Meta Platforms & Mark Zuckerberg: Going Deep with Mostly Borrowed Ideas (MBI)! 🕵️♂️🩻
Aug 19, 2023
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Mark Zuckerberg, Founder of Meta Platforms, joins the podcast to discuss Facebook, Messenger, Whatsapp, Instagram, Reality Labs, AI, regulators, competitors, and high-variance founders. They debunk misconceptions about Meta, explore challenges of content moderation and language diversity, and discuss investments in the metaverse. The role of AI in Meta, engagement levels on Twitter and Threads, and Meta's valuation and challenges are also covered. Closing remarks discuss investor caution and the uncertain future of Meta.
Meta Platforms (formerly Facebook) serves a significant purpose: connecting people around the world.
Meta Platforms has demonstrated remarkable execution and evolution, propelling its global dominance.
Regulatory scrutiny poses uncertainty for Meta Platforms and other big tech companies.
Meta Platforms' ability to attract and retain top talent gives it a significant edge in driving future advancements.
The acquisition of WhatsApp was a defensive move to stay ahead in the social media landscape.
Deep dives
Misunderstood Product: Meta Platforms and the Power of Connection
One of the most misunderstood aspects of Meta Platforms (formerly Facebook) is its product itself. While many users and investors think of it as an addictive and vice-like product, it actually serves a much more significant purpose: connecting people around the world. Mark Zuckerberg has taken this mission seriously, working diligently to create a global product that transcends barriers of education, race, and ethnicity. Meta Platforms has built a range of social apps, including Facebook, Instagram, WhatsApp, and Oculus, that have become integral parts of people's lives worldwide. This level of global reach is unprecedented, and only a few companies, such as Google, have achieved a similar scale. Despite criticism and controversies, including scrutiny of its impact on society, Meta Platforms continues to evolve and adapt, demonstrating a management commitment to its mission.
The Execution and Evolution of Meta Platforms
Another aspect often overlooked is the execution and evolution of Meta Platforms. Mark Zuckerberg and his team have demonstrated remarkable operating performance over the years, propelling the company to unparalleled success. Starting from its humble beginnings at the age of 19, Facebook has grown into a multi-billion dollar enterprise with global dominance. The company has weathered challenges such as competition from Google and the changing landscape of social media. Despite skepticism and doubts, Meta Platforms has continually evolved its products and services to stay relevant, from embracing the mobile transition to introducing formats like stories and short-form videos. The management's ability to adapt, endure, and tackle new challenges has been instrumental in its success.
Regulatory Challenges and the Uncertain Future of Meta Platforms
Regulatory scrutiny and challenges are a significant aspect of Meta Platforms' journey. Governments and regulators around the world have targeted the company, trying to make its operations more challenging. While some criticisms and concerns are valid, it often seems that regulators are attempting to curb the company's power and exploit its financial resources. This ongoing battle poses uncertainty for Meta Platforms and other big tech companies. It raises concerns about potential constraints on behavioral advertising, algorithmic content ranking, and even the possibility of region-specific platforms emerging. The regulatory landscape remains unpredictable, and Meta Platforms' ability to navigate and adapt to these challenges will play a crucial role in shaping its future.
The Power of Human Capital and the Challenges for Competitors
One of the less discussed factors contributing to Meta Platforms' success is its ability to attract and retain top talent. The company's profitability allows it to hire the best engineers, creating a collective intelligence that sets it apart. This human capital is a raw material that sustains the company's monopoly, making it difficult for new entrants to compete. The expertise and intellectual stimulation present within Meta's workforce enable the company to continually innovate and develop cutting-edge products. Other tech companies trying to access similar talent face significant challenges, both in terms of attracting such talent and matching the compensation packages offered by big tech giants. The talent advantage gives Meta Platforms a significant edge in driving future advancements and maintaining its position as a market leader.
Meta's defensive acquisition of WhatsApp
Meta's acquisition of WhatsApp was seen as a defensive move, recognizing the potential threat of the messaging network becoming a scaled competitor if left independent. The acquisition allowed Meta to prevent WhatsApp from copying features from Facebook and potentially becoming a significant competitor. This defensive strategy highlights the importance of staying ahead in the social media landscape.
The significance of human capital
While human capital is often overlooked, it plays a crucial role in the success of tech companies like Meta. The ability to hire talented individuals, particularly in areas like AI and AR/VR, provides a competitive advantage. Meta's early recognition of the importance of AI is evident in their hiring of renowned AI researcher Yann LeCun in 2013. Human capital continues to drive innovation and development in various functions of Meta's business.
The uncertainties and challenges of the metaverse
Meta's focus on the metaverse raises several uncertainties and challenges. The potential success of VR and AR glasses as the next evolution of social platforms remains uncertain. Building a metaverse that is viable and able to attract users poses significant challenges, especially considering the competition from established platforms like Apple. Additionally, the question of ownership and control over the metaverse raises concerns for Meta's future success.
Threads and the challenge of creating a new platform
The launch of Threads, Meta's platform similar to Twitter, presents both opportunities and challenges. The initial success of Threads attracted a large number of early adopters, but the subsequent experience for later users may have been less engaging due to the lack of established content and culture. The success of Threads may depend on differentiating itself from Twitter and attracting a unique audience. The competition between Twitter and Threads will also influence the success of both platforms.
The importance of evaluating Meta beyond low P/E
Investors should look beyond the low price-to-earnings (P/E) ratio when considering Meta. While the low P/E may appear attractive, it should not be the sole reason for investing in the company. Understanding the long-term prospects, challenges, and ability to generate cash flow is crucial. Investing in Meta requires a tech-savvy mindset, emotional control, and a deep dive into the company beyond surface-level metrics.
On his sixth appearance on the pod, MBI joins me to discuss the most polarizing of the Big Tech companies: Meta Platforms (the artist formerly known as Facebook).
Of course, it’s impossible to talk about it without talking about Mark Zuckerberg, so we try to better understand how he thinks about the company that he founded when he was 19, and how he compares to other founders.
There was a lot to cover, and I think we touched on most of the big things: Facebook, Messenger, Whatsapp, Instagram, Reality Labs (AR/VR), AI, Threads, regulators, competitors, high-variance founders, and even cage matches (😬)…
It was a fun conversation for me, I hope you have as much fun listening to it (and learn a few things about Meta too)! 💚 🥃
For more on Meta, check out MBI’s excellent coverage at MBI Deep Dives. He has 10 posts on the company, but I’m going to highlight 5 of them:
