Facebook was on a growth curve until last year when they changed their name to Meta (FB). Ever since, they have been struggling. Facebook was one of the tech darlings for more than a decade. So, why is Meta in such rough shape today? There are in fact several reasons. Let’s take a closer look at some of them. Fortunately, there are solutions. The question is will Meta use them?
During the last year, Meta has experienced both significant stock value loss along with market share loss to the competition. But it’s tough to catch a falling knife without getting cut. And that’s the corner, to mix a metaphor, that CEO Mark Zuckerberg has painted Meta into.
In the past, he had Sheryl Sandberg at his side. She may have been the right counterbalance for him. Now that she is no longer there, and it’s all on his shoulders, things seem out of balance. The reality check that Sandberg provided was very important to achieve their level of success during the previous years.
Now Zuckerberg sees the future and is convinced it’s the metaverse and he is going full steam ahead. The problem is, as with all forward thinkers, he is there before the rest of the world. In order for this to work, everyone else must catch up to his thinking and that will take a while.
I believe the metaverse has significant potential going forward. However, the idea is new to the marketplace, even though it is really just the next step in the evolution of the technology we’ve been developing for years like the Internet, AI, IoT, the cloud, 5G wireless and more. All of a sudden, the ability to blend all these forces together is too compelling to ignore. And Zuckerberg does not want to be left behind in the dust as this new sector launches and grows. He wants to own it.
Struggling with The Basics
However, while there is enormous potential, and while some companies are already going full steam ahead into the building of this dream, most other companies and individuals are struggling simply trying to wrap their mind around the basics, how it will impact them, their competitors, their customers, their industry and our civilization.
I think on one hand Facebook should be focused on building the future of the metaverse from their perspective, I also think they went too far, too fast jumping into this space when the marketplace still has no earthly idea what the heck this new place really is.
They would be better off continuing to follow the path of their previous success, and at the same time work to bring Meta to reality.
Today, Meta looks like an addicted gambler who has won a fortune yet bets it all on the next hand.
While Zuckerberg is brilliant, that’s not enough. He’s the Yin without the Yang. Sandberg no longer has anyone there to balance his creative genius with solid business sense.
And Meta needs both.
Sometimes companies are perfect with one leader like Steve Jobs at Apple (AAPL). Other times they need a Mr. Inside / Mr. Outside as Home Depot (HD) had with Bernie Marcus and Arthur Blank.
In the past, Facebook saw the social media sector changing regularly and quickly. Because of that they acquired smaller, newer, yet rapidly growing competitors. Companies like Instagram, Whatsapp, Oculus VR, Onavo and Beluga.
As these companies grew, so did Facebook. That was the winning Facebook strategy. That is what they should still be focused on, even with hotter competitors like Tik Tok from China.
However, the writing was on the wall, so Zuckerberg had to make a big move. He chose Meta. While that may be the right direction for the company, eventually, it will take a while. And during that timeframe anything can happen in a competitive marketplace.
Facebook needs to do something to burst back onto the growth wave they were on for many years. They need to refocus on these two areas, continuing to grow Facebook, while at the same time growing Meta. This is a critical moment for the company. Competition is increasing and what they want to turn into is still down the road as far as investors and customers can see.
Today, it is like Zuckerberg is staring into the future and seeing the incredible growth opportunities ahead. The problem is that is not easily translated to the rest of us meaning customers, users, investors, governments and more.
So, the best path forward may indeed be for Zuckerberg to split their efforts into continuing to build Facebook like they have done in the past, while at the same time building this new growth venture called Meta.
All they have to do is admit they moved too fast and get back to basics. History has shown the marketplace would reward that move. Coca Cola did it after introducing New Coke. They finally admitted their error, had egg on their face for a while, but that admission won the hearts of the marketplace, and once again they got back on the winning track.
So a crisis of confidence is brewing at Facebook Meta. It can recover. It can get back onto the growth wave. But leadership must admit this vision of the future, while valid, will take a while to reach. Until then they will go back to their winning formula.
The last thing they want is to become is a has-been like previous market leaders AOL, Yahoo and Blackberry when Google, Apple iPhone and Google Android entered the market and changed the world virtually overnight.
Jeff Kagan, a telecom, technology and wireless industry analyst and consultant, is an Equities.com columnist. He covers 5G, AI, IoT, the metaverse, autonomous driving, healthcare, telehealth, pay TV and more. Follow him at JeffKagan.com, and on Twitter @jeffkagan and LinkedIn.