[skippyboxedhero]

Zuckerberg runs it.

In no other company would a CEO be allowed to essentially go rogue like this. All companies with dual-class shares will eventually trade at a discount, this is FB's time.

I don't even think the Metaverse is a bad idea, but applying the SV mentality of: we just need to lose more money than anyone else won't work, that isn't how the real world works unless you have someone even dumber to pay you off (i.e. stupider VC fund, IPO)...FB is top of the food chain, no-one else is coming in on this.

They either need to slow the cash burn (the numbers are just ludicrous) or spin the company (not possible).

This kind of thing happens and the discount can last literally decades. With dual-class share, there is no way to close it and most investors know this so they are just selling.

I will say it again: dual-share class isn't smart, the market isn't dumb, investors aren't stupid, it will go wrong eventually and everyone else is paying the price for Zuckerberg's own desire for self-aggrandizement.

[bitL]

Mark is facing innovator dilemma. Should he pivot the company to a new field while he still has funds or just wait until the zombification finishes his baby off? Maybe the way he chose is not optimal, maybe Reality Labs should be completely ambidextrous without any link to FB outside funding?

[skippyboxedhero]

Right, but the problem would still be that Zuckerberg controls both so would still overfund VR. You could spin off, but it is losing too much. Zuckerberg could buy out, but then you have a CEO splitting his time with his side piece...and if that takes off, then you look like a complete asshole for stiffing public shareholders.

To be clear though: he has created this situation. If he lost a reasonable amount of money, none of these questions would be asked. Anything north of $10bn is just madness, $5bn is bad, $2-3 is probably about right. It is all sustainable within the current situation, he just has no-one telling him how bad this all looks (what it looks like now is the opposite of the final scenario: man who is worth hundreds of billions rinses public shareholders for his fever dream VR fantasy).

Innovator's dilemma is all operational, so it should be separate from FB. Capital allocation choices are distinct from all this (the innovator's dilemma exists because CEOs are usually terrible investors/capital allocators, there are maybe 20 CEOs who have ever run a public company who can allocate capital well, Zuck actually had a decent rep before this because of his acquisitions but he is torching it with VR, which is clearly very far from commercial revenue).

[EFreethought]

WRT Zuckerberg looking like an asshole: I think that ship sailed a long time ago.

[EFreethought]

> In no other company would a CEO be allowed to essentially go rogue like this.

I wonder if Meta would be going all-in on a VR system that nobody seems to want if Sheryl Sandberg were still around. She seemed like the only one who could say no to MZ. Granted, there are lots of other factors (TikTok, recession, Apple's privacy changes), but it is an interesting coincidence.

[kevinventullo]

My guess is that this is basically why she left.

[pardesi]

Agree. I am not going to invest into dual-class share companies anymore. Learnt hard lesson with FB

[reaperducer]

In no other company would a CEO be allowed to essentially go rogue like this

Actually, it happens all the time. The business press had been full of these sorts of characters for centuries.

Currently, even within the HN bubble, there's Mr. Musk, and several others.

[skippyboxedhero]

No, it doesn't happen often. Because, by definition, it can only happen with dual share class. If a CEO goes rogue then they lose their job. Unless Zuckerberg fires himself, the only way to get off the train is by selling the shares.

[mempko]

Uh, the federal government is always at the top of the food chain in all R&D tech. They pioneered VR before Meta. They continue to fund VR. Zuckerberg is just acting like a government research investor. Which is, spend money on an idea that doesn't seem like it will immediately bear fruit.

This is how literally ALL the technology you use was developed. Huge, multi-decade spending on R&D until it works. Literally any technology you can think of.

[skippyboxedhero]

Two mistakes: one, survivorship bias, lots of people spent money on tech that didn't work. And two, the problem isn't that he is spending money, it is that he is spending money on something that continues to show no revenue. The point of spending money is not the technology, it is to get a return of more money later.

I can't think of any technology that required multi-decade spending on this scale before revenue, fusion? If something needs multi-decade spending, it is either a scam or uninvestable.

[mempko]

VR had 50 years of R&D before they hit markets. Computers had 50 years of R&D before they hit markets. What exactly are you talking about? You are discounting the largest buyer in the economy, the federal government. By the way, the federal government spends more on R&D than all VC combined.