Mark Zuckerberg was once on his way to becoming the richest person in the world.
In September 2021, his net worth reached $142 billion, making him the third richest person
on Earth.
This man gave birth to the social media industry.
Yet today, the Facebook founder has seen his net worth slashed by more than $100 billion…moving
him down to 28th place on the Bloomberg Billionaires Index.
Zuckerberg’s fall reflects that of his company.
At one point, Meta was valued at $1 trillion.
Today, Facebook's parent company has lost three-quarters of its value.
Its market value is now lower than that of Home Depot.
On November 9, Meta announced it laid 11,000 people or 13% of its workforce.
That’s nearly triple the number of employees Elon Musk let go from Twitter the week before.
In a message posted to his company’s website, Zuckerberg wrote:
“I know this is tough for everyone, and I’m especially sorry to those impacted.”
Meta has burned billions - spending so furiously on its virtual world that predictions are
it could eventually cost more than the entire Apollo moon program…which was more than
$250 billion adjusted for inflation.
We believe the metaverse will be the successor to the mobile internet.
We believe in this vision so deeply that we renamed our whole company after it.
Last year, in October 2021, Facebook the company officially changed its name to Meta to reflect
a new focus.
The metaverse is a vision of the future where people share virtual worlds through virtual
reality or augmented reality headsets.
Quest Pro is the first in a new line of advanced headsets.
In the same way that everyone has a smartphone today, Zuckerberg is betting they’ll have
a headset tomorrow.
He’s been intentionally pivoting away from Facebook.
Facebook’s own research shows it's struggling to keep young people interested.
Facebook’s number of daily active users dropped at the end of 2021 for the first time.
And TikTok has been taking away eyeballs from Meta’s Instagram while WhatsApp doesn’t
run ads.
It was already a painful year for Meta BEFORE announcing the large-scale layoffs in November.
Meta dropped $232 billion in value in one day in February.
Zuckerberg blamed it partly on Apple’s privacy changes which gave iPhone owners the choice
of whether they’d allow apps like Facebook to monitor their online activity.
If people opt out, Facebook receives less user data, which makes targeting ads more
difficult, costing the company ad revenue.
But what’s been really dragging down Meta’s profit is the ridiculous spending on the metaverse.
Spending on the metaverse is absolutely BONKERS.
Hey
Meta spent $10 billion on the metaverse in 2021 alone.
That’s 10 times what it paid to buy Instagram.
$10 billion is just a number I had trouble processing.
I feel sick to my stomach thinking about that much money being spent.”
John Carmack is an adviser to Meta and the former chief technology officer at Oculus,
the VR company Facebook acquired.
His comments put him at odds with Zuckerberg, who has put all his eggs in one metaverse
basket.
Zuckerberg is committed to a division of Meta called Reality Labs - which makes VR and AR
headsets and software.
Reality Labs reportedly has 17,000 employees - that’s four times the size of Twitter’s
entire workforce.
Like other tech companies, Meta went on a hiring spree during the pandemic as everyone
was locked away at home on their computer.
But now, Zuckerberg admits Meta grew too quickly; the global economy has slowed, inflation has
soared, and investors are nervous about costs.
Facebook has weathered storms before - even scandals related to privacy and misinformation
didn’t hurt its financial performance.
But this time…it’s different.
Although tech stocks have been in a slump, Meta’s problems far outpace both the Nasdaq
and the S&P 500.
November’s job cuts are the most significant since the company was founded in 2004.
A hiring freeze will be extended until March 2023.
Employees will lose some perks.
They already lost free laundry and dry cleaning earlier in the year.
Zuckerberg is asking his employees and investors to trust him.
And his plan for the metaverse.
In fact, he’s made himself the face of his company’s push for the metaverse.
According to the New York Times, some meta employees refer to metaverse projects as M.M.H.,
an acronym for “make Mark happy.”
But he wasn’t very happy after he posted a selfie in Meta’s virtual reality social
network Horizon Worlds and the world laughed at him for how ridiculous it looked.
People on Twitter were RUTHLESS, comparing Horizon Worlds to something outdated from
decades ago.
In response to the mocking, Zuckerberg promised the graphics would get a lot better and shared
an improved version three days later.
But even Meta’s employees are barely using its own metaverse app!
In September, the vice president in charge of Meta’s metaverse division, Vishal Shah,
wrote in an internal message board obtained by The Verge: “The simple truth is, if we
don’t love it, how can we expect our users to love it?”
He said managers would start tracking employees' use of Horizon Worlds.
Nearly all of Zuckerberg’s wealth is tied up in Meta stock.
So he’s betting his entire fortune on the success of his vision for the future.
During Meta’s earnings call in October, Zuckerberg defiantly said:
“I get that a lot of people might disagree with this investment.
I think people are going to look back on decades from now and talk about the importance of
the work that was done here.”
But for now, as one headline proclaims, its metaverse dream feels as far away as ever.
It remains to be seen whether the metaverse will transform our lives.
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Thanks for watching.
For Newsthink, I’m Cindy Pom.