But don't fret, if (when) Zynga does collapse, it's execs (including the founder, who I hear is a piece of work) will be up to their eyeballs in lawsuits. Ahh the fun, writing checks to your lawyers.
This is a pretty common story. Probably more common than when the options pay anything. I once worked for a company that acquired another company. We were bigger, our CEO set up the deal, their CEO got paid, etc. But officially it was a "merger of equals". Why? Because if we'd bought them their options would have vested immediately and we would have had to buy up all the stock the employees held.
The way it was worked my company traded their options for options in the new company. Two years later everyone who had worked for the company we acquired was out of a job, and they had to decide whether or not to exercise their options in a company that wasn't publicly traded (which is madness, BTW - never, ever do that). I would have bought one of those mirrors on a stick and checked under my car every day if I'd been the CEO. But eventually he cashed out for a cool $15m.
Given how litigious the US is, if I were super rich I could not imagine keeping a significant portion of my assets in the country. If you have a lot of money it makes a lot of sense to not only diversify your investments but your jurisdictional exposure as well.
If you know the lawsuits are going to take forever (time) and cost a bunch (money), not having many assets in the US makes it easy to accept a default judgement, declare bankruptcy and write off the loss entirely without ever paying any lawyers a cent.
In this case, the people being sued seem like they totally deserve a lawsuit, but that doesn't change the fact that it is naive to not diversify jurisdictionally.
You don't even need to be wealthy. The US no longer has the rule of law, so you can now be stripped of your possessions even if you are _accused_ of a crime:
http://en.wikipedia.org/wiki/Asset_forfeiture#The_trend_towa...
I know an employee #3 at a successful startup who was fired two weeks before he would have vested. He got his due but only after legal action.
Turns out, though, that the founder was funding payroll out of his own pocket for the last couple of months. Subsequent datapoints suggest he's a good (if occasionally odd) egg.
Trust in the Valley is a very scarce commodity, but it can be found.
Zynga? I have to say I saw it coming from miles away.
It is really a problem. People have simply been conditioned to think it is normal. it may be "normal" but it is farked and wrong.
Decide.com in 1999 - they farked over the employees and diluted the stock of everyone hoping to cash out in an acquisition - this caused a major meltdown and the company fell apart and nobody received anything.
Savi Technology was acquired by Lockheed - they stated an option price internally which was wildly wrong, granted many many many options to execs and came out and said that anyone who joined in the last 12 months had options worth zero. People who did have common shares got farked over, newer employees even worse. and all employees got ZERO equity in lockheed.
Then Lockheed stock tripled after the acquisition due to the War on Humanity and everyone was still stuck holding the bag.
This is just two direct examples.
Most companies will fuck over their employees. I don't trust ANYONE in the valley.