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Meta’s Virtual-Reality Arm Is a ‘Flaming Bag of Sh*t’

On the latest Pivot podcast, Kara Swisher and Scott Galloway discuss why Mark Zuckerberg’s pivot to virtual reality doesn’t seem to be resonating with investors.
https://nymag.com/intelligencer/2022/02/metas-virtual-reality-arm-is-a-flaming-bag-of-sh-t.html

Kara Swisher:
And again, the spending on Meta is insane — they lost $10 billion on that division, the Reality Labs division. And 2022 could bring challenges for both Alphabet and Meta. The Senate is considering a bill that would force them to pay news publishers, similar to the Australian law that took effect. Zuckerberg blamed Apple’s anti-tracking feature for the losses, but the big thing was this $10 billion cost for the Metaverse investment. So what do you think about the situation?

Scott Galloway:
This is the quarter that Google disarticulates from Facebook, much less Pinterest and Snap. Search is its own form of communications and advertising that continues to just grow. But even at scale, the ad-supported model seems to be under pressure. Facebook, for the first time in 18 years, had a decline in daily active users. It’s never registered that. So just some positives because I’m always critical of Facebook: Mark Zuckerberg is a brilliant business person. He’s doing exactly what he should be doing, and that is, he’s making a staggering investment in trying to pivot the Titanic and finding something big enough to replace what he sees as the sun passing midday on their core business model.

Swisher: He’s also bored with it, right? You can feel it.

Galloway: He’s doing exactly the right thing strategically. The problem is the tactics make no sense. The people in this universe are not impressed with the universe he envisions, and specifically the portal. One of my predictions in November of 2021, when I made 2022 predictions, was that the biggest failure in tech-product history might be the Oculus. The Reality Labs group grew from $1 billion to $2 billion, but to spend $10 billion to get to $2 billion … If he pulls it off, it’ll be one of the most impressive feats in — not even corporate renewal — but vision around maintaining growth. I don’t think they’re going to. I think this thing is already a giant flaming bag of shit.

Swisher: Well, he’s got some pattern-matching when they move to mobile, so it feels like that’s what he’s thinking about. But he really is spending.

Galloway: You can’t argue that the guy isn’t bold and isn’t a visionary. But the two words that are missing from the narrative, or your narrative around the problem and why they have hit a wall here — the first word is Tik and the second is Tok.

Swisher: That’s another thing — I left that out. They talked about TikTok, the audience issue.

Galloway: TikTok has learned from Facebook. The majority of the complaints I see about TikTok are creators upset that their content got taken down, so they’ve pivoted the other way. I want to be clear, they have problems, but directionally, I think they’re more about joy and creativity, as opposed to arguing and calling other people out and teen depression and all this shit. So I’m a big fan of TikTok. If it can disarticulate itself in a credible way from this fear that it could be weaponized on a moment’s notice by the CCP, it will probably be one of the ten most valuable companies in the world in the next 24 to 36 months.