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The Problem With Meta Is Meta

On October 23rd 2015, just after I left Facebook to join Intercom, I posted this:

What happened? Facebook's share price had just surpassed $100 for the first time ever.

Facebook had not yet released third quarter 2015 results. When they were released, on November 4th 2015, the results were stellar.

1.01 billion daily active users. 1.55 billion monthly active users. $4.3 billion in revenue for the quarter. On track for $17.93 billion revenue for FY 2015, an increase of 44% year over year. Not bad.

Cash and marketable securities were $15.83 billion at the end of the third quarter of 2015. Free cash flow for the third quarter of 2015 was $1.41 billion. Facebook was a money machine.

Fast forward to October 26th 2022, and Meta's third quarter earnings.

2.93 billion daily active people. 3.71 billion monthly active people. $27.71 billion in revenue for the quarter. Projecting $30-32.5 billion billion revenue for the third quarter of 2022. Well north of $100 billion for FY 22. Not bad at all. Specially compared with just 7 years earlier.

Cash and marketable securities were $41.78 billion at the end of the third quarter of 2022. Free cash flow for the third quarter of 2022 was... oh... $173 million.

This is what is freaking out investors. Investments into Meta's Metaverse ambitions are soaking up revenue gains the company is making. Before, fast growing revenue and generous free cash flow could fund almost anything for infinity. Today, that aggressive allocation of cash and intellectual capital into an unproven future is much harder to balance.

Herein lies the fundamental problem with Meta. The brand, not the company (or the people working for it).

Google, when it restructured itself to become Alphabet - a holding company for Google and its "moonshot" bets and acquired businesses - chose a pretty unopinionated name. Alphabet can mean lots of things to lots of different people.

Meta, however, is a different beast.

Meta - the company - owns a variety of different businesses. Facebook, Instagram, WhatsApp and of course (Oculus) Quest. But it also owns Kustomer (a customer service CRM), Workplace (a work collaboration platform) and CrowdTangle. And, of course, an insanely large Ads Marketplace.

If Zuck had chosen a different name, and pushed some of the metaverse narrative under the radar, sentiment might be different. But, for futurists like Zuck, mistakes are often repeated. Like Elon Musk and Tesla, SpaceX, and (sadly) Twitter, Zuck is the brand. Meta is Zuck.

In the end, that might be a good thing. For now, it's pretty bad.