Plain English with Derek Thompson - Elon Musk's Reign of Chaos and Mark Zuckerberg's Metaverse Madness

Episode Date: November 7, 2022

The Musk regime is off to a chaotic start at Twitter. In barely a week or two of ownership, Elon has already overseen a collapse in advertising revenue, announced a pivot to subscriptions, attempted to fire about half of the staff, and then attempted to rehire some of the fired staff. It would be one thing if Elon were flailing at Twitter while the rest of social media was on a rocket ship. The opposite is true. At Meta, the parent company of Facebook, Mark Zuckerberg has embarked on a truly audacious and possibly suicidal plan to spend somewhere between $100 billion and $200 billion building out a metaverse platform. What the hell is happening at these companies and, beyond the lurid details and gossip, what does it say about the larger ecosystem of social media? Today’s guests are the co-hosts of the new New York Times tech podcast 'Hard Fork': Kevin Roose is a reporter at the Times and a frequent guest on this show. And Casey Newton is the author of the Platformer newsletter. Host: Derek Thompson Guests: Kevin Roose and Casey Newton Producer: Devon Manze Learn more about your ad choices. Visit podcastchoices.com/adchoices

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You can listen to This Blue Up on Spotify or wherever you get your podcasts. Today's episode is a very special, very feisty breakdown of all the mayhem and the madness coming out of the social media world. We begin, as we must, with the news of the week in tech, which is the reign of chaos at Twitter under the ownership of Elon Musk. Some people have written in to accuse me of being an Elon Musk's sympathizer. I don't know that I'm a sympathizer, what I think I am, what I try to be, is someone who tries to clearly see all of Elon's accomplishments and all of his accomplishments. and all of his commentary, and his labor record, and his wealth, all of that clearly. And I think that when you try to see all this stuff clearly, the result is kind of an amazing mess. So Elon is a thrillingly successful chief executive of companies that solve important

hardware engineering challenges, SpaceX, Tesla. Twitter is not a hardware company, and it has no hard engineering challenges. Like all social media companies, its success depends. on its ability to program us, the users. That is what successful social media companies do. Instagram, YouTube, TikTok, they attract, hold your attention, and sell advertising against it. But Elon should not have bid for this company at $44 billion. He did not want this company at $44 billion.

He tried to shimmy out of this deal, then realize his path to the Delaware Chancery Court was blocked, then came to be the unproud owner of a company where in barely a week or two have owned, ownership, he's already overseen. One, a collapse in advertising revenue. Two, announced a pivot to subscriptions. Three, attempted to fire half the staff. Four, attempted to rehire some of that fired staff because it turned out he fired people who were integral to the working of the company.

Now, it would be one thing if Elon were flailing at Twitter while the rest of social media was on some kind of rocket ship. The opposite is true. At Meta, the parent company of Facebook, Mark Zuckerberg has embarked on a truly audacious and possibly suicidal plan to spend somewhere between $100 billion and $200 billion building out a Metaverse platform that is basically the price of an Apollo program. So what the hell is happening at these companies? And beyond the lurid details and the gossip, what does it say about the larger ecosystem of social media today?

Today's guests are the co-hosts of the New New York Times tech podcast Hard Fork. Kevin Ruse is a reporter at the Times and a frequent guest on this show. Casey Newton is the author of the platform newsletter. We recorded this episode on Friday, but I think all of it is extremely relevant today. We go inside Twitter to understand what employees are saying about their new boss. We break down Elon's strategy to pivot towards subscriptions. We explain why Zuck is betting the farm on an unproven technology. And most entertainingly, we have a frisky fight.

about the relationship between tech and media. I'm Derek Thompson. This is plain English. Kevin Ruse, Casey Newton. Welcome to the podcast. Thank you for having you. It is great to see you guys. You are off to a sensational start with Hard Fork.

It's really, really wonderful. And I want to start with your latest breaking reporting. You guys have both spoken to people inside of Twitter after Elon announced that he would essentially be laying off 50% of the staff. sometime today. Of all the stories that you've heard from inside Twitter in this unbelievably hectic period,

the people sleeping on the floor, working 20 hours, being forced to print their code on eight and a half by 11 sheets of paper and handing it into their new bosses, what is the craziest thing that you've uncovered

from inside Twitter in the last week? Casey, we'll start with you. I mean, look, it's very sad. And, you know, like right now, the whole spotlight of the world is on this one company that is so important to so many of us. And there is a lot of it that is funny, you know, like being asked to print out your code and then shred it, you know, an hour later or whatever. But I mean, to me, the craziest thing is just that the people who were up all night coding and who are sleeping in the office, like, they're fired now. Like, you know, the people that worked the hardest that did everything to save their jobs, it didn't save their jobs, right?

they're gone. They worked as hard as they could, and it didn't matter. And now they got to go find something else to do. So, you know, it is a truly dizzying morning. I've never woken up to more signal messages in my entire life. Frankly, I'm still sorting through everything that I have been hearing. But, you know, the one thing that I might say, just to kick it off, is that the people who left and the people who are still there sort of feel equally sad. And both sides are sort of wondering if they're happy where they are or if they wish they were on the other side. And Kevin, are they hearing from Elon Musk directly, or are they basically logged into Twitter like the rest of us to hear his hourly proclamations about the future of the company? Yeah, this has been one of the wildest parts of this is that there's been essentially no internal communication at Twitter since the deal went through.

Actually, there was the first that many people heard from the company itself was this notice yesterday that they were about to have layoffs. So a week of total chaos, very little, if any, internal communication coming through the official channels. And they've been tweeting and logging into Twitter like the rest of us and also like texting and calling us. And that's like, to me, that's a good heuristic for like when you know things have gone sideways at your company is when employees are texting reporters to try to figure out what's going on with their own colleagues. Yeah, also the emails that they got, they weren't from Eli. They were from something called team, and they were signed Twitter. It's like nobody is putting their names on anything at this company. Who is running Twitter right now?

I mean, from the outside, it seems to me like you've got Elon. You've got the hosts of the All In podcast, like Jason Calicanus, David Sacks, who have basically taken a week off, I assume, from recording their podcast in order to run a major now private company. Who's running this operation? Just podcasters. It's those two. It's Riham Krishnan, who has his own podcast.

Two Ron at Andreessen Horowitz, right? That's right. And, yeah, presumably they'll be bringing in more podcasters as the weeks go on. Let's take a brief moment to assume that the podcasters and car and rocket ship CEOs running Twitter right now are doing the right thing, or at least doing it. an understandable thing. What is the most reasonable gloss that you can put on Elon Musk's strategy

for Twitter right now? I'll elect Kevin Cape for Elon Musk. No, I think, look, there have been people who are supportive of Elon who have said to me, you know, this isn't novel. A private

equity takeover of a company followed by massive layoffs and restructuring, and people feel, feeling like their new boss is evil. Like that kind of thing happens all the time. It just happens usually in boring industries that nobody cares about, like steel or auto manufacturing or healthcare or insurance.

And we don't hear about that because that's just normal corporate cost cutting and drama. And what's just different about this is that it's happening at Twitter, which everyone in the media loves to talk about. And so it looks much larger than it is. I've heard that argument made. I don't buy that, frankly, in part because this is not a normal private equity takeover. This is the richest man in the world, overpaying by an order of magnitude for one of the most important communications platforms in the world. And doing so seemingly, at least partially out of spite for the company, its power users, and its employees.

Casey, the Reuters were reporting on the possibility that the steep cuts at Twitter, particularly on their engineering team, their infrastructure team, could put the website itself at risk, such that when users are rushing to Twitter to consume and share info, such as during moments of a crisis or a political event, the site could crash. It's like, I read that. I was like, is there a major political event coming up,

like maybe a midterm election in 72, 100 hours? What is the risk of cleaving half of your headcount when the company still has to function on an hour, two hour basis. It's extremely high. I do not think it is a bold prediction to assume that sometime in the next few weeks there will be an extended Twitter outage, right?

The people who took over this company spent less than a week trying to sort out who they needed to keep the servers running. If you remember, there was a whistleblower complaint filed earlier this year that said that if certain servers went down, the company wasn't entirely clear they would be able to get them up and running again.

So, yes, we should just expect that there will be a major extended Twitter outage. Casey, back to you, is there any feeling among people who are working at Twitter or people that you were talking to about Musk's dealings with Twitter? That there's a galaxy brain take here that he might not want the company to succeed, that there might be benefits to dragging the going big, shooting for the moon, and if it fails moving through bankruptcy court in order to discharge all of the debt that he's taken on in order to buy a company, that he very clearly. was not that interested in buying for the last few months. I don't know. That sounds pretty complicated and weird to me. I think that he basically, you know, he wanted it.

Then he didn't want it. Then he decided, ah, what the heck? Like, I guess I did sign a binding agreement. I guess I'm going to take it over anyway. I can't really get out of this. And so now he's going to try to make a go of it. But, I mean, if there's one thing we learned over the past year, it's like, if you want to sort of, you know, guess as the Elon Musk motives, like, have fun.

But, you know, you're probably going to be, you know, proven wrong. next day when he changes his mind again. Kevin, to you on the strategy, Elon Musk's plan to turn around Twitter right now seems to be based around the idea that users should pay $8 a month to be verified, to get a blue checkmark, and then maybe to benefit from certain increases in visibility in replies and searches. Tell me a little bit about why you think this is the strategy that Elon is settled on for his first attempt to drag 20. Twitter toward profitability? I think, frankly, it's the one that's the easiest.

It's sort of a low-hanging idea. Every social platform, every media platform, everyone is struggling with advertising right now. We're in an economic downturn. In global economic downturns, one of the first things that gets cut by big companies is their advertising budgets. And so this is not a Twitter-specific problem all across the industry. ad revenue is dropping precipitously.

And so even if Elon had not bought Twitter, Twitter would be looking pretty urgently for some ways of making money that don't rely on big checks from advertisers. So they were already working on subscriptions that was already a change that they wanted to make. But this is a company that is still 89% of its revenue comes from ads.

And so I think the strategy here is to diversify away from that, both because of the macro environment right now, and also because advertisers are really skittish. When it comes to Twitter specifically right now, we saw Elon Musk tweeting this morning that Twitter is suffering a major revenue collapse because advertisers are pulling back their spending on the platform.

So I think he knew that was happening, knew that was going to happen more and more. It's a point of real vulnerability for Twitter because it's not as big as Facebook or Instagram or some of these other platforms that command massive advertising. advertising revenue. And it's a point of, of, you know, of weakness for the platform. And so I think the move to subscriptions and to start charging people is just the sort of first step in a move to try to diversify away from that. Casey, I want to ask you about where Twitter fits in the

landscape of the social media industry. So last quarter, Snap announced quarterly income revenue of $1.13 billion. And in its last quarterly earnings report publicly as a public company, Twitter announced basically the exact same quarterly income, $1.18 billion. Now, Snap started the pandemic with 3,500 employees. They then grew to about a little more than 6,000 employees, and now they're going through layoffs. Twitter has not done layoffs in the last few months. They've not done layoffs during the big tech crash in the equity markets because they've

been frozen in the Elon zone for a while. But the company has 7,500 employees. You divide that in half, which is roughly what Musk is trying to do right. now, and you're basically where Snap was in March 2020 in terms of your headcount. So you take that and you think, well, you know, it's not that crazy to think that Twitter right-sized should be roughly three to four thousand employees. Meanwhile, like Musk is out there complaining about this massive drop in advertising revenue due to what he sees as activists online, you know, ginning up a lot of mean stories about Twitter. But again, this story also seems to have a structural

explanation. Like the story of the year, as you've written about, is that social media has been in across the board slowdown when it comes to advertising. Am I crazy to think that behind the Elon Musk craziness, a lot of the stuff happening to Twitter right now, the scale of the layoffs, not the way they're being done, but the numbers, the scale of the layoffs and the drop in advertising plus the frantic pivot to non-advertising revenue sources, that all of this is actually about industry-wide trends, macro-trends, and not just about Elon Musk being Twitter CEO? I mean, like, are there industry-wide trends? Yes. Is this basically just a story about Elon Musk? Like, also, yes? Like, I don't know. Like, you know, you make a bunch of valid points.

I think that Snap and Twitter are fairly different businesses, right? Like, Snap is a messaging business for teenagers and Twitter is the source of all news and information for the people who write all news and information on the earth. I think you are not going to need the exact same staffs, even if the revenue happened to be the same. I think Twitter has been a really mismanaged business for a long time. They could have much more diversified revenue streams. If they had sort of started sooner,

they were working on a bunch of creator-focused revenue products over the past year as well as beginning to start subscriptions. You know, to me, like one of the tragedies of this is that Twitter was actually starting to get some pretty good ideas about what its business should be, and they were starting to roll those out and iterate on them. And then Jack Dorsey, last November, decided he didn't want to be CEO anymore. He was tired of dealing with his board who he hated.

And so he left, and they brought him Paragagawaal, and Parag had about two weeks to try to figure out what he was going to do with CEO. For Elon Musk said, no, my turn. And that's kind of where we are. But I think there is something, I want to just make a point there, which is that I think there is kind of this emerging consensus among the CEO class in the tech world, which I would also put venture capitalists in that bucket,

that all of the big tech companies are overstaffed by a lot. That it's not just a 10% reduction that they need, that there are people who think that all of these companies should be firing half their workers. And so I think there are a lot of CEOs who sort of wish that they had the cover to do what Elon is doing at Twitter right now. And part of that is just CEOs always want to cut costs.

that's part of the mandate. But I also think there's a sense that the hiring of the past few years has been out of control and that these companies have gotten bloated and inefficient and, you know, kind of looking like incumbent legacy businesses that they were once trying to disrupt. But don't these companies still all have, like, I don't know, 40, 50% profit margins? Like, you know, you look at the average revenue per employee. Isn't it still in the million? It's like, I don't know, when I hear people start to talk about, like, bloating and inefficiency,

I just hear like capitalist vulture who wants to squeeze a few more pennies out of the enterprise. Yeah, I mean, my hot take is this is actually about those TikTok videos that are like the day in the life TikTok videos from tech employees where they just look like they're spending all day

like drinking fancy lattes and like eating pokey bowls in the courtyard of the office. And that, you know, tech CEOs and venture capitalists saw those and just went into like spasms of rage. It's funny to think the TikTok is destroying American tech companies in two ways.

Not only is it eating their lunch on the consumer demand side, but also it's demonstrating that no one in tech is working. Again, I don't actually think that no one in tech is working. These TikTok videos are obviously a small minority. Casey, I think you're right to point out the fact that, like, there is a lot of talk about tech being bloated. But when you look at revenue per person or when you look at profit per person and you line that up with almost any industry from the 1990s,

1980s, 1970s, 1970s, 1960s. It's like, Google today would be like the most profitable per-person company for like basically every decade of the last 100 years of capitalism. Exactly. But there are new expectations in this current environment maybe

because of the direction of online advertising revenue. I want to ask a little bit about a subplot in the Twitter drama, which is this fight between Silicon Valley and tech media. David Sacks, who is a Trump friend and one of the co-pilots now of Twitter, responded on Twitter to criticisms of the Elon Musk plan to charge people $8 a month. He said this, quote,

The entitled elite is not mad that they have to pay $8 a month. They're mad that anyone can pay $8 a month, end quote. And there's this idea within the people in Elon's corner that journalists are mad at Elon because the value of our blue checks is going to be diluted by this new business strategy. And I just want to lift up and say, that is so wrong. It's almost amazing. Like, I am an entitled elite with a blue check mark. I never think about it. I couldn't care less about it. If anybody can pay $8 a month to get a symbol by their username, a symbol that I never look at as I'm interacting with the platform, like, fine. I don't care. Why do they, do they? think we care? I mean, do they? I'm hesitant to even assume that David Sacks is tweeting in good faith, right?

Like, the company got a lot of pushback for introducing this plan and what other choice do they have but to present it as some sort of populist intervention, you know, in the face of overwhelming outcry? I think it genuinely does annoy them that journalists are verified on Twitter and that some of their friends in tech aren't, and that maybe their friends are rich and powerful, but they didn't work at CNET in 2013. And so they don't have a check next to their names. It's like, I think it really gets under their skin that journalists, and I would say accurately, they perceive that journalists have kind of a special status on Twitter, right? Not just because of being more likely

to be verified, but, you know, they sort of occupy a large percentage of the conversation on at least certain pockets of Twitter. And so I think that really does get under their skin and annoy them. And so I think this, A, it's very funny that the populist revolution at Twitter is being led by David Sacks, who had a Marie Antoinette-themed birthday party, whose entire podcast is like him and his rich friends talking about flying private and wearing $400 baseball hats. Like, there's a running gag on the All-In podcast about how David Sacks's baseball hat is very, very expensive. And so just the fact that he is the one leading the populist revolution, I just find incredibly

satisfying. But I do think it really gets under their skin. And I think this is sort of their misguided attempt to kind of get back at the blue checks is to make them pay up. Let them eat checks. You saw that with Elon Musk himself. He got into this strange Twitter fight with AOC the other day where she was tweeting criticisms of him and he said basically, thanks for your feedback and I now pay $8. So this is like, it's really an attempt to kind of get revenge on the people that they feel have wronged them. This story, you know, Elon reply, David Sacks tweet, that's gossip. But underneath the gossip, I do think that there is a real and interesting animosity that has emerged between tech media and Silicon Valley executives.

You go back to the early 2010s, and my sense is that, and maybe this is a mistaken sense, that there was a more positive valence from most tech coverage toward technology, and that that changed in the last decade. And there was this quote from Matt Iglesias that I wanted to read to you, Kevin, and have you respond to and possibly reject or possibly agree with. He said, quote, what happened is that a few years ago, the New York Times made a weird editorial decision with its tech coverage.

Instead of covering the industry with a business press lens or a consumer lens, they started covering it with a very tough investigative lens, highly oppositional at all times and occasionally unfair, almost never curious by technology

or an awe of progress and potential. This was a very deliberate top-down decision. They decided tech was a major power center and they needed scrutiny and needed to be taken down a peg, and this style of coverage became very widespread and prominent in the industry.

End quote. Kevin, is he right? Was there a top-down edict at the New York Times to darken your coverage of Silicon Valley? If there was, I didn't get it,

so I must be on the wrong email lists because I have never been told from the top or anything that could be construed as the top of the New York Times that I needed to cover some company more critically or be meaner to tech executives

or something. That's just not how coverage works at a place like the New York Times. So, you know, I'm not sort of going to speak on behalf of the whole institution. I will just say that my vantage point is that it's not actually that there was a top-down edict. That, frankly, wouldn't work. Like, journalists are a pretty ornery, anti-authoritarian bunch and anti-authority bunch. And so I think if we did get some kind of edict, it would, A, immediate. have leaked because people have been so mad about it.

And it just wouldn't have produced the changes that whoever was doing that the edict ordering would have wanted. But I do think there's, I do think it's true that the tenor of tech coverage broadly has gotten more oppositional in the past, you know, I would say 10 years, but especially since 2016. And, you know, there are two ways of explaining that. One is that the entire, you know, tech press decided sort of independently or in a shadowy cabal somewhere to be mean to tech. The other is that the tech companies became the most powerful companies.

Yes. This is what I hate about your framing, Derek. There is such an insane amnesia. It's like we all pretend like we don't remember what the 2010s were like. It's like, oh, yeah, what? I guess I remember we all used to love tech in 2010. Go read any story about tech in 2010. You know what we were doing?

Completely dismissing these companies. go read a story about the Facebook IPO and tell me how positive it was about Facebook. We only ever said one thing about these companies, collectively, generally speaking, which was they're never going to be able to make any money. You can never run an ad business on these things. It's just a bunch of hype. We're reliving the dot-com era over again, and pretty soon the bubble's going to burst,

and everyone is going to be high and dry, right? And for some reason, we look back and we're like, man, all those tech journalists in 2010, all they used to write about was how amazing the tech companies were. No, we didn't. We didn't take them seriously enough. And that's why in 2016, we all collectively said, maybe we need to scrutinize this thing that we were dismissing for 10 years.

Right. And it's like if, say, the past 10 years had not seen tech companies becoming the biggest companies in the world, but instead, you know, insurance companies had become the biggest companies in the world. You know, seven or eight of the top 10 market caps in the world, the power to influence, you know, elections and culture and politics across the globe. Like, I imagine that mainstream media organizations would have focused much more critically on the insurance industry. So I think this stems. I think that the observation that the tenor of tech coverage has changed is correct. But I think the explanation is almost entirely

wrong. And instead, what you had was a sector that was seen as sort of a sort of sideshow that wasn't taken seriously, all of a sudden amassed this extraordinary power and influence and capital. And the coverage sort of followed from there. And I think that if you're a tech CEO who's sort of seen this whole thing going on, like, I think it's fair to be offended at that and say, wait a minute, we, you know, we didn't, you know, why are people who were maybe nice to us 10 years ago suddenly being critical of us? And I think that they just, they should do a little more self-reflection about why that is instead of pointing like to weird conspiracy theories. It seems to me that like the coverage in like the late 2000s and like early 2010s is like

most typified by something like tech crunch, by something that was interested in the promise of new gadgets and reported on new gadgets and new emerging startups through what they could accomplish. And of course, as those startups became the most valuable and most powerful companies in the world, the approach to them shifted from curiosity and mixed with dismissal toward one of relatively unified skepticism, criticism, and even opposition, as Kevin said. I think that transition is absolutely real. Whether that transition was motivated by an inappropriate bias, that's its own question. But like, the transition seems absolutely obvious to me. And I'm surprise that you don't think it exists.

Well, I mean, I think the transition exists, but for some reason we want to ascribe these dark motives to it. And it's like, rewind to 2010, which is when I got to San Francisco, I started writing about technology. The app store on the iPhone is maybe two or three years old. You have this pre-Cambrian explosion of technology. Every week your smartphone is getting a new superpower. You know, you didn't used to be able to hold up your phone in the grocery store to figure out what song was playing, right? You didn't used to be able to tap to sort of mash the screen. of your phone with your paw and summon a vehicle to your exact location. But you could.

So we were curious about them. And, you know, it's just sort of hilarious to me that it's like what people really, if people talk as if what they wanted TechCrunch to be doing in 2008 was to be like, there's a new app called Uber that summons a car to your literal location to take you wherever you want to go. But, you know, we've got to ask, you know, in 10 years, will the gig economy have supplanted, like, all, like, full-time employment in America? You know, I'm sure that there were cases.

where we should have asked harder questions from the jump. But, like, ultimately, that's just honestly not really the kind of technology coverage. I think when new technologies are introduced that have some instant, immediate benefit to people, it's okay to just write a 400-word story that describes that without trying to deliver an absolute moral judgment about every possible application of the technology. Different stories require different treatments. The story that a company is going from zero to one is a story of curiosity. Ooh, this thing didn't exist, and now it exists.

I couldn't hail a cab of my phone, and now I can. Facebook didn't unite the world as a kind of global newspaper, but now it did. Let's see how this evolves. And then it evolves, and then you report the stories that evolve, and those stories are ones of power and responsibility. I also just say, like, to add one more thing on this, because I do get touchy about this particular narrative that the New York Times is, you know, somehow like wall-to-wall anti-tech.

Like, the people who are saying that just do not read the New York Times. Like, pick up the paper, go to the website. look at the stories. It's not wall-to-wall. Tech is bad. Like, you know, stories are written all the time about new and interesting things

happening in the tech industry. Some of them appear in the tech section. Some of them don't. But they're out there. You know, we had an episode of our podcasts the other day with Cashmere Hill, who published a big story in the New York Times about her experience in Facebook's Metaverse,

which was, for her, positive. Like, that story wasn't, you know, that story wasn't suppressed, it wasn't killed in the editing process. Like, nothing happened to her as a result of this. I think there's this idea that there's this sort of shadowy group of New York Times editors who just like, anytime they see a positive text story coming across their desk, they're just like stamping it with the big rubber stamp, you know, the big rubber kill stamp and, you know, putting it in the trash.

And that's just not true. I mean, the most criticism I've gotten for something that I've written in the past year was actually a piece that was criticized for being too positive about cryptocurrency. So, you know, we're sort of getting it from both directions. There are people who think we're too positive about certain pieces of tech, and then people who think we're too negative

about certain pieces of tech. And so from the inside, it's just like that the sort of Iglesias critique just does not ring true at all to me. Can I also just say, I think people are such babies about media coverage. They read a story, and if it isn't precisely calibrated

to their personal, specific emotion about that information, they think it's a crime against journalism. And I'm just here to tell you, that's not the way that media is actually supposed to work. We go out, we interview you people, we tell you what we find, we give you a couple ways to think about it, and then guess what, sweetheart, you can make up your own mind, okay? So stop coming to me complaining that whatever I wrote didn't match your exact mood whenever you happen to read it, because that's how babies think. It's also just not how other industries work. I used to cover Wall Street.

And like, you know, executives at Goldman Sachs, you know, whatever their flaws, like, they're not sitting there all day, just like tweeting about how mean the financial press was to them. Like, they kind of get it. They're like, we're powerful. We work at a big institution that has, you know, consequences on, you know, lots of people's lives. And like, with that come scrutiny. And we're going to be like grownups and just sort of accept that that's sort of the price of power. and it seems like the folks in tech have not quite gotten there yet.

I'll say this. I'm very glad that I was screamed at, in part because there's this idea within tech that journalists are all the same, that we all agree with one another, that we're all motivated by the exact same status anxieties and shared the exact same techno-pessimism. And it turns out, no, like, we scream at each other too. Like, we fiercely disagree not only about what coverage is appropriate,

but also about, like, what underlying motivations change that coverage. Is it, is it jealousy? Is it envy of tech? Is it the fact that tech actually changed and went from being like a really fascinating startup to being a like world concrete behemoth? Like these are actually like interesting debates that happen inside of newsrooms and like journalists scream at each other. And that's that's actually good. Like it's good that we don't agree about absolutely everything that has to do with the big tech narrative. So that's just my pathological optimism trying to shine through that that segment.

I love that that was a bit of a fight. Can we move to Mark Zuckerberg and the Metaverse? there's a way in which, despite everything that Elon is doing and all the weirdnesses that are happening inside of Twitter, people sleeping on floors and printing out their code, that what's happening at Meta and Facebook is actually weirder. Meta could plausibly spend more than $200 billion on its Metaverse department reality labs, which would make this project larger in inflation-adjusted dollars than the Manhattan Project. It would basically put on an equal footing with the Apollo program. Casey, why is Zuck D. doing this? Good question. And I will say that I agree with you that this is an extremely risky thing. And I do think it's the riskiest thing that he's ever tried. Okay. So ask yourself,

though, why is he doing this? Well, let's look at the status quo. He has a handful of social platforms where while they continue to grow in unprofitable markets, for the most part, they've penetrated every wealthy user on earth. And those properties are now just all in managed decline. And as they are in managed decline, he has Tim Cook coming and saying, actually, I'd rather build an ad business. And so now yours has to die.

And so that process has now begun. And so if you're Zuckerberg, and you're one of the most ruthless and effective business people of all time, you realize that you've made one key mistake, which is that your business is dependent on someone else's platform. And for him to get what he wants, which is to have sort of like an all-time platform

that will long outlive him, he needs to own that platform. And because all of the current platforms have been built, right? He has to go out and build the next one. And so there is no price he will not pay to go do that. Right? His alternative is to be to drift into irrelevant. and that is not a price Mark Zuckerberg is willing to pay.

Yep. Zuckerberg and Facebook are essentially renters on the iPhone. They're renters on Samsung devices. They are living in a world that is owned by someone else. And he's like, no, I want to be a homeowner in the tech universe. And the way to do that is to build your own platform. And that platform could be virtual reality. It could be headsets that we wear. It could be something else that extends our consciousness into some other dimension.

Kevin, how do you evaluate the, reality labs bet. Do you see it as a rational response to the existential threat of Apple? Do you see it as an absolutely ludicrous pipe dream? Or do you see it as essentially both? It's both. I think as Casey said, I think the walls are closing it on him and he sees that this is the sort of way out. He can manage a declining business for as long as it lasts until there's nothing left in the well. Or he can, you know, try to, in the old days, what he would have done is try to acquire his way out of this. He would have tried to buy a fledgling social network. Maybe try to acquire TikTok. Maybe, you know, it's probably too late for that now, but, you know, try to acquire, be real, try to acquire something that has

some momentum and some energy behind it, especially with younger users, and try to integrate that into, into, you know, what he's doing. But he's not going to be allowed to do that. The FTC and, you know, other regulators have made it very clear that Facebook is never going to be allowed to buy a smaller social network again. And so really, this is his only chance. And so I think it's it's born of desperation, masked as excitement about some new, you know, fancy new computing paradigm. And just add one more thing about that. They tried to buy a gift search engine, okay? Gifts are already irrelevant, right? But three years into this acquisition process, the UK competition markets authority says, no, this would decide.

destroy competition on earth if Facebook were able to integrate a GIF search engine, which is not used by anyone under the age of 30. If they cannot buy Giffy, then, yeah, Mark Zuckerberg has to have a new plan B. Yeah, right, this is such an important point, which is that, right, he wants to become a homeowner, but he can't acquire a home. He has to build it himself, right? He can't go out into the market to buy any kind of platform because regulators have basically decided across the board in Europe and America that meta is done with acquisition. They are not allowed to acquire anything else. They got Instagram, they got WhatsApp.

Sorry, that's it. You're done. Casey, how are they proving the success of this program on a quarter by quarter basis? Because it's very strange for a publicly traded company to essentially say, we plan on spending something between $100,200 billion over the next X years to build the future. Typically, what you do is you build an iPhone, and the iPhone's pretty good, and then you improve it. You build another iPhone. And then you build iPhone 3 and 4, and it blooms.

And there's an ecosystem of economies that grow up around it. And that's how the company pays for itself. It's very odd to call your own home run shot here like Babe Ruth. How are they showing that this is working on a quarter-by-quarter basis? They don't think like that. They don't think on a quarter-by-quarter basis. Like all of the financial analysis that gets written about Facebook, I mean, I'm sure the CFO reads it. But Mark Zuckerberg, you know, is the king of Facebook.

and Facebook has vast amounts of wealth, and he will spend as much of that wealth as he needs to spend to do what he wants as the king of Facebook. I'm quite confident he is not thinking, like what message is my quarter-by-quarter metaverse spending, sending to the street? Now, maybe things will get so bad that'll have to start paying more attention

and they'll have trouble attracting entertaining employees because of stock-based compensation, all that stuff. But to the extent that he can never think about one word that you just said, he is doing that. Isn't that pretty weird? I mean, it's pretty odd that we're like in this generation where I don't know when the dual class structure norm became like the thing in Silicon Valley. But like it's really historically bizarre for there to be essentially a czar of a public

company who can do whatever he or she wants without concern for the markets on a quarter by quarter basis. And arguably you could say that like, you know, we're not going to have the whole debate over like what's best a public or private company. But one of the ways that public companies have worked for decades is that investors have had input into the companies that they own. And if Zuckerberg is basically saying, when you buy shares of meta, when you buy shares in Facebook and in me, you don't own anything. You don't own the ability to change my mind at all. I'm the czar of this company. I'll do whatever I want.

Why would you invest in this unless you had some almost like religious faith in Zuck's ability to see the future? Well, because over the past 15 years, it was one of the best investments you could make, right? Like, the thing just printed money. And to take the other side of your argument, if it had been a bunch of investors who are making the calls about what Facebook should do, they would have just pushed him to, like, optimize ads, like, you know, introduce more ad slots, do more of the thing that you're already doing. And what Zuckerberg has observed, looking at the past 100 years of public markets, is that, you know, whatever the biggest company in the world today, it's like not going to be the biggest company in the world five years from now, right?

And in part it's because of this slavish devotion to these quarterly deadlines. So there have been multiple moments in Facebook's history where he has said, you know, even though the market is going to hate this, I'm going to do it anyway because I think it's in the long-term best interest of the platform. And up until this moment, he's basically been right every time. I do think this is a different and much riskier moment. But that's why he has the confidence to do what he's doing. Kevin, Casey, do you use Oculus?

Do you use the meta products that are a part of? this Metaversweet? We tried to use it on a podcast taping the other day. It was like kind of a disaster. I mean, I have an Oculus that I barely ever use. And the first time you dig it out of the box in six months and turn it on, it's like an hour-long process of getting it updated and all the software installed. And it's just like it's not like a seamless out-of-the-box experience.

We did manage to like tape the podcast, you know, part of it. in VR, but it was not like a smooth or enjoyable process. I, so I have a review unit of the MetaQuest Pro, which is the very expensive new headset. And honestly, I've only spent a handful of hours in it. It's much better than the thing that we recorded the podcast in. But there's just still not that thing that makes me feel like I want to be in this every day. I would almost always rather be playing my PlayStation 5 than doing anything in VR. And I think, look, this will be.

keep getting better. We should also say they've sold more VR headsets than any company in the world, right? They've sold, we think, more than 15 million units. So it isn't as if they have no empirical basis to assume that they can become the biggest VR company in the world, because in a lot of ways they are today, right? But they have a long way to go. Kevin, I want to ask about a company that's behind a lot of these stories, even if we haven't mentioned it a lot, and that is TikTok. The Biden administration has sort of, and maybe case you can correct me here. But the Biden administration seems to have sort of like peaked around the corners of maybe we should find a way to ban TikTok. Maybe we shouldn't. Obviously, Republicans have a

pretty clear line on China, the Chinese Communist Party, which is that they don't like it very much. And they might find some interest politically in taking on TikTok. Do you have any optimism or pessimism, depending on your opinion of TikTok, that there could be congressional action in the second half of Biden's first term on banning TikTok in America? Yeah, I think there could be action. I think that it's, you know, I'm coming around to the view that it's probably more likely than not that TikTok will either be banned or forced to sell to an American company in order to continue operating in the U.S.

I think there's, you know, bipartisan support for that. And I think that people are really just looking for one smoking gun, one point of proof that the Chinese government is using TikTok to either push property. or interfere in American elections or influence the minds of America's teens. I mean, it's really a story that is sensational if the evidence is there to support it. And so I think there will be continued quest to look for that evidence. And I also think that the sort of American tech companies are going to step up their lobbying and advocacy around this issue in trying to get TikTok band in part because it would be good for their businesses.

We should also say, though, I mean, so Vanessa Pappas, who's the C-O-O of TikTok, has said that they're pretty far along in a deal with the Council on foreign investment in the United States, Sipheus, and it is possible that they could reach a deal before the end of the year. Now, that's not to say there wouldn't be new pressure on the company if Republicans take power, but I actually do also see a world where it just sort of continues to exist. in the world in which TikTok is forced to sell in order to operate in the United States, does that mean that an American company would buy TikTok? Like it would be Oracle TikTok or Microsoft TikTok,

which means we would have a new entry into the social media wars, Casey? Yeah, I mean, that's the idea. The thing that is going to remove TikTok from the cloud of suspicion is just that there is no possible way that the Chinese government can access user data or use the network to so propaganda sort of at a systemic level. And the only way to do that is to sort of get it out of the hands of bite dance. Kevin Ruse, Casey Newton, the podcast is Hard Fork. Gentlemen, thank you very, very much.

Thanks, Derek. Thanks for having us. Thank you very much for listening. Plain English is produced by Devin Manzi. If you have a comment, a concern, a question, an idea for a future show, please email us at plain English at Spotify.com. That's plain, no space, English at Spotify.com.