Mark Zuckerberg Says Meta Makes It “The Year of Efficiency”

During Meta’s fourth-quarter earnings 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 kind of a phase shift for the business,” he said, noting that headcount has been steadily increasing for almost two decades, which makes it “very difficult to really increase efficiency as you grow so rapidly”. Now, after laying off about 11,000 employees and pausing most hiring, he is focused on “increasing the efficiency of how we make decisions.”

Concretely, Zuckerberg said it 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 line, he said it more clearly to employees at a recent town hall meeting: “I don’t think you want a management structure that is all about managers managing managers, managing managers, managing managers, who manage the people who do the work.” In effect.

Turns out Wall Street loves austerity these days. Meta’s stock price soared nearly 20% after it released its earnings report with Zuckerberg’s comment. The company took on a one-time charge of $4.2 billion related to layoffs, the cancellation of some construction leases, and the cancellation of expensive data center projects. He also hinted that more layoffs could be on the horizon in his press release: “We may incur additional restructuring costs as we progress with our efficiency efforts.”

Meta’s core business of serving ads remains challenging, with overall revenue down 1% in 2022 from 2021. But Zuckerberg struck an upbeat tone on the earnings call, saying comments on the company are lagging behind the progress it is seeing internally on key initiatives like Reels’ performance.

And for all the misfortune and sadness of the slow decay of Facebook itself, the numbers tell a different story; daily users reached a staggering two billion for the first time in the fourth quarter.

“We’re going to be more proactive in scaling back projects that aren’t working or that may not be as crucial anymore,” Zuckerberg said. For now, that doesn’t apply to its metaverse efforts, which remain as expensive as ever. Reality Labs, the division of Meta that builds its Quest headsets and upcoming AR glasses, reported an operating loss of $13.72 billion for 2022. That number is, surprisingly, expected to rise this year.

Ever since Facebook was renamed Meta in the fall of 2021, investors have grown increasingly concerned that Zuckerberg is spending on his metaverse dreams with reckless abandon and little to show. It could still be true. But with this new push for “efficiency”, he may be able to get away with it.