Pod Insights Big Technology Podcast Disinflation Begins, Snap's Cultural Roadblocks, Meta's 'Year Of Efficiency' About this episode Ex-Snap and Instagram executive Meghana Dhar joins Ranjan Roy and Alex Kantrowitz for our weekly news recap show. We cover 1) The implications of the Fed's talk of "deflation." 2) Snap's disappointing earnings and operational challenges with an insider's perspective. 3) Meta's wooing of Wall Street and whether its pivot is real or just talk. 4) What the combination of layoffs and buybacks really mean. 5) Downturn as an excuse to kill ESG? 6) AI Hands!
----
Enjoying Big Technology Podcast? Please rate us five stars ⭐⭐⭐⭐⭐ in your podcast app of choice.
For weekly updates on the show, sign up for the pod newsletter on LinkedIn: https://www.linkedin.com/newsletters/6901970121829801984/
Questions? Feedback? Write to: [email protected]
Learn more about your ad choices. Visit megaphone.fm/adchoices
Transcript Speaker names marked ? are inferred from speaking time and the show’s known hosts — they are not voice-verified.
0:00 Alex Kantrowitz? This episode is brought to you by Genesis. What does it actually take to put Agentic AI to work across an entire enterprise? I recently spoke with Genesis chairman and CEO Tony Bates about why orchestration is emerging as a competitive advantage in customer experience and what companies need to get right in the AI era. Then I sat down with Adam Mitchell, head of enterprise business solutions at Voya Financial, to go inside a large-scale Agentic CX transformation, including the business decisions, trade-offs, and lessons along the way. You can watch both conversations now on my YouTube channel today. It's never been more challenging to get frontier compute. How do you know where to look, who to trust, or how much to pay?
0:43 Alex Kantrowitz? Akash is an open cloud that provides easy access, flexibility, and peace of mind. That's how companies like Razer were able to cut their inference cost by 15 times. Visit akash.network/alex for a free consultation. That's akash.network/alex for a free consultation.
1:11 Alex Kantrowitz? Welcome to Big Technology Podcast, a show for cool-headed, nuanced conversation of the tech world and beyond. And boy, am I glad that we now do this Friday show that breaks down the week's news, because we have had a rip-roaring week of news that has seemingly not stopped since the beginning of the week. We've, of course, had Meta, Snap, Amazon, and Apple all report their earnings results. We've had the Fed talk about what their plan is over the next, I don't know, a couple of quarters. And we've had this massive surge in big tech stocks that has been up and down, and there's a lot to make sense of. We're starting to see a little bit about what Facebook and what Snap and what Amazon are looking at as we move into the future, and we're going to break it all down for you today.
1:56 Alex Kantrowitz? Again, this is a show we do on Fridays. It's live on LinkedIn at 11:00 AM Pacific. 2:00 PM Eastern and we also drop it on the feed. So if you're seeing it on the podcast feed, that's why you're seeing it because we dropped the recording there. Of course, if you're here, your questions are welcome. We will take them as we go throughout this conversation. Joining me today, we actually have two guests today. For the first time, the Friday show has two guests. Ron John Roy, of course, is here as always. Ron John, welcome to the show.
2:25 Speaker 01 Hello.
2:26 Alex Kantrowitz? And we have another amazing guest. Megan Adar is here. She is former Snap, former Instagram. So someone who's been an executive at both companies. And when we have questions about what's happening inside them, instead of saying, well, I wonder what's going on inside there, today, we can actually ask, which is amazing. So Megan, welcome to the show.
2:48 Speaker 02 Happy to be here, Alex. Thanks.
2:51 Alex Kantrowitz? So let's get started. The big news of the week, I think the big news of the week, despite the fact that we've had these really interesting situations with the earnings results has been that the Fed seems like it's ready to moderate its rate increases. Instead of doing half a percent or three quarters of a percent raise every quarter, now it's going to a quarter of a percent. And Jerome Powell, Fed Chair, is saying, finally, we're hitting this deflationary moment. Ron John, how did you view the, the press conference this week and the Fed's announcements?
3:24 Speaker 01 Yeah, I think you have to look at the press conference on Wednesday, especially in the context of the jobs number today. And I both would want to be Jerome Powell and not want to be Jerome Powell right now. On one hand, Jerome Powell might pull it off. He might pull off the soft landing, the thing that everyone said was impossible. We're seeing moderating inflation and we're seeing a continued strong labor market, something no one thought was possible. And if he pulls this off, I mean, he's going to be in the Hall of Fame of central bankers. But on the other hand, is this actually sustainable? Again, today, the jobs number showed one of the
4:03 Speaker 01 strong, it showed the lowest unemployment rate since 1969. You have to go back to 1953 to see a lower unemployment rate. The, the US added 517,000 jobs.
4:17 Speaker 01 Which was far, far above what economist expectations were. So it blew the expectations out of the water. So we're in a situation where everything looks amazing, even underneath the actual like top level jobs number, average wage growth was exactly as expected, which was moderate 0.3%. So we're seeing a situation where we might not have inflation, or it will continue moderating and the Fed actually will be in a very good position. So, I mean, Jerome Powell, he might be looking good right now.
4:47 Alex Kantrowitz? Right. And everything that happened with the tech giants, these giant jumps, Facebook going up or Meta going up 23% in one day. No coincidence, I don't think that that happened on the day the Fed reported these, these numbers and held the press conference. We'll get into that in a bit. Rajan, though, I'm kind of curious, and maybe you can help us all make sense of this, because it again seems like we're in this uncanny valley or trying a very confusing point where we have good, you know, we have good news, but we also have the Fed saying there's continuing to stay the course, and they're continuing to raise interest rates into a slowing economy, not a contracting economy, but a slowing economy. And Kelly Evans from CNBC had a great newsletter this week, and the headline
5:29 Alex Kantrowitz? was every landing feels soft at first. Like you initially feel like you're gonna kind of ease into it. And then of course, you look down the line, and there is actual contraction in jobs. We're seeing things like wage inflation come down. So what, what's your view on that? Is that something that we should be concerned about?
5:49 Speaker 01 I honestly think the most concerning part to me is everything started to make sense again, as longtime listeners or readers of the margins will know, the world has been pretty stupid and crazy for the past few years. And things started to make a little more sense. And then suddenly this January, we're back to Carvana is up, I think 85%. We were talking last week Buzzfeed went up 250% off of a Wall Street Journal article about using GPT-3. Bed Bath & Beyond actually missed an interest payment and is going to have to default on their debt potentially, yet the stock went up 35%. So I feel like Jerome Powell is probably just sitting there like, guys, I'm giving you this chance here. We're
6:34 Speaker 01 saying disinflation is around the corner. I'm trying to make this work, and everyone cannot help themselves right now, and is right back to stupidity.
6:43 Alex Kantrowitz? That's right. And the market keeps, keeps rewarding all the, all the, well, I don't know, the big tech companies, tech companies. Kathy Wood is a happy person right now.
6:52 Speaker 01 She, she called herself, what was it? The new NASDAQ, the new NASDAQ on Bloomberg. I can't take it.
6:59 Alex Kantrowitz? Yeah. So, but look, her portfolio is doing pretty well at the moment. So.
7:03 Speaker 01 For one month, for one month.
7:05 Alex Kantrowitz? But hey, you know, that counts for something, especially given where she was. So let's break down a little bit about what's happened in tech right now because it was a very uneven type of month or type of week where you had something like a meta do really well. You had Snap do quite poorly. And I know, Ranjan, you might have some perspective on that, that maybe I'm reading it wrong. But then you also had Amazon go kind of muted, but still not give up its gains on the day, even though it said it's going to have a slow couple of quarters. And Apple, for the first time in seven years, missing earnings expectations. Now, I know Snap is a little bit smaller tech, but I found what they were saying this week to be extremely disappointing. They came in, they said that revenue next quarter
7:48 Alex Kantrowitz? is going to be down anywhere from two to 10%. My perspective here is there's something really sick about Snap. Not just the business is not working in the way that it needs to be.
7:58 Speaker 01 Yeah, I, I, I'll give you my macro view and then very, very excited to hear Magna's view from the actual inside because to me, I've been wanting to be bullish on Snap for a good while where I feel they have all the pieces in place. Again, they have a highly engaged user base and they, their user base is growing, is up 17% year on year. They have an attractive user base, a 13 to 34 demographic. They are the metaverse company more than Facebook is people actually use augmented reality on the platform. But I feel the Snap, the thing, I mean, the execution side clearly is, I think we're going to get into that topic.
8:42 Speaker 01 But what killed me this week is Snap basically was, they missed on revenue, but they beat on earnings, whereas Facebook beat on revenue, missed on earnings. Amazon.
8:55 Speaker 01 Beat on revenue, missed on earnings, trying to keep everyone kind of hit one, missed on one. Everyone's guidance was either flat to slightly weak. Amazon guided slightly lower, Facebook guided flat, and everyone celebrated like this is the greatest day ever and we can get into why I think that is, but but overall Snap really got destroyed on the day after earnings and were down 11% that day, but are actually up to where they were before. And I think it's more just this narrative that, again, the big tech companies, all they have to just show is that they'll just be somewhat consistent and everyone's happy, whereas Snap has to really still show that they can, you know, transform their entire business.
9:36 Speaker 01 And so the question is, can they? And that's, I think, where Megna, I'm sure, has some respect.
9:41 Alex Kantrowitz? Yeah, let's put it to Megna. So Megna, talk a little bit about what you did inside Snap and how you view this situation.
9:49 Speaker 02 Yeah, well, first of all, happy to be here and thanks for having me. So most recently, I was leading the global brand partnerships team at Snap. And so really, this idea of trying to build a business ecosystem on Snap and kind of got a firsthand view of kind of how the company works and where it was going. I've now left, and so kind of a little bit of an outside in view, kind of piggybacking off of Ranjan, is look, I think there's the obvious stuff, right? Like first, it's really hard to be number three or four, fighting for eyeballs in a very niche demographic, right? It's primarily Gen Z, not to mention the ad tech doesn't really work. Snap is often going to be the first platform to go
10:32 Speaker 02 for marketers' budgets, right? So so there's that reality. There's iOS 14, the changes there impacting the ads' algorithms. And then there's COVID, the over-hiring and the layoffs, right? So like that stuff, we all know that's foundational. But kind of my take on it is, I think, you know, Snap's a brilliant product and I think it has so much potential, you know, the stickiness, the engagement, the ephemeral messaging, you know, it broke boundaries, it changed the world in a way, it really changed how teenagers, people interacted with each other, not to mention AR technology and that kind of groundbreaking tech behind it, right? However, something's not working and why isn't it working? And I think everyone's scratching their heads on it.
11:16 Speaker 02 And my point of view really comes down to execution. You know, having worked there, you know, having a great time, um, learning a lot and having, um, really a ton of respect, I'd say for the product and designers in the company. Things didn't really work. And I think that's kind of a conundrum that you might see across tech, right? There's this focus on product visionaries. The valley has always rewarded product visionaries companies, you know, groundbreaking technology has been built around product visionaries. But then who are they going to hire around them to actually build a business? And I think that gap has not been filled at Snap.
11:55 Alex Kantrowitz? Yeah, so you wrote on a post on LinkedIn this week. It's well known that Snap has never had a strong or long lasting COO. This fact in and of itself is demonstrative of a palpable operational gap in the org. And then you have what I have up on screen here, which is, uh, you say that product strategies disappearing are disappearing on Snapchat, like a Snapchat.
12:17 Speaker 02 I thought that was a good one.
12:18 Alex Kantrowitz? That's a good one. I like that one. Yeah, acquisitions occurring randomly and without proper integration, staying separate and stagnant, groundbreaking technology unable to break ground because of a lack of a go to market support and ad tech remaining mediocre and returns on ad spend diminishing, which is all, all seems to track with what we're seeing. So can you talk a little bit about, about what it was like inside the company? I mean, bring us in as someone who was trying to get stuff done inside the company. What were you running into and how has that held Snap back, especially from a business standpoint?
12:52 Speaker 02 I think you come into this problem at Snap and, you know, arguably it's kind of the framework under which tech companies are born and raised, which is product first, product first, product first. That's not a bad thing, right? Like product inherently can be groundbreaking, revolutionary, change the world. But then product and design alone, it's like, let's put it this way. If a tree falls in the forest, right? So if the product and design is really breaking boundaries, that's great. But then how is it getting to market? How is it reaching your audience? And like, what are the business infrastructures around that product to actually make it a business? Right? And this is kind of what I saw. Great ideas, smart people, truly creative design.
13:38 Speaker 02 But a fundamental gap in operations. Now, I kind of highlighted on LinkedIn, that's operationally built into the company from an org standpoint. But additionally, it sees itself in kind of strategies coming into existence, really good strategies coming into existence, and not being able to see the light of day because of that organizational gap.
14:01 Alex Kantrowitz? Why is that? What is going on inside Snapchat that's causing such a problem? I would imagine, I'm just going to take a leap here, I would imagine that you have this product-focused visionary, Evan Spiegel, but he hasn't installed a Sheryl Sandberg-type operational person to get that operationally working. How far off am I and what is actually happening inside that company?
14:21 Speaker 02 I love the Sheryl analogy because, look, I really think Mark and Evan both are true product visionaries. They changed. You know, the internet broke the internet in the way they built and the products they designed. It kind of goes back to Lincoln's team of rivals, right? You have this pure product vision and like, who are the people you're going to hire around you to actually get that product to market? And so, you know, Mark hired Sheryl, hired people to make Facebook and take it from a product into a business. And one thing I'll say, and the reason I bring up the team of rivals, is a true product visionary never wants that product vision to become impure, right?
15:03 Speaker 02 And inherently, any businessperson is going to have to make it impure to monetize it, right? So it's a little bit of like that balance where it's like, you have to sacrifice a little bit of that purity to actually run a business, and I think that's the gap we're seeing at Snap, candidly.
15:18 Alex Kantrowitz? And what happened with the ad tech? I mean, you know, obviously, the impurity is always something that like, well, that comes with advertising and advertising is the business. So... Yeah, I'd love to hear your perspective on why they can't get their act together on advertising technology, why they have ad reps leaving.
15:40 Speaker 02 I mean, listen, I don't think I have a great answer for you, but I think it's a combination of things. I think the first thing is, again, that operational gap. You can have all the great ideas, the greatest engineers in the room building, but how is that being taken to market? Second, when you inherently have a smaller pool of advertisers, right? It's just a very small pool of advertisers and quickly diminishing, again, because Snap's demographics are small and, you know, it's a niche demographic, people are going to drop it first. So then your inputs are smaller, right? So it's kind of like a little bit of a vicious cycle.
16:16 Alex Kantrowitz? And that's what I heard. I spoke to one advertiser this week and was like, what do you think about Snap as we were heading into earnings? And they were like, still for teens. And I was like, okay, well, if you have Facebook better ad tech, that you have Facebook that has much broader segment of the population, Facebook's going to do better.
16:33 Speaker 01 What do you think on the product side has prevented it from expanding outside of that demographic? Because, because again, out of my friend group, no one really uses it. But when I do use it, everything, I mean, and everyone I know who's younger does use it as their primary means of social communication. What stopped it from actually breaking out of that, that, that age range?
16:56 Speaker 02 So, well, first of all, you're absolutely right, Ranjan. Like even the data will show looking back that I think it was something like a 12 to 21 demographic people. And I remember I mentor groups and undergrad and all of them would raise their hand, we use Snap, we use Snap, we use Snap. Senior year comes, they graduate, we no longer use Snap. So it was clearly like they were aging out of the app and we saw that over and over again. And why? I think Snap is kind of built inherently to be a little weird, right? Like it's fun, it's created the UX is a little hard for people like us to use, right? It's a little different. And that's kind of the joy of using Snap, right? It's kind of a niche app that teenagers think is their own little world. And my point of view is they should
17:41 Speaker 02 be doubling down on Gen Z versus pushing it, pushing it up to millennials, because that's a hard sell unless you do real core product changes. And the core product is the one thing that's working right now.
17:55 Alex Kantrowitz? I just want to ask one more question about operationally, what it was like. I just want to hear your perspective, what it was like when you were inside that company and you saw product strategies disappear. What happened?
18:11 Alex Kantrowitz? Did they just not get approval? Did they get approval but not budget? Was there middle management there?
18:19 Speaker 02 Look, I really don't think there's like one clear thing, right? I know this isn't what you want to hear, Alex, sorry, but like I'm being honest, right? There's not one clear answer for it, but what I can say is people were smart. Ideas were happening, right? Like good ideas, good product roadmaps were built, but there was a gap in operations. And I feel like I get frustrated with the narrative here right now saying Snap isn't innovative. I actually think they're very innovative. I think there's a very clear operational muscle lacking in the organization. And like, I hate to be the MBA talking about business processes, but like business processes matter, you know? And I think it's really that fundamental before we start talking about iOS 14, revenue, all of that stuff.
19:04 Speaker 02 It's like a fundamental issue.
19:07 Alex Kantrowitz? Right. And sometimes you just need that champion at the top to say, okay, whatever it takes, we get this done. And if that leadership isn't there, then stuff doesn't get done, doesn't get pushed through, doesn't get the resources. And next thing you know, you're trying to explain to Wall Street why your revenue is going down because your product team couldn't build fast enough to bring in ads in a new world brought about by Apple.
19:31 Speaker 02 That's exactly right, Alex.
19:34 Alex Kantrowitz? Ronjo, do you have any other questions?
19:36 Speaker 01 No, I think, I mean, to me, the thing I like to hear there is it's not that it's not an innovative company. Because again, it's, it still blows my mind that they basically, I mean, they did invent the stories format.
19:51 Speaker 02 They did.
19:52 Speaker 01 They invented the lens. They basically owned augmented reality for a while, but that was, that was years ago. And they really haven't developed beyond that. And on the ad tech side, you know, and we're going to be getting into Meta. Meta. Supposedly is showing that they're actually combating iOS 14 and the lack of the tracking changes and are using AI machine learning modeling to build new systems to actually be able to combat that and Snap, nowhere in their earnings call did they, they talked about their conversion API and how, which everyone has right now, but they didn't actually get into what their big grand strategy is to change their performance ad marketing.
20:34 Speaker 02 Yeah, you know, when I was at Meta, we were talking about iOS 14 before iOS 14 was there, right? Like, we were preparing, there was Cappy, there were things we were thinking about. I mean, in a way, Instagram shopping was a hedge against iOS 14. And I'm happy to go more into that if that's interesting. But, so I think that there is a level of operational prep work and like cushion built into the company to actually be having these conversations. Whereas if you don't have those structures in place in Snap, you become a reactive business, right? You're just taking things as they come and maybe thinking about the future, but not actually being able to prepare for it.
21:12 Alex Kantrowitz? So, we'll definitely get into the Meta stuff, but I have one more question for you about Snap, which is, what do you think the future is here? I mean, you're, you're really correct in pointing out that it's coming to advertisers after Facebook, after Google, in some cases after Amazon, maybe even after Twitter. I mean, Twitter makes more money per user than Snap does.
21:31 Speaker 02 Sure.
21:31 Alex Kantrowitz? So, where exactly is, is this company going to go? Because on, on one hand, the money, the money is bad, right? The money situation sucks for Snapchat. On the other hand, this thing is growing about as well as any consumer app you, we have out there outside of Facebook, right? It went from 363 million users to 375 million. I think this is daily active, where you look at, you look at Twitter, Twitter is like pushing 100. So, what do you think is the future?
22:01 Speaker 02 I'm op uh I'm cautiously optimistic. I think that Snap is a beloved. Was that is that like the most pop out?
22:08 Alex Kantrowitz? That was such a good hedged. Yeah, exactly. What do you really think, Megan?
22:13 Speaker 02 I can go like yes or no, whichever way I feel. Um, listen, I think that the product is beloved, truly beloved. The stickiness, the engagement that you see with Gen Z is truly unrivaled, right? Perhaps only by TikTok. So I think there's that. But the cautious part comes in because if you're not able to do anything with it and innovate on top of it or grow that revenue in some meaningful way, like it doesn't really matter. It goes back to like the tree falling in a forest analogy. Like you can have the stickiest, you know, product ever, but if it's limited to that demographic, it's not really growing, that demographic is not becoming more monetizable because of your ad tech issues. You run into a tree falling in the forest and it doesn't really matter.
22:59 Alex Kantrowitz? Right. I want to end this segment with a quote from Michael Nathanson, uh, who's an analyst analyst at Moffett Nathanson. And I realize in the newsletter this week, I didn't even finish my description of this quote, but it's the quote of the week. And he says, Meta ate Snap's lunch because Meta is a shark and Snap is a minnow. Now, the bull case for the app depends on Snap doing to TikTok what Meta did to it. And personally, I just don't see that happening anytime soon. We're here on Big Technology Podcast. We have two great guests with us. Ron John Roy of Margins is here with us as always on Fridays. And Megan Adar, who you're hearing for who you're hearing from is the former Global Head of Partnerships at Snap and the former Head of Partnerships at Instagram Shopping. So as we talk through
23:42 Alex Kantrowitz? this, is definitely someone, she's definitely someone who knows what she's talking about in this world. Again, if you're watching with us live, and we know there's a bunch of you here, your questions are definitely welcome. So feel free to drop them in and we will get that get to them when we see them. We'll be back right after this talking about Facebook or as they call it Meta. And then we're going to talk a little bit about AI hands. And maybe I can get some Mr. Beast content in here. It'd be good for TikTok. All right, back after this. This episode is brought to you by AVPoint. Everyone's racing to roll out AI right now. Co-pilots, chatbots, agents doing real work. But here's the part nobody loves talking about. All that AI runs on your data. And most teams have no single way to see it, secure it, and prove it's under control.
24:27 Alex Kantrowitz? That's exactly what AVPoint does. For 25 years, they've been the trusted layer beneath the world's most demanding data, now extended across your entire AI estate. Your data, your cloud, and the agents acting on your behalf. It's how more than 28,000 organizations deploy AI with confidence. So innovation scales without scaling risk. AVPoint, the unifying trust layer for AI. Head to AVPoint.com to see how enterprises deploy AI with confidence. Learn more at AVPT.co/bigtechnologypodcast. That's AVPT.co/bigtechnologypodcast. Violent threats against executives are growing at an alarming rate.
25:12 Alex Kantrowitz? When a company experiences backlash, executives are the first people blamed. When their address and other personal details are sitting online, this backlash can lead right to their front door. The team at Ironwell knows this better than anyone. They've protected some of the most targeted executives and individuals on the planet for almost two decades. As a wide-glove enterprise security service, they protect your people with continuous personal data removal, proactive prevention tools, and human-led emergency support. So when someone goes looking for your executives, Ironwell ensures they hit a dead end. So here's what to do. Go to ironwell.com/bigtechnology, fill in the quick form, and request your free risk assessment. Their team will show you just how exposed your executives are and how to lock it down before a threat reaches their front door.
25:57 Alex Kantrowitz? That's ironwell.com/bigtechnology. Learn how to stop online threats before they become real-world attacks. The link's in the show notes.
26:09 Alex Kantrowitz? And we're back here on Big Technology Podcast Friday Edition. We're breaking down the news, of course, big week of earnings. Every company in the big tech world reporting, well, except for Microsoft, but Facebook, Snapchat, Apple, Alphabet, they're all, they're all telling us how they're doing. We got the Fed chiming in. And the darling of the week really was Meta. Meta reported not unbelievable earnings, right? They had, you know, they, they narrowly beat on revenue and guided
26:41 Speaker 01 Missed on earnings.
26:42 Alex Kantrowitz? Missed on earnings guided flat for next year, yet they, they were the absolute most beloved stock on the market this week and almost single-handedly changed the narrative around their company in one earnings call. I mean, I think Jim Cramer was calling it like a generational earnings call or something like that, which is pretty impressive, given that the numbers weren't impressive. So let's talk a little bit about Meta. Ranjan, you, you had a perspective on it this week. I mean, what has made Meta stand out in the way that it has that others haven't been able to do?
27:16 Speaker 01 I hate to agree with Jim Cramer, but I will agree that this was a generational earnings call. So for me, the numbers were meh. Like, I mean, they, they were fine. They, I don't think they were, they were actually very similar to Snap's for the most part, other than the guidance. However, I've been waiting for this moment for a while for Mark Zuckerberg to quietly, but definitively deprioritize the metaverse. And I think he did it. And I think he did it in an amazing way. First of all, in the actual earnings release, in the intro, he doesn't even mention Metaverse. He talks about AI reels, content discovery. I did a search 29 times, he says AI, seven times, he says Metaverse. He
28:00 Speaker 01 Before even mentioning the metaverse says, we want to be the leader in generative AI and AI recommendations. And then my favorite part, when talking about successes about the metaverse, he bragged about having 161 million people use WhatsApp digital avatars. That is the metaverse he's talking about right now. But he made a good point. I mean, and again, this is like a snap bit emoji, or you know, just a, everyone has these. This is not some fancy metaverse wearing a helmet type thing. And he's using that as an example of success. So I think he's saying it right now. He's like, we're getting back to the core business. And AI obviously is the hot topic of the day. And Facebook is well positioned for it,
28:44 Speaker 01 as you and Jan Leukun discussed the other week. So I mean, that conversation feels even more relevant right now. They are saying, we have been working on this. We're a leader on this. This is core to our business, and that's what we care about in our quote unquote "year of efficiency," which is what they titled their management philosophy for the year.
29:06 Alex Kantrowitz? So I will-
29:06 Speaker 02 Sounds like some expensive consultant-
29:08 Speaker 01 Yes.
29:09 Speaker 02 Right?
29:10 Speaker 01 I read that, and I was like, there's a lot of workshopping and testing on that one.
29:15 Alex Kantrowitz? Okay, but I want to push back on this, Ron, Jenna, and I totally hear you. But I also think that, yes, in the top of the earnings release, you have Zuckerberg saying, okay, it's a year of efficiency. We're going to work on generative AI. No meta in the beginning. However, if you look at the actual numbers on the quarter, the company lost another 4.28 billion on the metaverse last quarter. And that's 13.72 billion in 2022. Nearly $14 billion on the metaverse, and it accelerated in the fourth quarter. That, to me, doesn't seem like a slowdown. The company is still called Meta, and the expectation is that they're going to lose even more money this year. So, yes, he did a good job talking to Wall Street, but my understanding is Wall Street
30:00 Alex Kantrowitz? actually reads the numbers as well as the words. And so how do you square that with this hypothesis that you have?
30:07 Speaker 01 Yep. So Meta Reality Labs, which is the big money loser, also includes all their work around artificial intelligence research. They don't break out what is going to the future Metaverse platforms in us all not having legs in a virtual office room from the good generative AI stuff. So the research that is in there that's been pushing all of these product changes around content recommendation, that lives in there as well. So I think to me, my, the bull case is more and more they're diverting that spend where they're comfortable losing money towards generative AI and other AI and quietly, you know, going head to head with Microsoft, who's the cool kid of the moment right now in the space. But also, I
30:51 Speaker 01 think it's more just hearing the words from Mark Zuckerberg's mouth year of efficiency. And again, those consultants probably paid off because all he had to do was just say it. For so long, everyone's just been waiting for him to say refocus, efficiency, cost cutting, and he finally did it. So I think that's what everyone's paying attention to.
31:13 Alex Kantrowitz? You think Wall Street is that easily persuadable? I mean, how does saying year of efficiency like 20 times lead to the generational call of earnings call of your life?
31:22 Speaker 01 Did you see the Tesla earnings? I think, yes, I think Wall Street is easily that persuaded by narrative.
31:30 Alex Kantrowitz? Okay, interesting. I mean, I'm going to throw in two different variables and see how much you think that, because I think these might have also played a big role. I think the fact that this came out on the day that the Fed kept saying, you know, the same day Mark Zuckerberg is saying year of efficiency, the Fed is saying disinflation, right? I think that plays a major role. The other thing is there is a fundamental difference between, and maybe, maybe you're gonna push back on me here, but. There's a fundamental difference between what Facebook did, which is it beat the it beat revenue or revenue expectations in the call and Snap basically matched them. And then also Meta's guidance might have been a little bit, little bit down, but it's got, no, Meta's guidance was flat.
32:13 Speaker 01 Flat. Snap's was down.
32:14 Alex Kantrowitz? Snap's was down. And this, if this is all about momentum and expectations, then Meta has a story now and a narrative that's accompanied by facts with a moderating Fed and, and revenue that it can continue to hold in the face of iOS 14 changes that don't allow it to track. Whereas Snap is in a boat in the middle of the sea without an oar and that narrative is falling apart for that company. What do you think about that hypothesis?
32:39 Speaker 01 Yeah, no, no, hold on. I, I actually would agree with you here. I think I would say, no, I would say that was the most powerful part of the narrative is that Facebook by beating on revenue, showing we can still grow even in this, you know, very bad environment. Cause again, all they have to do is just turn off that money spigot that's going to the metaverse and suddenly those earnings look a lot better. So they have pure control over their financial future, whereas Snap, as we've talked about, on the core part of their business, the performance advertising side, again, it was up plus 4% on the direct response side, but overall, no one has any confidence in their core business. So I think, I agree. I think that's the difference there. And as you
33:20 Speaker 01 said, and let's just note, Snap is right back to where it was before their big disastrous, horrible earnings call. It's right back there. After this Fed meeting, Meta happened to report on the day of the Fed. So yes, I think the animal spirits might've played a role here too. But, but I, I'm very curious for Magna's side, how you, what, what your perception of is, is Meta, have they figured out the iOS 14 problem? The IG shopping you brought up is one potential head, which it sounds at least publicly that they've been deprecating a little bit. You had written on this, like, have they figured out their way out of this, uh, this hiccup in their trajectory?
34:04 Speaker 02 I mean, if you really think about it, they're probably the most ahead of the game versus the other platforms, but then is that still an enviable position to be in, given iOS 14? Not really, right? And like, I mean, this is foundational, everyone knows this, but like, why is Mark investing in the metaverse, right? It's the rails of his own universe. He can't control the rails here. He wants to focus on the metaverse. It all kind of adds up, right? You know, with the losses in Reality Labs, what, like $4.2 billion, consistent draining of the money? Like, it kind of makes sense that he's walking it back, but do I think that that's actually going to be deprecated? No way. I think that that's a long-term investment.
34:45 Speaker 02 He's just learning that he has to position it a little better, because it's not plausible for the rest of the market. Now, in terms of Instagram shopping, I think Instagram shopping was a brilliant little strategy, right? If you think about it, there is so much opportunity with e-commerce, and Asia cracked social commerce, and I think Instagram was best positioned in America to crack social commerce as well. So there was that angle to it. Added revenue, GMV, changing the business, right? Becoming the super app. But then there is also the checkout angle to iOS 14, right? And the checkout angle is really important, because it gives them the audience data that they lose with iOS 14, and that
35:30 Speaker 02 was the real strategy.
35:31 Alex Kantrowitz? Yeah, so just explain that, because... Yeah, that's a good point. If, let me take a hack at it. If someone clicks through an ad on Facebook and lands on another page and buys, now because of those iOS 14 changes, Meta has no idea if they bought or not, so they're not able to optimize the ads. So this is the push, is to bring shopping within the app. Am I getting that right?
35:54 Speaker 02 And if you, yeah, you got it, exactly, right? So you are consistently on Instagram losing traffic, right? Because people are driving to their websites. They can no longer traffic or track that traffic, if you will, right? So now they lose an audience to which they can retarget ads, right? So that's kind of the foundation. Now, with Instagram checkout, you win a lot of things, right? You get a take of revenue, you get some GMV going, but most important, so it's how much you sell on a platform.
36:29 Speaker 02 So you get kind of these new revenue sources on platform. And on top of it, you now have like PII data, right? End to end PII data that you lost through iOS, but also data that you never had before, like processing payments. So now you have not just that data, but a new audience and a new way to retarget that audience that shopped on Instagram. I'll pause there. Does that make sense?
36:56 Alex Kantrowitz? It does. I'm going to ask a question here.
36:58 Speaker 02 Yeah.
36:58 Alex Kantrowitz? I spent a long time as a beat reporter covering the ins and outs of Facebook. And I remember going into the Menlo Park headquarters as, you know, as long as eight years ago and hearing from them about the social buy button and how that was the future. And, okay, that was a time where they weren't pressed to do this because they could still track checkouts.
37:19 Speaker 02 Sure.
37:20 Alex Kantrowitz? Because it was before the Apple changes, but it just never worked. And Twitter also had a same thing. They had a, they tried to push social commerce. That didn't work. I'm curious if you saw anything inside the company that would give you faith that this will work this time. Maybe it's desperation. I don't know. But what did you see inside Facebook to make you think that it's possible that people will actually decide they're going to see a product and then buy it within Facebook or buy it within Instagram?
37:48 Speaker 02 Two answers for you. One is there was organic user behavior that birthed this product, right? People were interacting with brands. I think like 80% of people on Instagram follow a business, right? People are commenting on businesses. Hey, like, tell me more about this product. Can you DM me a link? And then you lose that traffic. So there was this behavior on platform already that made a product like this enticing to Instagram and Facebook, right? So that's like number one. And then number two is the theory I kind of wrote up on LinkedIn about, which is, listen, they're trying to do a lot, you know? And the Kevins, you know, back in the day, the founders of Instagram, and they were still there when I first joined, they used to talk a lot about focus, right?
38:33 Speaker 02 Like being disciplined about how you grow the app and what features you build. And I think that was their legacy, right? After they left, it It kind of like catapulted into a super app, right? Like, let's throw on reels, let's throw on dual facing camera like B reels, let's throw on IG shopping, let's just throw on a bunch of things and see what sticks, spaghetti on the wall kind of thing. And I think when you lose focus, you have to kind of decide how, how much revenue you can actually attain for that lost focus. And I think like those two are competing interests that Instagram is running into now.
39:12 Alex Kantrowitz? Oh, my God, I'm just remembering how many topics we want to cover today. So, but the word focus brings me back to one of them that we want to. So Andrew Bosworth, who is the head of Reality Labs, wrote this kind of unbelievable post. I mean, it actually makes sense, but the, just the way it's written is like, what are you talking about, man? It's called focus. And in it, he's talking about how when Facebook was a younger company, the beautiful thing about it was that it focused. And then as it got bigger and more successful, it would start saying yes to things. The example that he gave is charity and which they would never do because they were like, we'll make the world better with our product. And he said, he's talking about how the company needs to return to focus. I'll read like a quick selection from it.
39:55 Alex Kantrowitz? He says, "Each individual digression from our core competency like this can probably be positively, be measured positively on ROI when considered locally, but I believe they collectively add up negatively. There are hundreds of them, each individually, individually reasonable, but they take people and money and all together, they start to outweigh the core and create drag. I pick charitable giving not to suggest we should change anything about that program necessarily, but rather because it is an example of what seems like an unalloyed good, which nonetheless has a hidden cost at scale." What he's saying is the company needs to focus. I think that, and Ranjan, you brought this up in a text message to me, so I want you to riff on it.
40:36 Alex Kantrowitz? I think that conceptually this makes sense, but Facebook and Megan, you hinted at this is like one of the most unfocused companies that you can you can ever come across in the tech world. And it's potentially this kind of like weird, unself aware statement that Boz is making because potentially his division, the Reality Labs is is the unfocused part of the company.
41:01 Speaker 01 Alex sees me jumping at the microphone.
41:04 Alex Kantrowitz? That's your thesis around John. So why don't you expand?
41:07 Speaker 01 Okay, two things on this. One, as you said, the lack of self awareness when it's your division that is the poster child for the lack of focus, where instead of having owning commerce and focusing on that, again, we're putting on the vision is putting on helmets and that type of metaverse. The other thing I found really interesting in this, and I've been seeing this more and more, actually connected to this Axios communicators and their newsletter had a whole piece about how CEOs are going more silent around ESG and DEI initiatives. My hot take here is that in our post Zerp world, a lot of companies, you're going to start to see
41:51 Speaker 01 the true character, everything that they were talking about a few years ago. And you're seeing it more, especially in tech, that people are saying, you know, rather than blaming their own management decisions, rather than blaming their own lack of focus, charitable giving, the fact that that was the chosen thing. ESG, the BP CEO the other day said they're going to be cutting back on renewable energy efforts because they're just not paying off, totally moving away from renaming their company beyond petroleum. Now that times are a little tough and suddenly there's economic pressure. So, so I think you're going to see a lot more of the technology world, the corporate world, change the way they were speaking about a lot of things over the last few years.
42:36 Speaker 01 And I think this is the perfect encapsulation of that.
42:40 Alex Kantrowitz? Well, there's one more point that I want to bring up. By the way, last call for questions because we've got like five, we have like five minutes left and then we're gonna go. But I wanted to bring up that there was this other thing that's happening, which is that people are saying maybe this entire move towards layoffs was not entirely Wall Street driven and part of it was a way to recapture power over employees. There was a article by Brian Merchant in the LA Times that talked about this. And at first I was skeptical because I was like, no, of course, Wall Street does need to see these cuts inside these companies. But then when you combine that with what, a $20 billion share buyback with Facebook?
43:20 Speaker 01 Forty authorized.
43:22 Alex Kantrowitz? Forty, right, authorized. So they haven't done it yet, but you authorized that. You've you've cut layout, you've cut all these employees to cut costs and now you authorize this massive buyback. And it's like, well, maybe this is a moment where a lot of these social causes that have been baked into the companies are now going to be stripped out with the excuse that, okay, it's it's tougher times. So Megan, I'm curious what you think about that.
43:45 Speaker 02 I mean, I'm super aligned, Alex. I think they're using it as an excuse to trim fat. Even companies who aren't in financial trouble are doing layoffs now. So it's kind of like the trend of the season, you know, spring 2023, if you will. But, you know, my take on layoffs in general is, you know, it's obviously a very hard time on people and, you know, especially people who need healthcare or need visas, et cetera, et cetera. But I actually think this is going to be healthy for the market. I think that, you know, the the trend we're seeing are these big platforms not doing too hot, pulling back, over hired, pulling back now, looking at core product, right? And I think what that really means is they're
44:27 Speaker 02 forsaking some real territory in the innovation field. And there's going to be a lot of innovation coming up with not just the talent that was let go, but you know, people at these companies who decide to leave and build because there's clearly market value and like a value prop to be built. It's just that the platforms aren't doing it.
44:44 Alex Kantrowitz? I that sounds right to me. And having been inside the company, what do you think about this thesis that it's the end of charitable giving and ESG and employee resource groups now under the banner of of hard times?
45:00 Alex Kantrowitz? Or is that a little bit of an oversimplification?
45:03 Speaker 02 I, yeah, listen, I think it's a little reductive and you know it. And I think it was, I think it begs the question on whether you think corporations are inherently evil or good. Um, I think share, uh, corporations are just driving value for shareholders. So like, I'm not surprised at all.
45:21 Alex Kantrowitz? Okay, great. We have one question here, or really a comment, right? From Jafari Khalid, he says, just to piggyback on Dara's comments, product strategies are disappearing. It was very evident recently when OpenAI and ChatGPT were reported on by the mainstream media that all of a sudden, big tech companies jumped on the bag wagon, bandwagon on AI. Never seriously reported on their product strategies, seriously incorporating AI. Are they, are they serious now? Or is it just a bubble and will it be over soon? My perspective is it's definitely serious. And this has been like, like Jan has been talking about, um, Jan LeCun, who was on last week. This has been under development for a very long time inside these companies. And the question has always been, do they have the guts to do it?
46:06 Alex Kantrowitz? And now OpenAI has cleared a path for them to do it in a way that would have been difficult for them otherwise. But I'll step out of the way and curious what you guys think.
46:15 Speaker 01 I mean, to build off of that, what Megna was just saying around how the refocusing, the year of efficiency, whatever it's being, whatever we want to call it, will create a whole new, you know, era of innovation. I completely agree because I think a lot of what these companies did was defensive. A lot of the markets they went into, a lot of the products they launched. Again, when every company is in everything, whether it's media, music, video, uh, messaging, commerce, whatever else, it was just to head off some other competitor or because one of the other big giants was doing it, they did it as well. And I think that we're not going to see that anymore. And I think that's going to be incredible for startups, especially kind of mid to late stage startups
46:59 Speaker 01 that never really could, you know, hit that rocket fuel growth path because they were hampered by the big technology companies. So, so I think that, I think from that perspective, kind of the reshuffling of resources to smaller companies, I think is a very good thing.
47:18 Speaker 02 I mean, plus one, right? Like, I think it's just healthy for the ecosystem, and I think it's about time that the little guy had a shot. So I'm going to be very interested in leaned in to see the kind of innovations that are built in the next 12 to 24 months.
47:31 Alex Kantrowitz? Now, if only these companies can get the AI hands correct. And there's this, just to end on this, there's a great story in BuzzFeed talking about how they have no idea what hands are supposed to look like, and they always botch them when they try to draw them, because they don't have a perception of the real world, and hands are photographed weird, oftentimes not in photos, oftentimes with digits being hid, and these AI systems just can't get the hands right. And once they, if they can't get the hands right, you're, you wonder how, how smart they are. I mean, let's just end. AI hands are weird. Any thoughts about that, guys?
48:08 Speaker 01 I think it's, it is the perfect representation. I'm guessing it's going to be continued as kind of a meme, like, way to explain this really difficult thing in a very simple way, because it's true, anyone who has used Dolly, sometimes you get some weird stuff, especially if you use stable diffusion and go to the kind of cheaper free models, you get even weirder stuff, people's heads kind of turned in different ways, or just things that don't make sense. And I think that we're going to see more and more of that as everyone rushes towards generative AI and thinking that they're going to get this easy way to do incredibly, incredibly difficult tasks and challenges, they're going to realize that, no, a lot
48:49 Speaker 01 of things actually don't work that well. Yes, you can write a poem in the style of Shakespeare about Jerome Powell or whatever else, but, you know, to actually solve really specific problems, there's a lot of stuff that unless the training data is there, it's not going to work.
49:06 Alex Kantrowitz? So, yeah, Megan, why don't you take us home? Have the last word?
49:09 Speaker 02 Take, take us home. Um, listen, I think we're just in the beginning of generative AI, and everyone's saying it's overhyped, but I'm here to say it's even more overhyped than overhyped. This is just the start. And so there's a real, real long way to go, and I'll be curious to see what Microsoft does to actually grow, grow the business and incorporate it into real products to drive real value.
49:33 Alex Kantrowitz? Okay, great. Well, thank you, everyone, for joining. Thanks for all the folks here in our live audience. Thanks, Megyn, your first podcast ever. Yeah, thank you. Amazing. Coming on. Ron, John, great to see you as always. Thanks for joining us. Thanks to all of you, the listeners. Thanks to LinkedIn for hosting us here and having me as part of your podcast network. Really appreciate it. And we will again be back on Wednesday with a conversation with Joe Caparozzo, the president of Whistle Sports, Kaya Yuriev, who is a reporter for The Information, asking if the creator economy was a farce. I'll just tell you right now before we sign off. I've turned on monetization on YouTube Shorts just to see what type of money
50:15 Alex Kantrowitz? I'd be getting paid out. And I got one cent, no, two cents off of 18,000 views. So Oh, my God. Welcome to the creator economy. Exactly. So I'm excited to have that conversation. And then next week, we'll be back on Friday, again, going over the week's news and taking your questions, 11 a.m. Pacific, 2 p.m. Eastern Time, on LinkedIn, on YouTube, and then back again on the feed. Hope you're enjoying these new shows. It's been amazing seeing the engagement and the the average listen times on them. It's been great to bring them to you every Friday. And we'll keep doing it. And and you stay there and we'll keep coming back. All right, everyone. Thanks again. And we'll see you next time on Big Technology Podcast.
51:04 Speaker 03 Now, more than ever, we need someone on our side. But Rob Whitman? Whitman's votes drove up costs, cut Medicaid, and risked 350,000 Virginians' health care to pay for tax breaks for himself and his donors. He's not on our side. Shannon Taylor will fight corruption, cut taxes, and bring down costs. This November, vote for Shannon Taylor. She's for us. Paid for by HMP, the HouseMajorityPac.com, not authorized by any candidate or candidate's committee.
51:33 Speaker 04 In this life, you can't win.
51:35 Speaker 05 When the world gets you down.
51:36 Speaker 04 No!
51:37 Speaker 05 Escape to Pluto TV.
51:39 Speaker 04 This is objectively fantastic.
51:40 Speaker 05 Relax into the movies and shows you already know and love, all for free.
51:44 Speaker 04 Schwing!
51:45 Speaker 05 Even our news is uplifting.
51:46 Speaker 01 You stay classy, San Diego.
51:48 Speaker 05 Watch School of Rock, Crazy Ex Girlfriend, Anchorman: The Legend of Ron Burgundy, The Ex Files, Wayne's World, and so much more.
51:54 Speaker 01 We're not worthy!
51:55 Speaker 05 The best things on TV really are free.
51:58 Speaker 04 You just have to know where to look.
51:59 Speaker 05 Escape to Pluto TV. Stream now, pay never.
Previous What's Next For CNN — With Brian Stelter Next Was The Creator Economy Way Overblown? — With Kaya Yurieff and Joe Caporoso Page updated October 13, 2026 · transcript and summary are machine-generated
