In the broadly owned but mostly unread The Wealth of Nations, Adam Smith properly focuses on stationary versus ascendant economies. What’s stationary is an investor repellant simply because in commerce, the present is always the past.
Let’s please keep this in mind as the criticism of Facebook creator Mark Zuckerberg grows. There’s a reason he’s Mark Zuckerberg, and we’re not. Think about it with Smith in mind.
We know the above is true simply because Zuckerberg clearly struggled to find capital while on the ascent. Evidence supporting the previous claim is that Peter Thiel was able to acquire a 10% stake in Facebook for $500,000. The previous number is a reminder that Sand Hill Road and well beyond is littered with smart money that passed on Facebook. Only for Zuckerberg to pull off a miracle.
Up against much better funded rivals (lest readers forget, MySpace’s owner was Rupert Murdoch’s News Corp), Zuckerberg managed to create a global phenomenon; one with billions of users. Stop and think about how rare his accomplishment was. Which requires a pause.
While most of us properly strive for a work life defined by specialization in one area, Zuckerberg pursued much more. He would build a business that in its evolved form would amount to a never-ending reunion for restless Americans located all over America, only for the never-ending reunion/political conversation/free advertising phenomenon to go global. Nowadays billions visit Facebook daily.
Stating what should be obvious, Zuckerberg’s achievements with Facebook alone were truly stupendous, and born of a vision that realistically only he had. How we know the previous assertion to be true has to do with a valuation for Facebook the corporation that soared above $1 trillion not terribly long ago, and that even in its relatively “depressed” form as Meta carries a value of $295 billion. Sorry, but if the titans of commerce in the world’s most dynamic economy had seen what Zuckerberg saw, they (this includes Murdoch) would have put him out of business long ago.
Of course, the challenge for the world’s creators is that the history of commerce is defined by dominance followed by obsolescence. Sears was once the bluest of blue chips, so was grocery chain A&P, so was General Motors, so was IBM. The list is long. And it is because without an ability to avoid the stationary, the future invariably sneaks up on the present, only to place it in the proverbial dustbin of history. It’s that simple, but what’s simple to understand is also difficult to see. Arguably for two reasons.
For one, it’s very challenging to cease doing what customers seem to love. Really, who was asking for the iPhone when everyone seemed to love RIM Blackberry phones? Who was asking for DVDs by mail when Blockbuster was offering Blockbuster Nights? Who was clamoring for books ordered on a little-used internet at a time when physical bookstores offered such brilliant atmosphere and community? In business, it’s plainly difficult to see one’s eventual replacement simply because it’s hard to see what’s wrong when nothing seems wrong. Success is blinding.
For two, precisely because the future is opaque it’s incredibly challenging to know what tomorrow will look like. Paraphrasing George Will, tomorrow is another country. In business it’s arguably another universe. The smart CEOs know their replacement is coming but they don’t know from where. This is obviously true for Zuckerberg. Having overseen a miracle in Facebook, followed by more miracles with Instagram and WhatsApp, Zuckerberg is now trying to see what’s around the next corner. It’s no exaggeration to say he’s trying to pull off yet another miracle.
With the future of commerce anything but certain, Zuckerberg is working feverishly to find it. He understands from business history that essential as Facebook, Instagram and WhatsApp are, they won’t be essential forever. Obsolescence always awaits what’s great simply because a dynamic business environment that makes it possible for the Zuckerbergs of the world to thrive is also one that will fund the replacement of same. Translated for those who need it, centi-billion and trillion-dollar valuation concepts are magnets for the very investment that aims to knock the highly valued off of their perches.
Which pretty easily explains Facebook’s evolution into Meta. Critics say Zuckerberg has wasted shareholder wealth with his energetic pursuit of tomorrow, but his critics are short-sighted. If Zuckerberg truly meant his shareholders harm, he would remain stationary; focusing intently on what consumers presently love.
Zuckerberg is too smart to stand pat, which means he’s pursuing tomorrow in the metaverse. Will he succeed? Billions, and realistically trillions will be made on the way to answering the previous question. What’s certain is that expensive as Mark Zuckerberg’s look into the future is, a failure to look would make his leap seem incredibly cheap by comparison.