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Back to the Future? Zynga Founder Mark Pincus Returns as CEO.

Will a sudden shift in leadership mean a new direction for the troubled social gaming company?

Kara Swisher

After leaving social games company Zynga less than two years ago under pressure from Wall Street over his performance as CEO, Mark Pincus is once again taking over the reins of the company he founded.

Current CEO Don Mattrick will leave Zynga immediately and also will step down from its board. In a press release, he said he was moving back to his native Canada.

Rumors of Mattrick’s departure have surfaced in recent months — I have called Pincus about them myself several times — but the company had said that he was not on his way out.

Asked about the suddenness of the departure, Pincus said in an interview that it is not as jarring as it seems. While he lauded Mattrick — a well-known former Microsoft exec — for getting the San Francisco company back on track by cutting costs and rejiggering it from a Web-focused company to a mobile one, he added that Zynga now needed to shift focus on a broader customer base and quickly.

“Don and I and the board came to this together and it was super amicable,” said Pincus. “[But] it’s been two years and we are still not winning as a company on the level we had hoped and think we can be. We need to move fast and we need to act a little bit more as a startup, by focusing more on entrepreneuring and speed than on structure and management.”

Pincus is certainly a startup kind of exec, even though Zynga is now a public kind of a company. Before Zynga, he founded three other companies: Freeloader, a push-technology service; early social network; and, a service and support automation company.

But he is best known for Zynga, which rocketed to fame on the massive growth of its social games like FarmVille, which became hugely popular on Facebook. It went public in the end of 2011 at a $7 billion valuation, which was much lower than had been expected. Still, that was better than its current market cap of just over $2.6 billion.

After criticism of his leadership by investors and much pressure from Wall Street, Pincus gave up his CEO spot to Mattrick in July of 2013 (“I basically fired myself,” he said in an earlier interview with me). Less than a year later, he also unloaded his chief product officer role, although he remained chairman of the board at Zynga, which he said was taking up some time weekly.

Most recently, Pincus has been focused on building several startups via an incubator called Superlabs. He noted that some of the talent and ideas from that effort will make its way over to Zynga.

Now, obviously, Pincus is back full-time in a job he said today was “permanent,” rather than interim. The move of a founder back to a company is not uncommon in tech, although it does often signal that its board and also investors felt the need for a dramatic change.

“When we brought Don in a little under two years ago, the company was not in a strong place when I handed it to him,” said Pincus. “And he fixed a lot of important things, reduced costs and got us on the path to mobile.”

Mattrick has certainly stabilized Zynga in his tenure, and also has made some interesting moves. That has included the acquisition of NaturalMotion, which offers popular games like Clumsy Ninja and CSR Racing.

But Pincus noted that Zynga had to stand out more: “What has differentiated our company is that we got a whole new class of adults to pay and play and we have to do that again.” Pincus also aded that going forward in the new gaming landscape that the company “needs to build our own network and cross-promotion ability.”

Change will be important since Zynga’s stock has continued to skitter in the sub-$3 range and its performance has been weak. It lost $226 million in 2014, compared to $37 million in 2013. To be fair, its free-cash flow loss was significantly lower in 2014 at $14 million and Zynga still has about $1 billion in the bank.

What Pincus has to say when it reports its earnings on April 22 will be important to Wall Street, which will be looking for fresh vision from the long-time entrepreneur.

In a recent class, Pincus seemed to grok that and also the challenges he faces now. “Not having a clear goal leads to death by a thousand compromises,” he said, in a bromide that was tweeted.

Until them, here is Pincus’s memo he sent to employees today about the leadership shift:

Team Zynga,

I am writing to you today to share some significant news. Don is departing the company and I am returning to Zynga as CEO effective immediately.

I want to thank Don for his incredible efforts and leadership. He has laid groundwork that will benefit our players and company into the future.

Don joined us at a very important time in our evolution. In less than two years under his guidance, our teams have worked hard to better serve our mobile players and deliver world class quality and value
to our consumers. This hard work for our mobile players has resulted in bookings growing from 27% mobile when Don joined to 60% by the end of last year. Further, to deliver unique and differentiated value to our mobile
players, Don and the team acquired NaturalMotion. NaturalMotion has surprised and delighted the world with Clumsy Ninja and CSR Racing resulting in more than 160 million installs.

Now that we are a mobile first company, it’s time to renew our focus on our vision to make play and social games a mass market activity.

I am inspired by our upcoming products — it is the most exciting slate of mobile games in Zynga’s history with titles like Empires & Allies, Dawn of Titans and FarmVille: Harvest Swap. These games are coming on the heels of one of the most successful mobile launches in our history with Wizard of
Oz Slots, which was launched this past November by our Spooky Cool team in Chicago.

I am returning to the company that I love in order to accelerate innovation in the most popular categories like Action Strategy and strengthen our focus on our core areas like Invest and Express. I look forward to partnering with our leaders to intensify our focus on social experiences for the millions
of consumers who play our games.

Zynga pioneered social gaming for the mass market and our mission to connect the world through games has never wavered. We will be sharing more details on the plan that I believe will help us win together and engage more players on mobile when we announce our Q1 Earnings on May 7.

Later today, I will be hosting a flash All-Hands in the Café at 4:00 pm PT. We will be making the session available via vidcon to our global studios and teams in Austin, Chicago, Eugene, Orlando, San Diego and Toronto. For our teams at NaturalMotion and in Dublin, I’ll be hosting a vidcon meeting tomorrow morning at 8:00 am PT, and another at 9 am PT for our employees at Studio-I — details to follow.

Finally, I know many of you across the company globally are heads down focused on readying new player experiences and supporting our evergreen, live games. I want to thank you all for continuing to dedicate yourselves to our mission and what’s best for our consumers.

If you have questions about today’s announcement please feel free ask them at our All-Hands or send them in advance to Dani and I’ll read them live on a “no names” basis.



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