00:00So what we're doing is we're looking at the fact that out of the 23 stocks we cover,
00:05Meta pays the most in stock-based compensation per employee. Both are metrics you can pull out
00:11of their public financials. So they're paying every single employee at Meta, which is like 70,000
00:16people, $300,000 each. So presumably some people like receptionists don't get stock, which means
00:23they're probably paying people who do get stock $500,000 each in stock-based comp. So you say to
00:28yourself, why are they paying more, a lot more than everybody else in big tech and in big cap?
00:34And when you look, you look at the answer out of the 23 companies we cover, their ratings by employees
00:40today is a 2.8 out of 5, which is the lowest of all the companies we cover by a
00:46lot. Like Netflix is
00:484.4, Google 4.2, and Meta's down at 2.8. So one of the reasons they have to pay
00:58so much,
00:58is because their culture and values are really low and horrible internally.
01:03Okay. Say more about this. What do we know about the culture and the values? I mean,
01:06you dug into all of this. What did you find?
01:09So I think the problem is, you know, the CEO is unimpeachable. He controls the company,
01:15absolutely. And you've seen him pivot really rapidly from the metaverse. Oh, change the company
01:21name, but now we're firing all those people. Quest goggles were really in, you know, vogue for a year,
01:27and now they're sort of getting left by the wayside. So now we're doing, now he's doing
01:31generative AI. But three weeks ago, he said, we're getting into the chip business and we're
01:35going to compete with NVIDIA. So I think just this strategic pivoting really demoralizes people
01:42and confuses them about what the strategic priorities are of the enterprise.
01:46So the net result is to, I guess, attract and retain. They have to pay more. And in Silicon
01:51Valley, that means stock. That's not like Laura and I grew up in Wall Street, where it was just
01:57cash, cash, cash. Out there, it's all stock. What's the long-term impact, do you think,
02:02on their equity value, their stock performance?
02:06I think it means you have higher employee churn. And the people who churn are the people who can get
02:12the next job, which means they're good people. So they're leaving for OpenAI or Anthropic or Google.
02:17And so that makes, to get the new person to replace that churned out person is just more
02:23and more expensive. And that's bad for shareholders because it's dilutive to shareholders if you have
02:28to pay people more to attract them and retain them. So I think it's bad for, and it's bad for
02:33both.
02:34I mean, both employees and Wall Street need stock prices to rise. So it's bad for both employees and
02:41Wall Street to have them have to give so much equity to attract and retain people, I think.
02:46What does it mean for the company's ability to deliver on these new strategic initiatives? I mean,
02:51if Mark Zuckerberg is pivoting the company every six months, every year to something new,
02:56he's paying up for the talent. But can they execute if the, I mean, if there isn't that
03:02allegiance between company and employee the way you might find elsewhere?
03:06Right, exactly. So one of the things he just said in a town hall that he's going to lease capacity,
03:11he just did a $10 billion leasing deal where he has built too much capacity because he said his AI
03:17initiatives aren't going as quickly as he had hoped. Well, that's exactly the answer to your
03:23question, that the employees are either infighting or it's unclear what priorities are. Things are
03:28happening slower regardless of, despite the amount of money he's spending on talent.
03:34Laura, you're one of, there's 72 buy ratings on this company, only seven holds. You're one of them.
03:39Why is that?
03:41Because I think he is destroying value by not having strategic focus. That I think he's got,
03:48Quest was about trying to go into competition with Apple. He's in the shopping business because
03:53he's trying to displace Amazon. Of course he does search because, right? So that tries to, he really
03:58is next to search, social and search. He is the number one competitor to Google. And now he's going
04:04in the chip business which competes with NVIDIA. So I feel like his strategy is reactionary and keeps
04:11going into business, you know, sort of trying to compete with the incumbent winner take all.
Comments