In March, Meta CEO Mark Zuckerberg held a town hall meeting where employees could ask him about the future of the company. It was a tense moment: He had recently announced another round of layoffs, and employees wanted to know how they could still trust his leadership.
But Zuckerberg, according to reporting by the Washington Post’s Naomi Nix, didn’t answer as the confident, move-fast-and-break-things version of himself that is the stuff of Silicon Valley myth. He was cautious and reserved, assuring employees that things would be tough for a while, but that the company would get through it. For Nix, the moment signaled a “remarkable shift” in Zuckerberg’s leadership.
On Sunday’s episode of What Next: TBD, I spoke with Nix about Meta’s growing pains—and whether the company will be able to regain its footing amid layoffs, competition from TikTok, and a somewhat baffling bet on the Metaverse. Our conversation has been edited and condensed for clarity.
Lizzie O’Leary: When did you start to see Meta’s fortunes shift?
Naomi Nix: Fall 2021. Apple had introduced new privacy rules that hurt Meta’s ability to offer retailers targeted advertising. The rules reduced the amount of information and the ability for the company to measure the effectiveness of advertising campaigns. The less effective advertising campaigns, the more money retailers have to spend, the more they start to pause and potentially seek other ways of reaching their customers. Then, Russia’s invasion of Ukraine and rising inflation created a kind of market instability that also prompted some marketers and retailers to slow down their advertising.
There had been a lot of optimism during the pandemic that the e-commerce market would continue to skyrocket even when government lockdowns started to ease. But that didn’t turn out to be true. People kind of returned to their pre-pandemic shopping habits—that slowdown in growth in e-commerce also hurt Meta.
Also, the social media market is just becoming more competitive. There is more competition for eyeballs; there is more competition for advertising dollars—TikTok, Snapchat, the streaming platforms. And all of that was sort of coming together in this one moment, and it hit Meta like a perfect storm.
How do you think the public perception of Facebook influenced people working within Facebook and Meta?
Over the years, Meta had experienced a lot of scandals. There was Cambridge Analytica, there were repeated political controversies related to some of the company’s top senior leaders, and more and more regulators and activists and everyday people were asking questions about Meta’s role in the public sphere. Is it hurting teens? Is it hurting our democracy?
At that time, Facebook the company had begun to lose its luster. It was harder for the company to attract top talent. They ended up often paying above-market rates to attract talent, because people were less interested in working there. I think Frances Haugen, the documents she released, exacerbated those anxieties. But the company could still lure workers because it offered great salaries and really generous benefits and the potential to work on interesting problems. And even people in the integrity space saw the ability to work on some of these issues that were gaining the company a lot of scrutiny. They thought they could do something to help, and they could do that with the relative assurance that they had job security.
But as the tech industry began to lay off workers, those comfortable lives were slipping away. And for some, layoffs felt like a betrayal, right?
I think a lot of employees stuck with the company despite those controversies, even during the Trump years. But this feels like a different moment. It’s no longer just a publicity scandal. It’s something that’s happening to them.
This was also around the same time that Facebook lost something like 500,000 daily active users in that last quarter of 2021. What does that say about their core business model as a social network?
The core social app is no longer the buzzy new social media app that was revolutionary among young people. And we saw that in the wake of the Frances Haugen documents—executives had for a long time been really concerned that young people were no longer signing up for Facebook, that they weren’t spending as much time as they once did on Facebook, and that they were going to competitors like TikTok. The core product that made Meta the strong business has no longer retained its appeal. User growth has recovered, but there’s a sense in which it’s not the social media platform of the future and that Meta needs a second act in order to retain its dominance in this space.
The company has invested big in the Metaverse—how would you say that bet is panning out?
It’s not yet a profitable division. Meta says it’s making a long-term bet that eventually people will want to go to work and spend time with their friends and go into digital stores using virtual reality headsets or augmented reality glasses, and that this will be the next great computing platform after mobile phones. But the standard of technology that the company is striving for is a long way away.
When you talk to people in the company, do they still have faith in Mark Zuckerberg and the Metaverse?
You’ll hear mixed opinions about the Metaverse. Some employees think the products are really cool. Then some are like, “I am actively trying to avoid having to use them.” I think the tolerance among the workforce for making this big bet at a time when the company is cutting down on jobs has grown thinner. You’ll see it in some of the questions that employees will put forward: Why is the company not making deeper cuts in the division that oversees its Metaverse efforts, when that’s the division that’s not making money? People who are working on the core social media apps—Facebook, Instagram—they’re the ones that are essentially paying the bills.
What’s the company response to that?
Andrew Bosworth, the chief technology officer, late last year put out a very lengthy blog post about this, and he said, look, we still are investing in technologies of the future, and we’re still committing to put 20 percent of our spending toward this Metaverse bet. There’s been a forceful defense of the Metaverse from top leaders, despite the fact that it’s still not profitable.
One of the things that can happen to a company in this middle-age period of time is a loss of a sense of mission. What would people within Facebook and Meta say they do? What’s their purpose?
That’s part of the confusion and frustration among employees. It seems like Meta is just kind of jumping to the new shiny thing and that they don’t always hear a clear mission or a clear sense of direction from the top leadership ranks. Even if you listen to Meta’s quarterly earnings calls, you’ll hear a lot of different themes. It was just more than a year ago that we were renaming the company and the company was focusing on the Metaverse. And right before that it was Young adults will be the North Star. And before that, they talked a lot about e-commerce. Lately they’ve been talking a lot about A.I. It wasn’t until maybe the last quarter you really heard a consistent framing of how all those are coming together to work toward a common goal that could rally the troops.
Speaking of the troops—what’s morale like?
Morale has plummeted. Meta puts out an employee survey twice a year, and I obtained some of the data from that last survey, and it showed that confidence that leaders were taking the company in the right direction had plunged more than 10 percentage points. A lot of people have lost trust in their CEO. In recent weeks, it’s really been about this idea of accountability. They argue that their top executives are the ones that got the company into this mess. They’re the ones who decided to over-hire, they’re the ones who made decisions based on rosier projections of e-commerce, but it’s the rank and file that are paying the price.
Mark Zuckerberg could have cashed out and walked away. Why didn’t he?
He stands out in Silicon Valley. It’s still a founder-led company, and he has shown no signs that he has any interest in walking away from the company. If anything, he’s consolidated his power in the wake of Sheryl Sandberg’s departure.
We get the sense that Mark still cares about being an innovator. More and more, his public commentary has been focused on selling the company as the space that’s continuing to come up with new products, that’s continuing to seek to transform human communication. And we get the sense that this is a leader who doesn’t want to give up that mantle yet. Mark still wants that next act.
Future Tense is a partnership of Slate, New America, and Arizona State University that examines emerging technologies, public policy, and society.