Mark Zuckerberg says Meta is making this the ‘Year of Efficiency’

During Meta’s fourth-quarter conference call with investors today, CEO Mark Zuckerberg explained why he wants to make this year the “Year of Efficiency.”

“I just think we’ve entered a kind of phase change for the company,” he said, noting that headcount has been growing steadily for almost two decades, making it “very difficult to really increase efficiency while you’re like that growing rapidly.” Now, having laid off around 11,000 employees and hired most of the new hires, he is focused on “increasing the efficiency of our decision making”.

Zuckerberg said this practically means “flattening our organizational structure and removing some layers of middle management to make decisions faster.” As I reported in last week’s edition of my newsletter command linehe put it more bluntly to employees during a recent all-hands meeting: “I don’t think you want a management structure where just managers manage managers, managers manage, managers manage and manage the people who do the work. ” As a matter of fact.

It turns out Wall Street loves austerity these days. Meta’s stock price shot up almost 20 percent after the earnings report with Zuckerberg’s comment was released. The company accepted a one-time charge of $4.2 billion related to the layoffs, the cancellation of some building leases and the exit from costly data center projects. In its press release, it also hinted that more layoffs could be on the horizon: “We may face additional restructuring costs as we continue to drive our efficiency efforts.”

“I don’t think you want a management structure where just managers manage managers, managers manage, managers manage.”

Meta’s core business, serving ads, remains challenged as total revenue fell 1 percent in 2022 compared to 2021. However, Zuckerberg struck an upbeat tone on the conference call, saying comments about the company fell short of the progress he sees internally on key initiatives like the performance of Reels.

And for all the doom and gloom about Facebook’s slow decline itself, the numbers tell a different story; Daily users hit a staggering two billion for the first time in the fourth quarter.

“We’re going to be more proactive about cutting projects that aren’t working or aren’t as important anymore,” Zuckerberg said. For now, that doesn’t apply to its Metaverse efforts, which remain as costly as ever. Reality Labs, the division of Meta that makes its Quest headsets and upcoming AR glasses, reported a $13.72 billion operating loss for 2022. Surprisingly, that number will increase this year.

Ever since Facebook rebranded to Meta in the fall of 2021, investors have become increasingly concerned that Zuckerberg is spending on his Metaverse dreams with reckless dedication and little showmanship. That could still be true. But with this new “efficiency boost,” he might be able to get away with it.

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