12:51 PM

Zynga Credibility Evaporating - What's The Effect On Its Super Star VC Investors?

Zynga, one of the largest virtual goods and gaming companies, promised it would stop running scam ads after Mike Arrington at Techcrunch called it out, amongst others, last Sunday. Then Zynga did it again.

On Saturday Mike Arrington noticed the ads were back, but he had to use someone else's computer because the ads weren't showing on his connection.

Deliberate blocking?

Mark Pincus, CEO of Zynga says no, it was "offer provider, doubleding, told us this was the result of their failure to remove an optimization queue which was still showing these ads to 10% of pageviews. i want to be clear that zynga had no control over the pages being shown and never filtered them from michael or anyone's view. "

You would think that this week of all weeks Mr Pincus would use a belt and braces to make sure no scam ads filtered through unnoticed.

It didn't take Mike Arrington long to find the ads so how come Zynga didn't see them?

Dean Takahashi at VentureBeat noted:

Shukla, who was replaced as CEO last week at Offerpal, told us in an interview that her tools allow publishers to review every single offer in the system and remove those that the publisher doesn’t think are proper. Super Rewards also has the same kind of offer removal feature. But those systems evidently haven’t been implemented...

Zynga's credibility is fast evaporating. It's quickly accumulating an unpleasant reputation; especially since Techcrunch posted a video of CEO Mark Pincus admitting "I Did Every Horrible Thing In The Book Just To Get Revenues".

There are 230,000 Google references to Zynga plus "scam" out of 1.44m just for Zynga. That's 1 in 6 references .

How will this effect Zynga's A-list investors? There must be considerable concern about being in the public eye.

It's a top tier A-list take a look:

Bing Gordon
Kleiner Perkins Caufield & Byers

Fred Wilson
Union Square Ventures

Reid Hoffman
Chairman, LinkedIn

Peter Thiel

Managing Partner Clarium Capital

Bob Pittman and Andy Russell

The Pilot Group

Brad Feld
Foundry Group

Sandy Miller
Institutional Venture Partners

Rich Levandov
Avalon Ventures

Maybe we can hear from some of them this week.

For example, New York city's top VC, Fred Wilson has a very popular blog A VC - Musings of a VC in NYC.

But like the New York Times' recent failure to notice the scandal in the world of virtual goods, Mr Wilson's blog hasn't noticed it yet either.

It's a great story. You'd think the East Coast media would be all over this story of a Silicon Valley bubble fueled by scams...

- - -

Please see: NYTimes Article On Virtual Goods Misses Huge Controversy