In an open letter to Mark Zuckerberg published today, one of Meta Platforms Inc.’s biggest investors had a lot to say about the future of the company.
The letter, which was published on Medium and signed by Altimeter Capital Chair and Chief Executive Brad Gerstner, didn’t mince words. Gerstner said Meta has too many staff and is spending too much money on its dream of the metaverse becoming a reality on a global scale.
“It’s with some hesitation, but significant conviction, I am sharing an open letter strongly encouraging Meta to streamline and focus its path forward,” he said. “Like many other companies in a zero rate world — Meta has drifted into the land of excess — too many people, too many ideas, too little urgency. This lack of focus and fitness is obscured when growth is easy but deadly when growth slows and technology changes.”
To address dwindling user numbers, Meta has lately focused on redesigning the Facebook app to look a little more like TikTok. This year the company saw its first-ever drop in user numbers and, in February, lost $230 billion in market value. In July, the company said it would reduce its staff, but was confident in its long-term investment in the metaverse. In September, it was reported that Meta was looking to cut 10% of staff from its payroll.
This hasn’t done anything to placate Gerstner, who warned that Meta is now losing the confidence of its investors, despite being “one of the largest and most profitable” core businesses in the world. He said Meta “needs to get its mojo back” and “get fit and focused” in order to rebuild confidence.
He offered some solutions, starting with saying that the company needs to lose not 10% of its staff but “at least 20%.” He wants to see Meta reducing capital expenditures by $5 billion and limit investment in the metaverse – including Reality Labs – to no more than $5 billion.
“It is a poorly kept secret in Silicon Valley that companies ranging from Google to Meta to Twitter to Uber could achieve similar levels of revenue with far fewer people,” Gerstner said about the staff reduction. “I would take it a step further and argue that these incredible companies would run even better and more efficiently without the layers and lethargy that comes with this extreme rate of employee expansion.”
As for capital expenditure investment, the letter decried Meta’s spending, saying it was more than many large tech companies combined. Like Zuckerberg, Gerstner believes that the future is augmented reality and artificial intelligence, but going forward, he says, Meta has to take its foot off the gas in terms of spending in those areas.
After the rename of the company to Meta and all that investment in the metaverse, Gerstner believes too much onus has been put on this land of make-believe. “People are confused by what the metaverse even means,” he noted. There are better ways to spend money and perhaps not gamble with it too much was the gist of the criticism. He added that these are not demands but advice.
“We simply wanted to further engage and continue sharing our thoughts as an interested shareholder,” he said. “We believe in this team. We know Meta has more reach, more relevance, and more incredible opportunities for growth than almost any platform on the planet. And we are confident that your long-term investments in AI and the next generation of communications will continue to drive us all forward.”
Meta has yet to offer a public reply.