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Zynga’s Pincus Tries to Keep ‘That Startup Feeling’ After IPO

As Zynga Inc. shares began trading in New York yesterday, hundreds of the company’s employees gathered to mark the occasion in the atrium of their San Francisco headquarters.

Zynga Chief Executive Officer Mark Pincus said he arranged the ceremony -- Nasdaq’s first initial public offering bell-ringing in San Francisco -- to help staff feel invested in the IPO process. Moments later, the crowd dispersed.

“The sign of a great company meeting is that a lot of employees are so fired up that they want to go back to work,” Pincus said in a telephone interview, citing a favorite saying of Zynga board member Bing Gordon. “This event was like that -- times 10.”

Under Pincus, Zynga raised $1 billion in the largest IPO since Google Inc. debuted in 2004 -- an event that stands to make many employees rich, at least on paper. His next big challenge is keeping Zynga’s roughly 2,800 staff members focused on crafting the online games that fuel growth.

“I think we’ve kept that startup feeling for people,” said Pincus, a serial entrepreneur who founded Zynga in 2007. “Our values of being metric- and outcome-driven enables us to push down ownership and control and leadership to the team, and I think that they appreciate that.”

Stock Drop

On its first trading day, Zynga fell 5 percent to $9.50 at the close. The developer of games such as “CityVille,” “FarmVille” and “Mafia Wars” sold 100 million shares earlier this week for $10 each, the top end of a proposed range.

Pincus said he wasn’t concerned about the stock-price decline. His aim, he said, is achieving long-term value for investors.

“We’re not experts on stock trading and we don’t intend to be,” he said. “This story is going to play out over the next couple of years, not the next couple of trading days.”

Pincus wouldn’t comment on specific plans for the capital raised in the IPO, citing the U.S. Securities and Exchange Commission’s “quiet period” rules around companies going public. He pointed to Zynga’s history of spending hundreds of millions of dollars on data centers.

He also cited acquisitions, including last year’s $53.3 million purchase of Newtoy Inc., maker of the popular game “Words With Friends.” Zynga made 20 acquisitions in 2010 and the first nine months of 2011.

Big Believers

“We’re bigger believers in the future of play and social gaming than any other company, and we wanted to be in a position that we had the resources to invest more in that future than any other company,” Pincus said.

Zynga gets more than 90 percent of its revenue from Facebook Inc. Investor concerns about Zynga’s dependence on the social-networking company may ease over time as it adds users on mobile devices and other platforms, Chief Operating Officer John Schappert said in an interview yesterday.

“We’re very happy to be on Facebook because it is where all our players are playing,” said Schappert, who left Electronic Arts Inc. for Zynga earlier this year. “At the same time, we’re also excited about new platforms. We’ve made big investments in mobile, we’ve grown our mobile user base both on iOS and Android, and we’re also on some of the new emerging platforms like Google+.”

After ringing the bell and conducting interviews with media, Pincus said he intended to spend his Friday afternoon building games.

“I’m spending the rest of the day on our product,” he said. “I believe that that’s what serves investors the best, and I believe that that’s the way it will be rewarded by the market in the long term the best.”

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