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Zuck turns up the heat

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Mark Zuckerberg stared into his webcam, trying to make yet another remote meeting seem urgent.

Since Facebook started, he’d made a habit of frankly addressing employees directly at a weekly Q&A. Almost no topic was off-limits. But as the company grew, these sessions had become more scripted. He’d stopped showing up every week, instead letting other executives field the most upvoted questions submitted by employees.

The raw Zuckerberg persona was back on June 30th, though. Sometimes he sounded like a general preparing his troops for the war ahead. In other moments, he was the wunderkind visionary, hyping where the company’s metaverse push might take it over the next decade.

But mostly, he just seemed annoyed.

“Hi there,” the first prerecorded employee question started. “I’m Gary, and I’m located in Chicago.” His question: would Meta Days — extra days off introduced during the pandemic — continue in 2023?

Zuckerberg appeared visibly frustrated. “Um… all right,” he stammered. He’d just explained that he thought the economy was headed for one of the “worst downturns that we’ve seen in recent history.” He’d already frozen hiring in many areas. TikTok was eating their lunch, and it would take over a year and a half before they had “line of sight” to overtaking it.

And Gary from Chicago was asking about extra vacation days?

“Given my tone in the rest of the Q&A, you can probably imagine what my reaction to this is,” Zuckerberg said. After this year, Meta Days were canceled.

For Zuckerberg, the company he founded 18 years ago was facing existential threats on multiple fronts. Both Facebook and Instagram were being rearchitected to compete with TikTok. Apple’s iOS privacy settings had disrupted the company’s once-stable ad business, costing it billions in revenue. Meanwhile, Zuckerberg’s bet on the metaverse was a money pit that he didn’t see turning a profit until at least the end of the decade.

But first, Gary from Chicago. As the all-hands escalated, it became clear that Zuckerberg saw that fixing his company’s culture was critical to surviving the tough times ahead. Two years into the pandemic, his company was in a very different, more vulnerable place. It even had a new name.

The days of coddling employees would be over.

“Realistically, there are probably a bunch of people at the company who shouldn’t be here,” Zuckerberg said on the June 30th call, according to a recording obtained by The Verge. “And part of my hope by raising expectations and having more aggressive goals, and just kind of turning up the heat a little bit, is that I think some of you might just say that this place isn’t for you. And that self-selection is okay with me.”

Comments on Workplace, the company’s internal version of Facebook for employees, came flying in. “This is war-time, we need a war-time CEO,” one wrote. “Beast mode activated,” a second employee posted.

Others couldn’t believe what they’d just heard. “Did Mark just say there are a bunch of people at this company that don’t belong here[?]” a staffer asked. Another responded: “Who hired them?”

If a corporate all-hands meeting exists to rally troops, this one was arguably more divisive than galvanizing. But Zuckerberg did deliver on the promise of transparency: his employees now understood how he really felt about them.

Photo: Amelia Holowaty Krales and Alex Castro / Sculpture: Okamoto Studio Custom Ice / Concept: Kristen Radtke

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CreditPhoto: Amelia Holowaty Krales and Alex Castro / Sculpture: Okamoto Studio Custom Ice

Exceeds expectations

For big tech companies, the pandemic was a lucrative period. And unlike many other industries, tech was well-suited for the shift to remote work. Zuckerberg proudly leaned in. “We’re going to be the most forward-leaning company on remote work at our scale,” he told The Verge in May 2020.

When COVID pandemic lockdowns began, Facebook suspended its performance-review process that determines bonuses for half of the year, giving everyone a blanket “exceeds expectations” grade, extra time off, and a $1,000 cash bonus. By June of 2021, almost anyone could work wherever they wanted. At the same time, the company embarked on a massive hiring spree, growing its number of full-time employees by 62 percent, from 48,000 at the end of 2019 to more than 77,800.

During the June 30th call, parts of which were earlier reported by Reuters and The New York Times, Zuckerberg made clear that his company, in its pandemic era of expansion, had become too soft. It was time for a work culture reboot.

“I think during a lot of the COVID period, I kind of bias[ed] towards more flexibility and convenience for people,” he said. But now, he’d noticed people making personal appointments in the middle of the day, making it hard for even the CEO to get everyone to attend a meeting.

“Given the intensity of the environment that we’re in right now,” he continued, “I think now the right way to bias is more towards ‘let’s try to make the decision today, not wait until next week.’” From now on, employees were told to be available for meetings midday California time.

It wasn’t just their schedules that would need to adjust. Zuckerberg explained that, in an effort to be “cost-conscious,” he was freezing or reducing staffing for low-priority projects and slashing engineer-hiring plans for the year by 30 percent. While employees had historically picked the team they worked on, from now on, they should expect to be shifted to top initiatives, like Reels, the company’s answer to TikTok, and building products for augmented and virtual reality.

“This is a time when moving fast really matters,” Lori Goler, Meta’s head of HR, wrote in a follow-up post on Workplace seen by The Verge. She added that leaders were being asked to “resolve issues that are blocking decisions or slowing teams down.”

Facebook went public in 2012, riding what became the longest US stock market bull in history. When the government lowered interest rates in the pandemic and investors flooded into tech stocks, the company’s valuation surpassed $1 trillion for the first time. It rebranded to Meta in October of last year, just a few months before its stock price would enter the free fall it’s in now. Now, Zuckerberg isn’t the only one sounding the alarm about potentially worse times ahead.

In an unusually ominous message to staff two weeks ago, Google CEO Sundar Pichai warned that they will have to work with “more hunger than we’ve shown on sunnier days.” Snap’s stock price cratered last week after the company told investors that it’s not “satisfied with the results we are delivering.” TikTok, the app Meta sees as its biggest threat in social media, recently laid people off. Even Apple, the richest tech company in the world, has slowed hiring.

Unlike its competitors, Meta finds itself in a uniquely risky position. The rebrand was meant to reflect a new emphasis on Zuckerberg’s bet on building the “metaverse,” a maximalist, 3D version of the internet lifted from the pages of Snow Crash and Ready Player One. But virtual reality remains a niche market, and the kind of AR glasses that he believes could one day replace smartphones are still years away.

Meanwhile, there have been signals for months that all is not well with Meta’s current business. The greatest hit came from Apple. In its push to focus on privacy, the iPhone maker introduced a feature that lets users opt out of cross-app tracking. It may seem small, but that single move by Apple has torpedoed Facebook’s ad business, which relies on combining data from different companies to personalize ads. People tapping “Ask app not to track” on Facebook and Instagram cost Zuckerberg $10 billion in lost ad revenue — the equivalent of what he spent to fund his metaverse division — last year alone.

In conversations with current and former employees over the past few weeks, the consensus is that internal morale has been hit harder than during past scandals. The company’s history of bad press, from Cambridge Analytica to last year’s leaks from whistleblower Frances Haugen, barely hurt the stock price. But last February, when Facebook lost daily users for the first time in its history, Meta’s share price plunged almost immediately. Its stock price is off more than 50 percent from its high of last year.

At big tech companies, a significant portion of employee compensation is usually determined by the stock they receive. That means the thousands of Meta employees hired in the pandemic are making less than on their first day at the company.

Meta’s own analysis of morale tracks with its stock price: in a recent internal employee “Pulse” survey that the company takes seriously, only 39 percent of respondents reported feeling optimistic about the company’s future. Just 42 percent expressed “confidence in leadership.” Both are the lowest numbers ever. The sunniest stat: 77 percent said they’d still recommend working at the company.

Overall, the results of the employee survey suggested there is anxiety about Meta’s direction that has been compounded by the state of the economy. “Pulse comments indicated there’s some certainty about our vision, as well as concerns about stock fluctuations and the rapid shifts in priorities and hiring,” a summary obtained by The Verge read.

That may be why, on the day of the fiery all-hands, the second most upvoted question, after one about layoffs, was about compensation. “Seems like other companies are compensating their employees because of the stock dip,” one staffer wrote. “Will Meta also compensate [in a] similar fashion?”

Zuckerberg, who personally sold over $4 billion in stock last year before the market crashed, explained that compensation is evaluated at the beginning of the year, and that wasn’t going to change.

“I get that it can be painful when there’s volatility in the middle of the year,” he said. “But I think, frankly, I want the teams working on products and the things that we need to ship right now.” Layoffs weren’t planned, he said, but they also weren’t ruled out.

“Any company that wants to have a lasting impact must practice disciplined prioritization and work with a high level of intensity to reach goals,” Joe Osborne, a spokesperson for Meta, told The Verge. “The reports about these efforts are consistent with this focus and what we’ve already shared publicly about our operating style.”

Ice Sculpture of the Meta logo on a moody blue background.

Photo: Amelia Holowaty Krales and Alex Castro / Sculpture: Okamoto Studio Custom Ice / Concept: Kristen Radtke

Coast, Coasters, Me

Almost immediately after the Zuckerberg all-hands, one question took hold in the minds of employees: Who exactly are the people who don’t belong here?

“I don’t see people around me slacking whatsoever,” one employee wrote on Workplace. “I see smart hard workers. Honestly, hearing ‘some of you don’t belong here’ from a leader instead of ‘Here are the challenges. Let’s rally together and overcome them.’ is disheartening and might not be the best way to get this point across.”

What Zuckerberg meant became clearer when, the following week, an engineering executive at the company, Maher Saba, told managers that they needed to identify people on their team who “need support” by 5PM the following Monday and “exit people who are unable to get on track.”

“If a direct report is coasting or a low performer, they are not who we need; they are failing this company,” he said in an internal post that was deleted after it was published by The Information and posted on Blind, an anonymous message board for tech workers. “As a manager, you cannot allow someone to be net neutral or negative for Meta.”

“Coasters know they’re coasting,” one employee said on Workplace after the post leaked. “You’ve seen them gloat on Blind about resting and vesting and avoiding doing real work. They are well aware that they are milking the company for all it’s worth while living like royalty. They are not you.”

The term became a meme in no time. “Coast, Coasters, Me,” a riff on Meta’s recently introduced “Meta, Metamates, Me” mantra, made the rounds on Workplace. Employees mocked up posters for the walls of Meta’s headquarters that asked “Should you be here?” in bold, all-caps red letters, while others posted mockups of the question on literal coasters. “Look at this dude coasting,” one employee wrote above a picture of Zuckerberg hydrofoiling on a lake while holding the American flag.

But the jokes, many of which were posted in a Workplace group called “Shitposting @ Meta,” masked an underlying nervousness taking hold. Employees debated whether it was enough to have satisfactory ratings in their performance reviews or if that would qualify them as a coaster. One asked, seemingly as a joke, “where do I submit names?”

Things got even worse a few days later when word spread across Workplace that the company wasn’t planning to hire any of its current interns at the end of their program. Like many companies in tech, Meta’s internship pipeline has historically been a crucial, fiercely competitive source of junior hires. The decision was framed as part of the broader hiring slowdown.

Employees were furious. “This is extremely sad, is there any other way to motivate our interns?” one asked. “My intern spent all of her internship across the country from her 18 month old daughter,” another said. Another saw the decision as indicative of deeper cuts to come: “When a company starts cutting interns (or junior roles in general), it’s generally a really bad sign for the company as a whole.”

Many worried that, by not extending offers to interns, the company was harming one of its best ways of finding young, motivated talent. “There is no large pool of exceptional candidates wanting to join Meta and replace people ‘who don’t belong here,’” one employee wrote. “And unless there is some radical change that will make Meta the coolest place to work, if the company plans to continue growing, it’s inevitable that expectations will have to come down.”

Take more pain

In Zuckerberg’s mind, diminishing expectations are a death knell. He sees the next two years as an inflection point for the company’s top bets: its pivot to entertainment content with Reels, the AI work that needs to be done to make its recommendations as good as TikTok’s, and rebuilding how its ads work to use less data. Those bets need to work to fund his metaverse vision, which he has said likely won’t be profitable until at least the end of the decade.

“We’re sort of in this pretty intense period for the next 18, 24 months,” he said during the late June all-hands. “It’s possible it’s even a little bit longer.”

Zuckerberg has the unusual ability to weather tough periods that might sink other CEOs. The 38-year-old continues to have near-total control over the company’s direction, thanks largely to his supervoting shares. He simply cannot be removed. And he has emerged victorious from other painful moments before, like when Facebook barely survived the shift to mobile phones from desktop computers.

Now, he’s reinforcing that authority. In recent months, with COO Sheryl Sandberg planning to leave the company, Zuckerberg has brought even more of Meta’s teams under his direct supervision, including the HR department. He has appointed his trusted lieutenants, like newly minted CTO Andrew Bosworth, to top roles.

“We can either reduce funding for future stuff, or we can take more pain in terms of a little bit less profitability,” he told employees. “Constitutionally, it’s more painful for me to slow down the progress that we’re making towards the long term than it is to have a short-term difficult period.”

His bet is that the future he’s inventing is so alluring and that the long-term gains will be so tremendous that it will be worth the fight to come over the next couple of years. Around the company, there’s real concern that he might be wrong. Without that ever-growing stock price to keep employees happy in the present while they invent the future, Zuckerberg and his employees appear to be further apart than ever. Changing the company’s culture might require rebuilding it, even as he also tries to rebuild its business.

The task will be monumental — arguably the biggest challenge in the company’s history. Zuckerberg is up for it. It’s unclear if the rest of Meta will be, too.

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SOURCE ARTICLE : https://www.theverge.com/facebook

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