NEWSMAKER-Pincus makes power play with Zynga IPO

Pincus has said he got the idea for Zynga from playing the game "Rise of Nations," where he would be beaten by kids on the Internet. He told Vanity Fair magazine that he wished there was a way he could pay for tools to give him an edge in the game, and that's how he came up with the idea for Zynga.

Law said Pincus, while at Tribe, was aware of companies in South Korea that made money off virtual gifts. "He saw that happening over there and was thinking of doing experimentation around it. It was less about games and more about what do users really care about and what would they pay for," Law said.

BEYOND FACEBOOK

Some analysts are still are not convinced Zynga can build a lasting business that relies so much on Facebook, where it derives all but 5 percent of revenue. They also question the sustainability of a business model that is dependent on a few core users -- so-called "whales" -- to drive revenue.

Of Zynga's more than 240 million players, less than 3 percent pay for virtual items, according to the company. Its net income fell to $30.7 million in the first nine months, from $47 million in the year-ago period as Zynga had to spend more on new games and to expand internationally.

Indeed, Pincus' main task during Zynga's IPO roadshow was to convince investors the company can live and innovate outside Facebook, and wring more money out of the casual gamer.

"I think you are seeing their acquisition costs go up, marketing costs go up and they have very high churn," Strauss Zelnick, CEO of video game publisher Take-Two Interactive Software , said of Zynga's business model.

Zynga's business practices were also criticized in its early days, when it offered users in-game currency if they downloaded phony tools or signed up for dubious advertising offers.

Pincus admitted he pushed the limits in what is a now famous speech. "I knew that I wanted to control my destiny, so I funded the company myself but I did every horrible thing in the book to -- just to get revenues right away," he said.

Despite the criticism, Greg Cohn, a former Yahoo Inc employee who worked with Zynga, said Pincus was right to leverage Facebook's openness and "Wild West" culture at the time.

"There was no doubt he was aggressive on that, but that's the job of an entrepreneur," Cohn said. "He was very clearly among the first people to recognize the potential of an open platform."

Forbes in September estimated Pincus' net worth, inclusive of his Zynga stock and other investments, at $2 billion, though that could change depending on the final IPO price.

"Mark Pincus is absolutely going to call the shots going forward, so if you believe in him and what he says and what he has done, then you can bet he will keep up or stay a step ahead of the competition," said Lise Buyer, an IPO adviser at Class V Group in Silicon Valley.