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Billionaires gone wild: Musk, Zuckerberg slash jobs, roll dice with future of Bay Area tech icons

Tesla chief executive Elon Musk. (Luis Sinco/Los Angeles Times/TNS)
December 31, 2022

As Elon Musk and Mark Zuckerberg lay off thousands of workers while chasing their personal visions for the future of the internet, the fate of Twitter and Facebook rests in the hands of these two billionaires, experts say — and the outcome for the two iconic Bay Area technology firms is far from clear.

Under CEO and founder Zuckerberg, Facebook parent company Meta is hemorrhaging billions of dollars in pursuit of an immersive online world Zuckerberg calls “the metaverse” and touts as the future of social life, work, entertainment and commerce. And under CEO and recent buyer Elon Musk, Twitter is sending advertisers fleeing and revenue plunging as Musk pursues a free-speech agenda he insists will foster diverse viewpoints and allow users to crowd-source truth.

“These are risky bets by Musk and Zuckerberg and so far they have backfired in epic fashion,” said technology-industry analyst Dan Ives of Wedbush Securities.

In the past two weeks, both men have put massive numbers of employees out of work — 11,000 at Meta, with almost one-quarter of that number coming from the Bay Area, and nearly 4,000 at Twitter, including 900 local job losses.

The two CEOs share a trait, according to prominent Silicon Valley tech-industry strategist Tom Coates: “A sublime confidence in (their) own abilities to predict the future and turn something that doesn’t exist or exists badly into something brilliant.”

Both men have a history of doing just that, Zuckerberg with the creation of social media titan Facebook and Musk with revolutionary electric car giant Tesla and pioneering rocket firm SpaceX. But the skills each used to create those successes won’t necessarily translate to their new enterprises, and observers said Musk and Zuckerberg may be deluding themselves.

“There’s a fine line between a visionary and someone who’s hallucinating,” said Steve Blank, adjunct professor of management science and engineering at Stanford University.

The two are leading companies beset by broad challenges, with recession fears cutting the advertising spending they rely on, short-video platform TikTok grabbing market share, a change to Apple’s privacy policy gutting Meta’s valuable ability to track consumers across the web, and Twitter racking up losses for eight of the past 10 years.

Zuckerberg in a conference call with analysts last month said of the so-called metaverse, “I think our work is going to be of historic importance and create the foundation for an entirely new way that we will interact with each other and blend technology into our lives, as well as a foundation for the long term of our business.”

Zuckerberg’s comments came as Menlo Park-based Meta was reporting a $9.4 billion loss from its metaverse project and projecting continued losses. Reviewers have slammed Meta’s new $1,500 headset and its virtual world.

Meanwhile, San Francisco-based Twitter, saddled with $13 billion in debt from Musk’s acquisition, has seen companies including General Mills, Volkswagen and REI suspending ads over content concerns, top Twitter privacy executives quitting, the Federal Trade Commission expressing “deep concern” over user data, and Musk responding with the laughing-to-the-point-of-tears emoji to concerns about the impersonation enabled by his hastily rolled out new $8 user-verification scheme. Last week, Bloomberg reported, Musk told employees Twitter might go bankrupt.

Stanford’s Blank was unsurprised by Zuckerberg’s all-in bid for the headset-based metaverse, noting he led Facebook’s purchase of immersive virtual-reality company Oculus in 2014. “There’s a very consistent vision that he’s been articulating about where he believes the future is,” Blank said. “The question is whether he’s wrong or whether he’s too early.”

Musk seemingly acquired Twitter on a $44 billion whim, but he launched SpaceX, according to a book by former NASA official Lori Garver, because a Russian rocket designer spat on his shoes. “Resentment and anger are sometimes a pretty good motivator for entrepreneurship when combined with an ability to see things that others don’t,” Blank said.

Whether the two CEOs have acted rationally is a different question. Coates sees Zuckerberg’s metaverse ambitions as a logical response to the decline of Facebook. “Zuckerberg is looking at his own business and seeing it may die,” said Coates, calling Zuckerberg’s virtual-reality bid “a semi-desperate approach to find out what comes after social networks in order to fix his business.”

Musk’s Twitter purchase is harder to understand from a business standpoint, Coates said. “My sense is he’s looked at it and said, ‘I can do it much better than you idiots. I’m super rich.’ It fills his ego,” he said. Musk is now “massively mismanaging” Twitter, Coates said. “It is true that it has been badly run. But that doesn’t mean it can be the things that Musk thinks it can be and it doesn’t mean that he understands that industry at all,” he said. “He is exceptional. It doesn’t mean he’s exceptional at everything.”

What also appears to set the two CEOs apart is Zuckerberg’s trust in subordinates to help guide and run Meta, compared to Musk’s firing of Twitter’s previous leaders and reliance on a “war room” of venture capitalists “who generally don’t know the territory,” Coates said. “The sense I have is that Musk is not making the same level of granular but significant decisions at Tesla and SpaceX that he is at Twitter, that he’s deferring to actual experts in car manufacturing and rocket science in a way that he’s not doing at Twitter.”

Richard Hagberg, a Silicon Valley leadership coach since 1979, said seeking out subordinates’ views is a hallmark of successful leaders. “You have to have somebody who tells truth to power,” Hagberg said.

Unlike some CEOs, such as Apple’s Tim Cook, Zuckerberg and Musk present themselves as the public faces of their companies, said Ben Little, co-author of the 2021 book The New Patriarchs of Digital Capitalism. The validation and adoration the two receive as celebrities is part of what drives them, Little said. “They’re playing at being digital frontiersmen — cowboys even — staking claims in virtual space,” he said. However, Little added, “at a certain point this celebrity-driven business model stops being an asset and becomes a liability.”

In this region’s technology industry, change is constant. CEOs succeed and fail, companies rise and fall. Russell Hancock, CEO of think tank Joint Venture Silicon Valley, sees the ups and downs of Musk and Zuckerberg in a historical context. “That’s what Silicon Valley is made of,” Hancock said. “It’s people having hunches, taking risks, making bets.”


(c) 2022 Silicon Valley

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