Report: Zynga's aggressive corporate culture bleeds talent, risks company future

A report from The New York Times suggests that the same aggressive corporate culture that has been at the root developer Zynga's success could be a serious liability for its future.

Dozens of internal, companywide emails shared with the newspaper reveal frustrated workers have grown tired of Zynga's "long hours and stressful deadlines." One employee even admits plans to "cash out" and leave the company once Zynga's stock goes public, leading some to believe a mass exodus by employees with vested shares may follow the company's $1 billion IPO. Wall Street Journal reports Zynga management have demanded "a small minority" of certain employees surrender some of its unvested shares or be fired. The report notes that Zynga's chief executive Mark Puncic was known for "generously giving shares," rather than offer higher salaries to keep top talent within the company during its early days.

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According to the report, the Farmville creator failed to finalize large acquisitions, including a cash deal worth $950 million for PopCap Games. After weeks of acquisition rumors, PopCap Games was sold to Electronic Arts for $650 million cash, plus $100 million in EA common stock "certain stockholders" of PopCap. The deal also included an additional $550 million if certain earnings goals were met.

Zynga also failed to purchase Angry Birds developer Rovio this summer, reportedly offering the company $2.25 billion in cash and stock.

"Zynga should be an example of entrepreneurship at its best," Roger McNamee, co-founder of venture capital firm Elevation Partners, told The New York Times. "Instead it's going to be a Harvard Business School case study on founder overreach--this will be a cautionary tale."

Sources for The New York Times indicate that Zynga's management--specifically citing "a professed data obsessive" Pincus [pictured above]--focuses heavily on data metrics to carefully track the progress of all company employees. Employees "are constantly measured and game designers are pushed to meet aggressive deadlines" the report notes, adding that some staff find this work environment "crushing."

Rewards for achieving goals can be lavish, but "those who do not perform can perish."

But Zynga has attempted--and still is attempting--to change its ways, adding data centers and expanding teams to "ease the burden on its engineers." Pincus himself has attempted to "soften his managerial style." There is fear, however, that potential talent will decide to avoid Zynga due to its reputation, which could hurt the company over time as it attempts to grow beyond its roughly 3,000 employees.

Electronic Arts suffered similar problems in the past, having dealt with highly publicized employee dissatisfaction, resulting in a number of lawsuits. "We've learned that when companies treat talent as a commodity, the consequences are severe," Gabrielle Toledano, EA's head of human resources, said of the Zynga situation. "It takes years to repair a reputation."