Sunday, June 16, 2024

Zynga founder Pincus steps down as CEO, again

SAN FRANCISCO — Zynga founder Mark Pincus is stepping down as CEO from the gaming company he started. Again.

The once-highflying gaming company, whose stock is down 87% since March 2012, announced the move Tuesday. Zynga board member Frank Gibeau will step in as CEO on March 7, while Pincus will serve as executive chairman of the board.

After founding the company in July 2007, Pincus stepped down as CEO in July 2013 and returned in April 2015. The founder comeback story is a familiar one in tech. Twitter is now being run again by Jack Dorsey. In the past, similar returns to the helm were made by Steve Jobs, Larry Page, Michael Dell and LinkedIn's Reid Hoffman.

“I recruited Frank seven months ago to become an active board member to advise and coach our teams," Pincus said in a statement. "Frank has mentored product teams, led road map meetings and delivered inspiring talks to our game-making and PM communities. Frank has also been a big supporter of our move to smaller, more nimble teams. Equally important, we have worked well together and share a common vision for Zynga around mobile and social gaming."

Gibeau added in a statement that “despite the success of mobile games, Mark and I believe that the full promise of Zynga and social gaming has yet to be fully realized. We believe that Zynga has an opportunity to create new social experiences to connect even more players together. We will continue to invest in our talent and build on our empowered, entrepreneurial culture."

Pincus is a billionaire (he is worth $1.08 billion, according to Forbes' latest billionaire list) due not only to Zynga's 2011 initial public offering, which raised $1 billion and valued the company at $9 billion, but also because of early investments in Twitter and Facebook. Today, Zynga is valued at less than $2 billion, in keeping with a growing downward reassessment of tech company valuations.

But things quickly went south as the company, while popular because of games such as FarmVille, never showed that it could grow to profitability. With first-year stock plunges of 85% and 74%, respectively, Groupon and Zynga earned the dubious distinction of being the worst-performing tech IPOs of recent years.

Zynga also recently put its large downtown headquarters up for sale. The onetime U.S. headquarters for Sega was purchased for $228 million in 2012, and could be worth significantly more, given the rise in Bay Area real estate. Zynga's headcount has shrunk from nearly 4,000 to about 2,300.

Pincus first stepped down as CEO to make way for Don Mattrick, the former head of Microsoft's Xbox division. Mattrick oversaw the company's shift from Web games to the smartphone and tablet. Zynga's mobile bookings — money spent by consumers on games — represented 27% of their overall revenue when Mattrick started. As of last year, that percentage swelled to 60%.

When Pincus returned last summer, he wrote an email to employees saying that the time away from running day-to-day operations helped him take a breath. "I was able to really reflect on a lot of things I did right and wrong. One of the qualities I've grown to respect in leaders is patience," Pincus wrote.

Zynga (ZNGA) stock jumped 7% in after hours trading to $2.16.

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