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The Zynga founder says entrepreneurs overthink business ideas.
Mark Pincus was one of the first investors in Facebook and founded mobile gaming giant Zynga, which he took public in a $1-billion IPO and eventually saw sold to Take-Two Interactive Software for $12.7 billion. He doesn’t need to work these days and says he’s trying to take it easy (aside from promoting his new book Life at the Speed of Play). But if he were starting over and looking to create a new business, he says, he has a particular formula for doing so.
Appearing on the My First Million podcast, Pincus discussed his method for deciding what sort of business to start with hosts Shaan Puri, founder of Shaan’s All Access Fund, and Sam Parr, founder of Hampton. And it comes down, in large part, to merging things that excite you with markets that have matured.
Step one, suggests Pincus, is to make a list of things you’re passionate about. Don’t think of what makes business sense or seems logical here, he says. Instead, just think of what brings you joy. (For him, that includes surfing, being a father, and hosting cocktail parties, which allow him to connect disparate people.) Next, make a list of successful and mature businesses. These don’t have to be business categories you like and can run a wide range, from video games to job listings to peptide companies.
From there, he says, “you kind of Frankenstein these things.” Look for intersections where your passions and proven businesses meet. The best opportunities, he says, are often hiding in “dead” markets.
“Find a mature market that’s over, that’s done, that’s dead, that’s been played out,” he said. “Online dating, eBay with listings, or analog businesses that are not attractive. They’re almost not investable—VCs won’t touch them. They’re red oceans. They’re not growth markets. Find a market like that, but it has a lot of money in it and it has a proven behavior in it.”
That’s a strategy that worked well when he was starting Zynga. The gaming industry, he said, was $23 billion at the time, but it was barely growing. “It was stupid to go into,” he said. “It was not fundable.”
Today, 19 years later, the gaming market has grown to $283 billion, he says, and it’s still considered not to be growing and VCs often avoid it.
That makes it a “perfect place to try to do something innovative, because if you can find a new dimension to this that sparks people, you don’t have to prove that anyone’s going to do it or wants it or is going to spend money on it.”
There are parallels, he said, between today’s business world and 2007, when he launched Zynga. In both time periods, the consumer category was seen as uninvestable because of distribution. The focus for investors then was social media. Today, it’s AI. For him, that makes consumer-focused ventures much more interesting.
Once you’ve found that intersection of passion and proven business, said Pincus, it’s smart to test your theory before committing to it. What entrepreneurs think is “better” is often just new. So real world feedback is important.
“Our ego is where we fall in love with the idea,” he said. “We fall in love with the potential of it. And that works against us because we’ve got to get to a very, very small, small use case that really works before we can do anything else.”
To do that, take a small slice of your idea and compare it to your nearest competitor to get feedback.
“If people don’t like it better, you do not pass go,” he said. “There’s no reason to even try to build this in software. If they do, then we can start to use AI and say ‘Is there a way to use AI agents to automate this?’ But that’s very, very secondary. The first [priority] is, can we get to a clearly better product experience? That’s the hard part. That’s the lightning in a bottle, not the AI.”
Speaking of AI, Pincus said he would tell a younger version of himself today to do as much as possible in AI right now, despite any hesitations he might have. AI can’t make a company for you, he said, but it can help save you money in the early startup stage by, for instance, creating agents as employees.
However, he warned, don’t become overly dependent on it.
“I would avoid founding a company around it,” he said. “Part of the danger of AI and vibe coding is that we can build something in three months instead of a year or two. And so we do, and we skip testing it and we don’t set real objectives for ourselves—absolute objectives and goals that we hold ourselves accountable to. And the next thing you know, you’re just kind of in this B-plus relationship and you don’t love it.”
This post originally appeared at inc.com.
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