2024.09.30
Shawn Tzuens Wu. Former as Product Director. Currently START in the AI field.
Contact me at [email protected]
Excluding Netflix, from 2012 when Facebook went public to 2014 when it acquired Oculus for $2 billion, Facebook was the FAANG giant with the largest and fastest market value growth in these three years, with an increase of over 110%. However, Zuckerberg remained the most anxious CEO among the tech giants. The reliance on advertising revenue structure, the diminishing effectiveness of free games, and the dependence on the iOS and Android ecosystems all contributed to Zuckerberg's unprecedented obsession with "entry points". With mobile advertising starting to grow rapidly in 2013, using cash on hand to buy computing entry points became a necessity. In retrospect, the $2 billion might have been a placebo for Zuckerberg's anxiety, but at the time, it was the most valuable painkiller for Facebook as a whole.
Over the years, despite Quest being criticized for its high price leading to poor shipments and a weak developer ecosystem affecting active users, this couldn't shake Zuckerberg's persistence in entry points. Behind the parasitic business was the art of managing shareholder expectations. On one side was the Oculus department constantly monitoring internal deployment data, and on the other was the M&A department always ready to acquire external products. Revitalizing the advertising business could continue to fund the unprofitable hardware business. The high growth in stock price came partly from the 61% compound annual growth rate of mobile advertising over six years, and partly from the patience in anticipating the arrival of the hardware entry point singularity.
The bet on the metaverse began in the two years before the pandemic. At that time, Zuckerberg's anxiety reached its peak. Data security issues, influence on elections, and endless public problems portrayed Zuckerberg as a clown with no bottom line for profit. The pseudo-progressivism aimed at exploiting the middle class made the term "Silicon Valley elite" exceptionally cheap. Children who once admired Zuckerberg because of the movie "The Social Network" all started giving him the middle finger.
When no one believes in you, you perform at your worst. In 2018, FAANG experienced its biggest downturn in the history of mobile internet. While all giants were cutting heads, Facebook was the only one nearing a halving in value. How to explain this to shareholders became a blank answer sheet that kept Zuckerberg up at night. Zuckerberg again reached the classic stage of treating symptoms rather than the root cause. After some thought, fintech became the new lifesaver.On one side was the near-monopoly of social payment share across the Pacific in China, with WeChat Pay dominating the social payment landscape, and on the other was the 1288% rise in BTC in 2017, making him itchy and distorting his actions, starting to fill in the answer sheet randomly. In June 2019, Zuckerberg merely hinted at the brewing Libra coin project, and four months later he received a cordial reception on Capitol Hill: How could a computer nerd touch the lifeline? Zuckerberg's reasoning was consistently absurd: "WeChat and Alipay did it too." Zuckerberg's analysis department was not competent; they might not have known that Q coins, which once had unlimited anchoring to fiat currency, hundreds of millions of users, and even supporting "underground banks," had to face "a special crackdown on virtual currency transactions initiated by 14 ministries and commissions including the central bank" in 2007. Coming to a congressional hearing was already giving him face. But then again, in 2007, Facebook launched the Facebook Open Platform, allowing third parties to access Facebook's user data through APIs. This arrow in 2007 became the bullseye for Congress to attack the Cambridge Analytica data leak at this hearing, directly knocking Zuckerberg back to square one. Visa, Mastercard, and PayPal all subsequently announced "I'm out" after the hearing.
To let it perish, first let it go mad. After experiencing the stillbirth of Libra, the pandemic gave Zuckerberg an illusion of overtaking on a bend: mobile app DAU surged, people couldn't go out, leading to a sharp increase in demand for remote work and online entertainment. The idea of conceiving an online real-time interactive platform came along with Zuckerberg's fantasies about decentralized finance and the arrival of the next generation technology singularity. At this point, it went back to where the dream began: Quest. Raising troops for a thousand days, use them at the critical moment. The metaverse needed a new "computing entry point," and Quest and the newly established Reality Labs became part of this chaotic combination. But the market didn't buy it. Over 3 years, more than $60 billion was burned, earning nothing but mockery from sharp media targeting the financial reports, hardly making a splash. Horizon Worlds, the virtual reality social product pushed by Meta, after three years of struggle, had a daily active user count stuck at 200,000, with the vast majority of users not lasting beyond a month of use. The market didn't understand, users didn't understand, employees didn't understand, but this didn't stop Zuckerberg from repeatedly insisting on conference calls, "FB is in the past, now there's only Meta, firmly believing in the metaverse." The so-called anxiety had evolved into blind confidence, and even though it was difficult to get off the tiger, he had to keep riding.
In November 2022, Meta's stock price fell to the same level as in August 2015, reaching a new post-pandemic low. Despite exhausting all means to try to save the stock price, Zuckerberg was already in a desperate situation. Meta's management of stock price expectations in the post-pandemic era had never been so poor, with the overall stock price drop exceeding 76% from the high point of the quantitative easing to November. But just at this time, whether it was a joke or heaven favoring the "foolish child," at the end of November, when Zuckerberg was at the end of his rope, OpenAI released ChatGPT. The AI craze suddenly swept the globe, and Zuckerberg shifted from stubbornly defending the metaverse poison pill to the next generation of artificial intelligence.
Going back to 2021, to serve the metaverse strategy and the enormous computing power required for recommended advertising projects, Meta purchased a batch of NVIDIA graphics cards. Going further back to 2019, to strengthen its influence in the AI field, Meta invested heavily in AI infrastructure and community, including open-sourcing PyTorch, a machine learning framework that would later have a profound impact in the field of artificial intelligence. As if it were a scripted play, Zuckerberg once again received heaven's favor, with the open-source LLaMA series LLM entering an intense period of refinement. At the same time, another key figure, Meta's CTO Andrew Bosworth, Zuckerberg's former senior at Harvard, after experiencing the failure of Ray-Ban Stories, which we know as the first generation of Meta Ray-Ban glasses (expected shipment of 400,000, actual less than half), added AI voice interaction capabilities based on LLaMA to the second generation glasses. Five array microphones brought new life to Meta's hardware, which had repeatedly hit walls in the hardware field, with global shipments exceeding one million units. Zuckerberg in 2023 completely changed his past habit of reckless spending, with being placed in a desperate situation and then finding a way out becoming the starting point for all decisions. Training the LLaMA series models required large purchases of NVIDIA's latest A100 GPUs, and fully evaluating and activating cash flow became a financial question that was easier to calculate than metaverse investment. 2023 was dubbed by Zuckerberg as the "Year of Efficiency" - layoffs to control cash flow, LLaMA LLM investment, Ray-Ban R&D, optimization of mobile advertising operating costs, all these measures combined, and the market voted with both hands and feet. The stock price saw a crazy surge in 2023, jumping nearly 3 times. Meta was still Meta, Zuckerberg was still Zuckerberg, this year was like a dream back to 2014, the second fiscal year after going public, everything was flourishing, Zuckerberg could spend more time thinking about business possibilities, and could also temporarily forget the nightmares of past hearings.