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A Suitcase Of Unmarked Twenties: How To Win The Zynga Acquisition Lottery

You know those Fidelity commercials that show your own green line – your personalized path to financial freedom? Well guess what, there’s a tech startup equivalent of that green line if you get going quickly. The conditions are looking ideal for a number of reasons, including big money flowing out of Google and a smart little tax credit in Georgia. Let me explain...

There’s stunning news out of social gaming behemoth Zynga this week that they’ve now raised in excess of $340M in venture funding – including a ‘secret’ $100M from Google, who they’re building games for. That’s huge money by any measure, but the intriguing part is Zynga is on an absolute tear revenue-wise as well. According to a TechCrunch article over the weekend, sources are reporting Zynga’s first-half 2010 revenue at $350M, with a 2011 target in excess of $1B. At a reported 50% profitability, that’s better than having 10 ATMs in your kitchen. Those are monstrous numbers, and raise an interesting question: what’s all the cash for? As you might guess, rumors are circulating around M&A activity. And of course a huge mountain of cash can be very strategic in defending your top-of-the-hill position (witness Apple’s Lala deal). So what does all this mean to Georgia entrepreneurs? It’s simple: go build a gaming company!

Let’s get specific on how to do this – with the full recognition we have all the pieces right here in town. There are three key roles needed to create a winning game company: an amazing storyteller (who can also pitch), a world-class digital artist who can give strong visual style to characters, and a hardcore engineer to architect and build the system. And you guessed it: between the student and alumni groups at Savannah College of Art & Design, Georgia Tech, Kennesaw State and Georgia State all the pieces are right here. It’s just a matter of putting together the team.

And if you can get going, there’s some serious tax credit goodness to help you along. The Georgia Entertainment Industry Investment Act was signed into law in 2008 and provides for a 30% across-the-board tax credit for any company who spends more than $500,000 in the state. And when you find yourself in the money-raising process, definitely include that number in your financial projections as free money is the best money. And don’t underestimate an angel basing a decision on the fact Georgia is a non-equity co-investor.

The other great news is you’ll have a decent-sized community to jump into – over 60 companies employ more than 1,600 people in the state according to Georgia.org. You can see the entire interactive brochure on the Gwinnett Chamber’s Economic Development site. You don’t hear much about the players beyond Chris Klaus’ self-funded Kaneva and Xeko (the former Elf Island), but you will notice all the big colleges and universities listed which sport more than 2,000 students in interactive design or full-on videogame development programs across the state right now. Make no mistake; this field is going to get more crowded very quickly.

So what to build? It should go without saying, but a FarmVille or Mafia Wars knock-off is out of the question. Imagine something highly social that delivers lots of ‘experience points’ for everyday tasks. Develop across social media and mobile platforms – exclusivity does nothing but limit your number of players. And create healthy competition among real-life peer groups to feed on the core human desire to compete and win versus one’s friends. Study Jesse Schnell's video below, and consume it multiple times in its long form. And consider the positive elements of game creation by listening to Jane McGonigal’s TEDTalk. Build something so radical that Zynga can’t ignore the rabid fan base around your game – even if it’s not bigger than all of Twitter (which FarmVille is).

The pieces are all out there – most in a dorm room or coffee shop within five miles of your house or apartment.  There are lots of variables stacked in your favor, but success requires the heart of an entrepreneur and the vision of an oracle. But there’s one pretty exit if you get it right. In fact, if you build the next hot multiplayer, socially aware game, I’ll personally give you 250,000 points when Zynga closes the deal (no cash value).

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0 # pfreet 2010-07-13 11:21
In the old days, if you wanted to buy into the "gaming" industry, you would have Fredo fly to Cuba with a suitcase of money for Hyman Roth.
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0 # JB Vick 2010-07-13 15:53
Ive got the perfect game for sports if someone is interested in partnering. Its a very big idea that I have worked out but we are somewhat limited in our ability to create games (as we focus more on the pure mobile marketing side and have nearly 100 clients that keep us busy)
I can deliver customers from the start but it needs a serious effort. As I stated its a very big idea and Im sure somebody will try an knock it off but its actually very easy protected with excellent barriers to entry.
So if anyone is interested get at me. JBV
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0 # GFRRTDEFF 2010-07-13 19:58
I love it: deals getting done right here in the comments. I'll keep an eye out for any partner prospects JB. Good luck.
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