7 ms·

> In the end the goal of a company (whether you agree with it our not) is not to get as big as possible but to generate as much cash for its shareholders as pos

by khuey 4y ago

> In the end the goal of a company (whether you agree with it our not) is not to get as big as possible but to generate as much cash for its shareholders as possible. Facebook's goal is to do whatever Zuckerberg wants, since he still controls a majority of the votes. It's a fascinating test of the value of corporate governance rights.

urthor 4y ago
^^^ have to emphasize. 60-80% of the cost base in many F500s is bullshit (exceptions exist. FMCG, any industry where physical products make up their balance sheet. Not salaries). Any excuse to avoid returning money to shareholders. Everyone quietly acknowledges. If say, Visa, really tried, they could cut the cost base by 50% and achieve the same output. Carl Icahn style shareholder activists have a point. Forget tech companies. Most public companies are a conspiracy by VPs/C-suite/board. The difference with tech companies is Google feather-beds its EMPLOYEES with free food. From a pure capitalist standpoint. You could run Facebook's business on 20 billion USD in costs. Their cost base is enormous because Z has ZERO interest in cutting costs. He's in it for the ego/vanity. Same as every other F500 CEO/Chairman. Ego is the driver, not the balance sheet.
- mi_lk 4y ago
  there's one quote in Ben Thompson's recent Meta article that I really buy. If you look from this angle many Meta's moves make sense > What is clear is that Zuckerberg in particular seems more committed to VR than ever. It may be the case that he is seen as the founding father of the Metaverse, even as Meta is a potential casualty. https://stratechery.com/2022/meta-meets-microsoft/ https://stratechery.com/2022/meta-meets-microsoft/
  - r00fus 4y ago
    So Zuck is bought into metaverse, but can they transition? My guess is this is going to be a really rough winter / several quarters for Facebook until they reconsider.
    - munk-a 4y ago
      They're throwing loads of technical resources at that - so they should be able to build it - but the problem is the "and they will come part". VR Gaming is awesome, BeatSaber is a wonderful game to engage in... for about an hour or so max - you'll want to shift gears and get your head out of the headset just to relax your eyes. Zuckerberg seems to envision matrix-style VR where it's 24/7 immersive and nobody outside a very small fringe group is at all interested in that proposition. I just fail to see the value proposition of VR socialization over video and even voice calls. If you'll recall even video calls have only really caught on since the pandemic - skype did business pre-pandemic, but it was still a fringe tool for social purposes and much more likely to see use in a work setting. It might be that VR can break into the workplace - but I have my skepticism.
      - deleted 4y ago
        [deleted]
      - chrischen 4y ago
        I don’t fully understand what the metaverse plans are, but if you look at the design of the quest pro that just released then what you say is not true. It’s an AR first device that doesn’t even come with full light blockers that make it usable as a fully immersed VR device. I agree with you VR is not the future but AR definitely is, and even Apple has been making silent but consistent investments in AR for more than the past 5 years.
        echelon 4y ago
        > I agree with you VR is not the future but AR definitely is. It's interesting to see the differences of opinions on this subject. I believe this will pan out in the opposite direction. As a consumer, AR seems so weird to me. I don't want to put on glasses or goggles to see overlays of the world around me. I want interfaces to be simpler, not more complicated and crowded. While AR hardware has improved, the software remains reminiscent of Nintendo DS Face Raiders [1]. I'm just not being sold on a day to day use case for the tech. Maybe Apple or Meta will teach us otherwise, but I can't even imagine it at this point. I do see AR being useful for a limited number of industrial applications. You already see quasi-AR virtual film cameras working well (cameras without a lens that capture xyz-orientation in virtual space for the purpose of pointing a virtual camera). But these don't even use optical overlays. On the other hand, VR enables infinite workspaces, telepresence, new kinds of 3D creative tools that place you inside the thing you're building, world isolation, closer to full sensory immersion, etc. Rather than a tool that serves as an overlay of the existing world, it puts you into a new type of cognitive body altogether. Metaphors of movement combined with spatial reasoning can unlock new abilities for the human brain. Like gestures, but full body and mind. [1] https://www.youtube.com/watch?v=bh-YrWvdUCs https://www.youtube.com/watch?v=bh-YrWvdUCs
  - victor106 4y ago
    The thing with the transition to Meta is the ability to marry hardware and software together which super critical for VR to click. There’s really only one company in the world that’s able to do that better than anyone else. You guys know which company that is. So it’s very very hard for them to be as successful in that space
    - jaxn 4y ago
      It's not an impossible playbook to follow. Tesla and Square are doing a pretty good job of it.
      - GoOnThenDoTell 4y ago
        Tesla’s not near the level of Apple. The physical product creaks and groans, and the software UI is android level. Tesla just has the convenience of competing with luddites
        jaxn 4y ago
        I disagree. And I drive one everyday.
        GoOnThenDoTell 4y ago
        I also drive one everyday.
        drevil-v2 4y ago
        I think you are wrong. The software is miles ahead of competition in polish. And the cars that coming from Giga Shanghai are just as good as any other manufacturer - just read reviews in New Zealand.
    - throw_nbvc1234 4y ago
      2nd best of two giants still a decent place to be. See iOS vs Android.
- skippyboxedhero 4y ago
  The only reason FMCG is an exception was after 3G. The sector used to be a totally bloated mess, then 3G acquired Heinz, fired whole teams of people, and it made no difference to results at all (obv, it all went a bit wrong after but I don't think anyone believes that was due to cost). After that, almost every FMCG started looking at costs (ofc, it also helped that revenue stopped growing). Carl Icahn story about cutting costs: https://www.youtube.com/watch?v=WSatPoD2W-o https://www.youtube.com/watch?v=WSatPoD2W-o - fired a building full of people, never heard about it again. Most companies are run as bureaucracies, dual share classes haven't helped. There is no difference between your average Google employee and a civil servant. Unfortunately, this is a pretty raw deal for shareholders. You cash out insiders, the bureaucrats move in, the amount of cost extends to the revenue base, eventually revenue slows down (bureaucrats don't tend to be good stewards of capital), the rats all leave the ship, you find out the cost base could have been 50% smaller all along, and you are left with a stock on its way to bankruptcy.
  - deleted 4y ago
    [deleted]
- klintcho 4y ago
  I don't necessarily disagree with this. However wouldn't this imply a couple of world changing things: - We should go for something akin to universal basic income? Given we could produce a bunch of output with very few people (I guess at that point it's more and ideological question of if these few people that get to stay + shareholders are going to get all that value rather than someone else) - People that are talking about "productivity growth" has declined the past 20 - 40 years, are probably wrong and we have seen productivity growth, we've just filled it up with useless stuff and made up jobs? - It also sort of implies that some of the projects that Google and Meta has taken on even though not financially sound right now haven't produced any value for humanity (and I fully understand that in a capitalist society; profits are the way we value things). I think they have and a lot do (like long tail stuff like producing knowledge, producing open source tech, driving tech that while not mature now, will explode in the future, VR + self driving comes to mind) Another thing that comes to mind when it comes to founder driven companies doing whatever they want is all the Elon Musk companies. He has also made a bunch of crazy bets that "value"-companies would def not have made.
- givemeethekeys 4y ago
  > The difference with tech companies is Google feather-beds its EMPLOYEES with free food. as part of an already very good compensation package.
yieldcrv 4y ago
Exchanges have listing standards related to share composition and size of float They can extend that to these voting class shares imbalances and start a cascade of changes
- modeless 4y ago
  S&P 500 already prohibited multiple share classes. Meta and Google are grandfathered in.
subsubzero 4y ago
Also would like to add that once you go this route(being a value company) rightly or wrongly you just died a little(many perceive this) and recruiting and talent retention becomes alot harder as who wants to work for the tech equivalent of a proctor and gamble or coca cola. Apple did do the dividend a few years back, so maybe a slow pivot could work. But a growth company can only grow so far as all the people who want to use FB's services have used them so its a natural progression for any company like FB.
- Kye 4y ago
  >> "who wants to work for the tech equivalent of a proctor and gamble or coca cola" People who value stability and work-life balance. It's great for people who see a job as a way to fund life and put something away for security later in life, not as a calling they're willing to sacrifice everything for.
mathattack 4y ago
It is, though the currency he lays his employees with is equity. That’s the challenge that Big Tech has to confront. If the stock value falls too much, Zuck won’t be able to convince engineers to join him for the ride.
- sangnoir 4y ago
  The way RSUs are calculated (dollar amount to shares at time of hiring) he'll be able to convince new joiners just fine. Holding onto current employees would be the challenge - assuming he wants to hold onto them in the first place.
  - bagels 4y ago
    Only if they think the stock won't continue the decline.
  - pardesi 4y ago
    Why would new employees (at current quality or better) would join his mission of self-destruction?
    - CoastalCoder 4y ago
      I suspect that many, many software developers would happily help Zuckerberg to implode. Getting paid well is just a bonus.
    - m-ee 4y ago
      I made it through the on-site only to hit the hiring freeze. It’s a well paying remote job even factoring in stock depreciation, moderately interesting work, and I’d happily spend zuck’s money on VR goggles no one needs until it all implodes.
    - loeg 4y ago
      The pay is still good, if not great. My salary is approximately the same as total comp at my previous job. Even with the stock down around $104, my total comp is still some significant chunk better than previous comp (20-30%). (I'm an IC5 SWE.) It will eventually be a problem (in the sense that switching to GOOG or AMZN will be a much better prospect) if the stock continues to go down, of course. And a new hire evaluating their stock package should probably be a little concerned about the trend. The infrastructure to support you getting your work done is great. There are reasonably interesting software problems to solve. There are smart people to work with. There are some good benefits.

by khuey 4y ago

urthor 4y ago

^^^ have to emphasize. 60-80% of the cost base in many F500s is bullshit (exceptions exist. FMCG, any industry where physical products make up their balance sheet. Not salaries). Any excuse to avoid returning money to shareholders. Everyone quietly acknowledges. If say, Visa, really tried, they could cut the cost base by 50% and achieve the same output. Carl Icahn style shareholder activists have a point. Forget tech companies. Most public companies are a conspiracy by VPs/C-suite/board. The difference with tech companies is Google feather-beds its EMPLOYEES with free food. From a pure capitalist standpoint. You could run Facebook's business on 20 billion USD in costs. Their cost base is enormous because Z has ZERO interest in cutting costs. He's in it for the ego/vanity. Same as every other F500 CEO/Chairman. Ego is the driver, not the balance sheet.

mi_lk 4y ago
there's one quote in Ben Thompson's recent Meta article that I really buy. If you look from this angle many Meta's moves make sense > What is clear is that Zuckerberg in particular seems more committed to VR than ever. It may be the case that he is seen as the founding father of the Metaverse, even as Meta is a potential casualty. https://stratechery.com/2022/meta-meets-microsoft/ https://stratechery.com/2022/meta-meets-microsoft/
- r00fus 4y ago
  So Zuck is bought into metaverse, but can they transition? My guess is this is going to be a really rough winter / several quarters for Facebook until they reconsider.
  - munk-a 4y ago
    They're throwing loads of technical resources at that - so they should be able to build it - but the problem is the "and they will come part". VR Gaming is awesome, BeatSaber is a wonderful game to engage in... for about an hour or so max - you'll want to shift gears and get your head out of the headset just to relax your eyes. Zuckerberg seems to envision matrix-style VR where it's 24/7 immersive and nobody outside a very small fringe group is at all interested in that proposition. I just fail to see the value proposition of VR socialization over video and even voice calls. If you'll recall even video calls have only really caught on since the pandemic - skype did business pre-pandemic, but it was still a fringe tool for social purposes and much more likely to see use in a work setting. It might be that VR can break into the workplace - but I have my skepticism.
    - deleted 4y ago
      [deleted]
    - chrischen 4y ago
      I don’t fully understand what the metaverse plans are, but if you look at the design of the quest pro that just released then what you say is not true. It’s an AR first device that doesn’t even come with full light blockers that make it usable as a fully immersed VR device. I agree with you VR is not the future but AR definitely is, and even Apple has been making silent but consistent investments in AR for more than the past 5 years.
      - echelon 4y ago
        > I agree with you VR is not the future but AR definitely is. It's interesting to see the differences of opinions on this subject. I believe this will pan out in the opposite direction. As a consumer, AR seems so weird to me. I don't want to put on glasses or goggles to see overlays of the world around me. I want interfaces to be simpler, not more complicated and crowded. While AR hardware has improved, the software remains reminiscent of Nintendo DS Face Raiders [1]. I'm just not being sold on a day to day use case for the tech. Maybe Apple or Meta will teach us otherwise, but I can't even imagine it at this point. I do see AR being useful for a limited number of industrial applications. You already see quasi-AR virtual film cameras working well (cameras without a lens that capture xyz-orientation in virtual space for the purpose of pointing a virtual camera). But these don't even use optical overlays. On the other hand, VR enables infinite workspaces, telepresence, new kinds of 3D creative tools that place you inside the thing you're building, world isolation, closer to full sensory immersion, etc. Rather than a tool that serves as an overlay of the existing world, it puts you into a new type of cognitive body altogether. Metaphors of movement combined with spatial reasoning can unlock new abilities for the human brain. Like gestures, but full body and mind. [1] https://www.youtube.com/watch?v=bh-YrWvdUCs https://www.youtube.com/watch?v=bh-YrWvdUCs
- victor106 4y ago
  The thing with the transition to Meta is the ability to marry hardware and software together which super critical for VR to click. There’s really only one company in the world that’s able to do that better than anyone else. You guys know which company that is. So it’s very very hard for them to be as successful in that space
  - jaxn 4y ago
    It's not an impossible playbook to follow. Tesla and Square are doing a pretty good job of it.
    - GoOnThenDoTell 4y ago
      Tesla’s not near the level of Apple. The physical product creaks and groans, and the software UI is android level. Tesla just has the convenience of competing with luddites
      - jaxn 4y ago
        I disagree. And I drive one everyday.
        GoOnThenDoTell 4y ago
        I also drive one everyday.
      - drevil-v2 4y ago
        I think you are wrong. The software is miles ahead of competition in polish. And the cars that coming from Giga Shanghai are just as good as any other manufacturer - just read reviews in New Zealand.
  - throw_nbvc1234 4y ago
    2nd best of two giants still a decent place to be. See iOS vs Android.
skippyboxedhero 4y ago
The only reason FMCG is an exception was after 3G. The sector used to be a totally bloated mess, then 3G acquired Heinz, fired whole teams of people, and it made no difference to results at all (obv, it all went a bit wrong after but I don't think anyone believes that was due to cost). After that, almost every FMCG started looking at costs (ofc, it also helped that revenue stopped growing). Carl Icahn story about cutting costs: https://www.youtube.com/watch?v=WSatPoD2W-o https://www.youtube.com/watch?v=WSatPoD2W-o - fired a building full of people, never heard about it again. Most companies are run as bureaucracies, dual share classes haven't helped. There is no difference between your average Google employee and a civil servant. Unfortunately, this is a pretty raw deal for shareholders. You cash out insiders, the bureaucrats move in, the amount of cost extends to the revenue base, eventually revenue slows down (bureaucrats don't tend to be good stewards of capital), the rats all leave the ship, you find out the cost base could have been 50% smaller all along, and you are left with a stock on its way to bankruptcy.
- deleted 4y ago
  [deleted]
klintcho 4y ago
I don't necessarily disagree with this. However wouldn't this imply a couple of world changing things: - We should go for something akin to universal basic income? Given we could produce a bunch of output with very few people (I guess at that point it's more and ideological question of if these few people that get to stay + shareholders are going to get all that value rather than someone else) - People that are talking about "productivity growth" has declined the past 20 - 40 years, are probably wrong and we have seen productivity growth, we've just filled it up with useless stuff and made up jobs? - It also sort of implies that some of the projects that Google and Meta has taken on even though not financially sound right now haven't produced any value for humanity (and I fully understand that in a capitalist society; profits are the way we value things). I think they have and a lot do (like long tail stuff like producing knowledge, producing open source tech, driving tech that while not mature now, will explode in the future, VR + self driving comes to mind) Another thing that comes to mind when it comes to founder driven companies doing whatever they want is all the Elon Musk companies. He has also made a bunch of crazy bets that "value"-companies would def not have made.
givemeethekeys 4y ago
> The difference with tech companies is Google feather-beds its EMPLOYEES with free food. as part of an already very good compensation package.

yieldcrv 4y ago

Exchanges have listing standards related to share composition and size of float They can extend that to these voting class shares imbalances and start a cascade of changes

modeless 4y ago
S&P 500 already prohibited multiple share classes. Meta and Google are grandfathered in.

subsubzero 4y ago

Also would like to add that once you go this route(being a value company) rightly or wrongly you just died a little(many perceive this) and recruiting and talent retention becomes alot harder as who wants to work for the tech equivalent of a proctor and gamble or coca cola. Apple did do the dividend a few years back, so maybe a slow pivot could work. But a growth company can only grow so far as all the people who want to use FB's services have used them so its a natural progression for any company like FB.

Kye 4y ago
>> "who wants to work for the tech equivalent of a proctor and gamble or coca cola" People who value stability and work-life balance. It's great for people who see a job as a way to fund life and put something away for security later in life, not as a calling they're willing to sacrifice everything for.

mathattack 4y ago

It is, though the currency he lays his employees with is equity. That’s the challenge that Big Tech has to confront. If the stock value falls too much, Zuck won’t be able to convince engineers to join him for the ride.

sangnoir 4y ago
The way RSUs are calculated (dollar amount to shares at time of hiring) he'll be able to convince new joiners just fine. Holding onto current employees would be the challenge - assuming he wants to hold onto them in the first place.
- bagels 4y ago
  Only if they think the stock won't continue the decline.
- pardesi 4y ago
  Why would new employees (at current quality or better) would join his mission of self-destruction?
  - CoastalCoder 4y ago
    I suspect that many, many software developers would happily help Zuckerberg to implode. Getting paid well is just a bonus.
  - m-ee 4y ago
    I made it through the on-site only to hit the hiring freeze. It’s a well paying remote job even factoring in stock depreciation, moderately interesting work, and I’d happily spend zuck’s money on VR goggles no one needs until it all implodes.
  - loeg 4y ago
    The pay is still good, if not great. My salary is approximately the same as total comp at my previous job. Even with the stock down around $104, my total comp is still some significant chunk better than previous comp (20-30%). (I'm an IC5 SWE.) It will eventually be a problem (in the sense that switching to GOOG or AMZN will be a much better prospect) if the stock continues to go down, of course. And a new hire evaluating their stock package should probably be a little concerned about the trend. The infrastructure to support you getting your work done is great. There are reasonably interesting software problems to solve. There are smart people to work with. There are some good benefits.