Zynga 2012 Annual Report Download - page 25

infrastructure. As of December 31, 2012, approximately 35% of our employees had been with us for less than
one year and approximately 70% for less than two years. We have implemented certain cost reduction initiatives
to better align our operating expenses with our revenue, including reducing our headcount, rationalizing our
product pipeline, reducing marketing and technology expenditures and consolidating certain facilities, and we
plan to continue to manage costs to better and more efficiently manage our business. However, we must continue
to expend significant resources to identify, hire, integrate, develop, motivate and retain a large number of
qualified employees. Our cost reduction initiatives could negatively impact our ability to hire and retain key
employees. If we fail to effectively manage our hiring needs, successfully integrate our new hires and retain key
employees, our ability to continue launching new games and enhance existing games, including in each case on
mobile, and to expand our With Friends Network, could suffer.
To effectively manage our business and operations, we will need to continue to focus on spending
significant resources to improve our technology infrastructure, our operational, financial and management
controls, and our reporting systems and procedures by, among other things:
• monitoring and updating our technology infrastructure to maintain high performance and minimize
down time;
• enhancing information and communication systems to ensure that our employees and offices around
the world are well-coordinated and can effectively communicate with each other; and
• enhancing our internal controls to ensure timely and accurate reporting of all of our operations.
These enhancements and improvements will require capital expenditures and allocation of valuable management
and employee resources. In addition, we cannot be sure that the cost reduction initiatives will be as successful in
reducing our overall expenses as expected or that additional costs will not offset any such reductions. If our
operating costs are higher than we expect or if we do not maintain adequate control of our costs and expenses,
our operating results will suffer.
Our core values of focusing on our players first and acting for the long term may conflict with the short-term
interests of our business.
One of our core values is to focus on surprising and delighting our players, which we believe is essential to
our success and serves the best, long-term interests of Zynga and our stakeholders. Therefore, we have made in
the past and we may make in the future, significant investments or changes in strategy that we think will benefit
our players, even if our decision negatively impacts our operating results in the short term. For example, in late
2009 and in 2010 we reduced in-game advertising offers in order to improve player experience. This decrease in
in-game offers led to a reduction of advertising revenue in 2010 as compared to 2009. Our decisions may not
result in the long-term benefits that we expect, in which case the success of our games, business and operating
results could be harmed.
If we lose the services of our founder and Chief Executive Officer or certain other members of our senior
management team, we may not be able to execute our business strategy.
Our success depends in a large part upon the continued service of our senior management team. In
particular, our founder and Chief Executive Officer, Mark Pincus, is critical to our vision, strategic direction,
culture, products and technology. We do not maintain key-man insurance for Mr. Pincus or any other member of
our senior management team. The loss of our founder and Chief Executive Officer or certain other members of
senior management could harm our business.
If we are unable to attract and retain highly qualified employees, we may not be able to grow effectively.
Our ability to compete and grow depends in large part on the efforts and talents of our employees. Such
employees, particularly game designers, product managers, engineers and executives are in high demand, and we
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