Rich Levandov, who is our East Coast tech partner in Boston, knew the entrepreneur, Mark Pincus. This is the way we get a lot of deals. Again it reflects on the way we do business at Avalon, our catechism, because we are a principals-only firm. We don’t have associates. That contact with entrepreneurs is at a partner level, so we’re not torturing someone with a bureaucracy of assistant associates, associates, venture partners, junior partners, partners, and the sun god. And entrepreneurs appreciate that, because they want a yes or no answer pretty quickly.
“Mark had actually tried to hire Rich in the mid ’90s for a company he was starting at the time. Rich was at AOL, and he passed on the opportunity, but they stayed in touch. So when Mark came up with this other opportunity, which was Zynga, it just sounded like it was going to fit right because it was an opportunity to use the social networking platforms to enable people to play games between and among their friends, which was not possible before. You could get online and play backgammon with strangers for the [previous] decade, or chess or something, as long as the Internet was around.”
Zynga was an appealing deal because it created a structure whereby your friends can help you, Kinsella says. “In fact, in order to get help, you have to enlist your friends, which is part of the magic of Zynga which is why people are invited to give turnips or whatever it happens to be.”
Today, Zynga is the hottest social game publisher on Facebook, with an estimated 235 million active monthly users for such games as Texas HoldEm Poker, FarmVille, and Café World. After I talked with Kinsella last week, Michael Arrington reported on TechCrunch that tensions have emerged in the relationship between Facebook and Zynga, largely because Facebook takes a reported 30 percent of the money that Zynga users spend to buy virtual stuff for their online games.
As a private company, Zynga doesn’t disclose its revenue.But they are substantial, with estimates ranging from $270 million in 2009 to as much as $600 million, according to Jeremy Liew of Lightspeed Venture Partners. The revenue growth at Zynga has been phenomenal, according to Kinsella, who says Zynga is “the fastest-growing company in terms of revenue in the history of the Internet.”
He would not discuss specific numbers, but he explains that 3 to 5 percent of Zynga’s players actually pay real money to buy virtual goods that are
