Most Innovative Companies: Zynga

9  Zynga

For being the $500 million alpha dog of social gaming

HEADQUARTERS

San Francisco, California

TOTAL REVENUES FOR MOST RECENT FISCAL YEAR

The Great Mystery

WEB

Zynga

TWITTER

@zynga

BLOG

Zynga

"Hey, can we go in here?" Mark Pincus, Zynga's founder and CEO, has abruptly stopped walking and is looking around for an answer. Who is he asking? He is the boss. Pincus has been leading me through the San Francisco company's colorful, dog-friendly Potrero Hill headquarters at a brisk trot, showing off the huddles of engineers and designers who self-assemble into the 13 "studios" that run Zynga's 11 insanely popular online games. So far, not one person has seemed remotely startled when their boss appears at their elbow and excitedly prompts them to show a perfect stranger their work, or, for that matter, to introduce their actual dog.

As we stand in the hall contemplating our next move, Pincus jukes left, circles back, and takes me around to the still-under-construction CityVille. "This is our next big bet," he says. A drive-by engineer chimes in, "Actually, it's live." Pincus pauses for a barely perceptible second. "CityVille? Live?" Well, parts of it, but yeah. Pincus nods. Okay, cool. No all-hands primal screams or commemorative Lucite tombstones? Pincus grins at me. "Mark literally bangs a gong when a new product launches," he says, gesturing south, in the general direction of Silicon Valley and referring to that other Mark, the one who runs Facebook. "I tell people [to] just go when they're ready."

Pincus and Zynga's aggressive embrace of lightweight and addictive social gaming has turned the company into a leviathan of fun, attracting 300 million people a month to play its titles. Known as "casual games," they are colorful alternate universes in which people, and their friends, raise avatar families in FrontierVille and crops in FarmVille. Those users spend real money to buy virtual goods to fill their imaginary places, stuffing the company's real-world coffers to the tune of an estimated $500 million in 2010. In late December, one month after it debuted, City-Ville (think SimCity with a Garanimals vibe) became Zynga's most popular game, with 84.2 million active monthly users, according to market analyst AppData. It is the fastest-growing app and social game on Facebook. Moreover, it is the fastest-growing game in history.

It is also a validation of Pincus's exceptional entrepreneurial vision, one that few people saw coming. In 2006, when he and his cofounders developed the concept for an asynchronous online game you could play with your real-world friends, the idea was exotic and untested. And the distribution plan — hitch a ride on the backs of the still-evolving Facebook and MySpace — seemed equally risky. "Mark went up and down Sand Hill Road and didn't get the deal he wanted," recalls Fred Wilson, the New York — based venture capitalist who has invested in and with Pincus since 1995, including an early-stage stake in Zynga. "He said, 'They all tell me that I have no expertise in gaming.' "

THE DOGS OF ZYNGA

Most Innovative Companies 2011 Zynga

Rocco
Curtis Lee, Director of Product

But what appeared to be about gaming was really about the social. "So much has been written about how technology is keeping us apart and not present in our lives," Pincus says. "We're giving people a reliable 15 minutes a day that lets them not only play but also connect with people in their lives with some level of meaning."

Pincus runs Zynga with a pugnacious style befitting his late, beloved American bulldog for whom the company is named (he already owned the domain name, a tribute in search of a concept). He has made Zynga a success, thanks to a relentless focus on speed and data-gathering, as well as to his increasingly mature leadership. His boyish shock of hair and mischievous grin belie a more seasoned executive: Pincus, 44, has been to the rodeo several times before as a company founder, venture capitalist, and investor. He sold his first Internet startup in 1995 for $38 million and took his next one public in 2000, but it's never been quite like this. He is routinely called brash, blunt, impatient, aggressive, and hard to work with — and that's by people who love him dearly. "When Zynga started, nobody would bet that he could be CEO of a company with more than $50 million in revenue," says Bing Gordon, the former Electronic Arts executive and current Kleiner Perkins partner who serves on Zynga's board and is a devoted Pincus mentor. "He could be brilliant, but he might self-destruct."

Pincus agrees. "I've failed a lot," he says. "I've been fired a lot." But neither crash and burn nor blockbuster IPO are part of his current exit strategy. "This is about building something that people can't remember life before it and can't live without," he says. "So much of society is so jaded, they can't believe there are companies trying to get it more right. There is no reason to sell your company, no reason to go public." He pauses. "I'm much more ambitious than that." Pincus, a man-child in a digital promised land, is all grown up.

The legends of Mark Pincus live in an ever-growing collection of short stories that could be published under the title, "Well, That's Just Mark." He picked out his kids' names well before he even met his wife. There was that time when he was running SupportSoft and he asked his terrified 19-year-old receptionist to choose a half-million-dollar new phone system and pitch it to the board. During Pincus's wedding reception in 2008, "he spent a good couple of minutes, while still delivering his welcome toast, pitching me on why I should join Zynga," says CTO Cadir Lee, Pincus's longtime entrepreneurial running buddy, with a sigh. "He was exhorting the audience to encourage me. That's just, you know, Mark," he says. (Pincus's new bride, Alison? Unfazed.)

Lee, of course, signed on. His mission: to build an analytics engine that would measure every aspect of the game experience, so that employees could evaluate users' behavior to improve every game, every day. His efforts became the lifeblood of the company. "It's not just getting the data back to offer the right feature," Pincus says. "It's data that helps us offer the right social experience." Adds Lee: "Analytics are usually seen quarterly. I wanted it to be part of the culture."

Zynga employees study such things as which features are popular, which days of the week people play, which demographic groups play the longest, and who sends out the most invitations. They then use the insights to "ghetto-test," to use their oddly literal term, new game elements. "Some users get a slightly different flow, user interface, or even a feature, to see how they interact with it," says Luke Rajlich, CTO of FarmVille, a game that was conceived and launched in six weeks. There are hundreds of tests running every day, in almost every game. "We can access every activity in any given hour in FarmVille," Rajlich says. "We have recorded 3 billion neighbor connections."

This data-driven approach to game play is antithetical to the video-game industry's auteur-driven predilections. "They're not in it for any lofty artistic goal," says Ian Bogost, a game designer and Georgia Tech professor, characterizing Zynga's offerings as uncreative, unchallenging experiences. "They're like the Wall Street hedge-fund guys of games."

Zynga-ites are refreshingly unapologetic about how they operate. If you want to mildly insult someone at Zynga, says Erik Bethke, who sold his company, GoPets, to Zynga, "just say, 'It sounds like you have a lot of conviction about that,' which is code for 'You don't have the data to back that up.' " The testing Zynga does is cold and rational, he admits, but "that's why we are successful. The rest of the industry isn't interested in how people use their products."

It's mid-January, and Mark Pincus is on the phone, juking again. He's calling from a corporate retreat in Carmel, California, where he has challenged his top 100 executives to invent the future of Zynga (and do some surfing). "We've almost gotten too good on data and analytics," he says. "We're at risk of losing sight of the end user and their delight." In five years, Pincus expects there will be a global audience of almost 2 billion social gamers, and he plans to let them take a greater role in creating his games. In addition, he's introduced a new metric for his team to study: the company's Net Promoter Score, the percentage of customers who are active advocates or detractors of its brand. "It's how eBay, Google, and Facebook all rate themselves," Pincus says.

The comparison is no accident. Around the same time Lee built Zynga's data engine, Gordon introduced Pincus to the notion of an "Internet treasure," and some 20 years of entrepreneurial aspiration suddenly snapped into focus. "It was this concept that we were building things that changed the way the world worked and that our generation — the Internet generation — would be remembered for," Pincus told me over lunch in New York back in the summer of 2009, almost 18 months before I inadvertently watched CityVille go live. Amazon, Google, eBay, and now Facebook were such treasures, Gordon told him. What are you going to make? "Zynga was a fine little company that nobody believed in," says the gaming legend, who also serves on Amazon's board and advises its founder and CEO Jeff Bezos. "I believed in the vision of the business, but I believed in him more."

Pincus began to take on his own transformation in earnest. "I couldn't be more impressed with him in this last year," says DreamWorks CEO Jeffrey Katzenberg, a Zynga gamer, advertiser, and now Pincus's personal friend. (They met after Katzenberg stated from the stage at the 2009 Allen & Co. Sun Valley media conference: "If I could be reborn today, I'd be Mark Pincus.") "I've seen him become more thoughtful—probing, asking questions, and wanting to create the right culture for the company." Pincus began by phasing out the company's early sweatshop vibe. "We were so desperate for people just to be writing code," he admits. "We'd grab any kind of contractor, spiffing people for working weekends. We were at risk of being a mercenary culture versus a missionary one," echoing a presentation shared with him by VC John Doerr.

Pincus constantly searches for new ways to give employees a sense of creative ownership. This can be especially challenging for employees working on older games with flagging numbers. When the newcomer Bethke delivered a tough critique of a sputtering game, he expected a bloodbath. Pincus, rather than teeing off on them, asked the team, "If you could do anything with this game, and you weren't worried about me or the numbers, what would you do?" The brainstorm that followed revived both the game and the team's spirits. "One of our core values is that everyone is the CEO of the thing that they do," Pincus says.

A certain amount of controversy still follows Pincus. His comments are frequently taken out of context and set upon by the blogosphere. Wilson admits that Pincus might benefit from more of a filter, but he is also a target. "Mark literally beat everyone in the category, and there are a lot of people who are upset about it. FarmVille wasn't the first farm game. It wasn't even the first farm-set social game. The reality is that he did it better than everyone else." Google chairman Eric Schmidt, who is rumored to be developing a games portal, agrees. "They were the first to figure out how to connect online gamers with their offline friends," he acknowledges via email. "They solved this problem through social networks, which seems obvious in retrospect but at the time was a brilliant insight that spurred their growth."

Last August, Pincus brought in Owen Van Natta, a veteran of Amazon and Facebook (and a survivor of MySpace), to be executive VP of business operations and sit on the board. His mission: further grow revenue, attract talent, and scale Pincus's leadership vision. Along with fellow Facebook alum Mike Murphy, Van Natta is building an advertising business to bring traditional brands into the fold. Thus far, Zynga has run successful campaigns with 7-Eleven, American Express, DreamWorks, and McDonald's, which launched its own plot on FarmVille last October—and according to Van Natta, "over half our users engaged with its content that day." Expect more deals in 2011, including music partnerships like last December's debut of Dr. Dre's "Kush" video within Mafia Wars. "It's not like any other platform that exists," Van Natta says of his new perch.

Van Natta's presence means that Pincus, the besotted new father of twin girls, Georgia and Carmen, has been able to reduce his number of direct reports and focus. ("I get home to put them to bed," he smiles.) Pincus radiates a fundamental decency that is hard to miss. His board, staff, and investor lists are filled with longtime friends. His blog, which he doesn't have much time to update anymore, is an eclectic mix of business and personal musings, featuring revealing stories such as his report of the death from cancer of the dog who shared the company name. In many ways, Zinga was Silicon Valley's dog too, a fixture at meetings and conferences, sitting patiently outside of Bay Area mixers, and serving as copilot in Pincus's small Baron single-prop aircraft, which he bought from Schmidt. I emailed Pincus on the anniversary of her death, to note how much he's accomplished in such a short time. "Thanks for your note and thoughts and remembering and reminding me," he replied. "We should all feel lucky to live in such a transformative time."

Add New Comment

0 Comments