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Zynga Layoffs: The Aftermath

We're tracking coverage of Zynga's move to save roughly $80 million by cutting 18 percent of its staff.
Mark Pincus, CEO and founder of Zynga

Editor's note: We're updating this story as news comes in. 

Wednesday 5:08 p.m. | For those still tracking the story, here's the latest: A laid-off employee took to Reddit last night and trashed his former employer. Besides calling the company a sinking ship, he mentioned Zynga doesn't have a salient business strategy, and sees it lasting maybe two or three years more, at most. 

Meanwhile, an OMGPOP manager tells Valleywag's Sam Biddle he and some others were given a lousy option: Train their replacements at Zynga San Francisco, or else leave without severance. 

"We've started calling ourselves The Walking Dead," said the source. 

Here's hoping they land on their feet once they get off the dole. 

5:44 p.m. | Several L.A. gaming companies are swooping in to hire ex-Zynga employees, reports The Los Angeles Business Journal. One of them is SGN, the company owned by Chris DeWolfe, who helped create MySpace. 

Meanwhile, gossip continues to trickle out from the OMGPOP ranks. One out-of-work game programmer tells BetaBeat's Jessica Roy they "never felt a connection there as far as the culture," and that people were "pretty bitter" about last year's acquisition.  

In terms of the layoff, they weren't surprised: “The last time that a meeting like that happened it was when Dan left,” the former employee told Roy. “So anything that’s midweek that’s a meeting in the front space is not a good sign.”

2:59 p.m. | In other news, a Wall Street Journal reporter went to cover Zynga's shareholder meeting in San Francisco this morning, and all he got were some pastries. (He couldn't get in.) 

2:50 p.m. | The Next Web ponders whether OMGPOP would have fared well alone given how quickly things unraveled under Zynga.

The gaming company spent about $180 million in cash to acquire OMGPOP and all but shuttered the group in a mere 440 days. "Cash in, not much out," writes TNW.

In all, they believe Zynga was losing $409,000 per day on the purchase. 

1:15 p.m. | Chris DeWolfe, the tech pioneer behind MySpace, weighs in on Zynga

“This company went public and hired a lot of employees quickly. You hire too many people too quickly and things go awry at some point. You can’t create great games with too many people. You need to think of how to make your technology more efficient.”

12:18 p.m. | Looks like the news from OMGPOP was worse than we thought. TechCrunch reports most of the studio was let go yesterday. 

Here's former senior community manager Joseph Alminawi: 

And the company itself: 

As TechCrunch describes, there was some "pretty serious culture clash from Day 1." But it's unclear whether that was what drove the company under. 

OMGPOP's CEO Dan Porter left the company two months ago after insinuating Zynga copies competitors' games in a conference. Could he have known what was coming? 

11:12 a.m. | Employees of OMGPOP, the high-profile start-up Zynga acquired about a year ago for $180 million, aren't keeping quiet about their disgust with the layoffs, notes Business Insider

10:47 a.m. | BuzzFeed's Matt Lynley describes the scene at Zynga New York: 

“'We met [in Porter’s old office], and it was the straightforward jargon you’d get from a Pincus email: due to restructuring, blah blah, you’re all very talented, but we are closing this office,'” an employee who was just laid off said. “'It was like, a 3 minute meeting, maybe 5 minutes at most.'”

On the plus side, it looks like Zynga's ex-employees will land on their feet: 

"A tech recruiter named Trent Krupp from DeveloperAuction, chasing fresh--and perhaps raw--leads had dropped off business cards for the bartenders to hand out. He left an open bar: two free drinks for anyone from Zynga."

Monday 5:00 p.m. | Zynga slashed 18 percent of its workforce on Monday, All Things D's Kara Swisher reports. The move could save the social gaming company close to $80 million and represents a big push to mobile. 

In addition to letting 520 employees go, Zynga closed three offices in New York, Los Angeles, and Dallas, Texas, said Swisher. The company will keep its offices in Seattle, Beijing, China, and Bangalore, India, and retain about 2,900 workers. 

The layoffs come only weeks after Zynga New York hit it big with the free game, What's the Phrase, and two years after its initial public offering, which was the largest in gaming history. 

Though Zynga's shares traded steadily the first few months, they tumbled 23 percent when Facebook went public in May 2012 and a New York law firm alleged investors had tried to offload their shares beforehand. Employee morale took a beating as well, with one worker describing the mood as "disillusionment and discontent."

But those weren't the only factors working against Zynga. With the number of gamers declining rapidly on Facebook, Zynga has tried to refocus on mobile, but with little success. Many doubt whether the company can crank out the hits, and the verdict's still out on whether its right-sizing path will work, given the rockiness of its morale.

With 18 games "sunsetted" in recent months and ambitious projects going by the wayside, said Swisher, the coming days may be dark ones for Zynga. 

More:
Last updated: Jun 3, 2013

JULIE STRICKLAND | Staff Writer

Julie Strickland covers start-ups, small businesses, and entrepreneurial endeavors of all kinds for Inc. Her work has been published in Brooklyn Based and City Limits in New York, the Free Times in Columbia, SC, Real Travel Magazine in London, and Daegu Pockets in South Korea. She lives in New York City.




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