Hundreds of billions of dollars rich Zuckerberg made two risky bets before the age of 40

Focus:

• 1

  In May next year, Facebook founder Mark Zuckerberg will turn 40 years old. Like Bill Gates at the age of 40, he is going from youth to maturity.

• 2

  In his 40s, Gates suddenly changed his image from a die-hard monopolist to a global philanthropist, benefiting both himself and the company's reputation.

• 3

  Zuckerberg has set two operational goals for Meta: to operate more efficiently and develop better products faster; Make sure Meta has enough money to continue investing in a long-term vision.

• 4

  AI and the metaverse are two of the main ventures Meta is working on, and Zuckerberg sees AI mainstreaming as a transformative event.

Mark Zuckerberg, the face of social media, is in his forties and is ushering in his Bill Gates moment, becoming more mature than ever and disrupting the company he founded. The future of everyday human life, and what legends it will leave us, will be a big gamble.

Sitting in a glass-walled conference room nicknamed "The Aquarium," Zuckerberg conducted a cost/benefit analysis of the topic that made headlines this year: cage buckets. He said expressionlessly, "It's not that painful to be punched in the face, but it damages the brain."

Zuckerberg's "cage fight" with Elon Musk may never happen, but it helped bring it back to the zeitgeist. He may have done so for business purposes as well: For much of his career, Zuckerberg struggled with a series of missteps and scandals that undermined his enormous achievements. But the competition with Musk proves that the former "toddler Facebook CEO" has evolved into a politician at Meta.

He realized: "It's not your competitors who decide your destiny, it's how you execute." ”

This reflection comes at an opportune time. Zuckerberg, who will turn 40 next May, has an estimated fortune of $106 billion and is owned by charities designed to exert maximum impact and transform one of the world's most important companies. He almost completely controls the company. In many ways, Zuckerberg is experiencing his own Gates moment. Like Zuckerberg, Gates dropped out of Harvard to start a historic tech company. Like Zuckerberg, he's a nerd in the field. Like Zuckerberg, his ruthless path to power has drawn fans, enemies and antitrust concerns.

Then, in his 40s, Gates suddenly made a change. He transformed his image from a recalcitrant monopolist to a global philanthropist, benefiting himself and the company's reputation. So, what will Zuckerberg do? His friend and colleague Daniel Ek, founder of Spotify, describes a narrative arc that brings us to the present moment.

"Three marks"? Zuckerberg just wants to be a better version of himself

Ek described the early Zuckerberg as "three Marks": Mark One in the Hollywood movie "The Social Network," the founder of Facebook portrayed as an arrogant, inconsistent genius. In the Cambridge Analytica data misuse scandal, Zuckerberg was seen as the "evil Mark," and he was also Mark Two. Then came Mark III at the height of Meta's glory. In this evolution, Zuckerberg's public image looks more real, but these only reflect the public's opinion, not his own.

"Zuckerberg has learned a lot in the last few years, and he has a new fire in his belly," Ek said. He realized he needed to act responsibly because he had a huge platform. But there is still some shadow of the former Mark who bet on something, even if everyone tells him "this won't work out." Most notably, Zuckerberg may invest $100 billion in a virtual world called the metaverse, which, although yet to be confirmed, may not pay off for another 7 years.

Zuckerberg says he and Meta have embraced a "martial arts worldview" that includes respect, purpose, discipline and many other management textbook clichés. But eventually, Zuckerberg, who is maturing, will rely on another principle of integrated management: self-awareness. When you compete, you're not competing against someone else, you're competing against yourself, right? "You just want to be a better version of yourself," he said. ”

Zuckerberg has more leeway in pursuing this reinvention. Professionally, no one can tell him what to do. Facebook has a dual-class share structure, which gives him unquestionable control. Currently, he owns 99 percent of the super-voting Class B stock and has 61 percent of the total voting power, which makes him neither fired nor essentially free from liability.

His friend Facebook co-founder Dustin Moskovitz asked, "Can you rally all the other common shareholders to vote against Mark?" No, you can't. ”

This is the basic operation of Mark in "The Social Network", and Napster co-founder and former Facebook president Sean Parker suggested the above. In Facebook's primitive era, people's need to control their own destiny was strengthened. Zuckerberg recalled Yahoo's $1 billion bid in 2006 to buy Facebook, which was just two years old. "When I don't want to sell the company, I think investors are thinking: 'Maybe we should change teams?'" But in fact, they can't do it. ”

Understandably, Zuckerberg thinks the benefits outweigh the disadvantages. "There are a lot of companies in the world that have a lot of capital and don't have a leadership or board structure to make big bets on the future," he said. And we are a founder-controlled company. "There's no doubt that this has helped Facebook complete several acquisitions that were once considered bold, including WhatsApp, Oculus, Instagram and others, which are considered the best corporate acquisitions of the century."

However, as Facebook went public in 2012 with a market cap of nearly $82 billion, these successes also led to the beginning of the "evil mark" period, which can be summed up in one word: arrogance. Around 2015, Zuckerberg took a listening tour of the Midwest with fishermen, farmers and firefighters. Meanwhile, in Menlo Park, California, his company, which connects the world better than any other, is being used to attack democracy on a larger scale than any other.

It's serious business: In 2014, Facebook's algorithm amplified the impact of racial violence, which helped incite violence. In 2016, Cambridge Analytica, an adviser to Donald Trump's campaign, inappropriately used data collected from Facebook to build voter profiles ahead of the presidential election. In 2021, leaker Frances Haugen revealed that Facebook's leadership already knew the harm its products could cause, but still prioritized profit and growth.

Venture capitalist Roger McNamee said: "Zuckerberg's legacy will be a key role his company plays in undermining democracy. Without Facebook, the whole world would be completely different and much better. This is a tragedy for a man who has many opportunities for good. McNamee was an early investor in Facebook and is now an outspoken critic.

Accumulate huge fortunes and place new super bets

In 2008, 24-year-old Facebook founder Mark Zuckerberg became the youngest self-made billionaire on the Forbes 400 list. Seven years later, he managed to squeeze into the top ten.

Zuckerberg initially said it was a "crazy idea" to think Facebook's concerns about interference in the 2016 election, even though it was happening right under his nose. In response, he said: "Some governments around the world will continue to try different similar activities, and I think our team has become more sophisticated in dealing with this situation."

That's probably all we might get. In addition to apologizing, voting control largely protected Zuckerberg from the nasty consequences. But he acknowledged the mistake at a congressional hearing in 2018, saying, "We didn't have a broad enough awareness of our responsibilities, and that's a big mistake." It was my fault and I'm sorry. I founded Facebook, I run it, and I'm responsible for everything that happens here. ”

But responsibility and accountability are different. Especially when the large asset companies that back him, including Vanguard, BlackRock and Fidelity, despite setbacks, offer shareholders an unquestionably good record. Over the past three years, Meta's share price has lagged the S&P 500 by nearly 16 percentage points, but over the past 5 and 10 years, they have outperformed the index by 31 percentage points and 367 percentage points, respectively.

In theory, benevolent dictatorships can produce greatness. Zuckerberg said: "There are not so many places in the world that can bet as long as we do." But without self-awareness, that benevolence would look more like what Ek calls an "evil mark," especially if the CEO's reign can last more than half a century. Zuckerberg said: "I think I will run Meta for the long term."

It's hard to determine a person's level of maturity, but looking at Zuckerberg now and Mark 3 before it, you might think of September 2021. At the time, Facebook's stock price hit an all-time high, the company's current market capitalization is close to $1.1 trillion, and Zuckerberg himself is worth about $136 billion. He entered the metaverse quickly. The following month, he announced his decision to change Facebook's name to Meta, betting his brand that the metaverse would be the future of computing, a founder-driven super bet.

However, bad news followed. Over the next 14 months, Meta's share price plummeted 75% and net profit fell 41% in 2022 as annual revenue fell for the first time. Zuckerberg's fortune plummeted to $33 billion. Apple made privacy updates to its mobile operating system, iOS, in 2021, which made it harder for tech companies to track users across apps. Another culprit is competition from TikTok.

Last year, Zuckerberg did something different: no motivation to move forward, no belated, half-hearted apologies. Instead, he changed his position. In four years, Zuckerberg increased the number of employees from 33,600 to 87,000. Last November, Zuckerberg announced more than 11,000 layoffs, or 13% of the company's headcount, and in March, Meta laid off another 10,000. "We made some really tough decisions last year, even though that's obviously not what you want to do," he said flatly. ”

Set two operational goals for the company, combining the metaverse with AI

Zuckerberg continued: "We tried to establish two operational goals for the company. One is to allow us to operate more efficiently and develop better products faster; The other is to make sure we have enough financial space to buffer any issues we encounter along the way so we can continue to invest in a long-term vision, which are very much the two major investments we're making in AI and the metaverse. ”

His vision hasn't changed, and while some believe the metaverse has failed, Zuckerberg has also publicly stated that it will take 10 years for the metaverse to become profitable. Meta has amassed about $40 billion in operating losses by betting on another metaverse led by its Reality Labs, but Zuckerberg is still fully committed.

Horizon worlds — a free virtual reality app for the Quest VR headset that was supposed to usher in the era of immersive experiences and VR conference calls — missed its goal of 500,000 monthly active users in 2022, less than 200,000, according to an internal document cited by The Wall Street Journal in February. Even Zuckerberg admits that Horizon Worlds isn't living up to the retention rate it should. "It was an impressive experience, so to speak," he said.

Susan Li, Meta's chief financial officer, added: "If I were to call the shots, I might have invested differently in Reality Labs." She noted that her remarks would not surprise Zuckerberg because he encouraged such debates. When Zuckerberg accepted the criticism and corrected course, the market responded. Meta's share price has more than tripled since its trough at the end of 2022, thanks to share buybacks worth about $38 billion since the start of last year.

Analysts widely expect Meta's revenue to grow 14 percent this year to nearly $133 billion, and net profit to jump a massive 50 percent to $34 billion, bringing it closer to its highs two years ago. The resulting rise in stock prices has once again made Zuckerberg one of the 10 richest people on the planet.

For him, the metaverse is part of a long-term vision that includes not only virtual and augmented reality, but also artificial intelligence. In an interview with Forbes magazine in February, Gates described the latest advances in AI as "as important as personal computers or the Internet," while Zuckerberg also saw the mainstreaming of AI as a transformative event. And, like many other tech giants, Meta has built a big-language model to train AI that will define its future. It's called Llama 2 and it's an open-source big model that will be integrated into Meta's various products.

Zuckerberg said: "Artificial intelligence will involve all aspects." He sketched out a new world that is now familiar, starting with an intelligent assistant and ending with a hologram of a colleague attending a business meeting. Zuckerberg also believes that artificial intelligence will power "characters" on Meta's various platforms.

He explains: "They're going to have Instagram and Facebook profiles. You can talk to them on WhatsApp, Messenger, and Instagram, and they will appear as avatars in the metaverse. ”

Zuckerberg acknowledged that AI is another costly forward-looking gamble. But he's Meta's only significant shareholder, and he's patient enough. "Listen, it's going to take some time to launch full-scale augmented reality glasses, which is a big part of the real-world lab budget," he said. So when people ask, 'Where are you spending all this money?', we're actually trying to fit a supercomputer into a regular pair of glasses frames. ’”

If Meta can take the lead in doing this in a convincing way, it will create a new market. Failing that, it will lie dormant at high cost, like many previous failures, like Facebook's mobile phone, the now-abandoned video chat device portal, and the screwed-up cryptocurrency Libra.

Andrew "Boz" Bosworth, chief technology officer at Meta, said: "What we're experiencing here is failure, constant failure, constant doing what we think people will enjoy. If they don't like that, we say, 'Why don't you like this?' Then we iterate until we find a product that fits the market. That's what we're very good at. ”

Improving the image through philanthropy, pledging to donate hundreds of billions of dollars in assets

If the first two Mark were based on public perception, the third Mark must have realized how Gates changed his image by focusing on public causes in his 40s. Zuckerberg, then 26, was one of the original signatories of the Giving Pledge. The campaign, launched by Gates and Warren Buffett, requires billionaires to commit at least half of their wealth to charity.

Zuckerberg said: "Bill firmly believes that if you want to do charity work well, if you want to do better when you are older, you need to practice ahead of time."

In 2015, just before their daughter was born, Zuckerberg and his wife, Priscilla, wrote a letter to the child, pledging to donate 99 percent of their Facebook shares to charity through CZI. Today, that share is worth about $103 billion (plus the $4.2 billion they've already donated). If they stick with it (and there's no indication they won't), CZI will become one of the largest charities in the world, second only to Gates and his ex-wife Melinda French Gates, and possibly even bigger, depending on how Meta performs in the future.

Priscilla described CZI as "an incredible opportunity." It is a non-traditional LLC that, in addition to donating funds, makes venture capital investments to for-profit companies that meet its goals. In addition, CZI provides funding for advocacy efforts. The LLC setup means that the Zuckerbergs won't receive immediate tax breaks and won't have to disclose the company's activities.

However, when they transferred their assets from the LLC to the CZI Charitable Foundation, the couple received a tax deduction and made it mandatory to disclose this information. CZI's charitable foundation has $7 billion in assets (according to recent tax filings). CZI's bold goal is to help science treat, manage, and prevent all diseases by the end of the century. The goals are set high, but the reality of providing treatment is complex. Priscilla isn't worried, she said, "It's worth it to solve problems that people think are impossible." ”

To that end, CZI plans to build the world's largest AI computing cluster for nonprofit life science research, trying to more fully model various human cells to understand how they behave during health and illness. The Chen Zuckerberg Institute for Advanced Bioimaging in Redwood City, California, is already developing new ways to observe cells at high resolution to facilitate early disease detection.

This expansive thinking changed the way Zuckerberg ran the company. While his CZI-backed entity researched disease, Mark III began embracing health in his own life to improve his productivity, exercising almost every day and sleeping a full 8 hours a night. In Jiu-Jitsu and mixed martial arts, he fights in a respectful, more thoughtful way. He is well aware that if he can fulfill even a small part of what CZI promises, his sins of the past decade may be cleared.

"Even if only a third of what you're betting on is valid, I think that would still create tremendous value for the world," Zuckerberg said. (Text/Golden Deer)