
Zynga Files to Raise $1 Billion via IPO - devinfoley
http://techcrunch.com/2011/07/01/zynga-files-for-1-billion-ipo/
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ahi
A much better article. Techcrunch is useless.
[http://online.wsj.com/article/SB1000142405270230444780457641...](http://online.wsj.com/article/SB10001424052702304447804576414111297459234.html)

heh. Just realized the wsj article is 2 days old. Still better than TC's.

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bproper
Yeah - why do TC articles end up as #1 on big breaking topics? They have
nothing to add but snark.

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mlinsey
Lots and lots of people here read TechCrunch. It's still essentially the paper
of record for the startup scene. Consequently, when major interesting news
breaks, several different people see it on TechCrunch first and all submit the
article at about the same time. The duplicate submissions count as upvotes,
and just 5-10 of these immediately after an article breaks is enough to get a
submission near the top for a short period of time, during which it's the
first link on the story people coming to the HN frontpage see, so it gains
momentum.

Honestly, I don't think TC is as bad as you characterize it, especially when
it comes to breaking news (as opposed to high-level commentary). They've done
a good job at breaking several big stories in the past year, even though I
disagree with a lot of the more opinion-type pieces.

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DevX101
A few media outlets including <http://twitter.com/#!/TheNextWeb> have claimed
this means Zynga has a $1 Billion valuation. That's not true. Zynga is RAISING
$1 billion. Some of the stock will not be available on the IPO day.

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hugh3
So... how much of the company are they going to sell? Or haven't they
announced this yet either?

A $1 billion valuation would seem awfully low, since last I heard they have
multiple hundreds of millions (possibly half a billion) in revenue. I
personally have concerns about the long-term sustainability of their business
model, but I'd expect a valuation much higher than this.

Personally I won't invest. Too evil for my tastes.

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18pfsmt
While I don't know specifically how much equity they intend to sell,
investment banks typically like to make their IPOs between $12-14/ share.
Given their last VC round was funded by Morgan Stanley and T. Rowe Price [1],
I would guess they will be shopping the deal among their investors to gauge
interest, and then price the shares as they see fit.

[1]<http://www.crunchbase.com/company/zynga>

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ashamedlion
The tech IPO floodgate truly has opened. This is like the 5th high profile IPO
within the past few weeks.

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zacharycohn
I'd put a lot more on this than I would on Groupon. Zynga is profitable,
scalable, and has a huge amount of dedicated fans - three things Groupon
doesn't have.

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maukdaddy
I wouldn't touch this IPO for one major reason - reliance on FB. In fact, the
first risk that Zynga lists in the filing docs:

"If we are unable to maintain a good relationship with Facebook, our business
will suffer,” according to the filing. “Facebook is the primary distribution,
marketing, promotion and payment platform for our games."

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uuilly
I would. A friend who works at Zynga showed me around a week ago. It looked
like Wall St. meets Silicon Valley. Real-time metrics scrolled across flat
screens. And huge teams of engineers packed into single rooms plotted
different ways to bilk housewives. It was the first software company I'd ever
seen where money was the metric. They have a quarterly bonus schedule and
everyone was aware of how much money they've made for the company. If it
weren't for the giant cardboard cartoons hanging from the ceiling, the dyed
hair and the dogs, it would be indistinguishable from my sister's high yield
bond desk at Morgan Stanley.

That beast is hungry. I wouldn't bet against it.

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maukdaddy
Sorry but that sounds like an absolutely awful place to work. :(

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uuilly
I agree. But the energy was undeniable.

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skizm
I really enjoyed the quote from founder Mark Pincus: " Games should be
accessible to everyone, anywhere, any time; Games should be social; Games
should be free; Games should be data driven and; Games should do good."

I hope more game developers take this (especially the last point) to heart.
Too many game developers are latching onto publishers who demand games on an
unreasonable timeline. To give one example, Valve is a testament to how
putting the appropriate amount of time into development of a game produces
great results (not to mention an amazingly loyal fan base).

That said I do understand game companies need money to produce these games but
I do think a culture shift is in order and publishers need to realize great
games take time. I think they undervalue how much more money a great game make
than a good game. Also nothing builds more hype than anticipation!

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markbao
Hmm... $90.6 million of net income in 2010? Can it sustain the growth to
justify a double-digit billion market cap?

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maukdaddy
Absolutely not. A key quote from the WSJ article:

"That could value the game publisher, which had about $850 million in revenue
last year, at roughly the same as the two biggest videogame
publishers—Electronic Arts Inc. and Activision Blizzard Inc.—combined."

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Lewisham
This is bonkers, because Activision Blizzard alone are making money hand over
fist with WoW. There's no way that Zynga is worth that much.

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nostrademons
The market for casual games is potentially much, much larger than the market
for games like WoW. WoW targets college students and young adults who identify
as gamers. Farmville targets middle-aged housewives. There are many more of
the latter than the former, and they control many more dollars in spending
decisions.

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kayoone
still WoW alone rakes in more money than Zyngas complete Revenue in 2010. Top
AAA games generate more than 1 Billion in revenue (GTA Series for example).

Dont undererstimate the gaming market.

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wildbunny
What you have to remember is that top AAA games take 3+ years to develop,
whereas top zenga games take 6 months and generate just as much revenue. The
risk factor is far, far lower for zenga, and that makes great financial sense
:)

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kayoone
Sure, but Zynga also needs a couple of games to reach the revenue of a Top
selling AAA+ title. Of course its more risk per title but what i am just
saying is that there is also alot of money to be made with the classic gamers.

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aninteger
"As of March 31, Zynga had 1,858 employees -- 64% of whom have been there less
than one year. More than 90% of Zynga's staff has been with the company for
less than two years."

Has any other company in recent history grown this fast?? Did Facebook or
Myspace grow this quick?

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skimbrel
The story I've heard to explain this is that it isn't the growth rate so much
as the turnover. I have friends who joined Zynga straight out of college
(Berkeley) and are looking around for something new a year later, now that
they have some vesting in their options. It really doesn't sound like a
pleasant place to work -- I was told eighty-hour weeks are the norm.

That said, Groupon has something like 8,000 employees, most of whom were hired
in the last two years.

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nostrademons
It's ironic that they're IPOing before Facebook...

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ozziegooen
I'm not very familiar with corporate management salaries, but these kind of
seem silly. Example: Mark Pincus made a 300k salary in 2010, what may be a
100% annual cash bonus, plus quarterly bonuses of "$22,500, $0, $75,000 and
$37,500, "

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breck
How did brad Feld get 30M shares? Just curious.

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anatari
If you look in the footnotes, it includes the shares his fund, Foundry, owns.

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breck
Ah, thanks!

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Liu
Maybe in Farmville cash...

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lallysingh
Hey, let's be careful. At this rate it may actually become real currency.

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hugh3
I'd invest in Farmville cash before I'd invest in bitcoin!

