Zynga CEO Beats Investors to Cash

Dec. 16, 2011 – The CEO of Zynga, the company that sells millions of dollars of imaginary animals and goods to gamers on Facebook and elsewhere, decided the company should buy some of his stock in March, months before it was to go public. Mark Pincus paid himself $109 million when he sold a tiny portion of his stock back to his company at $14 per share, according to Shayndi Raice and Justin Scheck writing in the Wall Street Journal.

Now that the initial public offering is planned for real, it turns out real buyers have no interest in paying $14 per share. After selling the shares at $10 each, the $1 billion the company raised were only ten times that raised by CEO Pincus. The first day’s trading dropped the price 5%.

“I don’t think it’s appropriate for founders to take out massive amounts ahead of early investors or ahead of the success that is demonstrated by the IPO,” Lise Buyer, a Silicon Valley IPO consultant told the Journal reporters.

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1 comment for “Zynga CEO Beats Investors to Cash

  1. April 9, 2012 at 4:51 pm

    AJ,The issue for Zynga is that “virtually all” revenue comes from Facebook (from their S-1). To be a snitasuable, long term business, Zynga will need to have a diversified stream of revenues that are not tied to a single source. I think it would be very difficult, if not impossible, to find a publically traded company with a market cap over $20B that has 98%+ of their revenue coming through a single supplier. It is unheard of. So while this does not pose a threat to Facebook in the short term, it is vitally important to Zynga in the medium to long term. At the end of the day, content is King and we will see game providers like Zynga win. With Facebook’s move to their native app on iOS, they are delegating Apple to a hardware provider (e.g., Acer, NVIDIA) and providing the social plumbing. This will eventually work across the Android and iOS environments.Zynga will take that a step further and become fully platform agnostic. They will develop their games for Facebook, Android, and iOS using both native and universal apps. As other platforms develop, they will spread their games into those areas as well. Their players will associate not with the device they play on (iPad3 versus Xoom2), but what game they are playing.Apple, Motorola, Samsung will all provide the hardware.

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