Meta Shareholder Writes Critical Open Letter, Saying the Company Needs To Slash Headcount and Stop Spending So Much on 'Metaverse' (cnbc.com) 95
Altimeter Capital Chair and CEO Brad Gerstner said in an open letter to the company and CEO Mark Zuckerberg on Monday that Meta has too many employees and is moving too slowly to retain the confidence of investors. From a report: The Meta investor recommends a plan to get the company's "mojo back" including reducing headcount expenses by 20% and limiting the company's pricey investments in "metaverse" technology to no more than $5 billion per year. "Meta needs to re-build confidence with investors, employees and the tech community in order to attract, inspire, and retain the best people in the world," Gerstner wrote in the letter. "In short, Meta needs to get fit and focused." The letter is the latest sign that Meta investors are starting to express reservations about the company's recent performance. Meta stock is down over 61% in 2022 so far.
At the end of the second quarter this year, Altimeter Capital held over 2 million shares of Meta. It's also a vote of less confidence about the company's ambitions in the world of virtual and augmented reality. Meta changed its company name from Facebook to better focus on its VR hardware and software, and is spending $10 billion per year on the technology. On Oct. 11, Meta announced a new high-end VR headset, the Quest Pro. However, there are few signs that VR or some of Meta's metaverse apps, like Horizon Worlds, are catching on with the public beyond early adopters. "In addition, people are confused by what the metaverse even means," Gerstner wrote. "If the company were investing $1-2B per year into this project, then that confusion might not even be a problem. An estimated $100B+ investment in an unknown future is super-sized and terrifying, even by Silicon Valley standards."
At the end of the second quarter this year, Altimeter Capital held over 2 million shares of Meta. It's also a vote of less confidence about the company's ambitions in the world of virtual and augmented reality. Meta changed its company name from Facebook to better focus on its VR hardware and software, and is spending $10 billion per year on the technology. On Oct. 11, Meta announced a new high-end VR headset, the Quest Pro. However, there are few signs that VR or some of Meta's metaverse apps, like Horizon Worlds, are catching on with the public beyond early adopters. "In addition, people are confused by what the metaverse even means," Gerstner wrote. "If the company were investing $1-2B per year into this project, then that confusion might not even be a problem. An estimated $100B+ investment in an unknown future is super-sized and terrifying, even by Silicon Valley standards."
VR is still a curiosity (Score:4, Interesting)
As good as VR is today compared to decades past, it's still not something for everyday use. Until they figure out snowcrash-like VR where some external lasers are played out against your eyes so you don't need a hefty headset display, it's just not going to catch on.
I always thought the AR stuff with google glass had the most promise - I'm surprised that dead ended.
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I'm not sure what people are talking about when they say 'catch on.' In 2021 just Meta sold over 10 million units. Maybe it is a marketing problem, people have this ready player one notion in their head and if the world isn't living in the oasis (metaverse) then it isn't "here.'
The headsets are actually quite comfortable now. Or rather they are with aftermarket upgrades that add active cooling, balance the weight, take all the pressure off your face, etc. Hot Swappable external batteries with magnetic inter
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Do you disinfect your headset and clean the face pad from time to time?
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Your face oils will build up on the face pad at least, and through normal breathing, sneezing, etc., you'll contaminate the headset. Just wipe it down from time to time with rubbing alcohol on a microfiber cloth, and wash the face pad with soap and water.
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I recommend the boba vr setup including their 'fitness' venting setup. Sadly it isn't passthrough charging. If anyone finds a little 100w rated usb-c passthrough dongle that just has a 6" lead off for these kind of accessories that would be epic. Even with the fan off their rig breathes better and is cooler than any other setup I've used (including a couple flavors of other active cooling solutions).
That said, I haven't had the problem you are describing even without venting/cooling. So maybe you've got som
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The problem Metastasis is facing is that people buy their cheap VR tools and then use it to access VR Chat and other games and don't give a fuck about their Metaverse.
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"The problem Metastasis is facing is that people buy their cheap VR tools and then use it to access VR Chat and other games and don't give a fuck about their Metaverse."
Absolutely. I also think VR+MR are a thing that has been a few years away yet already here in some form for a very long time. We've finally reached the early stages of it really happening and as much as I hate the company I have to admit Meta deserves a big part of the credit for that. Their horizon worlds thing is just lame.
If I were them I
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Oh and stick up some open api's and frameworks so everyone can host their own 'worlds' screw this AOL style bullshit.
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That would sell hardware, but it would murder their services since everyone else can do it better.
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If they did as I suggested above then the 'home' on the device would give them what they want. They are already the dominant hardware platform. An app store that was the best place to deploy and therefore everyone began using would make them the dominant app market. Excellent integration and open APIs would mean everyone, even their competition would integrate with their platform. Why fight the world when you can recruit it? They'd be the windows AND apple of VR.
As for the data market they are currently in.
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Credit or no credit, in the end, Metastasis doesn't give a flying fuck about credit, what they want is to tie the users to their product and that is failing. They are facing the same problem that MS faced with MSN and some other internet wannabe substitute that I even forgot by now did as well when they handed out heavily subsidized internet access that of course was tied to their own network they tried to steer people towards: Nobody gives a fuck about their network. Everyone just bought their stuff becaus
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Nope and I don't work for or get any benefit from anything of the stuff I mentioned except as a user. I don't want this tech to go away or stop developing at the current pace. Although for what they are spending it feels like it should be developing much faster.
Re: VR is still a curiosity (Score:2)
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I challenge that VR headsets must have a battery life of more than an hour or two. The situations where you're going to be using your headset for longer (marathon gaming session, Zuckerberg's pipe dream of remote workers being in the Metaverse all day) are also the ones where it's least disruptive to be plugged in because you're probably sitting at a desk. People playing room-scale VR games for hours at a time seem like an edge use case.
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I always thought the AR stuff with google glass had the most promise - I'm surprised that dead ended.
I'm not. Have you ever seen someone walking around wearing one of those? They looked like a idiot. AR will never take off till it can blend in with your look. The form of glasses or, I believe, they have a new contact lens in the works.
Re: VR is still a curiosity (Score:1)
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To be fair, people walking around staring at their phones all the time also look like idiots.
Why are you a shareholder (Score:1)
I never did own stock in Facebook or Meta, but if I had owned shares of Meta the day they announced the Metaverse, I would have dumped them all.
Remaining a stockholder as they drained the company down the black hole of VR communities I would not have thought was even an option. Gently worded letters asking them to please stop would seem to have no effect if the ginormous losses already encountered didn't slow them down.
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Exactly! This is what Brad Gerstner should have done as well, he should have dumped everything a long time ago. So he apparently didn't, he is now at a loss, and he hopes the stock will go backup when he should sell instead while it is still time. Maybe he is in cryto-currencies as well... /s
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Translation: I'm out a lot of money. Real money! Because of that, I'm going to pout and write you a nasty letter. I'll bet you went all-in on Sears when they were at the top of their game as well.
To bad, so sad, sux's to be you.
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To be fair, if an investor went all-in on Sears when they were at the top of their game (the 1980s) that investor could have done very well from Sears' 1990s spin-offs like Dean Witter-Discover Card and Allstate, even if they waited to sell "Sears" stock until after Lampert started siphoning off assets and driving them into the ground.
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Meta stock is down over 61% in 2022 so far.
So ... is Facebook losing money? No, Facebook is a very profitable company. And that's the big problem with all of this insanity. Companies are being judged solely on their stock price and nothing else.
And that makes zero sense because the stock market is entirely independent of the companies whose stocks are listed there. Sure, investors care about a company's stock price (obviously) but maybe its a really stupid idea to invest in something that can go up or down on a whim, with no connection to r
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So ... is Facebook losing money? No, Facebook is a very profitable company.
At last report (in June 2022) EPS was down 38% YOY...
So yeah technically they are still making money but the trend is not good.
Also of concern, Revenue is only down 0.88% but Net Income is down 35%, that seems like a pretty good indicator that the Metaverse is sucking up a ton of money to no good effect.
Re:Why are you a shareholder (Score:4, Informative)
And THIS mindset, ladies and gentlemen, is the downfall of American business.
INNOVATION drives progress. PROGRESS drives profit.
Yeah, Facebook could go into the typical bullshit MBA mindset of cut their personnel and rely on what they already have to make money. Don't invest, don't experiment, don't take chances to improve.
But that's how you kill a company. It's total stupidity. It's stagnation. It's what mindless investment idiots do when they buy a company. They cut headcount, destroy R&D, rely on the current product and don't give a fuck.
Then when something better comes along you're already so far behind that you have no choice, and you liquidate the company.
Yeah, sure, investors don't give a shit. They got their investment money and then they sell their shares. All is good in make believe money land.
Facebook's original business plan only gets them so far, and they were up against the wall. Now they are in search of the next big thing, because they are already watching people move onto different formats. Kids today don't use facebook. They use 'snap', 'insta', tiktok, and the like. And facebook has to chase those users while they try to define the next generation.
Otherwise you end up being Ford, and GM, while Tesla eats your lunch.
Of course, it's super ken doll. What did I expect.
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Profitability doesn't mean shit in the modern day stock market. It's all about GROWTH baby! Are they GROWING? And most importantly, is the rate of growth increasing at least 10% annually every year? If not it will soon be a dead stock.
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The transition from young, would-be disruptor to mature, profit generating company is a tough one, particularly because it's *personally* difficult for the founders. From their perspective, their risk taking, swing-for-the-fences approach has been vindicated, along with their faith in their own instincts. Why mess with an approach that from their perspective is successful?
Because even the most successful serial entrepreneur has failures; if he drags the investors in his successful venture into his new sche
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Re: Why are you a shareholder (Score:2)
"Endlessly betting on the founder's brainwaves is eventually going to end in failure."
Just relying on someone elses brainwaves no matter the situation is going to end in failure, and hurt for you. This is why it's best to be as self sustaining and not rely on other people as much as possible.
Also, fuck the collectivism that is being monstered on everyone by people who don't have to endure this themselves.
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Yeah, I've got to wonder if the Facebook Metaverse isn't some sort of embezzlement scam. I mean, they claim to be losing billions to it, and yet they have nothing more to show for it than a few guys in their garage could pull off for under a million. Where exactly is all the money going? Maybe they *were* losing money subsidizing the Quest, but with the Quest 2 being sold at a profit (last I heard), that money-sink should be cut off. So why are they still losing money hand over fist? Does it cost millio
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Where exactly is all the money going?
The Quest2 and investing in VR tech does make some sense to me, supporting new kinds of tech.... for me it's really the doomed "Metaverse" concept alone I feel like is sucking down tons of money for no reward, and possibly even forcing them into bad hardware choices (since the new Quest Pro seems kind of worse than the Quest 2).
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A good chunk of it went to international ad campaigns, complete with rebranding. Those are not cheap, and can cost in the billions.
Note that rebranding might have been the entire intention. Before, when people were talking about Facebook, it was entirely negative privacy invasion complaints. Now when the talk about Meta, they talk about the Metaverse (as ugly as it is).
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They have tons to show for their spending, you're just looking in the wrong place. Just take a look at their published papers [facebook.com] and it should be obvious the bulk of Meta's spending has nothing to do with Quest 2, Quest Pro, Horizon Worlds, any existing or soon to be released product. They are focused on solving the problems necessary to make Mark's long term vision for the Metaverse possible. The majority of the research isn't for products they want to produce 1-2 years from now it's for products they want to
Funny Letter (Score:5, Insightful)
This is the part that made me laugh the hardest:
Meta needs to re-build confidence with investors, employees and the tech community in order to attract, inspire, and retain the best people in the world.
His plan to attract and retain people is to fire 20% of the current staff. The "best people in the world" will stay far away from any company with that kind of policy.
Re:Funny Letter (Score:4, Insightful)
His plan to attract and retain people is to fire 20% of the current staff. The "best people in the world" will stay far away from any company with that kind of policy.
Its amazing how stupid they are. Greedy but stupid.
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It's not stupid, because all he wants is for his stock to go up more. Then he can sell it, and anyone who didn't profit (including having lost their job to his headcount reduction) can go fuck themselves. It is of course greedy. Welcome to capitalism, can I take your hat? Shine your shoes?
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Yep, starting with the CEO...
Re:Funny Letter (Score:5, Insightful)
He's the CEO of a financial company. He has a law degree and an MBA.
Of course his "solution" is to cut spending and fire people.
Re:Funny Letter (Score:5, Insightful)
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Well saying this as someone who isn't a fan of the current average integrity in our society:
There doesn't seem to be an avalanche of companies leading their respective industries that do not follow this paradigm.
So. Is it because nobody was smart and ethical enough to try running a company with workers and consumers first in mind or is the hard, sad truth that the MBAs are right and the current meta for megacorps is, if not perfect, the superior company type in terms of value to society (however you want to
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I've never heard this taught at business school, but I've noticed that people often think that employees outside their own area of expertise are fungible. A derivatives trader will recognise that individuals may or may not make good traders, while believing that software developers are interchangeable. Software developers see sales staff as interchangeable, and so on. People are bad at assessing things outside their own area of competence.
Re:Funny Letter (Score:4, Insightful)
Yeah - I think that's the difference between the company owned by the CEO who is personally invested in the company's long term success, and being owned by investors who only care about short term gains because they're never more than ten minutes away from selling out and switching to a faster-growing company. That becomes especially pernicious when the reward structure (bonuses, etc) of the executives get tied to short-term growth.
The inevitable outcome of a short-term focus is a company that grows fast and then dies when it overextends itself. Not necessarily a problem, provided they're actually allowed to die, and it's easy for other companies to take their place. But we've got a situation where a whole lot of "long haul" companies grew to gargantuan proportions before being taken over by short-term investors eager to cash out on their hard-earned reputation. Creating a situation where the economic fallout from their collapse is likely to be so great that the government repeatedly steps in to prop them up, while their own short-sighted profit motives (and a lack of protections against all but the most blatant monopoly abuse) has them doing their best to stamp out the young competitors that might otherwise replace them.
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Re:Funny Letter (Score:4, Insightful)
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One of the biggest reasons "improve shareholder value above all" ruins companies is that it milks the current decent reputation of the company for short-term gains because "good will" and "reputation" are usually not on their finance spreadsheets.
For example, IBM started nickel and diming their customers when they went into Ninja Finance Mode. It worked great in the short-term, revenue started flowing in. But customers hated the billing red-tape and delays it caused, and started switching vendors. IBM's re
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This is the part that made me laugh the hardest:
Meta needs to re-build confidence with investors, employees and the tech community in order to attract, inspire, and retain the best people in the world.
His plan to attract and retain people is to fire 20% of the current staff. The "best people in the world" will stay far away from any company with that kind of policy.
He's just blurting out strings of buzzwords that sound coherent if you don't examine then too closely: typical for people of his ilk. Maybe Facebook should hire him!
Re: Funny Letter (Score:2)
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"Focus on our core competencies" which I assume he is defining as the social network for boomers. Definitely a growth market, lol.
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Not sure I agree with that. Smart people want to build stuff, and the strategy of pursuing long-term nebulous goals by hiring lots of people does not readily equate to building stuff.
I think he's probably right that Facebook could actually speed up its development by not pursuing such a big broad strategy. And setting solid mid-term benchmarks of success is also a good strategy - it means that people can understand their progress and adjust.
OTOH, *how* they execute "streamline" matters as much or more than
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Facebook has stack ranking. The best people already left because that creates a toxic environment.
Drinking the kool aid or just sugar coating? (Score:2)
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History Will Show (Score:2)
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Where are the metaverse dicks?
I mean, he did a whole talk and everything
Why _not_ diversify revenue sources? (Score:1)
Devil's advocate:
Everybody hates Facebook. More and more often, ideas get floated (or go live!) to use the power of government to create laws which interfere with the targeted-advertising business model (e.g. GDPR in Europe). And targeted advertising is what Facebook does. More and more often, ideas get floated to use the power of government to prevent websites from allowing users to communicate (e.g. "let's repeal S230" in USA). Is it that hard to imagine that Zuck sees the end is nigh? Or at least that it
The evolution of VR (Score:1)
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It's now a $15 billion industry, and keeps growing every year. VR is now.
https://dataprot.net/statistic... [dataprot.net]
Response (Score:5, Interesting)
"F*** off"
-Mark Zuckerberg, majority (vote-holding) shareholder
Rightfully so (Score:2)
Investment in a company is an investment in their ideas and processes. You don't like the Metaverse concept? You can take your money and go put it somewhere else. Individual investors need to realise they may own capital but ultimately have limited say in how a company is run. This open letter is petty and stupid. It's not voting in an AGM, it doesn't have any bearing on the operation of the company what so ever.
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While I agree with your conclusion, your first sentence is completely false, unless you're buying brand-new issued stock. Otherwise it's nothing more than an instrument of speculation. You're certainly not investing in the company's ideas and processes. You're merely gambling that others will come along eventually and think the stock is worth more than you did, and buy it off you at a profit. This is certainly based on the perception of the overall value of the ideas and processes, but it has nothing to
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Actually, many investors are betting on stability and dividends, not quick growth. Just look at pension funds.
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Sure, but when you buy some stocks, except for the first time around, the company doesn't get any of that money. you're just paying off the last guy. Dividends get paid out to whoever holds the stock. So yes, excellent companies making money pay dividends. But you're still not investing in a company's ideas and processes. Except to raise the fortunes of the executives. The company's bottom line and employees are not benefited at all, except for the theoretical fortunes of the employees' stock options.
"They trust me. Dumb fucks." (Score:2)
Wouldn't that be his usual response?
As far as I'm concerned (Score:2)
This guy's company has at least one excess headcount, namely him. Let him try living like the rest of us for a year and then talk about how headcounts at companies are "excessive".
Metaverse vs. Quest (Score:2)
The hardware, talent, and vision they bought when they acquired Oculus is still providing great products: the Quest 2, and probably the Quest Pro, due out tomorrow. They've sold tens of millions of those and they're undeniably the best VR hardware out there, with some debate as to whether the Index beats it, though the Quest doesn't require an entire gaming PC.
good luck with that (Score:4, Informative)
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Even if he didn't, individual butthurt investors rarely get to change anything. If they don't like where the company is going, then maybe they should consider pulling out their investment rather than crying about it.
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LOL WTF (Score:1)
"Meta needs to re-build confidence with investors, employees and the tech community in order to attract, inspire, and retain the best people in the world,"
The best people in the world? For what? Selling advertising? Spying on your every move and then selling that information to advertisers? Buying other companies so they can't compete against you? Selling giant VR goggles that nobody gives half a fuck about? General douchebaggery? How do you need "the best people in the world" for any of that?
Facebook is so toxic and hated that they had to change their name in a lame attempt to pretend that they are someone else. A company like that is not going to
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A solid anti-Facebook shitpost, but the sad fact is you're horrendously off base.
The best people in the world? For what? Selling advertising? Spying on your every move and then selling that information to advertisers?
Yep. That is a field of data analytics that is actually quite complex and Facebook is one of the best paying employers of data analytics people on the planet, they have a lot of talent in this area.
Buying other companies so they can't compete against you?
When you buy other companies you often retain a significant portion of their knowledgeable staff. For example when Facebook bought Oculus they didn't just buy a competitor, they bought engineers, R&D, patents, and funnelled more
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A company like that is not going to attract "the best people in the world".
You'd be amazed how few people give a shit about then when money and opportunity is dangled in front of them.
Can you define "best people?"
Zuck has an uphill battle with VR (Score:2)
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VR is a niche product. There are as far as I can tell two "large" groups (well, as large as a group can get in a niche market) that adopted VR: Furries and cosplayers. With some considerable overlap between these groups.
And it makes sense when you ponder for a moment what these groups have in common. In both groups you have a surprising amount of money being blown on leisure (some would say luxury, some would say waste of money) articles and people who try to pretend they are someone (or something) else. A
Translation: Give me money now! (Score:2)
Normally FB can counteract that by buying up their competitors. But they've pissed pretty much everyone off. The right wing is angry that banned Trump & the left wing is upset about their well documented right wing bias [politico.com]
So they're getting actual anti-trust scrutiny right now.
They've got about 10 year
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Be it as it may, but after noticing that all your eggs are in one basket, moving them to another single basket is probably not really a smart idea.
Twice so when that new basket turns out to be lacking a bottom.
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But right at the moment they can't do that and unless that changes they're going to be toast in about 10 years and they know it.
I'm no fan of Facebook and it wouldn't bother me in the slightest if they are shareholders shortsightedness doomed to the company. If the social media landscape or to split up into smaller communities that would make it much harder for politic
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I absolutely agree, but going head-first into a field like VR is considerably stupid. First, this ain't the first time VR is attempted. From SGI to Nintendo, others have tried and failed in the past. VR is about as much a mine field as 3D video. It's a gimmick that has some novelty factor but it wears off fast. Unless you pair it with an absolute must-have app, it's just going to be yet another failed attempt at it. And you cannot force that. It has to happen. It's about as easy to plan as a viral success.
The shareholder also said that... (Score:2)
The letter of protest asserted that, plainly, "the business of fucking Facebook users in the ass by allowing commercial and political interests to manipulate their brains wholesale via the browser and mobile apps is far more cost effective than doing so via expensive virtual reality systems."
The investors concluded by saying that they had considered fellating Zuck, but realized that the act would be as ineffective as the letter of protest.
No, no! (Score:2)
What they should do is double their investment in Meta. No, wait, triple it!
The only way to get the investor's confidence back is to spend all the money on Meta. ALL OF IT.
Apple glasses (Score:2)
Enter Apple Glasses which in gen 1 I expect to be nearly all utility. Simply augmenting our world view with a clock, messenger, health report, etc... that would be enough. I expect world mapping and augmentation. Everythi
Do they really think name changes do anything? (Score:2)
What's with this absurd notion that calling something by a different name somehow changes what it is or how people see it?