Meta CEO Mark Zuckerberg Explains Why He Cut 11,000 Workers

Meta’s long-rumored layoffs have finally begun, and will impact roughly 13 percent of the company’s workforce, or 11,000 employees.  

Meta CEO Mark Zuckerberg sent a long letter to employees (available on Facebook’s PR website) breaking down what went wrong at the social-media giant:

“At the start of Covid, the world rapidly moved online and the surge of e-commerce led to outsized revenue growth. Many people predicted this would be a permanent acceleration that would continue even after the pandemic ended. I did too, so I made the decision to significantly increase our investments. Unfortunately, this did not play out the way I expected. Not only has online commerce returned to prior trends, but the macroeconomic downturn, increased competition, and ads signal loss have caused our revenue to be much lower than I’d expected. I got this wrong, and I take responsibility for that.”

This new, tighter environment obliges Meta to become “more capital efficient,” he added. Other cost-cutting measures, such as a reduction in employee perks and the company’s real-estate footprint, haven’t been enough: the company needs to lay off employees. (The letter didn’t really touch on Zuckerberg’s decision to spend billions of dollars on the “metaverse,” an ecosystem of augmented reality (AR) and virtual reality (VR) apps that might not see a huge profit for many years, if ever.)

“We’re also extending our hiring freeze through Q1 with a small number of exceptions,” Zuckerberg’s letter added. “I’m going to watch our business performance, operational efficiency, and other macroeconomic factors to determine whether and how much we should resume hiring at that point. This will give us the ability to control our cost structure in the event of a continued economic downturn. It will also put us on a path to achieve a more efficient cost structure than we outlined to investors recently.”

In the meantime, those affected by the layoffs will receive severance equivalent to 16 weeks of base pay, plus an additional two weeks for every year served at the company; RSU vesting; six months of health insurance; and outplacement benefits. That’s more generous than the three months of severance given to Twitter employees after new owner Elon Musk slashed the company’s workforce by roughly 50 percent.  

Despite the cuts, Meta’s survival will ultimately hinge on its ability to grow and innovate, which will require all kinds of specialized technology professionals. Zuckerberg is cutting at the moment, but at some point in the future, he’ll need to begin hiring again.  

6 Responses to “Meta CEO Mark Zuckerberg Explains Why He Cut 11,000 Workers”

  1. jake leone

    The focus on goggles, a niche hardware device, expensive and not attractive to like 95% of internet users, is a huge expensive mistake. Those Goggles, the development of them should have been left to a smaller, niche, hardware company. Sales of those Goggles will never pan-out. Further, heavy competition from better hardware companies (ex: Apple) will kill sales. It will be a complete failure.
    Many smaller companies have created metaverses. Some, a few, have been successes (after sale to bigger rivales). Most (ex: Second Life) have been big money sucks, that never earned a profit. Unless you can get out of the “niche” attraction of such virtual world, and attract a huge audience, your VR worlds will be empty and lonely.
    Meta’s Facebook, is not a niche platform. Meta should be adding features to Facebook. But the diversion of resources to a VR world, is killing innovation. Instead of spending 10-20 billion on a Metaverse. A better strategy would be work on content generation, via text prompts. If a user can create their own TV series, with Facebook tools, and if those tools are enhanced to add comedy, sound, voice, music, and drama to the episodes. Then Facebook can capture a huge audience from YouTube and maybe major players such as NetFlix and Amazon Prime. That’s the future.
    Ten years from now, content producers (be it via the web or some in-studio setup) will be able to produce hundreds of movies and TV episodes for a teeny tiny fraction of the cost of current content development costs (literally from a few dollars an episode). The key for Facebook, is how do we attract such content producers, and get them integrated into our platform. And, since most people just watch videos (and don’t care to interact much, save the peanut gallery, with what they watch), you need to have a system in place that is mostly just a watching oriented thing, with periodic ads or subscription.
    Facebook is asking users to do something, they just don’t normally do. Interact with an environment. That’s fun, if you are a kid, but when you come home from a hard day of work, you don’t need more work. And the working people are content with a mostly passive viewing experience.
    That’s the mass market Zuckerberg, get it Yet? You wasted billions on a fan-boy obsession with goggles.
    I have something to say about Twitter. Elon would do well to resurrect vine, but right now he is making some big mistakes:
    – Twitter is a virtual stack, employees don’t always need to come in. Elon should instead get rid of an expensive HQ, move it to Texas. And, some top talent might see work from home as a needed option, right now he can forgo WFH, but he will likely lose out on top talent that needs a work from home policy.
    – Twitter needs to attract commentators, writers, and celebrities. Big celebrities, obviously, but many struggling artists (who may eventually become top entertainers) will not get hooked on Twitter because of the subscription costs. Reporters in particular, need verification, but they might walk away from a subscription cost. Twitter has less to off than Facebook, in terms of messaging, but Elon wants half the company’s revenue to come from subscriptions. I would say, insisting on that, given the current environment, might be a good test for insanity.
    – Twitter shouldn’t kick bots out. Especially if those bots are entertaining or attracting users. It is as simple as that. Bots are probably a big part of the attraction to Twitter, but Twitter doesn’t really realise it, because a nerdy over obsession with (real comments from real people) isn’t going to be as good as many of the virtual personalities that will come out (in the TV series, generated by amateurs, 10 years from now).
    Anyway, that’s my 200 trillion cents worth.

  2. jake_leone

    Like 5 twitter execs quit today. Is it over no WFH? Have to wonder.
    Running virtual stack, doesn’t require an office. In fact, an office is unecessary overhead.
    Literally, what can we do to save Twitter:
    – Forget about subscriptions, until you have more to offer than Facebook. Facebook is family photo/video album + messaging of any size. Twitter is messaging, with great limitations.
    – Also, you at least have to have an offering level, in the video space, competitive with Youtube. What’s that going to take?
    Meta, clearly is dropping the ball in one very important, upcoming, area.
    Automatic Content Generation
    If you can get content generating producers, interested in Twitter, early, you can get them hooked on your tools. And if then, you get enough producers, you will have captured a chunk of the mass market.
    And the mass market is mostly passive watching of videos (you will catch Zuckerberg in an akward position selling his eyeglass tech for pennies on the dollar and trying to refocus on content generation)
    Hope you get my message Elon.

  3. jake_leone

    So the layoffs at META are about 50% in engineering staff cuts, including top performers. So this begs the question: Do we really need H-1b visas next year?
    Hey, top performers are being cut. Don’t you think, the right way to do it, instead of going out and finding some just graduated engineer and giving them an OPT or an H-1b. Isn’t the right way, to ask that top performer, “Hey, do you want to come back, fine tune your skill for another department?”. Meta (because it is a toy Mark Zuckerberg insists (reality distortion, with no field) will be success) Meta, cut its smart display department engineering staff. So we have to ask, if a person knows display engineering already, is it really wise to let that person go and hire some beginning worker on an H-1b visa or an OPT?
    No, what it points out is that Meta, like all of tech, uses the H-1b visa to hire in a discriminatory manner, completely excluding local candidates, in favor of people from certain countries, who can be trapped during the long Green Card wait. Or maybe, because the hiring manager wants people of his culture working under them because they have a cultural understanding that locals simply don’t have. And that understanding is to keep your mouth shut.
    There is a lot of nepotistic, racial and culturally motivated hiring at tech companies. Friends basically hire friends, but it is more than that, it is a favor that can be repaid via intercultural ties.

  4. jake leone

    You know it is important to keep in mind, META earns an immense amount every quarter, like 4 billion a quarter. That’s still a profit of ~200k a year per employee.
    We can understand the recruiting cuts, if you are truly not hiring.
    But I think the problem with Meta isn’t the employees. The problem isn’t entirely the direction.
    The problem is the immense expense of building out a “Metaverse” that no one will use. A “Metaverse” that will be sold off for pennies on the dollar, because of a failure to recognize these key facts about virtual worlds.

    #1 – The sector is actually saturated with other players, most of them are game companies. And now Apple is entering the space.
    #2 – The failure to realize that the next big things is Automatic Content Generation

    Facebook is basically messaging + photo album. What’s important to realize about this, is that these activities are not a niche business. Everyone sends message. And every family has a photo album. Everyone watches home videos and looks at family photos . This isn’t niche, it is mass market.

    VR worlds, not everyone does this. Kids do some of this, with joysticks mostly. Most of use simply don’t do VR. VR isn’t something that is going to become mainstream, it will be niche for many decades to come. As such, META’s VR world will remain empty and unused for decades to come. When will that change, well if ever TV becomes completely 3d and takes over your living room like say the Star Trek Holodeck. Then maybe, it will work, but that is decades from now. The best holographic displays are tiny little prototype displays, that cost hundreds of thousand of dollar. And they look washed out, but are truly holographic. If META put money into that, it wouldn’t have to be much, they might accelerate that tech. But it can’t currently replace the glasses, it is more like it could be a variable image snow globe. So maybe 10 years from now, at an accelerated pace, it could replace current TV sets (the jury is still very much out on that).

    What also isn’t niche, is watching video. And automatic video content generation is taking off. And it won’t take 10 billion a year to accelerate it to

  5. jake leone

    …accelerate it into a massive content generator, from mere text prompts.

    If you could give people the ability to generate customized cartoons for their kids, and share them on line. That could really attract users to your platform. And keep them engaged for hours.

    Later you could expand the tech to TV series generation and movie generation.

    For teeny tiny fractions (microscopic costs) we will be able to generate a huge amount of content.

    And that is the future. That is what is going to drive user engagement in the next 10 years.

    VR will be a dead space. Because most people don’t want to wander around a VR world after a hard day of work. Kids maybe, because they don’t work all day. But kids are a fraction of the market. And even most kids would rather do the almost passive thing of using a joystick.

    So my advice to Zuckerberg, drop the glasses. Take that money, spend a billion on holographic display, to accelerate that a little.

    Spend a few billion on automatic content generation. And capture a big part of what is going to become a trillion dollar industry, that will eclipse Hollywood. The way that Hollywood eclipsed live theater.

  6. jake leone

    Zuckerberg is unwilling to share the pain of failure. That is why he is making cuts.
    And the pain he is feeling, is the massive drop in stock price. And his solution is a reactionary grab for something, he can say to investors, in order to prop up the stock price.
    Zuckerberg made a huge gamble, and investors are not yes men. And he can’t handle that.
    And he needs the stock price to be high, so that his net worth is high, and so he can sell a small fraction of his shares to attain expense toys for himself like a 200 million dollar yacht and 6000 acres in Hawaii. And dozens of massive homes.
    This is what is really going on.
    Zuckerberg is unwilling to pivot.
    Zuckerberg could pivot to Automatic Content Generation, but he won’t. And the reason is because those VR glasses are a toy that he wants (and very few others want). And of course he wants a whole virtual world to play around in, even if it has mediocre games (that like in closed off meeting rooms). Even if that world mostly lonely (kind a like second life was, and he fails to learn that fact from tech history).
    The hard problem is the AI that is needed to capture the big market of passive watching. The thing that just like (message+photo album aka Facebook) that everyone does.
    The passive watching market is the big market for the next 20 years.
    When/if ever we have holographic displays that can take over an entire room, that’s decades off (if ever). Then a VR world might make sense, for a few more people. Because even 30 years from now, people will not want to come home after a hard day of work and walk around some VR world. Most people are couch potatoes, outside of a hard days work. Except for an occasional vacay or a weekend excursion.