Yahoo

Mark Zuckerberg’s Metaverse bet similar to Marissa Mayer’s Yahoo

  • Mark Zuckerberg is making the same mistakes that plagued former Yahoo CEO Marissa Mayer.
  • Mayer made ambitious bets that never paid off for Yahoo, which Verizon eventually acquired.
  • Zuckerberg is making a big bet on the metaverse, better suited to the world of venture capital.

An internet juggernaut whose growth is lagging behind. A brilliant CEO at the head of an ambitious bet. A base of employees fearful of high demands and impending layoffs.

This is what is happening inside Meta right now. This is also what happened almost ten years ago at Yahoo.

As Meta evolves to become “a metaverse business” amid growing user numbers and slowing ad sales, stories are emerging of the growing pains that have accompanied the changes. The New York Times reported on Sunday that current and former employees are skeptical of the push toward augmented and virtual reality, and wary of Mark Zuckerberg’s shifting priorities.

Their concerns are beginning to echo Yahoo’s internal turmoil under Marissa Mayer, a tenure that ended with Mayer leaving and Verizon acquiring the company for a fraction of what it was worth. in the old days. Now, years after Yahoo’s failure, Zuckerberg is repeating Mayer’s mistakes.

The Metaverse is an unusually risky bet for a big tech CEO

Mark Zuckerberg showing off his metaverse avatar during Connect 2021.

Mark Zuckerberg showing off his metaverse avatar during Connect 2021.

Facebook



Zuckerberg announced almost a year ago that Facebook would be changing its name and changing its focus – he said at the time that the Metaverse was the company’s “new north star”. Over time, Zuckerberg is betting that people will live and work in a virtual universe and interact using avatars.

But that’s exactly what it is – a gamble – and a gamble for the 18-year-old company.

Zuckerberg’s metaverse game isn’t unusual in the tech world, it’s just not one we’ve often seen pay off outside of the venture capital world. Unlike a VC who can make dozens of risky bets on startups in hopes that one might become the next billion-dollar company, Meta doesn’t necessarily have that ability, or that luxury – after all, it has virtual reality headsets to make, social media platforms to grow, and ad dollars to recoup.

Meanwhile, Meta is pouring time and resources into the Metaverse and hemorrhaging money along the way. The company lost $10 billion on its big bet in 2021 — a significant sum even by Meta’s standards — and Zuckerberg told shareholders this year that the trend will continue for the next three to five years.

And while Zuckerberg has made it clear he’s playing the long game when it comes to the Metaverse, it’s a game he has to win, an industry veteran told Insider earlier this year.

“Facebook has the guts, the capital and the ability to make it work and become a major player,” the person said. “But they can’t be wrong.”

Marissa Mayer also had an ambitious vision – and it didn’t pay off

Marissa Mayer, CEO of Yahoo

Marissa Mayer, former CEO of Yahoo.

AP/Eric Risberg



If this means anything to you, you’ve probably experienced the rise and fall of Yahoo.

As Nich Carlson, Insider’s global editor, recounted in his 2014 book on Mayer, Yahoo was also an advertising giant. In 2004, the company made $3.5 billion in revenue and had a market capitalization of $128 billion. But competition began to heat up with rivals like eBay and Google – and later, ironically enough, Facebook – and ad dollars quickly began to dry up. By 2012, Yahoo’s value had plunged to around $20 billion.

Enter Mayer, who was tasked with restoring Yahoo to its position as one of the world’s preeminent tech companies that could rival Google, Facebook, Apple and Amazon.

Mayer’s bets were as bold as they were imprecise: Create a Yahoo app for everything! Hire Katie Couric for $5 million a year! Create scripted shows like Netflix! Buy blogging platform Tumblr for $1.1 billion! But none of those big bets paid off. Two years after his arrival, Yahoo’s exciting turnaround has not materialized and the company’s revenue has remained stagnant.

In 2016, Yahoo’s era of operating as a standalone company ended when Verizon paid $5 billion to acquire Yahoo and merged it with AOL. Mayer resigned as CEO.

There are other aspects of Zuckerberg’s situation that mirror Mayer’s.

Man with blue umbrella with back against Meta logo.

Meta logo

Arnd Wiegmann/Reuters



Internally, Zuckerberg’s Meta begins to mirror Mayer’s Yahoo.

Meta employees who spoke to The Times described frequent strategy changes that seem rooted in Zuckerberg’s desires rather than hard data, as well as Zuckerberg’s willingness to spend huge amounts of money on projects that had no guarantee of success, so much money that former Oculus executive John Carmack said it made him “tummy sick”.

Similarly, at Yahoo, Mayer has been described as making decisions with instinct rather than data, such as when Yahoo paid up to $10 million a year to host the “Saturday Night Live” archive, or when he hired Couric as the site’s “global anchor”. “, even after the failure of his first videos for the site.

Then there is the corporate culture. Mayer implemented a controversial performance ranking system during his tenure intended to inspire hard work and catch underperforming employees, but it backfired, resulting in a frustrated workforce and low morale. down.

Zuckerberg now seems eager to weed out low performers and employees who disagree with his vision for the metaverse. At a town hall meeting in June, he told staff that Meta would “increase the pressure” on performance goals to weed out disengaged employees. Meta now appears to be changing performance expectations and urging managers to push employees out the door, Insider reported this month.

If Zuckerberg is right and the Metaverse is the future, these steps are prudent and will help propel Meta ahead of the competition. And there’s reason to believe his ambitious plan will work – after all, Zuckerberg already reinvented Facebook once when he planned the desktop-to-mobile shift, a strategy that even his former No. 2 Sheryl Sandberg deemed risky at the time. ‘era.

But if his gamble doesn’t pay off, then he could see Meta go the way of Yahoo.