Wooga, A Case Study In No-Cash Bonus Culture

BERLIN – German social gaming firm Wooga is on a serious roll—and attracting top tech talent—despite flouting the compensation structure you'd expect to find in the competitive industry: It doesn’t pay performance bonuses to its quickly growing staff of 150.

"I don’t believe in them," says Jens Begemann, the 35-year-old co-founder and chief executive officer of Wooga. "If people are not motivated, you may need bonuses to make sure they work. But I don’t think that’s the right incentive."

Bonuses would work against Wooga’s culture of openness and collaboration, Begemann says. Since Wooga has several games on Facebook and other platforms, developers work in teams and share knowledge at weekly stand-up meetings. They talk about growth numbers, "what we worked on last week and what we are working on this week," he says. They aim to share "all learnings and all secrets. That's this culture of openness. Almost all employees have access to almost all information."

Begemann says he doesn’t want teams on one game measuring themselves against teams on other games. "That leads people to work a little bit against each other," he says. "If someone thinks it is beneficial for the company to send users from one game to another...then they should do it. If it’s better for Wooga, they should do it. They should not just think about their own."

Instead, Wooga motivates its team with initial company shares, which it believes will keep people committed to working for the firm. Additionally, beyond the typical free coffee, beer, and creative work rooms with video game machines one finds at Internet startups, it offers:

 

  • Budgets for teams to have group dinners and to set their own office group décor. 
  • Monthly paid dinners for four-person tables from various groups, so the whole company can get to know each other, even people on different teams.
  • Recognition of employee birthdays with signed cards and thoughtful gifts.
  • Either an iPhone or iPad for Christmas, for every employee—an appropriate gift as it aims to enter more mobile platforms this year.
  • An educational budget of 1,500 euros per employee to attend conferences, take a class or lessons related to work.
  • Company-sponsored off-site parties when the company hits targets.
  • Hosted internal development classes, such as public speaking and German.
  • Choose-your-own computer hardware and roomy offices in a former bakery with high ceilings and no dress code.
  • Recruiting perks for employees who bring someone else into the firm, including flat-screen TVs, cameras, and iPads.

 

Larger U.S. social gaming rival Zynga, by contrast, is known to give top performers lavish gifts such as vacations or $100,000 in vested stock. The New York Times reported last year that Zynga is known for a hard-charging, competitive environment, where the 4,000 employees work in autonomous game teams—such as Farmville, Poker and Cityville—like "a federation of city-states." Employees work long hours and managers track progress fiercely, demoting or laying off weak links. Zynga also reduced some equity packages through demotions. Some industry veterans predict such management practices could result in a talent exodus for Zynga.

Wooga's HR chief Gitta Blatt, 46, says the no-cash bonus policy makes sense fiscally because a bonuses are taxed at nearly 50%. "Sometimes, people don’t even realize they received a bonus," she says. She says giving employees a gift they really wanted has a greater impact. "That is a way we like to treat employees."

She joined Wooga in November from another German gaming firm called BigPoint, which did pay bonuses to employees. Wooga, she says, is an exception in its no-bonus practice. "This is really unusual," she says. She says only a few employees have left Wooga and it is largely for personal reasons, such as moving with family to a different city in Germany.

"Bonuses can have a habit of encouraging tunnel vision, focusing more on personal advantage and creating a feeling of competition among colleagues," says Antti Hattara, a Finn who joined Wooga as Head of Studio in September from Digital Chocolate. "I like the way Wooga tries to steer clear of this."

So far, the management strategy, along with its game design talent, is working for Wooga. It saw 185% user growth in 2011 to 40 million monthly users, up from 14 million in January 2011. That ranks Wooga as the third-largest social gaming company on Facebook, behind Zynga and Electronic Arts. Dallas-based research firm Parks Associates estimates that social gaming will be a $5 billion market by 2015, up from less than $2 billion in 2011. Roughly half of Facebook’s around 500 million "daily active users" play social games, according to Clipperton Finance in London. Wooga plans to hire 100 more employees this year to its existing staff of 150, largely to focus on mobile games development.

Wooga’s four Venture Capital investors—Highland Capital Partners, Tenaya Capital, Balderton Capital and HV Holtzbrinck Ventures—have put $32 million into Wooga so far. As Facebook plans for an IPO, they hope to see their investment in Wooga grow. As a private company, it does not share revenue and profit numbers.

The no bonus practice and other philosophy "was one of the reasons I invested in Jens," said Roberto Bonanzinga, a partner at Balderton Capital in London. "I felt in love with this philosophy. He basically does not believe that running competitive teams is the best way to build the company."

Bonanzinga said bonuses are typically paid in European companies, as frequently as in American firms. But Wooga has a unique no-bonus stance partly because it is an early stage company and partly because its DNA is more about fostering knowledge-sharing and creativity. "He doesn’t believe there is any merit in just having people work harder," Bonanzinga said. "It is very important people work smarter."

Wooga is one of the shining stars in the Berlin tech scene. It’s churned out several free Facebook casual game hits including DiamondDash, Bubble Island, and Monster World. They make money by selling gear like magic wands inside the game, and from advertising. The office is set up in a way where teams of 20 designers, programmers, and artists work on a game and share knowledge with other teams to help cross-promote games.

Begemann says the game leads or product leads for each team have the final decision on strategy and development. "It is a very strong sense of ownership," he said. "They are responsible for the content of the games… If we have difference of opinions, they can overrule me."

He and other video game executives in Europe say the culture of collaboration on strategy is typical of European startup management as well as European game play, as opposed to a more capitalistic winner-takes-all game style in the United States. "We work very much with each other rather than against each other," he said. "We believe in competition—but more in competition with competitors, not in competition inside the company." And he may not be alone in such philosophies. 

Markus Witte, chief executive of Berlin-based language startup Babbel.com, says his firm also does not pay cash bonuses. "We don’t think it works so well," he says. "My experience is that money is not so motivating on its own. It’s more about freedom, being able to do the things you want to do." He also makes a point to make sure employees go home by 8 p.m. "I don’t want people working long hours. I don’t like 50 hour weeks or more. I think it wears people out and gets them on edge."

[Image: Flickr user iNFdesu]

Add New Comment

0 Comments