Brad Gerstner Letter to Meta Seeks to Reform Facebook's Business Strategy

Brad Gerstner, the CEO of Altimeter Capital, wrote a letter to Meta (formerly Facebook) seeking to reform the company's business strategy.

Gerstner's letter highlights the need for Meta to prioritize user safety and well-being over profits.

In the letter, Gerstner suggests that Meta's focus on growth at all costs has led to the company's current problems, including the spread of misinformation and the erosion of trust among users.

Gerstner argues that Meta should adopt a more long-term approach, prioritizing the health of the platform and its users over short-term gains.

The open letter is a direct address to Meta's CEO Mark Zuckerberg. Gerstner wrote it with some hesitation but now shares it with great conviction. He believes Meta needs to be more focused in the future. A lack of focus is only noticeable in times of growth, but it can be lethal when growth slows and technology changes. Gerstner recommends a three-step plan to help Meta double its free cash flow to $40 billion annually.

Meta's business strategy is under scrutiny, with a high-profile investor calling for a significant shift in direction. Brad Gerstner, founder of Altimeter Capital, is urging Mark Zuckerberg to pull back on Meta's metaverse investments.

Gerstner believes Meta has become too focused on growth, leading to a lack of focus and urgency. This is evident in the company's $10 billion to $15 billion annual investment in metaverse experiments, including Horizon Worlds, virtual and augmented reality, and the Meta Quest goggles.

Meta's stock has declined by nearly 60% so far this year, making its economic situation particularly dire. The company's poor stock performance is partly due to the negative reception of its metaverse previews.

Gerstner suggests Meta should reduce its metaverse investments to a maximum of $5 billion, with more discrete targets and measures of success. This is a significant reduction from its current investment, which he describes as "super-sized and terrifying."

To address its financial issues, Gerstner recommends Meta reduce its staffing costs by 20%, including through layoffs. This would bring the company back to mid-2021 levels of employee expense, which Gerstner believes is a more sustainable approach.

Brad Gerstner's letter to Meta has significant implications for employees and operations.

Gerstner recommends cutting personnel costs by at least 20 percent to restore investor confidence.

This would likely lead to layoffs, which can be a difficult and emotional experience for those affected.

The company should reduce annual investments by at least five billion to around $25 billion, Gerstner suggests.

Gerstner also criticizes Meta's plans for the Metaverse, calling them "outsized and daunting" even by Silicon Valley standards.

He suggests that an estimated investment of over $100 billion in the Metaverse is excessive, and that Meta should consider investing only one to two billion dollars a year in the project.

Brad Gerstner, a high-profile investor in Facebook, has written a letter calling for Meta CEO Mark Zuckerberg to scale back the company's ambitious metaverse investments. Gerstner is the founder of tech investment firm Altimeter Capital.

Gerstner argues that Meta's investments in the metaverse, estimated at $100B+, are "super-sized and terrifying, even by Silicon Valley standards." He suggests that the company should cap its metaverse investments at $5B per year.

Meta is currently investing $10–15B per year in its metaverse projects, including Horizon Worlds, virtual and augmented reality, and the Meta Quest goggles. Gerstner believes that this level of investment is unsustainable and will ultimately harm the company.

Gerstner also recommends reducing staffing costs by 20%, including through layoffs, to make the company more lean and productive. He acknowledges that this will have an impact on employees but believes they will find new jobs quickly.

Altimeter Capital owns more than 2 million shares of Meta, and Gerstner has been a vocal critic of the company's direction. Gerstner's letter is a call to action for Meta to refocus and regain its momentum.