Why Rich Levandov Invested Early in Zynga, and Why It Took Off—Lessons Every Entrepreneur Should Consider

11/3/10Follow @bbuderi

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its success. That was Pincus’s deep understanding of how to gain customers using social media tactics and theories. Says Levandov, “I think it was the first scientific social media company that understood viral marketing.”

Zynga’s first product was Texas HoldEm Poker. Levandov says if you downloaded the app, it prompted you to invite others to play with you. “So if your friends were on Facebook, which they were, you could start up a table in, like seconds. And there you were, playing poker with your friends.”

All the game designs were such that people were constantly incented to invite their friends to join them—or they might just post on their wall that they were playing this game. “Friends inviting friends is what led to the massive viral growth,” says Levandov.

On top of that, says Levandov, “Every game was constantly tested and measured.” Was it too hard, or too easy to play? Could you move up to more advanced levels as you mastered the level you were on? What about the color schemes? It turned out, he says, that traffic goes way up with a certain cloudy blue color scheme.

Then there are the virtual goods. Having a bunch of friends at the poker table with you facilitated chatting. So Zynga began experimenting with virtual goods—you could buy a friend a drink, for instance. Or, Zynga might give you 2,500 chips for showing up, but you could buy more if you lost those. In FarmVille, you might want to make your virtual farming more productive and make your friends envious. “And that’ll happen faster if you feel like buying a tractor,” says Levandov. “And, of course, if you buy a tractor, you’ll have to buy gas for your tractor.”

Now, Zynga has a big branding and revenue-generating presence in the real world. Go into a variety of retail stores and you can buy pre-paid Zynga game cards. And in May, Zynga announced a major deal with one of those stores, 7-Eleven, to create FarmVille, YoVille, and Mafia Wars-branded items on a variety of items from Big Gulp cups to bottles of water to fruits and vegetables.

The bottom line is that Zynga has been seeking to master three core principles: reach, engagement, and monetization. Reach means to get a lot of people playing. Engagement is about making the games really fun and challenging (but not too hard), and social. Then, he says, “If they’re loving it, they’ll monetize. They’ll spend money on things that are important to them.”

Bob is Xconomy's founder and editor in chief. You can e-mail him at bbuderi@xconomy.com, call him at 617.500.5926. Follow @bbuderi

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