My Zynga! How does one fall so fast?

Words With Friends. FarmVille. Scramble With Friends. We’ve all heard or played these games, or we have watched our friends on Facebook or Twitter interact with these games. These games are created by Zynga, a company that is nearly six years old based in San Francisco, California. This past week Zynga’s CEO Mark Pincus announced an 18% job cut for employees throughout the gaming company.

Who or what could possibly be the cause of such an 18% job cut? Pincus, in his blog announcement, acknowledged the fact that Zynga has struggled with adapting and entering the mobile space like many other companies. Larger companies, such as Facebook, have also admittedly publicly to have struggled to get a firm grasp on the market that caters to smaller devices that have smaller screens where users expect a fast, seamless and intuitive experience – with less ads. Is this lack of leadership on Pincus’? Or could it be Zynga’s lack of innovation?

This move to lean the company is certainly one thing – focusing on the future. By decreasing the size of the company today, Zynga was able to fairly compensate the newly departed associates. By making this move now, Pincus believes that Zynga is saving money in the long run. He believes making the deep cuts now will allow Zynga to take the risks it was once able to take before it expanded.

There are many similarities in this recent move by Zynga, and the the past few recent years of Chicago based, Groupon. These small start-up online companies expand exponentially all too quickly which brings up the questions, is it lack of leadership? One difference between Zynga and Groupon is that Pincus acknowledging the issues, and addressing them head on from the get go where as it can be argued that Groupon’s first CEO (yet to be replaced), Andrew Mason, failed to take the initiative to help his company early on. Mason, after months of criticism, left by similar fashion – a blog letter written to employees riddled with his off-based humor.

Companies that scale too quickly can easily lose their focus and their identity. Pincus is taking a risk to help his company in the long run. It is a difficult decision to make, but could potentially be the right one to correct Zynga’s projection path. Do think Pincus is making the right move?

http://blog.zynga.com/2013/06/03/ceo-update-4/

12 thoughts on “My Zynga! How does one fall so fast?

  1. You bring up an interesting point regarding how Pincus may be protecting Zynga’s future through laying off about 18 percent of his employees. While I would agree that this could be a defensive and logical move based on Zynga’s lack of success, I would argue that by Pincus laying off employees this would look unattractive for prospective employees looking to invest there careers into his company. If people are uninterested in this company this would obviously have an opposite affect on the company long run that Pincus is excepting and cause them to continue to plummet in sales. I wonder how Pincus will continue to keep his employees motivated while being able to successfully accomplish his company goals.

  2. As hard as this decision was for CEO Pincus, I do believe he is making the right choice. I have no concrete financial evidence to back this claim, but based on pure experience of the Zynga apps, I have noticed our friendly games fading away exponentially. I used to use Words With Friends multiple times a day everyday for at least six months. Just like any app, eventually the fad of it fades away, and updates or new versions become crucial to continued its existence. To my knowledge, this upgrade did happen with most or any of the Zynga games. Facebook is consistently updating its user abilities, and reformatting its functions to accommodate change, just as many other major social networking sites and even some apps. I hope that this 18% cut back in employees helps revitalize the Zynga games in hope to once again spring about on our phones/computers for everyday use. (Didn’t realize I was not logged in just before.)

  3. As hard as this decision was for CEO Pincus, I do believe he is making the right choice. I have no concrete financial evidence to back this claim, but based on pure experience of the Zynga apps, I have noticed our friendly games fading away exponentially. I used to use Words With Friends multiple times a day everyday for at least six months. Just like any app, eventually the fad of it fades away, and updates or new versions become crucial to continued its existence. To my knowledge, this upgrade did happen with most or any of the Zynga games. Facebook is consistently updating its user abilities, and reformatting its functions to accommodate change, just as many other major social networking sites and even some apps. I hope that this 18% cut back in employees helps revitalize the Zynga games in hope to once again spring about on our phones/computers for everyday use.

  4. This was a very interesting article, however I’m shocked with the large employee cut and I think that by decreasing the size of the company will not make Zynga any more successful. By saving money in the long run and focusing on the future are good choices by Pincus and management, yet like previous comments said, this can ultimately hurt the company, lower sales and look very unattractive to prospective employees. Pincus is going to need a lot of motivation and leadership to get the company back on its feet and accomplish the company goals he has in mind, and as risky as this whole thing is right now, I hope that this will turn out for the best for Zynga.

  5. As the saying goes, “hindsight is always 20-20”, Pincus is just reacting to what he sees as inevitable, either he downsizes and leans Zynga or it won’t survive. I believe this happens to many post start-up companies that managed to raise capital to expand but do not have a real PLATFORM that is technologically advanced but instead, relies on a PRODUCT that either matures or gets copied early by the competition. Lots of people get hired after the capital is raised and heavy product develpment is established but without a platform that can be reused and many othe ways and a culture of innovation that feeds new businesses, once the original product matures and competition closes-in it is hard to maintain sales to the same levels and the company must let people go for the sake of survival. I believe Pincus is doing the right thing but he is only reacting to his new reality. It is also a saying that “old news do not sell newspapers” so one must innovate constantly.

  6. Many internet based companies are taking a hit now with the technology market expanding with new devices every other month. As someone stated in a different comment, these games are becoming fads and with new devices coming out, the fads are phasing out even faster. He did however, in my opinion make the right decision in the layoffs. It is better to keep the company afloat.

  7. I really liked what I read in the blog because you ask the question whether small technology companies have such great beginnings followed by lack of leadership in how to progress from there. Same thing happen to the creator of twitter who was actually told to leave his position only for him to create square. We have CEOs for a reason and they run the company in a manner for profitability. 18% cutdown is huge in todays market for a company that has vast amount of followers. It is lack of leadership and not understanding trends and demands.

  8. I really do agree with the downsize move Pincus is doing with Zynga because it it going to help him sustain the company for the long haul. Without downsizing like he plans, Zynga will go extinct much like Blockbuster, who because of it’s sheer size could not adapt quick enough to the online presence of movie and game rentals. In many cases, a company has to take one step backward so it can go three steps forward. By downsizing, Pincus can improve his quality management and move Zynga into a different path that will allow it to be more agile to the changing market trend toward mobile phones and smaller interfaces. More companies should follow suit to improve longevity, and maintain their quality improvement on a smaller scale to prepare for larger scale expansion.

  9. Zynga has been struggling lately, but cutting 18% of its employees may help. Initially, it will lead to higher profitability as expenses decrease, but this doesn’t imply Zynga will see more growth. To do that, they need to use those freed up funds aggressively and strategically. They need to find new games that people get hooked on and enjoy. If they fail to do that, then they are just delaying the inevitable and will eventually fail.

  10. Thanks for an interesting article. I liked the way you compared this company to Groupon. When Groupon first came out, it seemed like they were the future and nothing could stand in their way. Obviously now we see that their expansion was detrimental to the overall growth and health of the company. I think it’s smart that they’re taking these steps and it will help them in the long run.

  11. I do believe Pincus is making the right decision. It is very hard to stop a train once it’s in motion and that is much like his own company. Unfortunately job cuts are a very personal matter but I do believe that it’s necessary for this newly public company. There are a lot of expectations and having lost a few connections by going public it is important for him to downsize while they get their feet wet in this new light. What I don’t think was a good move was actually going public. He has gained an even worse rep than the one he originally had. One of my professors is actually Mark’s sister and she is the one that created the idea of selling items to raise money for places like haiti and other starving children companies. This got him great publicity and he made the poor leadership decision to cut ties with her.

  12. Downsizing is never an easy decision for management to make. Pincus’ decision to downsize the company by nearly a fifth of its workforce might sound look the right decision at first; but nearly a year later, we can see that things have been downward sloping for Zynga. With a reduction in staff, a new CEO, and plummeting shares, the remaining employees must be feeling confused and unease, which has affected innovation at the company and their newly released games. I truly believe that management at Zynga should not have made so many changes to the company at once, and instead used the costs they’ve saved more efficiently.

Leave a Reply to spr1332mhanson Cancel reply

Your email address will not be published. Required fields are marked *