This article is from the WeChat public account: One Entertainment Observation (ID: yiyuguancha), author: big entertainer, the original title: "Zuckerberg's 2022: How to Kill "Zuckerberg"" "", the head image from: Visual China
Sure enough, the first financial disclosure after Facebook changed its name to Meta gave the capital market in 2022 another thunderclap after Netflix.
After us stock market hours on Wednesday, Meta released its latest quarterly earnings report, which showed that facebook's core application for its social products, had a continuous decline in daily active users for the first time. Meanwhile, The Reality Labs division, which is highly regarded by Zuckerberg himself, lost $10 billion last year.
The bad news is much more than that.
Meta's chief financial officer, David Wehner, also said that Meta's ad revenue in fiscal 2022 could lose more than $10 billion due to the direct damage Apple's latest privacy policy has caused to the platform's advertising effectiveness. That's equivalent to about 8 percent of its total revenue last year.
Meta 2021 Q4 financial report
In the face of this situation, Zuckerberg, who personally led Facebook's transformation, does not seem to waver, on the one hand, he frankly believes that TikTok's competitive pressure on Facebook is intensifying, and even admits that Facebook is losing young users, but at the same time he still insists on increasing investment in the meta-universe business.
In fact, Zuckerberg, as the founder of the only one of the five super technology companies in the United States that is still managing the front line, has always been on the cusp of public opinion when Facebook encountered controversy. Even if it is ridiculed as an emotionless money-making machine, in the face of major decision-making moments, Zuckerberg does have the determination of the founder of the company rather than a professional manager, and those who are still optimistic about Meta in the market today are actually adhering to the belief in Zuckerberg's leadership myth, believing that he can still overcome his past self and complete a double "iteration" of individuals and companies.
First, Meta encountered three obstacles
The timing of Facebook's change of name to Meta seems to be rather bad, as the company faces three challenges that hit it at the same time.
Competition, especially from TikTok; product shifts, social media's self-revolution; and declining advertising effectiveness, which is the result of changes to Apple's App Tracking Transparency Rules (ATT).
compete
TikTok first appeared on Meta's (then Facebook) earnings call in the first quarter of 2021, and in an analyst question; until the third quarter of 2021, no Meta executive mentioned the short video platform, but zuckerberg acknowledged in his prepared speech at the time that TikTok was "one of the most effective competitors we've ever faced." ”
Then came the first earnings call in 2022, where Zuckerberg mentioned TikTok five times, which felt like as many as 500 times.
This threat is, of course, real.
Today,tikTok is not a social network in the traditional sense at all, premised on the display of public content across the platform, which means it continues to grow in Meta's business blind spots. The problem with Meta is that its business isn't simply about content that shows social relationships, but rather serving ad placements based on user engagement, which means that any service that takes up users' time and attention — and TikTok that takes up a lot of users' time — is a threat.
Of course, TikTok's advertising revenue is obviously still a huge gap from Meta, but Zuckerberg will not let this situation continue, and the internal product changes he dominate proves a point.
Product transformation
Meta is fundamentally changing its product form in response to TikTok; the social media giant is showing with its actions that short videos are a threat.
Meta announced last quarter that it was changing its internal goals from attracting total users to focusing specifically on young people. Zuckerberg said: "We also expect major changes to Instagram and Facebook, tilting further towards video and making Reels a more central part of the experience." Over the past decade, as the audience using our app has expanded a lot, and we've focused on serving everyone, our services have been adapted to be best for most people who use them, rather than specifically for younger adults. ”
This effectively means that Zuckerberg is willing to sacrifice the most important fundamental invention he has made since he founded Facebook — feed feeds.
In fact, since last summer, pushing Reels has allowed this to take the lead on Instagram.
Reels lets users create and share short videos, much like TikTok
In other words, Instagram, after moving the app's primary usage scenario from feeds to Stories, will revamp the aforementioned feed to address two of its remaining drawbacks relative to TikTok: the lack of a new consumer experience, and the presentation of content based entirely on social relationships.
Notably, Zuckerberg has now made it clear that this change will also occur on Facebook despite the dominance of old users. While this may sound radical, Facebook is gradually abandoning the social attributes of social media, at least as far as feeds are concerned; however, it is also a product that is following the use of younger generations, who have shifted those interactions to IM software such as Facebook Messager.
Ad performance decreases
For the past two years, Meta has been warning about the impact of Apple's ATT revolution. It is only now, though, that they fully illustrate the consequences of this impact — a loss of about $10 billion in revenue in 2022, a figure equivalent to 8.5 percent of its 2021 revenue. This, more than anything else, can make investors feel disappointed in Meta's prospects.
In addition, while Meta is looking for ways to improve conversion ad tracking, these methods currently lack precision and persistence, meaning that this tool conversion is much more difficult than expected.
Meta will solve this problem, in part by making large-scale investments in machine learning to improve its advertising target tracking. However, this will require a significant increase in capital investment, which will hurt profit margins even more, but in the long run, this may help Meta to build its own moat.
Second, Zuckerberg is Meta's biggest chip
Meta's work on ATT will be painful and realistic, and will take years, but Meta is more capable and urgently needed than anyone else in the third-party advertising space to address this.
Meta's top brass noted on the earnings call that Google didn't face the same resistance because Safari wasn't covered by ATT, and for Meta, advertising revenue was everything to them right now.
To that end, just as Facebook's product changes proved that TikTok was a real competition, the recent continued stock price decline proved the benefits of founders still in control of such a giant company.
Meta share price
According to the size of the Meta, it is actually possible to avoid being so concerned about the threat of TikTok at this moment, especially when they also need to deal with the negative effects of ATT. However, the company decided to fundamentally change its product form to cope with competition when its performance was most affected by Apple's policy changes. Faced with such a decision, especially for professional managers, the wise decision should be to wait a quarter or two, because it is necessary to preserve the current profits, it is not too late to wait and see before acting, even if it is more convenient to throw the pot.
However, founders can have some degree of absolute freedom to prioritize long-term survival risks for the company as a whole over short-term financial losses.
Of course, they also have the freedom to spend $10 billion on long-term bets like in the metaverse, an amount that will "meaningfully continue to increase" in 2022.
Overall, Meta is still a big gamble on whether to believe Zuckerberg's vision.
The key thing that sets Meta apart from Google or Microsoft is that Zuckerberg is the founder who has not yet left, which means that he can also decide the direction of the company, because he has super voting rights, and it also means that he maintains the aura of attracting investors; but more importantly, Zuckerberg brings a clear founder spirit to Meta.
As he said last year when he frequently came forward to explain his vision for the metaverse: "What I care about is the existence of this thing, not just virtual and augmented reality, but it's built up in a way that really advances human connection, enabling people to interact in a different way." That's what I've been committed to all my life. I don't know if these things would have happened, if they hadn't invested so much in this, if they would have happened so quickly, or if they would have happened the same way. I think we're going to change that direction. ”
Meta exists because Zuckerberg believes it needs to exist, and he is committed to making the metaverse a reality.
This is reminiscent of a word that has always been popular on FinTwit: "House of Zuck." This phrase is seen as true by a group of Wall Street investors who are forever bullish on Facebook, not because of its performance itself, but because they firmly believe that it comes from Zuckerberg's leadership.
Facebook is arguably unique among today's top five tech companies in Silicon Valley because it's a company that hasn't formed a similar monopoly wide moat in its competitive market. Today, another unique thing about it is that it is the only one of the big five companies that is still led by a founder, which is obviously not a coincidence in the simple sense.
In fact, the perception that Facebook is most responsible for the social problems caused by social media is more like that Zuckerberg is in a more prominent position than any tech company leader. For example, how many people care about anti-vaccine rhetoric can casually say who is in charge of YouTube or TikTok without searching.
Larry Page and Sergey Brin wisely took a back seat after Google was founded, making Google an underdog; jeff Bezos, gates and Microsoft were the trailblazers; Facebook didn't enjoy the dividend.
Kara Swisher, a technology news writer for The New York Times, has previously made it clear that Facebook's way out of its current predicament is for Zuckerberg to hand over the reins of command to someone else. However, only founders can acknowledge, as Zuckerberg did on Facebook's recent earnings call, that the company's position among young people is declining, and that it's not just about tweaking the app family (FoA), but pushing the entire company toward a vision of a more uncertain future, establishing Meta as its own new dominant platform.
The Facebook Connect keynote that was born at Meta last year was almost all about a future that doesn't yet exist; believing it will happen depends on how much you trust Zuckerberg, the founder, to be more visionary than any ordinary professional manager and the execution he can bring.
Facebook Connect – AR glasses Project Nazare debuts
This is actually the Story of Jobs that has been repeated for many years - some people prefer to mention his success, but the Apple founder has a lot of very embarrassing past; his expulsion from Apple is a farce for the company, but it is very beneficial to Jobs's personal maturity, and he became a manager with the founder's vision and super execution, which can bring the later Apple to unprecedented heights.
Zuckerberg did not have the opportunity to dive away from the center of the stage, but the polishing and torture he has experienced in the past decade is obviously no less than that of Jobs.
Whether Meta can finally transform successfully and create a new business paradigm to maintain the belief in "Zach House" will prove whether Zuckerberg can "kill" the past self with his own hands.
This article is from the WeChat public account: One Entertainment Observation (ID: yiyuguancha), author: big entertainer
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