
Zynga Files for $1B IPO - ekm2
http://www.forbes.com/sites/marketnewsvideo/2011/12/02/zynga-files-for-1b-ipo/
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JonnieCache
A question to the SV hotshots on here: is there a social stigma in the valley
around developing for companies like zynga? Or does nobody really care? When a
load of devs meet each other in a bar, does one "admit" that one works for
zynga, or simply say so?

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seiji
There's a strong bully/prison experiment vibe to these companies. You get used
to abusing people because all your friends are hi-fiving you about being good
at abusing people.

The High Holy developers sit around thinking up ways of manipulating people
into addiction. The developers and management get positive social
reinforcement from co-workers and the board when they find another hook into
people's brains ("Your character will DIE unless you come back RIGHT NOW!"
"You haven't visited in 18 hours, VISIT NOW FOR FREE GIFT!").

Reinforcing shady practices of individuals ("It's not unethical, it's
funethical!") over time makes developers and management banish any thought of
wrongdoing. Users are just an abstract ID anyway -- an abstract ID with access
to a credit card. If someone wants to spend $10,000 per day buying purple
carrot pixels, why shouldn't we milk them dry?

~~~
teej
Your entire comment is bullshit and it pisses me off.

You've never worked at Zynga, so to purport that you know exactly what it's
like to work there is bullshit.

Your comment reflects exactly what Silicon Valley nerds think of Zynga
externally. They think that Zynga is nothing but people refining skinner boxes
for people to play in. You've probably seen one or two talks of Mark Pincus
talking about "doing every dirty trick in the book" or something like that.
Have you ever met him? Do you even know the last time he worked directly on a
game? You're allowed to have whatever opinion you like, but this opinion is
bullshit.

Your entire comment is ridiculously biased and unreflective of Zynga
internally or externally.

\------------------------------

So yes, JonnieCache, there is a stigma for working at these companies.
reflected by the parent comment. Is that stigma justified? Absolutely not.
There are plenty of other reasons not to like developing at Zynga most people
don't talk about:

* Zynga is not a technology company first. This means that product & revenue decisions are always prioritized over innovating tech. Most developers aren't comfortable with companies like that.

* Zynga isn't accepted as a legit member of "games companies" circles. You can't tell your buddy who works building a PC MMO or console FPS that you're in games because you work at Zynga. You'll get laughed out of the room.

* Developers are not decision makers at Zynga. Product managers and game designers call all the shots. So if you're writing code, you're not really "making games" in the traditional sense, you're just implementing someone else's spec.

So is Zynga the best place for a dev to work in the valley? It isn't the
worst. You'll make more money and get more perks than you would working at a
startup, but it won't be personally fulfilling. Do you spend all day scheming
ways to exploit people? Fuck no, get over it already.

~~~
seiji
Another thing Zynga is great at (and a business practice others follow) is the
outright copying of other product's game mechanics and concepts. Hopeful coat
tail riding doesn't always pay out. _cough_ MinoMonsterGalaxy _cough_

~~~
teej
Was FarmVille a direct ripoff of FarmTown? Absolutely. Was CityVille a direct
ripoff of the city games before it? Not even close.

The personal attack is hilarious. Mike Sego is a good friend and to think that
I would outright copy his game is deplorable. When our product releases in the
next few weeks, you'll see how different MinoMonsters is.

~~~
esrauch
I'm confused by this comment, Zynga is moral because it only copies games made
by people who aren't personal friends?

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zitterbewegung
At least I can understand how Zynga actually does make money. On the other
hand with a bunch of social media sites deemphasizing games or eliminating
social network spam how will Zynga keep up?

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ConstantineXVI
By starting their own network[1], of course

[1] <http://ztag.zynga.com/>

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kmfrk
That sounds like a pretty modest valuation compared to all the recent
craziness.

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hristov
The valuation is 7 billion. 1 Billion is the money they expect to raise from
the IPO.

7 Billion does not seem modest to me. Groupon's IPO was valued at a bit more
(about 12.5 billion) and that seemed like a much more substantial business to
me. And of course Groupon is not doing too hot right now.

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nolok
Groupon had to cheat their numbers to appear like they were making money.
Zynga, for all their fault, don't need that.

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r00fus
From an IPO standpoint, I see a strong similarity between Groupon and Zynga...
both were high-flyers that ran into profit problems and are now desperate to
get access to the public market funding before their business model peters
out.

I wish the best for the rank-and-file at Zynga, but I feel like the IPO is
rushed, and that usually isn't a sign of success.

~~~
kin
Zynga does not have the same profit problems as Groupon. The only reason they
dip low is from over marketing whereas Groupon's operational costs really are
pricey.

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cma
what significant operational costs does Groupon have that aren't in actuality
marketing related?

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kin
sales. their sales team is massive and expensive. Zynga pours money into
acquisitions and marketing. They have more than enough talent to produce
formulaic games and generate profit but instead choose to keep spending.

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cma
I guess I lump sales and marketing together

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jpancake
It's 1999 all over again.

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geoffschmidt
No it's not. Zynga has 200MM+ monthly active users and a revenue run rate of
$900MM. It's nothing like 1999.

You may think Zynga is overvalued, but if so, I'd be curious to see you put
that in the form of a quantitative argument.

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jpancake
All of Zynga's established properties are trending down. The attention
(DAU/MAU) new Zynga titles get does not last as long as it used to:

<http://techcrunch.com/2011/11/27/towerdefense/>

They're spending more to market new titles:

[http://articles.sfgate.com/2011-11-26/business/30446059_1_zy...](http://articles.sfgate.com/2011-11-26/business/30446059_1_zynga-
game-mafia-wars-social-gaming)

As a result of the above two factors alone, their net profit is shrinking
fairly dramatically. This is very similar to Groupon (also "profitable" at the
time of IPO), and you can see how they're doing for yourself, here:
<http://www.google.com/finance?q=GRPN> (-25% since launch, in case you don't
feel like clicking)

Using the 'it's profitable' logic would mean that investing in Beanie Babies
Corp while they were making money hand-over-fist would've been the height of
financial prudence.

Sure the VCs who have funded the company up to this point are going to make
tons of money. But that's their model: stoke interest in a business, take
profit, and get out.

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geoffschmidt
And they've dropped their valuation target from $20B to $7B.

OK, so you think it's worth less than $7B, but I suspect you also think it's
worth more than $0. What do you think it's worth?

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cft
I think a lot of these companies are like TV shows, they have a limited "run".
Hollywood does not seem to form companies and IPO individual TV shows, so the
question is whether Zynga can change games as fast and cost-efficient as a
Hollywood studio would change a TV show

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DiabloD3
I want to know why this is getting so much attention in the news? All they do
is sell some sort of weird game on Facebook[1].

How do you IPO a business that doesn't... well... do anything? I've googled
around and asked people I know who are into this kind of stuff, but I still
don't get it.

I probably will get downvoted, but my question is legitimate.

[1]: Still don't have a Facebook account

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callmeed
At any given time, my wife has at least 5 "Words with Friends" or "Hanging
with Friends" games going. They get serious engagement and that's worth a lot
of money.

Zynga has moved aggressively into mobile gaming and, from what I can tell,
they're going to be successful there. If they stay strong there, their
reliance on the FB platform will be less of an issue.

EA has a market cap of $7.68B so I see little issue with this market (granted,
I no nothing of their specific financials so I can't comment on their
valuation).

<http://www.google.com/finance?q=NASDAQ%3AERTS>

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joezydeco
5? Lightweight. My wife has 20 going and that's only because 20 is the max.

But she purchased the $1.99 mobile app and hasn't bought anything from Zynga
since. She abhors Farmville and all Facebook games in general. She doesn't see
the ads from the paid app. So where is the revenue in users like my wife?

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shinratdr
According to articles on the subject, there is no revenue in users like your
wife. But the truly desperate woman blowing 10k on FarmVille credits covers
her and 10,000 other 99c purchasers.

Freemium games don't have some secret way of monetizing all users effectively,
quite the contrary. They give the product away for free to increase exposure
and a small subset of users with piles of disposable income or a high credit
limit pay for everyone else, and that frequently results in making more than
what they would make if they charged everyone some small fee.

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esrauch
My friend who works at a Zynga competitor claims that they make most of their
money from what they call "Whales", a tiny subset of the playing (and paying)
population that goes way overboard and spends $10k+. The entire point of
getting other people to play is just to get the whales in the door.

~~~
shinratdr
Good to know. I'm just assuming the articles I've read are correct, it's nice
to have a little corroboration.

