Mark Pincus, best known as the founder of Zynga Inc., has never played well with others. The Chicago native began his career at Lazard Frères, an august financial firm with 150 years of tradition and a polished internal culture: a disastrous fit for Pincus. As he later told Details magazine: “I went out of my way to tell people they were stupid if I thought they were. People loved me or hated me. In hindsight I was forcing myself to be an entrepreneur—I was shutting all the doors.” How delightful.
After Lazard, Pincus eventually landed in the MBA program at Harvard. He recalled later that he was the only one in his class who didn’t already have a job lined up at graduation, having not been offered a position at Bain & Company, where he’d interned. It was clear by then that Pincus was not cut out for large organizations. “Even if I’d wanted to work at Goldman Sachs, they weren’t going to hire me, because I was saying things like ‘That’s a dumb question’ when I was asked something stupid in the interviews. I just didn’t have a lot of respect for authority.”
He started his first company, FreeLoader, in 1995. The company, which offered a “push technology” service that downloaded webpages for dial-up customers and presented them at broadband speeds, went on to be acquired by online news site Individual Inc. for $38 million.
After kicking around for a bit, Pincus began his second start-up, Support.com, a remote tech-support company. It was here that Pincus’s reputation for being difficult started to gain steam, and his obsession with control emerged. Control is a serious concern for entrepreneurs who use outside funds, of course, as they often end up sharing power with venture capitalists who have their own agenda and vision. Like many young CEOs, Pincus became paranoid.
As Support.com started to scale up, the VCs behind the company became less comfortable with Pincus’s leadership abilities and abrasive management style. In 1999, two years after founding Support.com, he was replaced as CEO.
He remained involved in Support.com as chairman until 2003, when he left to cofound the social networking site tribe.net. Tribe had a very bumpy ride, going through three CEOs in a few years. Again, problems surfaced with Pincus.
Tribe’s former head of IT, Darren Mckeeman, would later emerge as a leading critic of Pincus. By 2008, Mckeeman was the last employee at Tribe (by then owned by Cisco Systems). He resigned in September with a public tweet: “Mark Pincus just cursed at me in email and I sent him back my resignation. My 40th birthday resolution was to stop tolerating verbal abuse.”
Mckeeman would go on to allege that Pincus had “misappropriated” $30,000 in revenue from the company to start Zynga at a moment when Tribe desperately needed the funds to stay afloat.
When Pincus ran into trouble at Zynga years later, Mckeeman would again chime in: “Pincus lies as easily as he breathes. The entire venture was a pump-and-dump, built on the ashes of Tribe (whose users he ripped off to start Zynga).”
In 2007, Pincus started Presidio Media and released Texas Hold’ Em Poker. After securing $10 million in funding, he renamed the company Zynga after his beloved bulldog. This time, he was determined not to give up control.
During a talk in 2009 at the Startup@Berkeley mixer, he explained his early game plan:
I knew that I wanted to control my destiny, so I knew I needed revenues. Right. Fucking. Now. . . . So I funded the company myself but I did every horrible thing in the book just to get revenues right away. I mean we gave our users poker chips if they downloaded this zwinky toolbar which was like, I don’t know, I downloaded it once and couldn’t get rid of it [laughs]. We did anything possible just to just get revenues so that we could grow and be a real business . . . So control your destiny. So that was a big lesson, controlling your business.
Pincus raised $850 million in VC funding, creating games like Mafia Wars and FarmVille and acquiring popular games such as Words With Friends.
Meanwhile, his reputation for being a control freak grew. He structured his stock holdings to give himself dominant voting power and limit the power of his investors. He also reportedly demanded that employees return stock if he decided their work at Zynga wasn’t valuable enough. Employees who refused were fired. These equity “clawbacks” occurred right before Zynga’s IPO. Pincus reportedly believed that he and other executives had given away too much stock in the company’s early days.
In December 2011, Zynga launched its IPO, with the company’s estimated value at around $14 billion (it would eventually settle at $7 billion).
Mark Pincus was now a billionaire, owning 87 million shares of his newly public company. He later sold 7.8 million shares at a high price of $13.96 per share and, in a secondary offering, sold 16.5 million shares at a price of $12 per share. Pincus’s massive off-loading undermined investor confidence, sparked allegations of insider trading, and sent Zynga’s stock price tumbling.
Meanwhile, Zynga employees gave the company and its CEO scathing reviews on GlassDoor.com. One employee commented that management was “disrespectful to employees. They demand 24/7 availability and don’t hesitate to fire. Managers yell and push people publicly. Common to be put down or disrespected. No value for employees.” And another noted: “The company is very disorganized and so political that the environment has often been described as a modern-day Game of Thrones.”
Between August and September 2012, six high-level executives left Zynga, including the COO, the chief creative officers, VP of marketing, and the company’s top technologist. In June 2013, Zynga laid off over five hundred employees—a reported one-fifth of its workforce—and shuttered its New York and LA offices. A month later, Pincus finally relinquished the CEO post, becoming the chairman and chief products officer.
It’s hard to keep a mean man like Pincus down, though, and on April 8 it was announced that he’ll be returning as CEO of Zynga.
Zynga’s shares plunged 18 percent on the first trading day following the news. Not surprising as his ego-fueled deafness to market realities, undiscriminating arrogance, and blatant disregard for shareholders could fill a book.
While he owns less than 10 percent of outstanding shares, he now holds an imperious 59 percent of the voting power due to his creation of multiple classes of stock. Is Zynga a case study of the effect of one horrible entrepreneur, or is it a lesson about a more insidious dynamic of new, badly managed firms? For mean men to stay in control, they need puppet board members who are disinterested in the average shareholder. Maybe Pincus and his board deserve each other.