Meta Needs To Slash Headcount, Stop Spending Money On ‘Metaverse’, Says Investor

In an open letter to CEO Mark Zuckerberg , Altimeter Capital’s Chair and CEO Brad Gerstner said, “Meta has drifted into the land of excess — too many people, too many ideas, too little urgency”

Brad Gerstner said that since the cost of capital and interest rates have risen recently, a 20 per cent cut in employee spending would take Meta back to the levels of staffing it had last year.

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Facebook-parent Meta needs to streamline by slashing jobs and capital expenditure, its shareholders Altimeter Capital Chair and CEO Brad Gerstner said on Monday, in an open letter to CEO Mark Zuckerberg, reported CNBC. Gerstner said that the company has lost the investor confidence as it ramped up spending and pivoted to metaverse, while adding that "Meta has drifted into the land of excess — too many people, too many ideas, too little urgency."

The Meta investor recommended a plan to get the company's "mojo back," including reducing headcount expenses by 20 per cent and limiting the company's pricey investments in "metaverse" technology-VR software and hardware-to no more than $5 billion per year. Since the cost of capital and interest rates have risen recently, a 20 per cent cut in employee spending would take Meta back to the levels of staffing it had last year and argued that the company can't spend as it used to, he said.

"Meta needs to re-build confidence with investors, employees and the tech community in order to attract, inspire, and retain the best people in the world. In short, Meta needs to get fit and focused," Gerstner wrote in the letter. 

The letter is the latest sign of less confidence about the company's ambitions in the world of virtual and augmented reality. Meta changed its company name from Facebook to better focus on its VR hardware and software and is spending $10 billion per year on the technology, according to CNBC.

On October 11, Meta announced a new high-end VR headset, the Quest Pro. However, there are few signs that VR or some of the company's metaverse apps, such as Horizon Worlds, are catching on with the public beyond early adopters, according to the report.

Gerstner wrote,"People are confused by what the metaverse even means. If the company were investing $1-28 per year into this project, then that confusion might not even be a problem."

He said the money the company is currently spending to develop VR could add up for a decade before it comes to fruition. "An estimated $1008+ investment in an unknown future is super-sized and terrifying, even by Silicon Valley standards," Gerstner wrote. 

Meta has too many people and is spending too much on capital expenditures, Gerstner said. If Meta was able to control those costs, he said, then it could double its free cash flow and improve its share price.

In the letter, Gerstner added that Altimeter Capital doesn't have demands and simply wants to engage with Meta management.  "We think the recommendations outlined above will lead to a leaner, more productive, and more focused company-a company that regains its confidence and momentum," Gerstner wrote.