/Interview/ Mark Pincus
14/07/2010 | Filed under Discover > Interview
Fast-growing startup Zynga is leading the social game revolution. Oliver Lindberg talks to Mark Pincus, its founder and CEO, about his recipe for success and how a major scandal left the company’s popularity pretty much undented
Have your friends stopped calling round because they’re busy milking their cows and harvesting raspberries? Are most of their Facebook updates focused on farming, caring for virtual pets or cooking in a café that doesn’t really exist? Chances are they’re playing games by San Francisco-based startup Zynga, the biggest developer on Facebook and the leading company in the lucrative social games market.
At the end of November 2009, Zynga passed 100million monthly unique users across its 20-odd games. FarmVille, the most popular Facebook game, has attracted more than 65million players since it appeared on the scene around eight months ago. In October, Café World signed up 16million users in its first two weeks, making it the fastest growing social game ever, beating the previous record holder, FarmVille.
Zynga was founded in 2007, launching with Texas Hold ’Em, and became profitable by the autumn of that year. Today, the company employs more than 600 people (including around 100 contractors) and has a mind-boggling 300 open positions. Revenues in 2009 were estimated at up to $250million – and this at a time when many startups are struggling through the recession. Founder and CEO Mark Pincus says this growth is down to the fact that his company was there first and really believed social gaming was going to be an industry with a long future. “There’s a new consumer behaviour: consumers see value in virtual goods and spend their own money,” he explains. “We’ve been investing more heavily than any other company against that. And we celebrate golden game mechanics. So, we believe that every quarter there are new golden social game mechanics that drive great user experience and user game growth and revenues. We aggressively apply them to all of our games. In the last couple of quarters, for example, you’ve seen the harvest mechanic be so powerful in FarmVille, and then you see it come out in Café World with the way you prep the dishes, and in FishVille – you can find threads of it in all of our games. That’s not accidental.”
Positive feedback
To test new product ideas and improve existing games, Zynga has put a lot of resources into data warehousing. “Our infrastructure measures every action in every game, so that we have feedback loops,” he explains. “Every week every game product team is testing new features with users to see whether users in large numbers love those experiences. When we find one that really moves the dial, like FarmVille’s chicken coops, we go ahead with those new features.”
Zynga is trying to build its games as long-term services with a broad context. “We really want to create consumer versions of World of Warcraft that people play for the next three years.” All games come back to what Pincus calls the three pillars of the social gaming experience. “One is ‘play with your friends’. There’s got to be an element in the game that lends itself to a real social experience. Two is ‘express’. The game has to give you a way, either through decorating or the decisions you make in the strategy you employ, to express your unique personality. And the third is ‘invest’. The game has to have a long-term arc that lets you feel a sense of growing equity that you’re building up. That’s our playbook.”
It’s a recipe that works. Zynga’s games are very addictive and encourage players to check back as often as possible. Some revenue is generated from ads and sponsorships, but the bulk comes from users who pay for virtual goods. Usually, you earn in-game cash that you can then use, for example, to buy more animals, but to speed things up you can pay for them with real money. Alternatively, you can accept an offer from one of the advertisers on the game site and get virtual cash in return.
It’s a common practice across all social games and Zynga claims it accounts for less than 20 per cent of its business. The problem is, some of these offers are more than dubious and make you sign up to an expensive service you didn’t want. Enter your mobile phone number to receive the result of a quiz and you’d mysteriously end up with a $9.99 per month contract.
At the end of October, TechCrunch’s Michael Arrington launched a full-on assault against the industry he dubbed Scamville. Pincus responded to the allegations on his blog and vowed to remove all offers until the problem was sorted. “We were already policing and taking down questionable and bad offers on a weekly basis before Arrington posted. Facebook and other sites like it have been fighting against these bad offers going back two years and requiring ad networks to take them down. But this is a challenge that faces a much broader web industry than just Zynga and social games, because those same ads are available on Google and Yahoo today. In a world of shared data services, where you have third-party networks selling ads on your behalf and displaying them in real time to your users, it’s very difficult for you to control everything. We’re now building a system that will allow us to filter and choose which advertisements we want to present to our users.”
In January some tightly controlled offers were back, but in the fallout from the controversy, Facebook temporarily took down FishVille for advertising violations. A lawsuit over unauthorised charges is also pending. However, Pincus claims Arrington took him out of context when he posted a video of him speaking at the University of California, Berkeley. In the clip, Pincus admits he “did every horrible thing in the book just to get revenues right away”. Pincus says his overall message was that entrepreneurs should focus on having real revenues early on, so they can control their destiny, but that he learned not to sacrifice user experience.
Even before this scandal, social gaming had a slightly tarnished reputation, with many of the big players suing each other over copyright and trademark infringements. Many of the social games are indeed remarkably similar. There are several farming games and five of the current fastest-growing Facebook games are pet-themed.
“That’s the way the media works,” Pincus explains. “It happens in movies where we see two animated ant films come out mysteriously at the same time. In the gaming business, the copying and cloning of games and mechanics has been going on for 20 years.”
Social goods
Pincus points out that there’s one area of his business that he’s happy for the whole industry to copy. It’s what Zynga calls ‘social goods’. “We’ve pioneered it and it’s going to be a really world- and user experience-changing opportunity. My idea of social goods is that you can buy a virtual item that gives you in-game benefit but a portion of that money goes to a cause that you may want to support. We give half of the revenues to the cause and make clear to the user that half of what they pay for this item will go to this cause. We’ve tested this a few times in 2009. Most recently, the Sweet Seeds for Haiti campaign [launched before January’s earthquake] saw more than 400,000 people generating over $1million for two children’s causes.”
Zynga is also branching out to other platforms. It has plenty of games for the iPhone and, like Zynga’s first standalone game site, FarmVille.com, more games will make use of Facebook Connect, so players don’t have to be fully logged in to the social network any more. As Zynga raises another massive round of funding ($180million) in the midst of a media backlash and the latest addition to its gaming portfolio, PetVille, proves to be just as popular, the company’s dominance of the social gaming market carries on regardless.
Mark Pincus
Job Founder and CEO of Zynga
Age 44
Education BSc in Economics from the Wharton School, MBA from Harvard Business School
Previous career Founder of Freeloader, SupportSoft and Tribe.net; investor in Napster, Friendster and Facebook
Online markpincus.typepad.com and twitter.com/markpinc
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