WEBVTT - David Kirkpatrick on Meta (Audio)

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<v Speaker 1>Okay, we we're gonna a look at the Facebook and

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<v Speaker 1>Instagram owner meta meta platforms, giving a revenue forecast that

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<v Speaker 1>was at the low end of endless estimates. Getting over

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<v Speaker 1>now to David Kirkpatrick, who has found an editor in

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<v Speaker 1>chief of Techonomy. David, thank you so much for joining.

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<v Speaker 1>Is I think you make the valid point here that

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<v Speaker 1>everything in the results which came out earlier were at

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<v Speaker 1>or above expectations except for one key parameter. Profit That's

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<v Speaker 1>not not ideal, is it. Here's a company that really

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<v Speaker 1>has gone through a historic transformation since it changed its

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<v Speaker 1>name just a year ago. Uh. Not only were you know,

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<v Speaker 1>revenues down for the second quarter in a row, but

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<v Speaker 1>that wasn't expected, but profits were more than fifty below

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<v Speaker 1>a year ago. And it's largely because this is a

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<v Speaker 1>company that has shifted from a priority on its central business,

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<v Speaker 1>which is social media for three point seven billion people

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<v Speaker 1>in the world. Just per say that to yourself a

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<v Speaker 1>few times, to a a prospective business that doesn't exist

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<v Speaker 1>and may not exist for many years around the metaverse

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<v Speaker 1>that they're spending ten billion a year on plus Uh

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<v Speaker 1>and it's just not working. Yeah. This letter of from

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<v Speaker 1>Altimeter from Brad Gursner got a lot of play and Uh,

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<v Speaker 1>basically I'm curious whether or not you agree with a

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<v Speaker 1>lot of this. It's almost like, um, they need a

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<v Speaker 1>ruth poor Ade or something there to help with the management.

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<v Speaker 1>That they should be more mindful of profit. They should

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<v Speaker 1>be more mindful of expenses. Like you said the Reality Labs,

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<v Speaker 1>the expenditure there more than ten billion a year and

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<v Speaker 1>and Brad wrote in his letters should be more like

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<v Speaker 1>five billion. Um, there's a lot of a lot of

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<v Speaker 1>interesting points here. Do you do you? I mean, what

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<v Speaker 1>would your prognostication be for for how Facebook could write

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<v Speaker 1>the ship? Well, don't forget for fourteen years until just

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<v Speaker 1>a month or so ago, they had an ex Google

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<v Speaker 1>senior leader, Cheryl Sandberg, who was in there helping, and

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<v Speaker 1>she maybe voted with her feet by leaving. She doesn't

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<v Speaker 1>seem to believe in what they're doing. What they need

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<v Speaker 1>to really write the ship, unfortunately doesn't seem in prospect,

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<v Speaker 1>which is governance and collective leadership of the type that

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<v Speaker 1>any company with an active board is familiar with. But

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<v Speaker 1>this is a company where all power resides in one

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<v Speaker 1>individual who has no obligation to listen to anybody, because

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<v Speaker 1>he literally controls more than of the voting shares, and

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<v Speaker 1>he is obsessed with this metaverse future and doesn't seem

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<v Speaker 1>to care that much about the existing businesses, despite all

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<v Speaker 1>kinds of reasons why any rational person at least on

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<v Speaker 1>the outside, believes he should do that. So that I

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<v Speaker 1>don't think even a Rutport type person coming in would

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<v Speaker 1>make any difference unless Mark Zuckerberg decided to listen to them.

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<v Speaker 1>But he doesn't listen even to his board. That's it

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<v Speaker 1>isn't it's it doesn't does it? This is coming now?

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<v Speaker 1>If if it is an obsession, that probably the intriment

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<v Speaker 1>of as you mentioned earlier, the cool business and the

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<v Speaker 1>cool business perhaps could by this I suppose neglect lead

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<v Speaker 1>to it being in trouble for all sorts of things

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<v Speaker 1>such as oversight. Well, I mean it's in trouble because

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<v Speaker 1>when when the stock since this morning, the stock is

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<v Speaker 1>down to almost and you know, it's down from its peak.

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<v Speaker 1>This is one of the great growth stories of modern

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<v Speaker 1>business that has suddenly turned into something completely different, and

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<v Speaker 1>it's it's almost hard to contemplate what a turnaround this

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<v Speaker 1>is for what was for a long time the most

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<v Speaker 1>profitable company in capitalism on a per dollar of revenue basis.

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<v Speaker 1>So um, it's hard to understand why there isn't a

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<v Speaker 1>sense of you know, ten ten bell alarm to to

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<v Speaker 1>do things differently. But they just keep acting like, yes,

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<v Speaker 1>this is the kind of what it was going to

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<v Speaker 1>be like, and we're okay. So the work doesn't on

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<v Speaker 1>the direction going forward. I mean, there's nothing wrong with

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<v Speaker 1>pursuing the metaverse. I suppose perhaps it just needs to

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<v Speaker 1>happen more slowly and so the expenses would be you know,

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<v Speaker 1>less of a drag. What else I mean, he's not

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<v Speaker 1>reducing Yeah, he said that they should they should cut

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<v Speaker 1>their investment in the metaverse at least by half. That also,

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<v Speaker 1>they said that they should reduce their head count by

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<v Speaker 1>about which sounds reasonable. They still have over more people

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<v Speaker 1>than they had a year ago, so you know, they

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<v Speaker 1>could lose a lot of people and still be a

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<v Speaker 1>very robust, well governed company from an employee point of view,

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<v Speaker 1>a lot of people that are very capable. But again,

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<v Speaker 1>it's weird because the sense of crisis doesn't really seem

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<v Speaker 1>to be there. And you know, when you have somebody

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<v Speaker 1>who has absolute power who doesn't seem to care what

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<v Speaker 1>other people think. It's a very unusual situation in a

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<v Speaker 1>company of this scale. At some point he'll hear what

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<v Speaker 1>other investors are saying. We don't have time now, unfortunately, David,

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<v Speaker 1>But uh, you know, I mean, it's only a matter

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<v Speaker 1>of time. I think many would say that messages like

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<v Speaker 1>that one that we we talked about from Brad Gersoner

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<v Speaker 1>and others, and you, uh, he'll he'll ultimately hear it,

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<v Speaker 1>I suppose, is the argument. David Kirkpatrick, founder and editor

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<v Speaker 1>in chief of Teconomy