Mark it: Today, November 9, 2022, is the day that the seemingly unstoppable rise of Mark Zuckerberg's social media empire was stopped.
In a letter to employees Wednesday morning, Meta founder and CEO Mark Zuckerberg announced the biggest layoffs in the company's 18-year history, essentially admitting that the pivot into the metaverse may have been aggressive and the company needed to become "leaner and more efficient." The layoffs will effect about 13% of the company, or over 11,000 employees.
"Today I’m sharing some of the most difficult changes we’ve made in Meta’s history,” Zuckerberg said in a letter posted to the company's blog. “I’ve decided to reduce the size of our team by about 13% and let more than 11,000 of our talented employees go.”
Zuckerberg goes on to say that he listened to economic forecasts about growth in e-commerce due to the pandemic, believing they would have money to burn. "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," Zuckerberg says.
He mentions "our long-term vision for the metaverse" as one high-priority growth area, and he explains the big reasons behind this massive job cut — ad revenue is way down on Facebook's core platform and Instagram, and the company went on a hiring spree in the last 18 months largely driven by the metaverse project and something else Zuckerberg mentions, "our AI discovery engine."
"I got this wrong, and I take responsibility for that," Zuckerberg says.
The letter further explains that Meta's hiring freeze will extend through the first quarter of 2023, and that some times — like recruiting — will be most heavily impacted. All laid-off employees are getting 16 weeks severance plus an additional week for every year served at the company, and six months of paid health benefits.
"This is a sad moment, and there’s no way around that."
A key investor in the company, Brad Gerstner of Altimeter Capital, wrote an open letter to Zuckerberg and the executive team two weeks ago calling for a 20% workforce reduction by early 2023, and a return to "mid-2021 levels of employee expense."
"I don’t think anybody would argue that Meta wasn’t sufficiently staffed in 2021 to tackle a business that looks similar to how it looks today," Gerstner wrote.
Such calls by investors came after Meta had a dismal year and saw its stock price and valuation slashed by over half. Still, Gerstner noted that, contrary to the popular narrative, Meta was still "one of the largest and most profitable [companies] in the world with over $45 B in operating profits last year alone."
For those of us in the Bay Area, even amid a rash of layoffs in recent weeks including a high-profile mass layoff at Meta rival Twitter, this feels like a major milestone. Facebook was seemingly untouchable in the past decade, on a kind of meteoric rise that was immune to petty threats of government regulation — a company for whom a $5 billion fine by the FTC over privacy violations was but an inconvenient line item on a quarterly report.
But so it goes, and those of us with a long view of these things in Silicon Valley know that dark days like this usually arrive eventually, even for the big kids with vast budgets. No meteoric rise lasts forever.
Our condolences to everyone who is losing their job, but 16 weeks of severance isn't half bad. Your funemployment starts now.
Photo: Justin Sullivan/Getty Images