Investing

Investing the Payoff from Playdom – Chris Wang’s Seven “Quiet” Years

Chengwen Chris Wang, co-founder of Playdom. PC: Chris Wang

Even most digerati do not know of Chengwen Chris Wang, but many still remember the company he cofounded – Playdom, the social games developer behind FacebookFB +0.8%’s most played “Gardens of Time” and MySpace’s “Mobsters.” From its birth in December 2008, the Mountain View, Calif. outfit took over the market. In 2010, the 20-month-old company was acquired by Disney for $563 million, the richest deal in the social games market.

Playdom’s founding threesome of Chris Wang, Dan Yue and Ling Xiao seldom appeared in the spotlight, however. And they virtually disappeared after the acquisition.

Two hints of the founders’ whereabouts appeared to be dead ends. Wang’s name showed up as the chairman of Sentri, a Taiwan and San Francisco company providing ‘smart’ home monitoring. However, the company has been silent since 2015. The trio was listed as founders of Step 3 Ventures LLC, a VC firm incorporated in Palo Alto in 2011 but declared bankrupt in March 2016, according to records from the California Secretary of State.

But a little digging sheds light on Wang’s seven “quiet” years and his journey from computer genius to adventurous entrepreneur to, finally, mature investor at age 33.

Taiwan-born, Wang moved to the US at 13 when his mother was invited to be a visiting scholar at Stanford University. He completed high school early, then a bachelor’s degree in computer science from the University of California Berkeley in three years. After that, came a comp sci PhD at Carnegie Mellon University in a record two years and ten months. By then he was all of 22. “I guess I just really like to study,” he said, when reached in telecom interviews from Taiwan, where he again spends most of his time. “Graduating early is also kind of cheaper.”

Upon becoming Dr. Wang, he accepted a job offer at GoogleGOOGL +0.02%. In a little more than a year at the internet giant, he started to play online poker with two friends – Dan Yue, and Ling Xiao. The former he met in high school, the latter at Berkeley. Eventually, the trio made enough money from playing poker to start their own business. Wang quit his job at Google. “My parents thought it was not a good decision because it was such a good job but I knew I could always find a job elsewhere,” he recalled.

However, even the smartest people experience setbacks. First they flopped at e-commerce, then they came up with a dating app that allowed users to rate their friends’ cuteness and in turn tell them how high their cuteness ranks among their friends. The app attracted a million users within a week. “However we lost them all in the second week because once people know how cute they are they are no longer interested in the app,” Wang said. In any case, the three amigos never stayed with one idea for too long. “If it doesn’t work, we move on.”

The third attempt, Playdom, was a success. “We were lucky with gaming,” he said, crediting a word-of-mouth marketing approach. Within four months, the game developer made a profit and engaged 5.2 million daily active players. The value of Playdom surged until it was bought by Disney Interactive.

Although the 2010 deal was gravy for the sellers, it turned out to be a disappointment for Disney. Just three months after the acquisition, Playdom closed down three of its less popular games. As a result, more than a million players lost the money they paid for these games and reportedly many turned away from Playdom. The company slipped down to the 5th largest Facebook FB +0.8% application developer. Additionally, in 2011, Playdom was ordered by the U.S. Federal Trade Commission to pay $3 million in fines for collecting and disclosing kids’ information without parental approval. (Wang was still involved with the operation into 2012 but said of the settlement—which didn’t include any admissions—that “I don’t know the detail, our legal department took care of it.”)

By early 2014, Disney Interactive was cutting web-games staff, mostly at Playdom, and its Gaming and Internet division struggled to achieve profitability. The division eventually cut a quarter of its workforce, mostly affecting Playdom, which in turn announced the closure of all online games. Two years later, Disney shut its expensive acquisition down. Wang blames the gathering dominance of Facebook in social gaming for the eclipse of outfits like Playdom, as well as an inability of Disney to retain developers who found better prospects on their own. (Disney hasn’t responded to a request for comments about Playdom.)

But $563 million was in the hands of the Playdom founders, split more or less equally. Xiao and Yue now sit on the board of Green Chef, a 3-year-old startup in Boulder, Colo, that prepares and delivers meal kits.

Wang, on the other hand, returned to his roots and has assembled an equities portfolio. About half of the money is in ETFs and index funds. The other half, he’s invested in companies and hedge funds. “I spent some on real estate and myself, but those are negligible,” says Wang, who is still single.

In 2011, he bought into Alibaba for just $6.75 per share. Three years later, the company placed its IPO at $68 per share. Now its shares are selling at $169. (Wang says he has sold most of his Alibaba shares.) Wang also invested in Etsy, an e-commerce site specialized in selling vintage items, in 2014, a year before its successful IPO.

Other current favorites:  Glassdoor.com, the jobs and recruiting website with millions of salary reports, reviews and CEO ratings; Peloton Cycle, a silicon valley company that produces indoor home cycling machines, and India’s Flipkart, where he first invested in 2013. Just this year, the 10-year-old e-commerce company raised $1.4 billion and bought eBay EBAY +1.83% India.

Two things stand out in Wang’s investing strategy – the capabilities of the founders and the popularity of the broader industry. Timing of the investment, he says, is also crucial – “Whenever I try to invest in something, I ask myself ‘why now?’ Why it hasn’t been developed earlier?”

As for Sentri, he said it sold its technology to another company in 2015 but he remains its non-executive chairman. And Step 3 taught him that later-stage bets were more up his alley. In the stock-investing game, the Playdom payoff seems to be scoring okay.

[“Source-forbes”]

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Loknath Das

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