Zynga Shuts Down OMGPOP One Year After Acquiring It For $200M • Hacker News Board

Re: Zynga Shuts Down OMGPOP One Year After Acquiring It For $200M

#191

Post by acjohnson55 » Wed, Jun 05, 2013, 6:28 AM UTC

tomkarlo wrote: post #159

InclinedPlane wrote: post #142

Earlier quoted context omitted.

I think it's a testament to how quickly the business is changing and how increasingly broken the conventional wisdom surrounding investment and acquisition is becoming. If you look at the way business worked in, say, the '80s most companies that became big did so by selling stuff, and having positive rates of return. And the general trend for a company that was growing was for it to maintain that growth for several y…

Highly speculative publicly-traded businesses have been around as long as there have been stock markets and aren't new at all. Historians have suggested that in the 1850s/1860s more money was made selling shares in mining companies than was ever mined out of the ground. In the 80s you had the S&Ls and the post-deregulation airlines. Then the Dot Coms and Enrons of 2000 era. Everyone just tends to conveniently forget,…

The book Doing Capitalism in the Innovation Economy by William Janeway has a fantastic history of speculative bubbles and venture capital, and then some. It's a tough book to read if you don't have a background in finance and econ, but it's well worth the effort if you want to understand Western capitalism in practice.

Re: Zynga Shuts Down OMGPOP One Year After Acquiring It For $200M

#192

Post by acjohnson55 » Wed, Jun 05, 2013, 6:37 AM UTC

baddox wrote: post #90

abraininavat wrote: post #59

Earlier quoted context omitted.

One could argue that the system is currently set up to benefit executives (who often end up winning, regardless of whether the company loses) at the expense of shareholders and/or the general public. One could argue that this is a problem that market forces can't fix, and therefore that a regulatory solution is called for. One might refer to this sort of regulation as "taking back" the unfair advantages the executive…

One might also argue that a "regulatory solution" will inevitably make things even worse than the market forces it tries to correct.

Another might argue that markets quite often fail, rather than produce the efficiencies they should in the ideal world, let alone the socially optimal results.

Re: Zynga Shuts Down OMGPOP One Year After Acquiring It For $200M

#193

Post by acjohnson55 » Wed, Jun 05, 2013, 6:43 AM UTC

ksk wrote: post #69

ianstallings wrote: post #14

I bet all the execs got well paid for their terrible efforts though and they will slide into new positions of power regardless of their merit. We need to take our industry back from the leeches. The near-sighted execs with nothing but paper accolades and networks of cronies.

Well, the core problem is that the freemium model is not sustainable for most businesses. There are very very few companies that can remain cash flow positive (let alone making large profits). The execs get paid well because the owners of those companies assume (rightly or wrongly) that the execs performance determines the outcome of the business. The average engineer working in that company is assumed to not have su…

I think you're wrong on a couple counts.

Freemium does work in the medium term if you can generate enough value in your networks and data as an asset to grow your valuation. You obviously do eventually need to stop recapitalizing and monetize at some point. I would argue that a lot of companies should do this a much earlier point in time, rather than growing without reasonable bounds.

A counterexample to you last point is being a startup founder. For these folks, until you prove your concept to investors and/or go cashflow positive, your salary is completely dependent on profit.

Re: Zynga Shuts Down OMGPOP One Year After Acquiring It For $200M

#194

Post by ksk » Wed, Jun 05, 2013, 7:40 AM UTC

acjohnson55 wrote: post #193

ksk wrote: post #69

Earlier quoted context omitted.

Well, the core problem is that the freemium model is not sustainable for most businesses. There are very very few companies that can remain cash flow positive (let alone making large profits). The execs get paid well because the owners of those companies assume (rightly or wrongly) that the execs performance determines the outcome of the business. The average engineer working in that company is assumed to not have su…

I think you're wrong on a couple counts. Freemium does work in the medium term if you can generate enough value in your networks and data as an asset to grow your valuation. You obviously do eventually need to stop recapitalizing and monetize at some point. I would argue that a lot of companies should do this a much earlier point in time, rather than growing without reasonable bounds. A counterexample to you last poi…

Freemium model is setup so that it drives unsucessful companies to abuse their users for more data or in the case of microtransactions it leads to them employing psychological tricks to get the "whales" to spend more and more while the long tail continues to enjoy the service for free..

A startup founder is the owner (part or full) and is not a regular salaried employee. Hardly a counterexample...

Re: Zynga Shuts Down OMGPOP One Year After Acquiring It For $200M

#195

Post by [deleted] » Wed, Jun 05, 2013, 7:41 AM UTC

InclinedPlane wrote: post #143

ksk wrote: post #69

Earlier quoted context omitted.

Well, the core problem is that the freemium model is not sustainable for most businesses. There are very very few companies that can remain cash flow positive (let alone making large profits). The execs get paid well because the owners of those companies assume (rightly or wrongly) that the execs performance determines the outcome of the business. The average engineer working in that company is assumed to not have su…

I disagree on your last statement. I think that if a reasonable base salary were provided and profit sharing was done well and was truly equitable (i.e. not more than an order of magnitude different from 1/n of profit for n employees) then it could be quite attractive. It's all about trust and track-record.

[deleted]

Re: Zynga Shuts Down OMGPOP One Year After Acquiring It For $200M

#196

Post by ksk » Wed, Jun 05, 2013, 7:41 AM UTC

thedufer wrote: post #141

ksk wrote: post #69

Earlier quoted context omitted.

Well, the core problem is that the freemium model is not sustainable for most businesses. There are very very few companies that can remain cash flow positive (let alone making large profits). The execs get paid well because the owners of those companies assume (rightly or wrongly) that the execs performance determines the outcome of the business. The average engineer working in that company is assumed to not have su…

> BTW If any company started holding up salaries of their employees dependent on profit, nobody would join that company ! That's a pretty bold statement. Any particular reason you think that's true? I don't think profit sharing is that arcane of a concept. Unless you're talking about the extreme of no salary, only profit-sharing, in which case, yeah. But that's not what execs get, either.

Good point.

Re: Zynga Shuts Down OMGPOP One Year After Acquiring It For $200M

#197

Post by ksk » Wed, Jun 05, 2013, 7:41 AM UTC

InclinedPlane wrote: post #143

ksk wrote: post #69

Earlier quoted context omitted.

Well, the core problem is that the freemium model is not sustainable for most businesses. There are very very few companies that can remain cash flow positive (let alone making large profits). The execs get paid well because the owners of those companies assume (rightly or wrongly) that the execs performance determines the outcome of the business. The average engineer working in that company is assumed to not have su…

I disagree on your last statement. I think that if a reasonable base salary were provided and profit sharing was done well and was truly equitable (i.e. not more than an order of magnitude different from 1/n of profit for n employees) then it could be quite attractive. It's all about trust and track-record.

Yes, there is room for disagreement. I accept your point.

Re: Zynga Shuts Down OMGPOP One Year After Acquiring It For $200M

#198

Post by [deleted] » Wed, Jun 05, 2013, 7:41 AM UTC

InclinedPlane wrote: post #143

ksk wrote: post #69

Earlier quoted context omitted.

Well, the core problem is that the freemium model is not sustainable for most businesses. There are very very few companies that can remain cash flow positive (let alone making large profits). The execs get paid well because the owners of those companies assume (rightly or wrongly) that the execs performance determines the outcome of the business. The average engineer working in that company is assumed to not have su…

I disagree on your last statement. I think that if a reasonable base salary were provided and profit sharing was done well and was truly equitable (i.e. not more than an order of magnitude different from 1/n of profit for n employees) then it could be quite attractive. It's all about trust and track-record.

[deleted]

Re: Zynga Shuts Down OMGPOP One Year After Acquiring It For $200M

#199

Post by officemonkey » Wed, Jun 05, 2013, 9:44 AM UTC

socialist_coder wrote: post #135

untog wrote: post #77

Earlier quoted context omitted.

Shrug, it's not like he wouldn't get paid for it. I have no idea just how miserable it would have been working at Zynga, but working for a year in order to get three month's of severance doesn't sound too awful to me.

I worked at Zynga for a year + some months. It's actually a good place to work. You learn a ton about social / viral games and monetization, make really good contacts, get paid at or above market salary, eat really good food, and get all the other startup perks. And, you're still doing game development so it's not like your skills don't transfer. I don't regret working there at all. I just wish the stock hadn't of ta…

What successful game did you end up copying?

Re: Zynga Shuts Down OMGPOP One Year After Acquiring It For $200M

#200

Post by officemonkey » Wed, Jun 05, 2013, 9:51 AM UTC

chipsy wrote: post #119

potatolicious wrote: post #100

Earlier quoted context omitted.

Is it really fickleness? Even hardcore games have a relatively short shelf-life. The only real exceptions are games like WoW which have been able to maintain some staying power. For nearly everyone else all the money is made in the first few months after which it disappears into the bargain bin. It seems like social gaming is no different.

Longer-term successes do occur(Minecraft, the Sims, League of Legends are some of the biggest ones from the past decade or so) but the industry tends to quietly ignore them because they don't fit well into established models and formulas. The "blockbuster hit" model itself is a legacy of games being intertwined with the early-adopter consumer tech business, and has lately been challenged by an array of slower-growth…

You're talking about the wrong gaming space. You're talking PC. On the mobile side things are just as fickle (things go in and out of fashion,) but there are mainstream long-term successes: "Angry Birds" being the first among them.