In unsurprising news this morning, big time shareholders of Meta (formerly Facebook) are growing increasingly uncomfortable with CEO Mark Zuckerberg’s pursuit of the metaverse.
Yesterday, Brad Gerstner, the founder of Altimeter Capital, penned an open letter to Zuckerberg and Meta’s board of directors expressing concern at the amount of money flowing into what Gerstner ultimately denounces as an “unknown future”.
In the letter, titled “Time to Get Fit”, he claims that Meta has drifted “into the land of excess”, saying that there are “too many people, too many ideas and too little urgency.”
Additionally, Gerstner claimed that the company’s recent pivot to the metaverse had taken it off course from the core elements of its business, which unlike Reality Labs — the virtual-reality-focused research division — actually delivers a profit.
How much is too much?
The core concern that Gerstner shares in his nearly 2000 word missive is the sheer amount of money being used to fuel Zuckerberg’s relentless pursuit of the metaverse — the definition of which still remains completely unclear to many.
“In addition, people are confused by what the metaverse even means. If the company were investing $1–2B per year into this project, then that confusion might not even be a problem. You would simply do R&D quietly and investors would focus on the core business and the breakthroughs in AI,” wrote Gerstner.
“Instead, the company has announced investments of $10–15B per year into a metaverse project … that may take 10 years to yield results,” he added.
“An estimated $100B+ investment in an unknown future is super-sized and terrifying, even by Silicon Valley standards.”Brad Gerstner, CEO of Altimeter Capital.
While Gertsner admits that Meta should certainly be pursuing some investment in the metaverse and virtual reality, there should be a hard limit on how much capital gets poured into the fuel tank of Meta’s research engine.
“We think Meta company should cap its metaverse investments to no more than $5B per year,” he said.
Meta’s big metaverse flop
At the end of the day, the tens of billions being piled into research and development simply aren’t yielding any results. Internal documents leaked to the Wall Street Journal showed that people simply weren’t spending any time on the platform’s worlds, with complaints of glitchy technology, uninteresting virtual experiences and a lack of clarity around the point of the tech being consistent across almost all user feedback.
To this point, Zuckerberg’s Meta became a laughing stock of tech media after unveiling “legs” for their Horizon VR avatars. Making matters worse, Kotaku later revealed that even this weird announcement was essentially a lie, with most of the leg-related functionality being shown through a pre-recorded, animated video.
After the company announced its surprise rebrand to Meta late last year, following the revelation that senior executives at Facebook had been knowingly profiting from increased political polarisation, human trafficking and skyrocketing rates of mental illness in users, the company has struggled to remain a healthy position in the market.
At the time of writing the company’s stock price is down roughly 61% from the start of the year with the company reporting over $14 billion in losses since Q4 2021. Meta’s share price is expected to drop even further, with numerous market analysts predicting that Meta’s quarterly result — expected to be announced later this week — will show continued losses from Reality Labs. RIP.