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Zynga's Biggest Threat: Mark Pincus

NEW YORK ( TheStreet) -- Those bullish on Zynga's impending IPO can point to the company's explosive growth and ties to Facebook.

But those with doubts about the social gaming company typically list founder Mark Pincus as its biggest threat.
Zynga CEO Mark Pincus

While Zynga's reportedly stressful and overly intense company culture led by Pincus has boosted the FarmVille maker to a jaw dropping $10 billion valuation in only five years, it may have also created a brain drain once top developers can cash out and leave after the IPO.

"Some Zynga employees already started to contact me months ago," said Amish Shah, the founder of recruiting firm Millennium Search. "[A brain drain] doesn't need to happen with didn't happen with LinkedIn (LNKD - Get Report) or with Salesforce (CRM) back in the day. I haven't heard about a problem like this in a while."

Intensifying this concern for Zynga is a recent Wall Street Journal report alleging Pincus was threatening to fire several early employees unless they returned their unvested stock options. Stock options are often doled out by start-ups in lieu of cash as a way of attracting promising engineers and developers.

Zynga may now have more difficulty attracting top talent who are likely to question the company's willingness to properly compensate its employees.

"If Zynga bypasses giving employees options it's not only negative in the public eye, but it will be a concern attracting new employees," Shah said. "The press and the buzz are all negative--it's the first thing people will hear."

Zynga's poor reputation may poise a particular challenge for the company as a war for the best engineering talent wages on across Silicon Valley.

"I don't know how someone would want to work at Zynga with Google (GOOG - Get Report) and Facebook throwing money at developers," said Sam Hamadeh, CEO of Privco, a firm that tracks data from privately held companies.

Zynga's culture may also hamper its ability to broker deals with smaller gaming start-ups. The company has relied heavily on acquisitions for growth over the past two years, spending more than $140 million over the last seven quarters, according to regulatory filings.
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