4 ms·

Meta is burning $10B/yr to build Metaverse. They are also loading up on massive debt. This is the part I don’t understand. Development is expensive but NOT this

Meta is burning $10B/yr to build Metaverse. They are also loading up on massive debt. This is the part I don’t understand. Development is expensive but NOT this expensive! A back of the envelope calculation suggests that one can build an entire search engine infrastructure and product for the same price. Something like HoloLens from scratch would cost LESS than half of that price. A full competitive self driving E2E stack development will cost about half. Developing entire smartphone hardware and OS from scratch would cost about a third of that money. Moon worthy space rocket development will cost a tenth of this budget. One can do so much with $10B that it is absolutely mind blowing.

mike00632 4y ago
I have very similar thoughts, especially when I compare the Metaverse spots to the products that video game companies make for way less money that are comparably much better. I guess video game companies have a reputation for over-working and under-paying their employees though.
throwty345df 4y ago
I watched a presentation in which it was explained that they got Microsoft to create a version of Office for their metaverse and other companies to do similar things. I'm pretty sure that Microsoft is not doing this for free, so generally speaking I think their expenses include all the spending related to this kind of partnerships, which can add up to quite a lot when you have a whole ecosystem to build. This is not just software and hardware engineering. With this in mind, the $10bn figure looks much more reasonable and even disciplined for the goal pursued. Whether or not this goal is the right one is another question. I personally think Meta is misguided here and this aventure will fail miserably.
skizm 4y ago
This is completely incorrect. They took on ~$10B in debt recently for stock buybacks when debt was cheap. They make around $28B in profit after metaverse spending and have $40B cash on hand.
- sytelus 4y ago
  Corrected. It still doesn’t make any sense to take on debt (which no longer is cheap) to do stock buybacks.

mike00632 4y ago

I have very similar thoughts, especially when I compare the Metaverse spots to the products that video game companies make for way less money that are comparably much better. I guess video game companies have a reputation for over-working and under-paying their employees though.

throwty345df 4y ago

I watched a presentation in which it was explained that they got Microsoft to create a version of Office for their metaverse and other companies to do similar things. I'm pretty sure that Microsoft is not doing this for free, so generally speaking I think their expenses include all the spending related to this kind of partnerships, which can add up to quite a lot when you have a whole ecosystem to build. This is not just software and hardware engineering. With this in mind, the $10bn figure looks much more reasonable and even disciplined for the goal pursued. Whether or not this goal is the right one is another question. I personally think Meta is misguided here and this aventure will fail miserably.

skizm 4y ago

This is completely incorrect. They took on ~$10B in debt recently for stock buybacks when debt was cheap. They make around $28B in profit after metaverse spending and have $40B cash on hand.

sytelus 4y ago
Corrected. It still doesn’t make any sense to take on debt (which no longer is cheap) to do stock buybacks.