Memo to Zuckerberg: Be like Satya Nadella | Tech News

Memo to Zuckerberg: Be like Satya Nadella

Meta has made Wall Street happy again but the CEO needs to shake up the company a lot more — including reshuffling his core executives

| Updated on: Apr 28 2023, 11:14 IST
Facebook tends to release exciting new features and then quietly kill them, like its crypto project Libra or the NFTs it was meant to sell on Instagram. (REUTERS)

The non-believers can take a back seat. Meta Platforms Inc.'s year of efficiency is on track thanks to the dependability of its core businesses. The company said Wednesday that its digital ad sales rebounded during the first quarter, buying Mark Zuckerberg some more time as he continues to spend billions on the metaverse and on improving Meta's use of artificial intelligence. Now if he's serious about Meta's growth for the long term, he should consider even more uncomfortable strategies besides job cuts and bigger investments in AI, which so far appear to be paying off.

“We are no longer behind in building out our AI,” Zuckerberg told investors on a call Wednesday. He spoke about introducing “AI agents” to billions of people, using them to improve customer service chats with businesses or to create ads. Supercharging ads will be his most important focus as he seeks to enhance Meta's bread and butter business, which hasn't suffered the same fate as Twitter's.

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So far this year, Zuckerberg has excelled at wooing Wall Street back to the world's biggest social network. Having misjudged the long-term impact of the pandemic by over-hiring by the tens of thousands, he has since thrown investors a generous share buyback, promised to slash costs and even cut back on all the rhetoric about the metaverse (though he insisted last night that the metaverse still matters). Meta's reputation as a harmful bane on society, with algorithms that spread misinformation and make teenagers feel bad about themselves, has also improved thanks in part to its own efforts at cleaning up the platform. Attention has turned now to rival TikTok's toxic effects on teens.

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But the turnaround isn't over, and Zuckerberg can't keep investors happy forever with short-term wins like this latest quarter. Even if TikTok does get banned in the US — a potential hallelujah moment for Meta's own Reels service — it doesn't solve a lingering problem that Meta seems to have been grappling with forever: It hasn't released a truly successful product other than Facebook since, well, the beginning of Facebook. Its only other big success has been Instagram, a company that Zuckerberg presciently bought 11 years ago.

Facebook tends to release exciting new features and then quietly kill them, like its crypto project Libra or the NFTs it was meant to sell on Instagram. In fact Zuckerberg's biggest passion project to date, building the metaverse, might even be getting quietly mothballed.

Of course, this isn't all bad. Social media platforms need to keep churning out new features to keep their users engaged. BeReal, the buzzy new social media app that got rave reviews last year for letting people show their “authentic selves,” appears to be losing millions of its active users in part because the app has introduced hardly any new features in the past year. And developing new tech products requires a lot of experimentation to find out what sticks.

This puts Zuckerberg at a crossroads. One path leads toward a general stasis that looks a lot like Google's, and another looks more like Microsoft's, involving more radical, uncomfortable corporate changes. Satya Nadella took over Microsoft nine years ago, and the company has added more than a trillion dollars in market value since his tenure. One reason has been Nadella's fearless drive to diversify. Microsoft makes billions of dollars in revenue from cloud computing, as well as from gaming, office software, social networking and more.

Meta makes money from one thing: advertising. The company's first-quarter results show that business is going strong. Ad revenue increased by 4.3% to $28.1 billion. One advertising executive tells me that Facebook's ad business has been relatively stable, with its roster of Fortune 500 clients continuing to buy ad space on the platform over the past year and with relatively little competition from Twitter or even TikTok.

That first path Zuckerberg could go down involves making his ad business even better with a renewed focus on generative AI, the in-vogue technology that generates text and images and underpins ChatGPT. Zuckerberg and his top lieutenants have been spending most of their time looking at ways to capitalize on the technology, according to a recent interview in Nikkei Asia with Meta Chief Technology Officer Andrew “Boz” Bosworth.

Last month when Zuckerberg announced Meta's “year of efficiency,” he said: “Our single largest investment is in advancing AI and building it into every one of our products.” On Wednesday he repeated that mantra: Generative artificial intelligence was going to “impact every single one of our apps and services.”

Smarter, AI-generated ads could certainly keep advertisers and Wall Street happy for the next few years. But if Zuckerberg wants to take Meta down a road where its shares can get back to their September 2021 high of $378 and further (they were up 11% to $233 in pre-market trading on Thursday morning) he should consider a more radical route in the vein of Microsoft's Nadella, and consider pushing Meta more strategically into new businesses like the metaverse.

Zuckerberg has made a good start with his ambitious plan to build a virtual reality business. For all the flack the metaverse gets, the area is set to get more attention and reverence this June when Apple Inc. unveils its own mixed-reality headset to compete with Meta's Quest 2 and Quest Pro.

But Zuckerberg also needs act more strategically on the metaverse if he's serious about that endeavor. It seems unwise, for instance, to focus on selling VR headsets to employers to use for work meetings when gamers are a more accommodating audience.

Part of Zuckerberg problem may be his reliance on the comfort of appointing longtime friends and associates to critical positions on his executive team. For instance Naomi Gleit, one of Facebook's first employees and a longtime friend of Zuckerberg's, is the company's head of product. Yet for such an important role she is based in New York instead of Menlo Park, where Meta is headquartered.

Meta's chief marketing officer, Alex Schultz, also played a critical role in Facebook's growth in daily active users as the former head of the company's analytics team. But the data-driven executive has no serious career experience in leading the marketing budget of a multibillion-dollar company, and that has shown up in Meta's vague and strangely ineffective advertising for its Quest 2 headset.

Zuckerberg has cut tens of thousands of roles at Meta as part of his year of efficiency and he now has two good quarters under his belt after pulling the company out of a post-pandemic hangover. If he is serious about putting the company on a path towards serious growth, he might want to consider a more senior reshuffle. It's straightforward enough to restructure the wider company, but making changes at the top, including to the loyal lieutenants who have become part of his personal C-suite bubble, would be worth considering, too.

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First Published Date: 28 Apr, 11:14 IST