Editor’s note: This article was first published in June 2011; it was written before Zynga went public, so its valuation of roughly 10 billion dollars, planned IPO and staff numbers are 2011 data, as are the Facebook and FarmVille figures. Zynga listed on NASDAQ in December 2011 and was acquired by Take-Two in 2022.
In theory, that’s the business idea: create a service where users pay for something they can’t touch or perceive except in virtual reality. Put like that, you’d think we’d lost our minds, but no. These are legitimate companies, about to go public, and the entrepreneurs behind them are already millionaires. We’re talking about Zynga and its creator, Mark Pincus.
I’m sure that, as a Facebook user, you’ve received more than one invitation (maybe a hundred) to play FarmVille, the virtual farm where you keep growing your livestock and your space for the virtual “critters”. Why is this business so profitable?
Mark Pincus designed the game exclusively for Facebook, a social network now close to 700 million users, 250 million of whom are FarmVille cyber-farmers. His business doesn’t follow the Web 2.0 model. It doesn’t live on advertising; his vision is much more ambitious. Pincus wants people to pay to improve their farm with new gadgets and add-ons. And users do pay for these virtual services, an average of up to 400 million a year, which is Zynga’s current revenue.
Zynga is valued at around 10 billion dollars and is now considering going public. Behind this simple and, apparently, addictive game is a workforce of more than 1,400 people.
The story of entrepreneur Mark Pincus
He was passionate about video games from childhood. He earned a degree in economics and started working at a venture capital firm.
Pincus created Freeloader with an investment of 10,000 dollars and sold it eight months later for 37.8 million dollars. After that big success he had another business idea, at the same time as Mark Zuckerberg, and created a social network called Tribe.
Many investors backed the idea, since his previous success spoke for itself. But to their surprise, Tribe never took off. He lost time and money, to the point of becoming persona non grata in Silicon Valley.
As we’ve said many times, being an entrepreneur is a mindset forged through successes and failures, and it means never giving up in the face of difficulties. If you have to start from scratch, you start again. After his resounding failure, Pincus created FarmVille, and, as is more than obvious, it has been a huge success.
Someone set up a Facebook group called “One more FarmVille invitation and I’ll burn your farm and your f***ing cows”, which already has close to 500,000 fans. Pincus admits that, to make a profit, he has done horrible things, including spam.
For anyone still struggling to understand how a person can pay for something that doesn’t exist, remember that the future of property speculation lies in virtual real estate, where investors buy virtual land to sell it on. There have already been deals worth millions, and entire virtual cities have even sold for 100 million dollars. Clearly this kind of business is profitable, but what’s even clearer is that… we’ve definitely lost our minds.
Further reading
