How Zynga Boston’s Shutdown Birthed Proletariat, a New Mobile Studio

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the stock didn’t meet with the kind of unbridled demand that tech-company investors were hoping to see.

Even though Zynga registered more than $90 million in profit in 2010, investors had questions about its continued growth and how sustainable its business model would be. A typical Zynga game would see a huge initial spike of users, followed by a dropoff over time, and the company continually needed new games to attract those users so it could continue selling virtual goods.

Your garden-variety Zynga employee didn’t get terribly rich from the IPO, either. The company’s stock would peak at more than $14 per share last spring, but quickly fell again. It’s been trading at around $3 since August. “Yeah, we all had stock. If it was still in the $14-$15 range … we would be in good shape,” Sivak says.

As 2012 wore on, it was clear that a shift was taking place. Zynga had built its social, casual games for the same desktop Web environment that had spawned Facebook, but people now wanted to play on their smartphones and tablets as well.

In March, Zynga paid a staggering $180 million for mobile-game startup OMGpop, a studio that had one hot title called Draw Something. At a game business summit in April, Zynga Boston general manager Fareed Mosavat cited Draw Something as a hopeful sign that casual games had a lot of room left to grow. (Conduit Labs founder Nabeel Hyatt left Zynga in February 2012, becoming a venture partner at Boston’s Spark Capital.)

Within Zynga, the rise of mobile also meant new thinking for the game developers. Sivak, who was a product manager, says the Web game that Zynga Boston was working on after Adventure World was shelved while everyone tried to find ways to capitalize on mobile platforms.

They started working on ideas, with teams sketching out two smartphone-based games and another intended for tablets. The project Sivak was working on got some interest from the corporate offices, including CEO Mark Pincus. And they were off to the races again.

It would require a lot of work to release the game in time for the 2012 holiday season, as the team hoped to do. For one thing, Zynga was a bigger company now, with more layers of bureaucracy to coordinate. And developing for mobile platforms isn’t a plug-and-play operation for developers who are accustomed to the programming languages of the Web. But they were ready to tackle the project, and dove right in.

The first sign that something might be a little off came in the third weekend of October. Even though they were just weeks away from being ready to release the new game, Sivak says his Boston team wasn’t getting any response to e-mails it had sent to officials from their division.

Then again, he thought, the company had been through the wringer on Wall Street, and everyone was getting ready for the quarterly earnings report that was coming up later that month. Lord knows what their inboxes looked like, Sivak thought. So he shrugged it off—until Tuesday.

“And then, that morning, our division head just showed up in the office unannounced with HR folks,” Sivak says. “He pulled a couple of us into a room and gave us the situation and said, `Hey, this is going to be announced at 1:00. Today is Boston’s last day of operation.’”

“They were actually pretty nice about it,” Sivak says—people had until the end of the day to clear out, and … Next Page »

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  • Drew Hession-Kunz

    Boston- 2nd tier- come on, Curt, Austin is 2nd tier, Boston has 25% of the market, and has more startups per capita than silicon valley

    • curtwoodward

      I guess in my formulation Austin would be third or fourth tier ;) Not meant to be a slight against the Boston area of course, but I will say that’s the general consensus nationally – the “first tier” being occupied solely by SF/Silicon Valley.

    • jim

      @drew its not about Boston or Austin …its about the article and this great startup story…I love how people always find a way to make things about themselves

  • fjcmclgm

    Boy did Zynga plow through the game community and leave a wake of carnage and failure. I’ve heard the folks in Baltimore are heart broken after Zynga just swooped in and fired them all. What a wonderful company.