Founding of Facebook

The story of the founding of Facebook is well known.  It was dramatized in the 2010 film, “The Social Network,” directed by David Fincher with Jesse Eisenberg playing the role of Mark Zuckerberg. In short, Mark Zuckerberg started Facebook (originally called “The Facebook”) from his Harvard University dorm room, along with his friends Dustin Moskovitz, Andrew McCullum, Chris Huges, and Edward Saverin.

At the time, the university promoted networking of their freshmen classes by publishing a small book listing all the freshmen students complete with a photograph of their face and short biography. Harvard students colloquially referred to the book as the “Face Book.”

Whether Mr. Zuckerberg himself came up with the idea to make a digital version, or he got the idea from some upperclassman is controversial, but he and a few friends coded up the website and deployed it to the Harvard community. It was an immediate hit, and membership in the Face Book spread like wildfire from university to university

At the urging of Napster founder, Sean Parker, – the world’s first internet-based music file sharing program (think forefather of Spotify) – Zuckerberg moved the development team to Silicon Valley and then followed in the footsteps of Microsoft founder Bill Gates by dropping out of Harvard to pursue his dreams.  After receiving capital from various Silicon Valley venture capitalists, including PayPal (NASDAQ:PYPL) co-founder Peter Theil, Facebook gained popularity and expanded.

Mark Zuckerberg as a freshman at Harvard University in 2005. (Source: thecrimson.com)

Since moving his company to Silicon Valley, Facebook has become a pillar of social media and has billions of subscribers. The company at this point would be impossible to replace, and that’s reflected in its hefty market capitalization of nearly two-thirds of a trillion dollars.

Plotting a Course for the Company’s Future

The company’s dedication to developing the metaverse is a lot more than just a name change. Meta has been assembling the critical pieces for its metaverse since at least as early as 2014. In that year, Facebook purchased a start-up called Oculus that had made a few prototypes of VR headsets. Facebook paid a staggering $2 billion for the company and received a fair amount of criticism for its decision.

Today, Oculus, now Meta Reality Labs, is making some of the most advanced VR headsets there are. Whereas their headsets originally required a PC to operate, now they’re a self-contained device with high powered system-on-a-chip (SoC) processing power and millions of pixels of resolution per eye. The most recent version is named the Oculus Quest 2.

Oculus Quest 2 virtual reality headset from Meta Reality Labs. (Source: theverge.com)

Another technology key to the metaverse is eye tracking technology. This technology enables the headset to track where the user wishes to go once inside the metaverse. In 2018, Facebook purchased Danish eye-tracking technology leader The Eye Tribe for an undisclosed amount. Previously, The Eye Tribe had been a start-up of 16 freshly graduated Danish college students with the goal of developing affordable software for eye tracking for a variety of applications. One such application is reading virtual sheet music where the pages automatically advance themselves.

It’s not far-fetched to imagine that Facebook’s interest in eye tracking may be much simpler. Namely, since Facebook’s core business is placing highly targeted advertising in front of its users, eye tracking software could be used to further this business model. If the direction in which a metaverse headset user is looking is known, then targeted advertising can be placed within their field of view.

Another advantage for Meta Platforms (NASDAQ: FB) developing its own metaverse is that just like mobile phones have operating systems (OSs), so the metaverse will have its own, possibly competing, OSs. Today, Meta must develop its apps, like Facebook, to operate on both Apple and Android Oss, and when an app or other product is sold, Meta must pay Apple or Google some of the money it earns. However, if Meta can develop its own OS for the metaverse, it may be able to finally relieve itself of this burden.

Meetings in the Metaverse will be better than Zoom because you will meet with colleagues or friends in a virtual meeting room. (Source: nytimes.com)

A Long-Term Strategy

As final proof of Meta’s conviction over developing the metaverse, it has hired over 10,000 new personnel solely focused on this task.

Then there is the money. In 2021, Meta took $10 billion dollars out of its bottom line to pay for its metaverse. That’s a lot of money, and Wall Street was surprised. Its stock price suffered mightily, but as company founder Mark Zuckerberg said at a recent company-wide meeting, it’s all for the long-term good of the company. The investment will come back in multiples over the coming years if the metaverse takes off the way he believes it will.

A long-term strategy is one we can get behind!

To see what happened to Meta’s stock, have a look at the chart below. The stock price has sunk in recent times, but overall it has been tremendously profitable.

That dip is one that’s worth buying. FB’s commitment to the metaverse may not pay off short term, which is what most analysts care about, but long term, there are big names already diving into this new concept. The companies that are involved don’t waste their money on fads. This is a great time to buy a MegaTrend metaverse winner.

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