Friday Mailing #50: Robert Iger, Mark Zuckerberg & Vision

Meta's post-Facebook future begins five years after former Disney bought BAMTech; Comparing the two reveals valuable insights on the future of the metaverse

Oct 29, 2021

Something about yesterday’s Facebook presentation on the Metaverse reminded me of Bob Iger’s description of holding the video iPod for the first time:

"You can't tell anyone about this," [Steve Jobs] said. "But what you're talking about with television shows--that's exactly what we’ve been imagining." He slowly withdrew a device from his pocket. At first glance it looked just like the iPod I'd been using.
"This is our new video iPod," he said. It had a screen the size of a couple of postage stamps, but he was talking about it like it was an IMAX theater. '
"This is going to allow people to watch video on our iPods, not just listen to music," he said. "If we bring this product to market, will you put your television shows on it?"
I said yes right away.
Any product demo by Steve was powerful, but this was a personal demonstration. I could feel his enthusiasm as I stared at the device, and I had a profound sense of holding the future in my hand. There could be complications if we put our shows on his platform, but in the moment I knew instinctively that it was the right decision.

That moment set the wheels in motion for Disney’s $1B investment into BAMTech 11 years later. Iger writes that the foundation for that decision was:

After the dust settled on the last of our “big three” acquisitions, we began to focus even more on the dramatic changes we were experiencing in our media businesses and the profound disruption we were feeling. The future of those businesses had begun to seriously worry us, and we concluded it was time for us to start delivering our content in new and modern ways, and to do so without intermediaries, on our own technology platform.
The questions for us were: Could we find the technology we needed to accomplish that and be at the forefront of change rather than simply being undone by it? Did we have the stomach to start cannibalizing our own still-profitable businesses in order to begin building a new model? Could we disrupt ourselves, and would Wall Street tolerate the losses that we would inevitably incur as we tried to truly modernize and transform the company?
We had to do it, I was sure of that. It was the old lesson all over again about the need to constantly innovate. So the next question was: Do we build a tech platform or do we buy one? Kevin Mayer warned me that building one would take five years and would be a massive investment. Buying one would give us the ability to pivot immediately, and the speed at which everything was changing made clear that patience was not an option.

Mark Zuckerberg & Meta

Certain phrases from the above passages came to mind while reading the interviews with Meta CEO Mark Zuckerberg and watching the video presentation:

“a profound sense of holding the future in my hand”
“the dramatic changes we were experiencing in our media businesses and the profound disruption we were feeling”
“it was time for us to start delivering our content in new and modern ways”
“Do we build a tech platform or do we buy one?”

And then there is that paragraph asking variations of the question, “Could we disrupt ourselves?”

Above all else, like Iger, there is a willingness to invest big in cannibalization: investing at least $10B in Facebook Reality Labs this year, alone.

All of those thematically play out in Zuckerberg’s four interviews yesterday, all of which laid out his vision for Facebook’s central role in the metaverse:

Mathew Olson of The Information ($ - paywalled)
Dylan Byers of Puck News ($ - paywalled)
Ben Thompson of Stratechery, and
Alex Heath of The Verge

They are all worth reading, as they all flesh out Zuckerberg’s vision from a variety of different angles.

But the looming question in all this is timing, about which Stratechery’s Ben Thompson asked Zuckerberg:

Why now for the vision? There is an aspect of Facebook’s seems very hamstrung as far as acquisitions go, is there really any other alternative for Facebook’s cash flow other than returning it to investors than this all-in bet on the metaverse? I guess, in other words, is Facebook building the metaverse because it is best positioned to build something that is inevitable, or because Facebook needs the metaverse to exist so that it has further growth opportunities that are independent of Apple?
To your credit, you did buy Oculus way back in 2014, so this obviously isn’t a new vision. But to right now reorganize the company, to paint out this vision, to start announcing how much you’re investing and to what degree, obviously there’s the news cycles going on, why now? Why in October 2021 is this the time to paint this vision and be super public and upfront about it?
MZ: Well, I think there’s a few things. There’s all the business reasons and product reasons. I think that this is going to unlock a lot of the product experiences that I’ve wanted to build since even before I started Facebook. From a business perspective, I think that this is going to unlock a massive amount of digital commerce, and strategically I think we’ll have hopefully an opportunity to shape the development of the next platform in order to make it more amenable to these ways that I think people will naturally want to interact.
One of the things that I’ve found in building the company so far is that you can’t reduce everything to a business case upfront. I think a lot of times the biggest opportunity is you kind of just need to care about them and think that something is going to be awesome and have some conviction and build it. One of the things that I’ve been surprised about a number of times in my career is when something that seemed really obvious to me and that I expected clearly someone else is going to go build this thing, that they just don’t. I think a lot of times things that seem like they’re obvious that they should be invested in by someone, it just doesn’t happen.
I care about this existing, not just virtual and augmented reality existing, but it getting built out in a way that really advances the state of human connection and enables people to be able to interact in a different way. That’s sort of what I’ve dedicated my life’s work to. I’m not sure, I don’t know that if we weren’t investing so much in this, that would happen or that it would happen as quickly, or that it would happen in the same way. I think that we are going to kind shift the direction of that.

Iger, Zuckerberg & Vision

Iger clearly saw the future of video when holding a video iPod in 2005, Zuckerberg saw the future in Oculus VR back in 2014, Iger saw the future of Disney’s direct-to-consumer business in BAMTech in 2017, and now Zuckerberg sees the future of the metaverse in Virtual Reality, Augmented Reality, and Facebook’s distribution infrastructure.

But what Iger foresaw had clear business use cases around content distribution:

putting Disney shows for consumption on iPods (2005), and
delivering Disney content without intermediaries and on its own technology platform (2017)

Zuckerberg’s vision also is about content — or app — distribution, as he told The Information:

Zuckerberg has said one reason Facebook is investing so much money to build the metaverse is to free the company from reliance on other companies for distribution of its apps—a clear reference to Apple.

But otherwise, by contrast, Zuckerberg says “you can’t reduce everything to a business case upfront” (above). It’s also something he says in the video presentation, that they don’t know where this is all headed but business models are emerging that “may only make sense in the metaverse” (~47:00 into the video presentation).

That means his vision for the metaverse is bigger, broader, and most importantly, less constrained than Iger’s vision for content distribution. Iger and his team saw their legacy model being disrupted, but Zuckerberg is going so much broader, aiming to build software that captures livestreaming, gaming, VR, AR, Creator Economy, NFTs, crypto, and the “distributed retail” future for e-commerce.

It is unconstrained (for now), and that makes the vision more complex and the execution exponentially more complex than Disney building out a streaming service (which was unprecedented and more complex on its own).

The Gap Between Vision & Execution

This Iger-Zuckerberg comparison is helpful in this moment because of the timing: five years after Iger and his team’s streaming vision for Disney launched, Mark Zuckerberg is launching his vision for Facebook in the metaverse, with some similar business logic to Disney’s for moving into streaming, It’s also 15 years after Iger held that video iPod and understood how the future of consuming Disney’s content was going to change.

Disney’s streaming future is now entering its post-Iger phase under new CEO Bob Chapek and his lieutenants, with a new operational structure, and an ongoing list of departures from Iger’s regime. Disney now faces real questions about its growth prospects from investors (the stock was recently downgraded by Barclay’s).

So even if there are good reasons for us to buy into Zuckerberg’s vision for the metaverse, and Disney’s success offers similar precedent and business rationale that offer a reasonable basis for buying into, the turbulence Disney’s streaming vision is now hitting also offers grounds for caution:

change in leadership
change in strategy
loss of Wall Street buy-in into growth prospects
COVID, and
early risk averse product decisions impacting growth later (something I argued in August)

Conclusion

The big question the Iger comparison helps to flesh out is Zuckerberg’s future at Meta. He told The Information he does not plan on stepping aside, and he retains voting control of the company’s stock. But if Disney offers helpful precedent, it is that getting the vision right early still requires the right execution, and Disney has hit turbulence in streaming for very good reasons.

It’s something that Zuckerberg concedes in both the video presentation and in his interviews: they are approaching this initiative with “humility”, and with acknowledgement of mistakes they have made in the past.

But what bothers me is the complexity in the vision, even if the vision is also about Meta focusing on simplicity through “the interconnected nature of his company’s products”.

Iger tells us he held a video iPod in 2005 and had a concrete “vision” of where content distribution was headed. I’m not sure where Zuckerberg thinks the metaverse is headed, but in both listening to him and reading interviews with him, he believes “the metaverse is the next chapter of the Internet”.

I lean more towards Iger’s narrower thinking here: either the metaverse is the next evolution and iteration of a familiar business model, or it isn’t.

It don’t yet see how it is iterative or a logical evolutionary next step, largely due to the physics of the speed of light (read this Twitter exchange with metaverse evangelist Matthew Ball as to why).

If there is one thing I have learned working in digital media over 16 years, it is that most often only a select few executives and investors see the wins in building more complexity.

The metaverse as a vision and an outcome seems bigger than a select few executives and investors. Less is more.