comments here, it would seem that getting by on just a developer's salary in San Francisco is near impossible--you have to have stock money to keep you afloat.
So how come waiters, sales clerks, etc., can work in San Francisco and make ends meet for not only themselves for for a family, but single developers making more than the combined income of that entire working class family cannot? One comment mentioned that the developers might have student loans to pay off, but that's countered by the working class family might have to pay a lot to add their kids to their health insurance.
Same question for New York, and any other place where people consider $100k/year too low to be a living wage for a programmer.
[+] [-] doomlaser|13 years ago|reply
http://peninsulapress.com/2012/08/28/low-wage-jobs-drive-sil...
[+] [-] kamaal|13 years ago|reply
After this if your income tanks, it hurts hard.
You can very well travel by bus for 20 years of your life, travel a day by car and it will make you feel awesome. Then travel 10 years by car, it just feels normal. Then when you go through a difficult financial, which forces you to take a bus again- This time you will feel like crap.
People whom you are talking about are addicted to changing phones/tablets twice an year. Buying developer toys because they like it, drink latte every 45 mins just because they can. I can go on and on, but if you sit down and jolt down list of things that we do and spend money on, you will realize We are basically addicted to spending money
We just keep buying things. We are told to not do so means not doing better compared to your peers. We are told living frugal means living like a loser and spending money on fun/experiences/<whatever you call it> is what makes you successful.
Net-Net you end spending a lot more on things you don't at all. And expenses go up real high.
I've seen this among my rich friends as a kid, mysteriously they couldn't even live without things which I didn't even know about.
[+] [-] johnpowell|13 years ago|reply
[+] [-] twakefield|13 years ago|reply
Broader economic arguments aside, I think this diversity is a good outcome and makes urban living more interesting.
[+] [-] citricsquid|13 years ago|reply
Make ends meet != live well
[+] [-] xenen|13 years ago|reply
Allowing things like this to happen, accepting that this kind of behavior is okay and enabling these kinds of characters to thrive is exactly why the valley has become so frothy. The transformation of Silicon Valley into Hollywood, where anyone with a big enough mouth and large enough ego can thrive is nearly complete. But I'll sure fight tooth and nail until the day I get squeezed out of this place - voting with my dollars and my labor, and a small but convinced voice in what is right and what is wrong.
[+] [-] goodcanadian|13 years ago|reply
Book value (all assets - all liabilities): $2.46 per share
Book value less expected write off of $90M: $2.34
Book value less all intangibles: $2.01
Current Assets (essentially cash) less all liabilities: 0.78
Current market value: $2.35
So, the market is valuing it at exactly next quarter's expected book value. This means that they still believe there is some value in the intangibles (I don't) or the business (I don't).
For giggles, here are the some numbers for Research in Motion.
BV: $18.15 per share
BV less intangibles: 11.81
Current assets less all liabilities: 6.22
Market value: 7.76
[+] [-] steve8918|13 years ago|reply
[+] [-] asdf333|13 years ago|reply
What is the "short term investments" line item on the balance sheet under current assets? Are those corporate bonds or other highly liquid assets?
[+] [-] zynga_employee|13 years ago|reply
Personally, I am stil very happy to be working at Zynga. I enjoy my work and my team, and I am compensated very well. Also, all of the benefits from working at Zynga (the food, the atmosphere, the very good health benefits, etc.) are still available. The only negative I see is that this job might not last for more than a year, and my stock isn't worth very much.
As for everyone hating all of the Zynga employees: everyone I have met and whom I have worked with in my two months at Zynga has been very smart and very nice and incredibly fun to work with. I don't understand why people on Reddit and HN love to demonize the employees of Zynga. I would feel very sad if my friends or I were to be laid off.
[+] [-] lotharbot|13 years ago|reply
I apologize if I give offense while attempting to shed some light on why people have a problem with your company (and those who choose to work there). It's difficult to be honest about this question without coming across as mean, but I will try.
1) wholesale copying other companies' games (see http://www.scribd.com/doc/101954002/EA-v-Zynga-Complaint-Fin... for a legal complaint and http://news.ycombinator.com/item?id=4335287 for discussion.) From that thread: "they must realize that every day they go to work and rip off someone's original work." It's hard to respect someone who knowingly makes their living this way.
2) The game mechanics of Zynga games often hinge on what might be viewed as "bad" use of psychology -- manipulative, addictive, and in a sense abusive of the friends functionality of facebook. It's hard to respect someone who knowingly treats people so callously.
3) Common opinion is that the games themselves range from mildly awful to completely terrible, and are successful almost entirely due to the "bad" psychology above. It's easy to respect someone like notch, who got rich making an awesome game. It's hard to respect people like Pincus, who got rich by making games that are fundamentally lame.
Again, no offense meant to you or your friends. Maybe you're on a team that doesn't do any of the above bad stuff. But the parts of Zynga most of us are familiar with do all of that bad stuff. I hope this helps clarify why you might see so much hate directed that way.
[+] [-] MartinCron|13 years ago|reply
That statement is pretty much true for everyone everywhere. People like to pretend that it isn't, but people like to pretend lots of things that give them comfort.
[+] [-] languagehacker|13 years ago|reply
[+] [-] mratzloff|13 years ago|reply
I don't think people are really hating the Zynga employees. They hate the upper management.
[+] [-] anewguy|13 years ago|reply
[+] [-] state|13 years ago|reply
I'm being completely serious. When I read headlines like this I just assume this happened at least nine months ago. I'd like to hear some reasoned defense of how this company was going to survive.
[+] [-] beatpanda|13 years ago|reply
[+] [-] groby_b|13 years ago|reply
Yes, Zynga has many issues. But before we get all cold-hearted and rejoice at the wonderful invisible hand that will correct all, can we for a moment remember that it's going to affect mostly the people in the trenches? Who often had little to no say in the outcome?
[+] [-] mullingitover|13 years ago|reply
[+] [-] sbierwagen|13 years ago|reply
[+] [-] sbashyal|13 years ago|reply
[+] [-] DanBlake|13 years ago|reply
[+] [-] dfc|13 years ago|reply
[+] [-] s_baby|13 years ago|reply
[+] [-] kitcar|13 years ago|reply
[+] [-] philwelch|13 years ago|reply
[+] [-] timpeterson|13 years ago|reply
quora discussion on this: http://b.qr.ae/hFgaYd
[+] [-] erichocean|13 years ago|reply
http://blakemasters.tumblr.com/post/23435743973/peter-thiels...
Worth a read. I think Pincus' overall approach is actually dominant right now in tech, not an outlier. Most people just aren't so crude about discussing it.
[+] [-] trhtrsh|13 years ago|reply
[+] [-] AlexMuir|13 years ago|reply
My first thought was "Why bother? FB can just wait and pick up the good staff in the wind down." But the exact opposite of that logic has led to acquihires.
[+] [-] esusatyo|13 years ago|reply
[+] [-] aaronmarks|13 years ago|reply
[+] [-] andreyon|13 years ago|reply
[+] [-] VSerge|13 years ago|reply