Gaming the System

Zynga’s Stock Clawbacks Highlight The Google Chef and The Startup Everyman

farmville Zyngas Stock Clawbacks Highlight The Google Chef and The Startup Everyman

We're all in this together...until we're not

The big news yesterday was a piece in the Wall Street Journal which reported that Zynga was demanding stock back from early employees in the run up to their public offering. Employees were being threatened with termination for refusing to rescind their equity.

The WSJ story stated that Zynga executives said they didn’t want a “Google chef” situation, referring to a cook who joined the search engine early on and had $20 million in stock after the IPO. Zynga CEO Mark Pincus released a memo later in the day which found its way into the hands of Fortune’s Dan Primack, that gave credence to this:

Team,

The wall street journal posted a story last night (copied below) which paints our meritocracy in a false and skewed light.….Being a meritocracy is one of our core values and it’s on our walls.  We believe that every employee deserves the same opportunity to lead. Its not about where or when you enter zynga its how far you can grow. This is what our culture of leveling up is all about and its one of our coolest features.

we want everyone to put zynga first and contribute to the overall success of our company and all of you have.

thanks,
mark

The memo contradicts itself, of course. If everyone at Zynga has put the company first and contributed to its overall success, then why all the talk about a meritocracy that rewards some staffers over others? How exactly does Zynga keep score in their meritocracy and decide which employees have leveled up enough to deserve the stock they were offered to sign on?

A senior software engineer who was an early employee at Google wrote a post in defense of the early employee, no matter what position they hold. He pointed to this infamous “Google Chef”, Charlie Ayers.

“I have no idea what Google’s deal with Charlie was, but typically you take a pay cut for a shot at the brass ring. Charlie didn’t make $20M for cooking, he made $20M for taking the risk that the company he was joining would fail and that he could end up five years older, unemployed, and with nothing to show for his trouble.

But it is not Zynga’s failure to grasp this basic fact of startup economics that bothers me, it is their singling out of Charlie in particular because he’s a chef. As someone who was there in the early days I can tell you that Charlie Ayers contributed more to Google’s success that I did, and I was a senior software engineer.”

Anyone who goes to work at a startup is taking a gamble, no matter what their position. All the different parts of the business have to work together for a company to function at a high level. Unless Zynga can directly refute the WSJ article, this is going to make it very difficult for them to sign top talent in the future, no matter what kind of worker they’re looking for.


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