Counterparties: The unbearable lightness of silicon beings
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If you build a company on something lighter-than-air, will it inevitably float back to earth? Kara Swisher reported yesterday that Zynga is laying off 520 employees and closing its LA and New York offices. The company‚Äôs core business — selling desktop games for Facebook — is declining, and the company says it is focusing on the faster-growing but less profitable mobile market. Zynga‚Äôs stock is now down 70% since it went public in December 2011.
Two years ago, Zynga was declared the winner of the ‚Äúgreat social game Gold Rush‚ÄĚ. Better than anyone, it figured how to make money out of the inordinate amount of time wasted on Facebook. It never was, and won‚Äôt ever be, a ‚Äúfrighteningly ambitious startup‚ÄĚ. Despite being a big financial success, Zynga always had limited ambition.
Nick Bilton worries that too many startups are tackling small problems, aimed at the founders‚Äô ‚Äútechnophile friends rather than the public‚ÄĚ. His example: Twist, an app that uses geolocation technology to tell people exactly how late you are running. It‚Äôs just one product among many of companies started to find ‚Äúsolutions for mundane problems‚ÄĚ.
Many of these companies are the product of the new Silicon Valley that George Packer recently cataloged in the New Yorker. Examining Sean Parker‚Äôs $10 million eco-unfriendly wedding, Alexis Madrigal summarizes this ethos as ‚Äúdream big, privatize the previously public, pay no attention to the rules, build recklessly, enjoy shamelessly, invoke magic, and then pay everybody off‚ÄĚ.
The short seller Carson Block, the founder of research firm Muddy Waters, has decided now is the time to switch some of his focus from fraudulent Chinese firms to technology ‚Äúpretenders.‚ÄĚ — Ben Walsh
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