Ranveer Singh was in pink. Facebook is in the red. On September 30, wearing a shocking pink outfit with matching shades, Bollywood’s outre superstar inaugurated Meta’s 2022 edition of Creator Day in Mumbai. Meta is the parent company of Facebook, which changed its name in October 2021, to “reflect its focus on building the metaverse”. The showman hustled, “You all have affected, shaped, moulded (and) dare I say, become the culture.” But is Meta’s culture metastasising? The company’s stock is trading at its lowest since 2019—it had started with a market cap of a gigantic USD 1 trillion (which is about Rs 1 lakh crore), but is now at USD 365 billion. It is one of the worst performers this year in the S&P 500. Worse, Facebook admitted to losing daily active users for the first time in its 18-year history.
There was no rise in its monthly user activity, either. Meta reported another dismal first—in its second quarter this year, it reported a 36 per cent drop in earnings. In February, Wall Street cut Meta’s valuation by a shocking USD 250 billion, which caused a 26 per cent drop in just one day. “I’m not sure there’s a core business that works anymore at Facebook,” Laura Martin, an analyst at Needham told CNBC. CEO and founder Mark Zuckerberg lost more than half his fortune this year as his net worth nosedived by USD 71 billion. It takes time for ripples to hit the shore; the unkindest cut of all came from Apple, whose CEO Tim Cook takes a dim view of Facebook’s advertising policies—the Goliath of social networking depends on a tracking system that shows repeat ads for products you’ve already seen on other sites. Facebook reportedly traded information about buyers who are targeted by advertisers. Last year, Apple changed its mobile operating system to enable users to block intrusive ads from dogging them online. A cheap thrill for Cook would be Meta shutting down its dual-camera watch project meant to challenge the Apple Watch.
CRISIS AND OPPORTUNITY
At the heart of Meta, the most titanic gamble in the social media universe, stands its creator and CEO, Mark Elliot Zuckerberg. He was the world’s third-richest person two years ago; now Bloomberg has downgraded him to number 20. But Zuckerberg is clever at projection. Every day he goes to work in a grey T-shirt. When asked about his bland dressing choice, the billionaire replied, “I want to clear my life to make it so that I have to make as few decisions as possible about anything except how to best serve this community.” A smart answer, considering many wouldn’t know that it is a designer T-shirt that costs USD 300. One of Zuckerberg’s favourite quotes is by Einstein: “Make things as simple as possible, but no simpler.” Facebook started out with the simple mission to connect the world. It is now a behemoth that wants to recreate the world online. Hubris or a calculated gamble? Meta’s nemesis today is TikTok. It is faster and younger, while Facebook is still Boomerland with long, meandering sentences by middle-aged users. TikTok, a Chinese short-video platform, is perceived as the Zoomer’s app of choice; its function for users to create and watch short, viral videos makes it a world winner. Meta is fighting back with its own video version, Reels, which analysts predict will hugely boost Facebook’s revenues in the future. Many users aren’t amused at what they call the ‘TikTokification’ of Meta. Two powerful Instagram influencers Kylie Jenner and Kim Kardashian called to “Make Instagram Instagram again”. Along with Reels, Meta is also on a promotion overdrive of its free online video game Horizon Worlds and making VR devices to attract the gaming-obsessed next generation. They exemplify the founder’s vision of creating a 3D metaverse of virtual worlds, where users hang out with friends and buy products on the apps. Zuckerberg may have struck gold. He said people spent over 30 per cent more time watching Reels, and that Facebook “crossed a USD 1-billion annual revenue run rate for Reels ads”. This, however, hasn’t stopped the company from sacking employees for the first time. Zuckerberg also announced a freeze on hiring and budget cuts, even for growing teams. Kush Ghodasara, an independent market expert, says Meta has been losing strength because advertising revenues have been on a decline. “Short messaging apps such as Twitter and short video apps are trending, and this reduces users’ spending time on Facebook,” he says, advising investors to exit the stock for now and review at around USD 115. Some business experts allege that Zuckerberg’s poor leadership skills are at the core of Meta’s problems. Bill George, senior fellow at Harvard Business School, told CNBC, “I think Facebook is not going to do well as long as he’s there,” and “he’s likely one of the reasons so many people are turning away from the company. He’s really lost his way”.
BAD IMPRESSIONS
Zuckerberg is good at finding his way back from controversies, scandals and setbacks. He suffers from red-green colour blindness and made Facebook’s logo blue. Before Facebook came online, the digitalist was already in the zone. At Harvard, he built Coursematch, where students could list the classes they were taking.
He built Facematch, which became a campus rage, as it made photo matches of male and female students. In 2004, he co-founded Facebook with Dustin Moskovitz, Eduardo Saverin and Chris Hughes. Social networking was the new obsession and Silicon Valley welcomes youth and brains. In 2009, Zuckerberg was sued by three former classmates, Divya Narendra and the brothers Tyler and Cameron Winklevoss, who alleged that he stole the idea, technology, design and business plan for Facebook while they were students at Harvard. They had launched ConnectU three months after Facebook debuted in February 2004, but got less than 100,000 members compared to Facebook’s 150 million. Zuckerberg started Facebook in late 2003 by asking Saverin to deposit USD 15,000 in a joint bank account to pay for servers to host TheFacebook.com. The Brazilian agreed. But relations soured over financial and cultural differences. Zuckerberg was born in White Plains, New York to Jewish parents—a psychiatrist and dentist. Saverin, now a billionaire entrepreneur, was born to wealth in São Paulo, though his mother was a psychologist. Zuckerberg managed to oust Saverin through some deft corporate manoeuvering and diluted the ownership share of his friend-turned-enemy to 0.03 percent, while the shares of other investors were left untouched. He tells Zuckerberg in Social Network, “I was your only friend.” In truth, Facebook is its founder’s best friend. The Meta CEO would now need the same ruthlessness and survival instincts to arrest his company’s slide. In 2017, job search firm Paysa analysed the personality traits of wildly successful CEOs; Zuckerberg was one of them. Using data from IBM’s supercomputer Watson, Paysa identified his traits as intellect, emotionality, immoderation, melancholy and gregariousness.
ALL IS NOT LOST
Zuckerberg’s gregariousness and immoderation fuel his ability to think big and act big, as reflected in Facebook’s shift towards Meta, on which he has spent USD 10 billion in 2021. In 2012, the reputed American financial journal, Barron’s, owned by News Corp had published a cover story that declared “Facebook is worth USD 15” with a thumb-down emoji. In 2016, the stock traded at USD 130 apiece. Facebook’s population drop of just half a million daily users for the first time, which is offset by its massive following. Zuckerberg’s major worry is Facebook’s alienation from young people. His intellect responded to the crisis decisively. In October last year, he addressed users aged 18-29 in a post: “So we are retooling our teams to make serving young adults their north star, rather than optimising for the larger number of older people. But it should also mean that our services become stronger for young adults.” Even his worst enemies would attest to his capacity for meta-vision. He foresaw Spotify when he was in high school, where he co-created the Synapse Media Player app, which tracked a user’s favourite songs on an MP3 player and made appropriate playlists. There is no time for melancholy, Meta’s fate hangs on its founder’s chutzpah. Clues to the company’s future lie in Zuckerberg’s personality. He was 12 years old when he created an instant messaging programme named ZuckNet for his father to know when patients arrived at the clinic. At 24, he was a self-made millionaire; in spite of recent reverses, Meta’s market cap is USD 364.65 billion as of last week—no small change. At the beginning of every year, Zuckerberg’s Facebook profile would lay out his annual personal challenge. (The only pages that can’t be blocked on Facebook is that of its CEO and his wife Priscilla Chan.) In 2011, he had vowed to eat only the meat of animals he had hunted and killed himself. In 2015, it was about reprogramming his AI-driven robot butler. But in 2020, he stopped the personal challenges; the next year would be the launch of his greatest endeavour till now—Meta. Zuckerberg is betting on the metaverse to take him to the trillionaire level. It will define how people will interact. And how to live in a virtual world. Statista expects the number of social media users worldwide to touch 4.59 billion by the year-end. Worldwide social media advertising spend is expected to touch USD 357 billion by 2026. Zuckerberg sees Meta’s digital real estate business as his new empire: Precedence Research calculates that metaverse will be worth USD 1,607 billion by 2030. Its balance sheet is USD 40.5 billion in cash and short-term investments while its total debt is USD 166.7 billion.
During a Facebook Live in 2017, Zuckerberg filmed himself barbequing meat (presumably of an animal which he had killed himself) in his backyard. As the meat sizzled, he quipped, “You don’t get to be successful like this just by being hardworking or having a good idea. You have to get lucky in today’s society in order for that to happen.” Does the Milquetoast god of tech still have luck on his side? That’s the meta question of the times.
