Altimeter Capital Chair and CEO Brad Gerstner sent an open letter to Facebook CEO Mark Zuckerberg on Monday, stating that the company, which is the parent of Facebook, has to simplify by cutting personnel and capital expenditure, as reported by CNBC. “Meta has gone into the region of excess — too many people, too many ideas, too little urgency,” Gerstner said, adding that the business has lost investor trust as it increased expenditures and shifted focus to the metaverse.
When asked about the metaverse, he said that most people had no idea what he was talking about.
To reduce the annual investment in the metaverse from the previously anticipated $10-15 billion, Gerstner requested that Meta reduce the amount to $5 billion. He also suggested that Zuckerberg reduce spending on capital expenditures and staff. If Meta implemented Gerstner’s recommendations, he suggested, the company’s free cash flow would soar to $20 billion.
Instead, the corporation has pledged to spend $10-15 billion annually on a metaverse project that will primarily focus on augmented reality (AR), virtual reality (VR), immersive 3D (VR), and Horizon World (HW). It may take up to a decade to bear fruit.
An estimated over $100 billion investment in an unknown future is super-sized and terrifying, even by Silicon Valley standards.
Meta’s core business is one of the largest and most profitable in the world, with over $45 billion in operating profits last year alone. Moreover, Meta has industry-leading capabilities in key future technologies like artificial intelligence and immersive 3D that will help drive new products and future growth.
If the company were investing $1-2 billion per year into this project, then that confusion might not even be a problem. You would simply do R&D quietly, and investors would focus on the core business and the breakthroughs in AI,
Perhaps the company’s renaming to Meta caused the world to conclude that you were spending 100% of your time on Reality Labs instead of AI or the core business. Whatever the reason, that is certainly the perception. In addition, people are confused by what the metaverse even means. If the company were investing $1–2B per year into this project, then that confusion might not even be a problem.Genster Wrote in Open Letter
This letter is the clearest indication that the company’s leadership is losing faith in its plans to become a leader in the field of virtual and augmented reality. According to CNBC, Meta (formerly Facebook) now spends $10 billion annually on virtual reality gear and software.
Earlier this month, on October 11th, Meta launched their next premium virtual reality headset, the Quest Pro. There are, however, little indications that virtual reality (VR) or even some of the company’s metaverse applications like Horizon Worlds are gaining traction beyond early users, as the study notes.
Facebook Shuts Shuttle Service
Several shuttle bus employees will likely be let off due to Facebook’s cost-cutting initiatives and its permissiveness toward remote work.
According to an employment document seen by CNBC, WeDriveU, a major provider of Facebook (Meta’s) commuter shuttles, plans to lay off approximately 100 individuals in and around the Silicon Valley offices of the social network firm starting in November. The vast majority are drivers, while the others work as dispatchers, operations managers, and supervisors.
Meanwhile, meta shuttle provider Halcon Corporation said in a separate filing that it would cut off 63 employees at its San Francisco office on or around November 25 owing to a “substantial drawdown of client services.”
As a reaction to macroeconomic issues and the company’s overall underperformance, Facebook or Meta has announced layoffs will begin in the coming months. When the data for the third quarter of 2018 arrive next week, it is believed that Meta will have seen its second consecutive quarterly sales fall. This company is among the poorest in the S&P 500 this year, trading around levels not seen since early 2019.