Zynga CEO Mark Pincus celebrates the opening of his company's new headquarters in San Francisco last month. Pincus has been criticized for his hard-charging, data-driven leadership style.

Zynga’s chief executive, Mark Pincus, got an earful from employees last month.

In dozens of emails to a companywide list, frustrated workers complained about the long hours and stressful deadline periods. The quarterly staff survey solicited 1,600 responses, with plenty of criticism, including one person who said he planned to cash out and leave after the initial public offering.

Pincus took note, going through the comments and highlighting select excerpts. At a Zynga meeting several days later, he read some of the most acerbic words. Pincus said he was aware of the problems, but needed the staff’s guidance to fix them.

Few Internet startups have grown as swiftly as Zynga, creator of a sprawling network of virtual farms, cities and poker tables that is preparing to go public in one of the most highly anticipated offerings this year. Led by the hard-charging Pincus, the company operates like a federation of city-states, with autonomous teams for each game like FarmVille and CityVille. At times, it can be a messy and ruthless war. Employees log long hours, managers relentlessly track progress, and the weak links are demoted or let go.

But that culture, which has been at the root of Zynga’s success, could become a serious liability, warn several former senior employees who agreed to speak on the condition of anonymity because of fear of reprisals.

As the discord increases, the situation may jeopardize the company’s ability to retain top talent at a time when Silicon Valley startups are fiercely jockeying for the best executives and engineers. It could also hamper dealmaking, a critical growth engine for Zynga, which has spent about $119 million on acquisitions in the last two years.

“Zynga should be an example of entrepreneurship at its best,” said Roger McNamee, a co-founder of the venture capital firm Elevation Partners. “Instead it’s going to be a Harvard Business School case study on founder overreach — this will be a cautionary tale.”

Warning signs

Already, signs of trouble are emerging.

In July, Zynga lost a bid for PopCap, a mobile gaming company. Zynga offered $950 million in cash.

But PopCap’s founders worried about the company’s reputation after hearing rumors of the company’s rescinding share awards and fierce internal competition, said two people with firsthand knowledge of the situation. Instead, PopCap agreed to a rival offer from Electronic Arts, worth $750 million in cash and stock and the potential of an additional $550 million if certain earnings goals were met.

Several startups have also rebuffed Zynga this year, including Rovio. This summer, Rovio, the maker of the popular mobile game Angry Birds, walked away from discussions of a deal worth roughly $2.25 billion in cash and stock, three people briefed on the situation said.

With the IPO fast approaching, competitors are preparing to poach disgruntled staff members. This month, one recruiting firm sent cookie baskets to some 150 Zynga employees.

Zynga declined to comment, citing the mandatory quiet period before its IPO.

By the numbers

While from the outside Zynga may have the fun and whimsy of the Willy Wonka chocolate factory, the organization thrives on numbers, relentlessly aggregating performance data, from the upper ranks to the cafeteria staff.

General managers submit weekly reports, measuring factors like traffic and customer satisfaction. Every quarter, teams assess their priorities under an Intel-pioneered system called “objectives and key results.” And Pincus, a professed data obsessive, devours all the reports, using multiple spreadsheets, to carefully track the progress of Zynga’s games and its roughly 3,000 employees.

“It’s very similar to a New York investment bank,” said Lou Kerner, an analyst at the brokerage firm Liquidnet, who has followed Zynga for years. “It’s data-driven, and it’s intense.”

The data pipeline allows Zynga to fine-tune its games to optimize engagement, helping the company attract some 270 million unique users each month, many through Facebook. The four-year-old Zynga, which has emerged as the Web’s largest social gaming company, recorded $828.9 million in revenue in the first nine months of 2011, more than double the same period a year ago. It is also the rare Internet startup that is profitable, earning $121 million since the start of 2010.

But the heavy focus on metrics, in this already competitive industry, has also fostered an uncompromising culture, one where employees are constantly measured and game designers are pushed to meet aggressive deadlines. While some staff members thrive in this environment, others find it crushing.

For the top performers, the rewards are handsome. Zynga dispenses lavish gifts like vacations and $100,000 in vested stock.

Those who do not perform can perish.

In March 2009, Zynga hired its chief people officer, Colleen McCreary, who formalized the hiring structure and started to trim weak performers, cutting about 30 employees by that summer. Pincus began drafting “MIA,” or missing-in-action, lists to keep track of senior employees who were not doing a good job or who needed to be placed on more ambitious projects.

Changing its ways

Zynga has made efforts to change its ways. The company has added data centers and expanded teams to ease the burden on its engineers. It is also encouraging managers to schedule a bigger buffer between project phases and to give teams the week off before a game’s debut. Zynga — which offers employee perks like acupuncture, Friday happy hours and a cafeteria brimming with organic food — is also spending millions of dollars on focus groups and other initiatives to strengthen its manager training programs.

Pincus is also trying to soften his managerial style. McCreary has spent significant time with the executive, coaching him on his tone and constructive criticism. In 2010, the company also hired an outside consultant to do a “360-degree review” of Pincus. The consultant interviewed employees and board members and produced a report filled with feedback.

Still, rivals say Zynga will have to do even more to bolster its image, or risk losing its appeal as an employer at a time when resources are scarce.

“We’ve learned that when companies treat talent as a commodity, the consequences are severe,” said Toledano of Electronic Arts. “It takes years to repair a reputation.”