Brad Gerstner, Altimeter Capital CEO, has written an open letter to Mark Zuckerberg urging him to reign in spending.
Meta has been heavily investing in the metaverse, driven by Zuckerberg’s near-obsession with his vision of what the metaverse should be. Unfortunately for Zuckerberg & Company, the metaverse is not exactly a raging success, opening the company to criticism.
Gerstner is leveling some of that criticism at Zuckerberg & Company. After pointing out that Meta’s “core business hit a wall last fall,” and pointing out the importance of focusing its efforts on AI, Gerstner urged the CEO to scale back metaverse investments:
“The company has announced investments of $10–15B per year into a metaverse project that largely includes AR / VR / immersive 3D / Horizon World and that it may take 10 years to yield results,” Gerstner writes. “An estimated $100B+ investment in an unknown future is super-sized and terrifying, even by Silicon Valley standards.”
Gerstner then compares Meta’s investment in the metaverse with Amazon’s investment to create AWS:
By any normal company or start up standard, $5 B per year would seem like an extraordinary amount,” Gerstner continues. “I have been told that Amazon spent far less in total to build AWS. As such, we think Meta company should cap its metaverse investments to no more than $5B per year with more discrete targets and measures of success, as opposed to today’s much more ambitious and open-ended strategy. We have little doubt investors and others would happily support scaling up these investments as the ROI becomes more tangible — even if still long-term.”
Gerstner also pointed out Meta’s explosive headcount growth, a whopping 3x in the past four years, bringing the company from 25,000 to 85,000 employees. Gerstner urges Zuckerberg to cut employee-related costs by 20% by the start of 2023.
Ultimately, Gerstner believes Meta has simply become too big and too unfocused for its own good.
“Meta has drifted into the land of excess — too many people, too many ideas, too little urgency,” he adds. “This lack of focus and fitness is obscured when growth is easy but deadly when growth slows and technology changes.”