How Zynga Employees Marked The Company’s IPO at Headquarters

After four years of grueling hours, funnel analysis, and creating lots of art for virtual farms, Zynga employees and chief executive Mark Pincus had a modest and brief celebration this morning to mark the company’s $1 billion initial public offering.

Many of the 1,700 employees based at the company’s San Francisco headquarters came in beginning at around 5 a.m. this morning to see Pincus, his wife and One Kings Lane founder Ali Pincus, along with board member Bing Gordon and other executives ring the opening bell for NASDAQ locally. Breakfast on Fridays is apparently a company tradition. But this time they started a little earlier with cinnamon rolls and hot cocoa.

Pincus said he wanted to have the opening in San Francisco instead of New York so that employees could join in. It would have been difficult to fly in everyone from San Francisco plus the 1,000 other employees at offices around the world to the East Coast.

To employees who weren’t there, the company sent packages with black, gray and red T-shirts with the mantra “I <3 Play” and streamed the opening via satellite feed. There were banners with “I <3 Play” hung all over headquarters.

Pincus gave brief remarks which were livestreamed over the web. He told employees to make decisions with the next several years in mind, not the next quarter. He also said that building the company, which raised around $1 billion in funding, had restored his faith in venture capitalists. Pincus had founded three other companies before Zynga and at one, SupportSoft, he left his role at CEO because of a disagreement over strategy.

Every foot of the main office was filled with employees down to the light tunnel and cafe. “There was this really amazing energy,” said one employee, who declined to be named. “The whole building was on fire basically.”

Then at about 8 a.m. Pacific, shortly after Zynga’s shares began trading, everyone went back to work.

Zynga still has a lot more to prove. The company is priced at about seven times its current revenue runrate, a generous multiple considering that the company’s daily active user base is shrinking on Facebook and rival Electronic Arts’s market capitalization is less than two times its annual revenue.

So to produce value for investors going into 2012, Zynga must increase its share of paying users on Facebook if it can’t grow or accelerate on iOS and Android.

Zynga is so far showing that it can build, not buy on iOS. After paying $53 million for Words With Friends-maker Newtoy last year, it hasn’t made any other big ticket mobile acquisitions. Dream Zoo is outperforming comparable games from Pocket Gems and TinyCo at the moment and Poker by Zynga is now the leading grossing poker title on the iOS charts. However, titles from other studios like Cityville and the Farmville companions haven’t done as well.

Overall, Zynga has six of the top 100 grossing titles on iOS and 13 million daily active users. That’s more than every other developer except one or two independent companies like Rovio Mobile, but it’s not the overwhelmingly dominant position Zynga is accustomed to on Facebook. Plus, most of those daily actives likely come from Words With Friends, which doesn’t monetize on a per user basis as well as games like Poker or Dream Zoo.