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Zuckerberg is making a classic Silicon Valley mistake

Mark Zuckerberg, CEO of Facebook's parent company Meta, is making a typical Silicon Valley mistake, that is, Marissa Mayer, CEO of Yahoo, about 10 years ago. Mayer's mistake. Later, Yahoo was sold and Mayer resigned. And this time, can Meta and Zuckerberg live up to their "metaverse" vision? An internet giant whose growth rate is slowing; a brilliant CEO spearheading an ambitious bet; a group of jittery employees worried about looming layoffs. That's what's going on inside Meta right now, and it's what happened to Yahoo about a decade ago.

With user growth stagnating and ad sales slowing, Meta is transforming into a "metaverse company." In the process, the "growing pains" brought about by these changes also surfaced due to media reports.

Current and former employees are skeptical of Meta’s efforts to push augmented reality (AR) and virtual reality (VR), and CEO Mark Zuckerberg’s shift in focus (Metaverse) ) is cautious.

The staff's concerns echoed the internal turmoil that Yahoo experienced during the tenure of Marissa Mayer (former Yahoo CEO). Eventually, Mayer stepped down and Yahoo was sold for a fraction of what it was once worth. Now, years after Yahoo's failed turnaround, Zuckerberg is repeating Mayer's mistakes.

Metaverse risk is extremely high for CEO Zuckerberg

Zuckerberg announced about a year ago that Facebook was changing its name to "Meta," and that the company's focus would shift to the "metaverse," which Zuckerberg dubbed the "new North Star." Zuckerberg believes that over time, people will live and work in virtual worlds and use "avatars" to interact.

Obviously, it's a bet. It's also an adventure for the 18-year-old company (Facebook). Zuckerberg's "metaverse bet" may not be uncommon in the tech world. But outside of the venture capital world, we don't often see such bets pay off. VCs can bet big on startups, hoping one of them will become the next billion-dollar company, but Meta doesn't necessarily have to have that ability or pomp. After all, it still has VR headsets to produce, social media platforms to grow, and advertising revenue to capture.

At the same time, Meta is investing time and resources into the "metaverse," and spending a lot of money in the process. Meta has invested $10 billion in its 2021 gamble. Even by Meta's standards, that's a lot of money. This year, Zuckerberg also told shareholders that the trend will continue for the next 3-5 years.

Earlier this year, an industry veteran told the media that Zuckerberg is well aware that he is playing a "long game" in the "metaverse" market, but one that "must win" game. "Facebook has the guts, the capital, and the ability to make it work and become a major market player," the person said. "But in the meantime, they can't make mistakes."

Mayer also had an ambitious vision that didn't pay off

If you're familiar with Meta's current situation, you've probably experienced the rise and fall of Yahoo. Yahoo was also an advertising giant. In 2004, it had revenues of $3.5 billion and a market capitalization of $128 billion. But with the rise of rivals such as eBay and Google, competition in the market began to heat up. Ironically, Facebook also later became a competitor to Yahoo's advertising business. By 2012, Yahoo's market value had plummeted to about $20 billion as ad revenue dried up.

At this point, Mayer appeared. Her mission is to restore Yahoo to one of the most prominent tech companies in the world, rivaling the likes of Google, Facebook, Apple, and Amazon. Mayer's bets are bold, but not focused: build a Yahoo app "for everything"; hire Katie Couric for a $5 million video interview column; make shows like Netflix; Blogging platform Tumblr for $1.1 billion. But none of those bets paid off. Two years into Mayer's tenure, Yahoo's goal of a comeback has not materialized, and the company's revenue remains stagnant.

In 2016, the era of Yahoo operating as an independent company came to an end. Verizon bought Yahoo for $5 billion and merged it with America Online (AOL), and Mayer stepped down as CEO.

Zuckerberg and Mayer share the same sympathy, far more than that

Internally, Meta faced the same problems as Yahoo. In recent interviews with the media, Meta employees said that the company's strategy changes frequently, which seems to be related to Zuckerberg's whims rather than a data-based plan. Additionally, Meta executives were divided over the "metaverse" strategy. John Carmack, the former chief technical advisor to the Oculus business, has said he is "nauseous" by the amount of money the company is spending on unproven projects.

Likewise, at Yahoo, Mayer has been described as "making decisions based on one's intuition, not data. " For example, Yahoo pays $10 million a year to buy Saturday Night Live shows; it hired Couric for $5 million a year to set up a video interview, even though her previous videos have failed.

And corporate culture. During Mayer's tenure, he implemented a controversial performance ranking system designed to motivate people to work hard and identify underperforming employees. But that backfired, and the move resulted in frustration and low morale among employees.

Today, Zuckerberg also seems eager to weed out underperforming employees, and those who don’t support his vision of a “metaverse.” At an all-hands meeting in June, Zuckerberg told employees that Meta would increase performance targets and weed out unengaged employees. It was reported earlier this month that Meta was quietly laying off staff by changing its guidance, urging managers to send employees home.

If Zuckerberg is right that the "metaverse" is the future, these moves are smart moves that help propel Meta ahead of the competition. We also have reason to believe that Zuckerberg's ambitious plans will work. After all, he had foreseen the transition from desktop to mobile and reinvented Facebook once. At the time, even Facebook's No. 2, Sheryl Sandberg, thought the strategy was risky.

But if Zuckerberg's bet doesn't pay off, then we might see: Meta will follow in the footsteps of Yahoo.

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