VentureBeat just published a lengthy piece about the history of the soon-to-IPO Zynga, and Mark Pincus, the entrepreneur behind the company. The VentureBeat article reports a lot of information and history (of course it is impossible to truly know all the details.) And yes, Zynga has drawn a lot of attention and criticism from all different angles. I’m not going to discuss any of that.
The article brought back memories of my earliest days of building apps on the F8 Facebook platform. I remember Craig Ulliot posting about hitting 250k downloads on his app and not knowing how to handle all of the traffic. Keep in mind this was 2007 — Facebook with about 35-40 million users was the #2 social network behind the heavyweight MySpace.
It was glaringly obvious to Mark Pincus (and some other early players) that social games were an enormous opportunity — while it seemed glaringly obvious to many others that the silly games and applications on Facebook were just a fad filled with notification spam. I remember many people in 2007/2008 who told me there was no future in Facebook applications/games — no money to be made. Some older people told me that Facebook was just a fad for college kids. And people who were excited about the potential of the Facebook platform kept asking when we would see “real” apps instead of just games. Fast forward to today — entire venture-backed companies try to enter the market by launching apps on the Facebook platform (and or on the iPhone platform.) According to the Wall Street Journal, venture capitalists invested $1.33 billion into gaming in the first three quarters of 2011, after investing $589 million in all of 2010. Things change quickly.
The VentureBeat article reminded me how Zynga consistently raised big money ahead of everyone else time and time again. Zynga also focused heavily on the #2 Facebook rather than the spam-cluttered/creepy MySpace (seems so obvious in hind sight right?). Zynga did so while the media/pundits preached doubt about the viability of the social gaming business, while competitors failed to grasp the size of the market opportunity, and way before gaming incumbents even knew what was going on. Zynga raised a war-chest to go after what they could see was/is an enormous opportunity, while incumbent gaming companies did not view Zynga as a real threat or competitor. By the time the rest of the world fully realized the opportunity, Zynga was already miles ahead.
The takeaway is about being at the edge — by no means an easy place to be. This applies across areas like technology, entrepreneurship, and investing. The edge is the land of uncertainty — where everyone tells you what you are doing makes no sense, will not work, is too small, is not interesting, will not make money, etc. And often they are right. Many ideas, products, investments, and companies on the edge fall off into nothingness. Yet the edge is where you have to be to spot the obvious-in-hindsight big time changes before everyone else does. The edge is where you catch the big wave. [Or the edge is where you step out of the way for an impending storm.] The edge is where you can react to what is coming before everyone else. If you wait for the time when things are clear and obvious and everyone around you nods in agreement that there is a tremendous opportunity approaching, you are no longer on the edge. You are too late.