Today’s Wall Street Journal carries a remarkably sad business story, about the death of an American corporation that was once cutting-edge and profitable, but was reduced to rubble by sticky employee relations and declining demand for its unhealthy products.
No, not Hostess. I’m talking about Zynga, the makers of once-popular Facebook games like FarmVille and CityVille.
The Journal reports that Zynga CEO Mark Pincus is scrambling in an effort to save his company, whose stock price has fallen from a high of $14.69 to $2.21 as Facebook users find better ways to waste their sad little lives away.
Pincus’s efforts thus far have included getting an Apple board member to mentor him, working on his delegation skills, and swapping out his BlackBerry for an iPhone. But nothing seems to be working. Top executives have been fleeing the company, and most of Silicon Valley (which has never truly liked or respected Zynga) is writing it off as an imminent failure.
Morale is so bad that Pincus can’t even give Zynga’s stock away:
At the end of July, he announced the first companywide stock option grant, in a bid to boost morale.
But Zynga’s management team differed on how to distribute the options. Mr. Pincus favored giving everyone options while others advocated the awards for just the top employees. Zynga executives eventually compromised: Everyone would get stock options, but the best performers would get a larger share.
When Zynga notified employees of their extra equity, many received just several hundred options spread across a multiyear vesting schedule, while others got a larger amount. Some employees asked if they could refuse the grant, which they viewed as an insult and a pittance, according to two former employees.
It’s easy to sympathize with Pincus. Being on the cusp of losing a company you worked for years to build can’t be easy.
On the other hand, Pincus has already cashed out a significant chunk of his Zynga stake, making hundreds of millions of dollars in the process. Maybe he can use some of that money to corner the secondary Twinkie market, and eat his way back to happiness.