2012: Facebook plays catch-up with mobile. Not many people realize that Facebook had an existential scare when the action in computing shifted from the desktop to our pockets. This made Zuckerberg paranoid about being behind again when the next big thing arrived. He was determined to avoid what Clay Christensen called the Innovator’s Dilemma, which posits that dominant companies are doomed when the next paradigm arises, because their success—and their thinking—is tied to the current paradigm. When Zuckerberg saw an Oculus demo in 2014, he concluded that the future of computing lay in virtual reality. Spurred by memories of Facebook’s near-death experience with mobile, he bought Oculus for $2 billion and later went all-in, changing the company name and spending $10 billion a year on research to remove the scientific obstacles that currently make his vision of the metaverse impossible.
In the past, Meta’s problems were always mitigated by fantastic financial results. So what if people hated the company—it was making a fortune, and the stock was creeping toward that trillion-dollar valuation. Now that those gains have vaporized, Meta’s shortcomings have taken center stage. The company has been lax in improving its key products. Worse, there’s rot in them.
For years, the big changes in Facebook, Instagram, WhatsApp, and Messenger have been driven by what’s good for Meta, not what’s good for the people who use its services. Instead of improving things like, say, the birthday experience (one thing that people love about Facebook), massive resources are being expended to copy Meta’s main competitor, TikTok, something no one who uses Facebook is clamoring for. True, that approach worked to a degree when Instagram blatantly swiped Stories from Snap. But there is little chance that Meta’s TikTok clone, Reels, will surpass the originator of that format. TikTok not only has a state-of-the art discovery algorithm, it also has cachet among people under 40 that Facebook can’t match. And when it comes to retaining top talent at Meta, is being second- or third-best in short-form video (don’t forget YouTube) an inspiring mission?
So what comes next? I have a solution! Dear Zuck: Break up your company. Not in the way the regulators might want, separating Facebook from Instagram and so on. But simply acknowledge that Meta is already two companies. One is a technology bet on the metaverse, and the other is a massive social business suffering from the loss of the CEO’s focus. The twain should be split.
Meta then becomes a project to build the software and mixed-reality hardware for virtual worlds. Zuckerberg will be much happier returning to the exhilarating task of building something from scratch—he boasted in the earnings calls that work on the metaverse will wind up being “historic”—and no longer waking up every morning feeling he’s been gut-punched, as he told Joe Rogan. Funding the research-heavy Meta 2 will be a breeze. If Elon Musk can draw $44 billion from investors, banks, and his own pocket to buy Twitter, a firm that never came close to the billion-user goal it set for itself in 2009, Zuckerberg could certainly scrape up the cash for a runway long enough to develop the metaverse he so passionately believes in. Obviously the biggest investor will be his current company, devoting some of its $40 billion in cash to bet on its departed founder. One thing the new investors might specify is that the board of directors, not its CEO, will have ultimate control of the company.