Mon, Sep

How Zuckerberg Lost $700 Billion?


THE VIEW FROM HERE - Unlike the twit Musk, who bought something he did not understand, Zuckerberg built Meta Platforms (Meta). 

Nonetheless, he made some terrible errors, but one thing he did correctly – Zuckerberg apologized!  He seems to sincerely recognize that he alone is responsible. Whether he also knows what caused his Meta disaster is dubious.  One thing which must aggravate Zuckerberg is that everyone else in the world believes that they can tell Zberg what he did wrong. I am no different. 

First Fundamental Error - Virtual Reality 

It was easy for a child of Atari - Nintendo gaming era to go down the wrong yellow brick road of Virtual Reality.  In 2018, Fortunly.com wrote, “For the past 10 years, the video game industry has earned more money than Hollywood and the music industry combined.” http://bit.ly/3VbUeeB  Thus, thinking that turning everyone’s life into a super video game was reasonable, but it was wrong. 

When one sees Zberg’s simulation of the Metaverse, one says, “Yuck!”  Zuckerberg thought everyone wanted to become stationary in real life while zooming around a false metaverse. We’d all become more obese than Jabba the Hutt.  People want to live in a real world, and Americans know the type of real world they want.  This brings us to Zberg’s next terrible error. 

Second Fundamental Error - Urban Densification 

Zuckerberg accepted the absurd notion that Americans no longer want to have a nice home of their own but rather would prefer to rent cramped apartments, pay up to 50% of their income to corporate landlords giving up automobiles in favor of mass transit.  Apparently, he never bothered to ask what changed Americans entire orientation after four centuries? The answer was - Nothing had changed.  The American dream was the same. Those Europeans who crossed the Atlantic Ocean exemplified the Darwinian principle that members of a species with certain genetic traits pass those genes to future generations.  While millions of Europeans stayed in Europe, those who departed had to be different than those who stayed. The Pilgrims wanted to do things their way without some authority dictating to them (but they had no qualms about imposing their beliefs on others). Despite pogroms, not all Jews left the Pale of Settlement and came to America. 

America’s Manifest Destiny was based on this same desire (lust?) to move to and take over unoccupied lands (“unoccupied” if one ignored the existence of the people who lived there, but that’s not the point here.)  One can postulate that since Homo Sapiens started their trek out of Africa 60,000 years ago, certain genes meant that people want their own land.  The idea that Millennials would buck this 60,000-year genetic predisposition was preposterous. 

Almost three years ago, Patrick Range McDonald explained another factor which must have clouded Zuckerberg’s brain. January 13, 2020, Housing is a Human Right, Inside Game: California YIMBY, Scott Wiener, and Big Tech’s Troubling Housing Push, by Patrick Range McDonald.  Zuckerberg and other techie moguls were not happy with the extra costs which they had to bear for their employees’ high housing costs.  Thus, they naively bought into the Big Lie -- more dense urban housing would reduce their employees’ housing costs.  With economic narshkeit like that, Zuckerberg should have flunked Econ 101. Unlike his Metaverse which can expand as fast he can write code, the real world lives in reality. 

Constructing Crap That No One Wants Does Not Satisfy Demand

Just because tech billionaires believe their employees want to live in glorified dorm rooms and shun 60,000 years of human history does not mean densification is a solution.  About the time Zuckerberg became enthralled with Metaverse, Young Millennials were becoming Family Millennials and the country was recovering from the Crash of 2008.  Rather than hooking up, they were settling down.  Not only did the employees not want to live in the projects which the moguls favored, densification increases costs.  Thus, Zberg and the other big shots combined two fatal errors: Error #1: Millennials would never grow up, Error #2: densification reduces housing costs. 

The Metaverse and Tech Passion for Densification = Disaster 

Maybe some would not call losing $700 Billion a disaster and likewise not see anything amiss with criminally insane homeless people roaming the streets.  Zuckerberg seems to acknowledge the former mistake but not the latter. 

For decades, real estate developers have been trying to force feed Americans on densification. Densification has two profit points: (1) The more people per square inch, the more land is worth. (2) Densification calls for rapid mass transit which is so expensive that it calls for more densification to have enough ridership to pay for the mass transit, etc. The actual result is a homeless crisis since poor people’s homes are destroyed for new projects and the flight of family millennials away from urban centers because Millennials want homes, not apartments. 

What person smart enough to be employable by a tech giant would be so stupid as to give up ever gaining equity in home not to mention all the advantages of owning a detached home with a yard in a decent school district in a small city or town without traffic congestion? Under the developer densification goal which all tech giants promote, their employees will never own a home and forever be renters subject to the greed of huge corporate landlords so that when they reach retirement, they will have zero equity and can be dumped on the streets just as developers have been doing in Los Angeles for the past two decades. 

The Great Irony – Zuckerberg Had All the Ingredients to Avoid the Meta Disaster 

#1: If he had merely analyzed the housing market, he would have realized that densification, aka Manhattanization, was a financial scam 

#2: He should have realized that most people prefer real life over a Metaverse 

#3: He had all the technology to capitalize on Sprawl, aka Dispersion 

Facebook owned Portal+.  Portal+ had the key to Virtual Presence – no, not Virtual Reality. The two key features were directional mics and cameras. Almost wherever one was in the room, the cameras would follow them, and the mics could pick up their audio.  People were not glued a computer desk. The other vital component was already here – large wall monitors so that one could see the screen from 10 to 20 feet away. 

Virtual Presence Telecommuting Combats Urban Densification 

While tech companies want to suck every last cent out of small handheld devices, the future requires mega-zation.  Virtual Presence allows for more realistic human interaction than an iPad or even a desktop.  Zoom is nice but limits people to one place, whereas Portal+ had the technology for freedom.  Nothing about Portal+ required it to remain a tabletop device. It could easily have expanded to using huge wall monitors.  Coupled with emails and high-speed faxes, documents could be sent worldwide in real time.  If a teacher wanted the class to see a diagram, it could be displayed on the monitor and email/faxed so each participant could have their own copy in hand. 

There is no technological reason for Portal+ to die during the pandemic rather than emerging as the greatest winner. (Arrogant hubris can kill the most brilliant idea.)  Portal+ committed suicide, but its technology exists. 

Land Use and Virtual Presence 

Virtual Presence lowers tech giants’ housing costs as now employees can re-locate far away from urban centers.  Virtual Presence is not limited to conferences. Two colleagues can be working side by side although thousands of miles apart.  Since their Virtual Presence equipment will not use their computers, they can work on their computers while still connected via Virtual Presence.  Family members can more easily keep in touch. Consumers can better see what they are buying and they can even try on clothing virtually. 

Family Millennials are already fleeing urban areas for small cities and exurbs.  While not everyone’s job can be handled via Virtual Presence, as “telecommuters move to the exurbs, all the support services will follow: restaurants, plumbers, carpenters, EV car repair shops, etc. In other words, de-densification, de-centralization, sprawl or call it “The Great Dispersal,” allows for Americans to spread out – continuing the original migration out of Africa.


(Richard Lee Abrams has been an attorney, a Realtor and community relations consultant as well as a CityWatch contributor.  You may email him at [email protected].   The opinions expressed by Mr. Abrams are solely his and not necessarily those of CityWatch.) 


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