Why the Recent Zynga Departures Aren’t That Big of a Deal

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If you read the reports coming out of the highly insular, echo chamber-esque world of online tech & financial media, you’d think there wasn’t anyone left at Zynga besides Mark Pincus and maybe a couple of janitors.  No less than three dozen news (and “news”) sources termed the recent spate of employee exits an “exodus.”  Motley Fool calls it “embarrassing.”   Venture Beat refers to it all as “a series of high-profile departures.”  And so on.

But what are we really talking about here?  When you dig behind the headlines and endless re-reporting, you’re left with 10 Zynga employees who became former Zynga employees in August (or thereabouts).  How surprising are those exits, and what are the likely impacts on the company?

Let’s take the departures one at a time and see what we find.

Who Exactly Did Zynga Lose?

Based on the reporting surrounding the exits and my own additional research, I’ve grouped the recent employee exits at Zynga into three categories: Probably Not a Problem, Could Be a Problem and Difficult to Tell.

Probably Not a Problem

John Schappert (COO) – This guy was basically fired. Let’s move on.

Jeff Karp (Chief Marketing and Revenue Officer) – Former EA guy recruited by Schappert.  When Schappert left / was pushed out, this departure was predestined and anticipated by Zynga.  Zynga isn’t looking for a replacement, so this can’t be too much of a loss from their point of view.

Alan Partmore (Studio General Manager) –  Partmore’s Linkedin still has him at Zynga, but multiple sources report that the CityVille GM is out the door to quasi-rival game developer Kixeye.  How big of a loss can this really be given that he was at Zynga all of one year and CityVille lost something like 60% of its monthly average users during his tenure (August 2011 stats here, August 2012 here)?

Erik Bethke (Mafia Wars GM) – Bethke’s official title is General Manager at Zynga, but most news reports have him as the head of the swooning Mafia Wars franchise.  When you admit to analysts in your earnings call that a game is not a “high quality enough game,” (as Zynga chief Pincus did in July 2012) you shouldn’t be too shocked when the head of the game chooses to leave – nor should you be too sad to see him go.

Ya-Bing Chu (General Manager, Words With Friends) – I took that job description from Chu’s Twitter; news reports describe him as “a vice president in Zynga’s mobile division.”  Chu could have easily been squeezed out in the same July restructuring that pushed Schappert out the door (which involved an integration of “web and mobile groups” according to Zynga).  Either way, Words With Friends is pretty darn mature at this point, so I can’t see the ship sinking based on this exit.

Mike Verdu (Chief Creative Officer) – With the creative output of Zynga constantly under attack from all corners, it’s surprising that anyone would bemoan this loss.  Certainly not uncommon for someone in his profession to want new challenges, and he also likely doesn’t fit with Zynga’s new focus.  Hard to count this among the “exodus” especially when Verdu says this of his departure:

“I personally don’t want to add to the noise level,” he said. “I think this will be a good thing for me and for Zynga. … I’m concerned about how this might be viewed with what else is going on, but it’s not a function of anything else going on at the company.”

Could be a Problem

Jeremy Strauser (General Manager) – The L.A. Times describes Strauser as the GM “who oversaw development studios responsible for “Zynga Bingo” and several other casino games.  With Zynga focusing more and more on casino-style games as a possible precursor to real-money gambling, Strauser’s departure could leave a hole – although reading between the lines of his Twitter feed it doesn’t look like he jumped ship for a competitor.  Also, Strauser’s Linkedin indicates that he came up at EA / Tiburon (the company co-founded by Schappert and acquired by EA), so it might simply be that Schappert’s resignation nudged Strauser out as well.

Allan Leinwand (CTO of infastructure) – You could make the argument that his primary job – moving Zynga’s user base to a primarily private cloud – was pretty much finished.  Not surprising that he’d want a new challenge that he could build from the ground up, as opposed to basically maintaining at Zynga.  Is it a loss for Zynga?  Absolutely.  Does it change much about their position in the short term?  Not that I can see.

Tough to Tell

Bill Mooney (Studio Vice President) –  Again, Mooney’s Linkedin still has him at Zynga, and there’s very little information about his departure or where he’s heading.  Bloomberg says Mooney was the GM for FarmVille; VentureBeat says he was previously in that position but more recently worked on the Zynga Game Network (Zynga’s attempt to reduce reliance on Facebook as a platform).  If Bloomberg is right, then Mooney’s departure isn’t much to worry about, as the original FarmVille has been tanking for quite some time, and the FarmVille sequel is essentially a new game that seems to be headed up by Tim LeTourneau.  If VentureBeat is right, then the departure is more worrying, but it’s worth noting that most of these articles are trumpeting the devastating effects of departures like Mooney’s without ever clarifying or analyzing exactly what impact the the departure will have.  Mainstream sources can’t even agree on what Mooney did at Zynga.

Brian Birtwistle (VP of Marketing) – Another departure not officially confirmed by Zynga or the departee.  A story over at Bloomberg reports that Birtwistle came to Zynga in 2011 from Amazon.  Again, I was unable to find a single article among the dozens mentioning his departure that articulated what he did at Zynga and why his exit would be detrimental to the company.  I don’t know Birtwhistle and I’m not trying to assert he wasn’t valuable – but if you’re going to write about a company being in trouble due to departures, you really should at least attempt to spell out how the departures lead to trouble.

A little context: Zynga has over 3,000 employees.  A Linkedin search for “zynga general manager” returns about 30 profiles claiming that or a similar job title.  A search for “zynga vice president” returns around the same amount of results.

Why Numerous Departures Should Not Come as a Surprise at This Point in Time

Zynga’s depressed stock price obviously makes it easier for rivals to pick up some talent on the cheap.  Many employees were lured to the company by stock value, and that value simply isn’t there at the moment.

Zynga is pivoting in a big, rapid way and some people are going to go as a result. Zynga thought they were going to be one kind of company and hired for that company; now they realize they’re going to have to be a different sort of company (and fast).

Not to echo Zynga’s party line, but it is not at all unusual for executives to depart post-IPO.  Zynga’s not the only one saying that:

“At first blush, it seems suspiciously high,” said P.J. McNealy, a media consultant at Digital World Research. “But a deeper look shows that the business model continues to evolve, and they need different skill sets in the management team.”

It’s also not unusual for a company to clean house a bit when their earnings reports are poor and their stock tanks.  It’s somewhat contradictory to pound the company for its performance in 2012 and then also pound them for letting parts of the team responsible for that performance walk out the door.

Employee turnover is a fact of life, especially in the rapidly evolving, highly volatile world of tech companies (and even moreso in the terrifically unstable world of social gaming).

Would Zynga be better off if some of the above employees had not penned a resignation?  Sure.   Should their departures be viewed as proof that the sky is falling over FarmVille?  After taking a sober look at who left and why, that seems like a much more difficult conclusion to affirm.

Disclosure:  The author has a long position in Zynga.  The author has not changed that position within the last two weeks and has no plans to change the position in the near-term.  Author has no material relationship with Zynga.
- Chris is the publisher of OnlinePokerReport.com. Grove also serves as a consultant to various stakeholders in the regulated market for online gambling in the United States.
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