OMGPOP, from YC S07 and makers of Draw Something, was acquired last year by Zynga for $180 million dollars. Yesterday, Zynga announced major layoffs: 520 employees (18% of its workforce) and closure of three major offices (New York, Los Angeles, and Dallas). Based on a series of tweets by OMGPOP personnel, those layoffs apparently include OMGPOP’s offices and most of its staff. This seems to be the final chapter in OMGPOP after sudden popularity and a hasty acquisition.
In March 2012, OMGPOP’s Draw Something became a hit with 10.8 million Daily Active Users, replacing Zynga’s Words With Friends as the world’s most popular social game. Shortly thereafter, Zynga acquired OMGPOP. Zynga’s acquisition of OMGPOP was through purchase of 100% of outstanding OMGPOP shares for $180 million dollars in cash, as reported by Zynga in a filing with the SEC. The deal became worth as much as $210 million dollars after a potential $30 million dollar employee-retention earnout payment. Even with just the $180 million dollars, the acquisition remains the second-largest exit ever of a company funded by Y Combinator.
Draw Something quickly lost 3 million players just a month after the acquisition. In September, OMGPOP’s Chief Revenue Officer quit. In October, Zynga wrote down a loss of nearly half of its purchase of OMGPOP, between $85 million to $95 million dollars. This past April, OMGPOP’s CEO Dan Porter also left the company. In a press release, Zynga states these most recent layoffs will save the company as much as $80 million dollars annually.