Zynga was a high-flying casual game developer sailing on the winds of its relationship with Facebook. Zynga described itself as “the world’s leading social game developer.” It went public in December 2011 at $10.00/share, and its stock price had traded as high as $14.69/share in early 2012.
Since that time, Zynga’s fortunes have fallen. Its stock has traded below $4.00/share since Summer 2012 as its daily and monthly active users declined and it continued to lose a lot of money.
What was surprising was the Pincus was staying on as Chief Product Officer and Chairman of the Board.
In addition, reports state that Don Mattrick, the new CEO, was chosen by Pincus as his successor. Pincus was quoted as saying:
“that if I could find someone who could do a better job as our CEO I’d do all I could to recruit and bring that person in. I’m confident that Don is that leader.”
So, what are the lessons here for startups, particularly tech startups?
I’ve previously written about how startups need people different skillsets at different points in their maturity. What is remarkable in the Zynga story is that Pincus seemed to understand that Zynga had grown past his skillset as a CEO, and a different kind of leader at this point in its development.
Most founders, even those that do not name the company after a beloved pet, consider that company to be “their baby,” even after taking VC money and public investor money. They have nurtured the company from idea-to-business, and they believe that they should maintain control of it, even in the face of mounting evidence to the contrary, like, say, gigantic losses of money and declining user numbers, prying a founder out of a controlling role can be difficult and painful. This can be particularly painful for the founder, who may be faced with a loss of confidence and sense of shame despite the company he or she may have built.
Pincus will continue to have a powerful role at Zynga, particularly as one of the two members of the Executive Committee of the Board of Directors. However, if the reports of how this transfer of power took place are accurate, Pincus should be commended for his maturity and foresight in recognizing the changing needs of Zynga.
Or maybe he should be admired for his strategic foresight in maintaining a powerful role before being dispatched entirely by the Board of Directors and angry shareholders. Maybe Mafia Wars does prepare you for real life after all.
*For Gamasutra readers, see here for a discussion of how companies begin to need salespeople as they mature, a position that founders may not be suitable.