One of the cofounders of Zynga , the company’s executive vice president of sales and business development Andrew Trader , is no longer with the company, we’ve confirmed. He has been quietly removed from the company’s management page . Remaining cofounders – Mark Pincus, Michael Luxton, Eric Schiermeyer, Justin Waldron and Steve Schoettler, remain. As of a month ago Trader’s title had been downgraded to VP of Partnerships and Studio Services, although no top sales or business development replacement executive has yet been named. Why is he gone? No one is saying. CEO Mark Pincus says only “AT [Andrew Trader] and zynga have parted ways. He made an awesome contribution. We need to continue scaling the company.” Trader hasn’t yet returned a phone call asking for his comment. Zynga’s revenue growth has been nothing short of astronomical over the last 18 months, so it would be hard to blame him for not bringing in the dollars. Perhaps he took the fall for the Scamville saga although that has largely blown over now. Trader was with Zynga nearly three years, so he’s vested on a lot of his stock. Given how much money is at stake, the whole story about why the first cofounder of Zynga has left the building may never come out. Zynga raised $180 million in December 2009, at a rumored valuation of above $2 billion. And no, I have no idea why he’s holding a banana in the picture. CrunchBase Information Andrew Trader Zynga Information provided by CrunchBase
Zynga investor Fred Wilson remained mostly quiet during the Scamville debacle in October. But he’s starting to talk now, and he isn’t happy. In a post about Etsy a few days ago a commenter brought up the Zynga/Scamville stuff. Wilson replied “Citing techcrunch on the zynga stuff is a joke.” He waded into the subject again today on another of his posts , saying in a number of comments “i’ve tried hard to stay out of that debate because it is a false debate…zynga makes almost all of its revenue on virtual goods…the “scammy ads” thing is total red herring that everyone got excited about but is almost entirely irrelevant” and “nobody who got involved in that shitstorm took the time to really do the work and look at what Zynga did and did not do. or compare it to Google and everyone else who does way worse on a daily basis…the whole thing totally annoys me. it’s not fair.” He also said numerous times that we didn’t have our facts straight, and that we didn’t take the time to understand what really happened. Hogwash. Fred Wilson is a brilliant investor, but he’s conflicted and wrong yet again. There were a total of 22 Scamville posts (see updates) on TechCrunch alone. For the most part we left Zynga alone, until we were slammed in the face with CEO Mark Pincus on video saying “I Did Every Horrible Thing In The Book Just To Get Revenues” (how do you take that statement out of context?). Pincus also said “we need to be more aggressive and have revised our service level agreements with these providers requiring them to filter and police offers” in a post about Scamville. And Facebook took one of their games offline for a few days for a violation of their terms of service around scammy offers. Zynga had claimed in the past that fully 1/3 of their revenue came from offers. Some of that wasn’t legitimate, likely tens of millions of dollars, and other companies have said that the bad stuff tended to push out the good stuff. There is an excellent argument that you can continue to find most of these scams on Google and other search engines. But a big difference is the incentive that social games give users to enter into these scams via virtual currency, as well as the fact that they targeted teens without credit cards by pushing mobile subscription offers. Google is wrong to post these ads. But that doesn’t make what Zynga has done right. I think Pincus took the right steps to move his company in the right direction, and I think the industry is on the right track now, and Zynga looks to be a legitimate business even without scammy offers. I support Pincus as an entrepreneur. But to deny that there was ever a problem is irresponsible. And to suggest that we didn’t take the time to understand the facts is outrageous. In addition to the 22 posts where we spoke to dozens of sources on and off the record, I asked Pincus to go on video with me to tell his side of the story without editing. He declined. Zynga continues to be a very close partner to Facebook. They share a major investor, DST . A facebook board member, Marc Andreessen , is also an investor in Zynga. And Zynga is Facebook’s largest advertiser. The fates of these two companies are deeply aligned, and there has been more than a little evidence of wrongdoing. The relationship between Zynga and Facebook needs more scrutiny, not less. Crunch Network : CrunchBoard because it’s time for you to find a new Job2.0
Zynga CEO Mark Pincus said earlier this week that he intends to make sure his company’s games don’t include scammy offers in the future. Our full background on this story is here . But what he didn’t say in that blog post is that Zynga has been scamming users from the beginning quite intentionally as part of their revenue model. Rather, he pointed much of the blame at middlemen offer companies: “We need to be more aggressive and have revised our service level agreements with these providers requiring them to filter and police offers prior to posting on their networks.” Last spring, though, he gave a much clearer explanation to an audience at a Startup@Berkeley mixer, admitting that scamming users was part of Zynga’s business model from the start. And it was all caught on video. I think everyone sort of knew that this was exactly Zynga’s gameplan. But to hear it said so directly is just shocking. The full 30ish minute video is here . We’ve taken the relevant section of the video, roughly starting at around the 10:40 mark, and embed it below. From the video: I knew that i wanted to control my destiny, so I knew I needed revenues, right, fucking, now. Like I needed revenues now. So I funded the company myself but I did every horrible thing in the book to, just to get revenues right away. I mean we gave our users poker chips if they downloaded this zwinky toolbar which was like, I dont know, I downloaded it once and couldn’t get rid of it. *laughs* We did anything possible just to just get revenues so that we could grow and be a real business…So control your destiny. So that was a big lesson, controlling your business. So by the time we raised money we were profitable. Crunch Network : MobileCrunch Mobile Gadgets and Applications, Delivered Daily.
Zynga changed their lead gen scam policy this morning (the whole Scamville background is here , see updates at bottom as well). And now RockYou is taking steps to clean up their act to, according to an email we’ve been forwarded. In an email to RockYou’s publishers, they say that they will begin complying with Facebook’s rules on offer scams (and like you, we’re not sure why they haven’t been complying all along, but lax enforcement is likely the cause). Two interesting nuggets from the email though. First, RockYou says that from now on you’ll only see “clean, safe surveys from top tier brands advertisers.” All of the surveys we’ve seen are mobile subscription scams, so I’m not sure there’s such a thing as a clean, safe survey. Second, the email says “ the Facebook compliance team will be keeping a very close eye on offer walls starting tonight.” We’d heard that Facebook is coming down hard on app developers around scams right now, but Facebook won’t comment about it other than to say that they have always been monitoring application offers and enforcing the rules. From what we’ve seen, that enforcement didn’t bring much in the way of results, but perhaps they’re more serious about the situation now. The full email: Subject: RockYou Offers: Facebook Offer Wall Compliance Update Hi RockYou Publishers, You may have heard the recent controversy around the types of offers that are being run by most offer wall providers (Offerpal, SuperRewards, etc.). If you haven’t heard, take a look at this post on TechCrunch: http://www.techcrunch.com/2009/10/31/scamville-the-social-gaming-ecosystem-of-hell/ The Facebook compliance team will be keeping a very close eye on offer walls starting tonight. Since the RockYou Ad Network is the largest display network on the Facebook platform, we have a long history of working directly with the Facebook compliance team to ensure that we always maintain the highest standards of compliance and ad quality. We will apply the same level of quality assurance to our RockYou Offers platform. Some thing to keep in mind that set us apart from the other offer wall providers: * 100% Facebook compliance starting this evening, and on an ongoing basis * Clean, safe surveys from top tier brand advertisers * High quality brand campaigns ranging from video ads to free sample offers * Cost-per-install campaigns for other Facebook applications We believe we will continue to outperform the competition based on our diverse advertiser base, and we will do so while always maintaining full compliance with Facebook policy. Our technology provider for RockYou Offers, PeanutLabs, has also posted an interesting research study they ran over the weekend that clearly outlines how users feel about the scammy offers that have been so prevalent on offer walls: http://peanutlabs.wordpress.com/2009/11/02/survey-finds-arrington-has-a-point-given-choice-users-overwhelmingly-prefer-direct-payments-and-research-surveys-to-cpa-offers/ We believe the new Facebook policy enforcement is in the best interest of Facebook users and the entire platform ecosystem, and we look forward to working with you as a safe and effective monetization partner. If you have not yet switched over to RockYou Offers, all you have to do is: 1. Log in to your publisher account at ads.rockyou.com 2. Click on the RockYou Offers tab 3. Follow the 4-step integration process If you have any questions or issues with integration, please contact Chris or Aaron: Chris Akhavan [redacted] Aaron Choi [redacted] Thank you, RockYou Offers Team Crunch Network : CrunchBoard because it’s time for you to find a new Job2.0
A big part of the debate about the lead gen scams plaguing Facebook and MySpace via social games is over how much money is being made on these “offers.” Zynga, by far the most successful at building and monetizing these games, is now telling us exactly how much – 1/3 of total revenues, according to Andrew Trader , a co-founder of Zynga: Andrew Trader, co-founder of Zynga, said the company makes about a third of its revenue from advertising and another third from virtual goods transactions. The last third comes from companies that provide commercial offers, trading Netflix memberships and marketing surveys for in-game cash. Zynga revenue guesses range all over the place, but are likely $250 million a year or more. That means $80+ million/year is being brought in from legitimate offers like Netflix subscriptions, as well as the really smelly stuff like recurring mobile phone and learning CD subscriptions that trick users into paying big dollars for little or no return value. What percentage of offer revenue is scammy? We believe it varies over time, and is heading in the wrong direction. Legitimate advertisers like Netflix and Blockbuster, hit with countless laundered subscriptions from repeat subscripers, are said to be dramatically lowering bounty fees paid on signup. Far less scrupulous advertisers like Video Professor and Tatto take their place. HotOrNot cofounder James Hong said it best in a comment to our post yesterday outlining the scams : “In a nutshell, the offers that monetize the best are the ones that scam/trick users. Sure we had netflix ads show up, and clearly those do convert to some degree, but i’m pretty sure most of the money ended up getting our users hooked into auto-recurring SMS subscriptions for horoscopes and stuff.” Offerpal and others, who provide these offers to game developers, try to downplay the percentage of revenue that comes from scams. Clearly they are obfuscating the truth, to put it kindly. Facebook and MySpace must takes steps to address this. Crunch Network : CrunchBase the free database of technology companies, people, and investors
