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Aug 5, 2022 11 min read

⚰️Wiser! #85: The End For Facebook? | Saylor Quits For Bitcoin | Brands in the Metaverse

⚰️Wiser! #85: The End For Facebook? | Saylor Quits For Bitcoin | Brands in the Metaverse
Table of Contents

Wiser! #85: The bigger they are, the harder they fall. And there's no-one bigger than Facebook in Social Media. Is this the beginning of the end for the world's largest network? I think so.


w/Issue #85 - 5th August 2022


Welcome and happy Friday to the 13,844 smart people who want to make sense of what’s happening in today's tech economy.

Today, I'm talking about;

  • 4 reasons why it's the beginning of the end for Facebook,
  • Michael Saylor choosing Bitcoin over his 30 year stint as CEO of MicroStrategy,
  • what some brands are doing in the Metaverse,
  • tech stock roundup for the week.

Also, let me tell you about my next piece of work for premium subscribers. It's all about big brands, NFTs and positioning in the Metaverse. It’ll be a good one!

p.s. you'll notice that I've completed the rebranding on the website and to the newsletter. Hope you like it.

📬
If you've been forwarded this email by a friend or colleague, you can join the mailing list here for free.


w/Social Media


Is This The Beginning Of The End For Facebook?


First Time For Everything: Last week, Meta reported a decline in quarterly revenue for the first time ever. It may have only be a small decline (1%), but it was nonetheless a significant moment. Because it follows a trend of stagnant and declining user numbers...two fundamental indicators that can not be ignored.

The Point Is: IMHO, Facebook are screwed.

Here are my 4 reasons:

  • Their reliance on digital ad revenue is being severely tested. Apple cut them off at the knees last year to the tune of $10 billion a year when they allowed the 1.25 billion iPhone users to turn off app tracking.
  • TikTok are bossing the attention economy with no sign of a let up. Facebook just look desperate in their attempts to change to be more like the viral video app.
  • Mark Zuckerberg’s Day of Reckoning is getting closer. Cambridge Analytica is the scandal that is just not going away. The buck stops with Zuckerberg, who controls over 50% of the voting shares on the Meta board. Now he is to face a 6 hour grilling over what he knew and what (didn't) do about it as part of a class-action lawsuit.
  • The pivot to a Metaverse business has stalled. In the last quarter, the virtual reality division lost $2.8 billion. To make matters worse, Meta just increased the price of its Oculus devices around $100. They say it's because of more expensive parts. Whatever, this isn’t going to make the face bricks more appealing!

Go here to read the full version of The Beginning of the End for Facebook.

Other Facebook News


w/Metaverse


Xiaomi's Mijia AR Glassess

What Brands Are Doing In The Metaverse

Here are some examples from the forthcoming trends report on What Brands Are Doing In The Metaverse.

Xiaomi launch AR glasses

Augmented Reality: Intended solely for the China market these camera glasses will cost around $370. Called the Mijia Glasses Camera, it's distinctive feature is the 50-megapixel camera strapped to the side of the glasses.

Unlike Snap and Meta who are going for inconspicuous designs for their camera glasses, the Xiaomi model make no attempt to hide the additional technology.

So, whilst it may not win any designer awards, Xiaomi has an impressive record when it comes to launching products and it shouldn't be underestimated.

Banking in the Metaverse

Virtual Banking: The Sandbox is a virtual world running on the Ethereum blockchain network. It's essentially a huge video game that allows users to "live" a virtual life.

Now, the Sandbox has announced plans to run a real world bank in its virtual world. KEB Hana Bank is a commercial bank that provides the largest range of foreign exchange products in South Korea.

  • And they're opening up a bank in the Metaverse.

KYC Will Be Fun: Users will be able to access the virtual branch of the bank and request basic banking services, although it's not entirely clear exactly how this will work. I imagine that the Know Your Customer checks might prove problematic ("you don't look anything like your avatar!")

So Jung Kim, Deputy President of KEB Hana Bank, said: “The Metaverse is the way people will experience Web3, and we want to be a part of this new trend. This partnership can open a door for a brand-new type of service, especially for the young generations.”

Tinder swipes left on the Metaverse

About Turn: Talking of looking like your avatar (not).

Tinder has announced that it is scaling back its plans to build a dating app for the Metaverse. This is more to do with the poor performance of the business and the departure of the short-lived CEO than a reflection on their plans to build Tinderverse. (I didn't make that up!)

Dating In The Tinderverse: Their plans were to build a virtual town for real people to meet, represented by avatars that all looked nothing like their owners (to give it that unique Tinder feel).

Interoperability: Is the key word. The ability to move freely between ‘verses is one of the defining characteristics of the Metaverse.

  • Just like the early days of the Internet,  when the likes of AOL thought they could build their own, private version of the Internet, that’s not how it’s going to work.

Tweets For The Metaverse


w/Web3


The Day Michael Saylor Chose Bitcoin Over His Own Company

Nobody Saw This Coming: When software firm MicroStrategy posted a $1 billion loss, that wasn’t such a surprise.

After all, MicroStrategy have bought 130,000 Bitcoin at an average price of just under $31k. It's hovering around $23k at the mo. That's a loss!

But, what wasn’t foreseen was that Michael Saylor would step down from the CEO position he's held for three decades. He stays on as Executive Chairman with a role of overseeing the firm's Bitcoin strategy.

A Big Bet: Buying Bitcoin for the firm's balance sheet has been a bold move for Saylor. But then again, he is one of the most vocal advocates of Bitcoin in the world. He simply put someone else's money where his mouth is.

According to Axios;

MicroStrategy has used every financial lever available to fund the buy-and-hold Bitcoin strategy it announced in August 2020. The company sold its stock, issued corporate debt and convertible bonds, plus took out a loan backed by some of its Bitcoin.

Imagined Pain: MicroStrategy's Q2 hit on earnings is a balance-sheet reporting exercise. It's more of an imaginary pain than real blood loss. That's because it's (only) a loss on paper for as long as the firm continues to hold the Bitcoin on its balance sheet.

  • It's not until they actually sell them that the losses, or gains, become real.

(As an aside, did you know that Bitcoin is reported as a depreciating asset under US GAAP.)

Bitcoin Whale: MicroStrategy are the biggest corporate hodlers of Bitcoin. (“hodle” is a deliberate misspelling of "hold” and used in crypto jargon when you hang onto your cryptocurrency.)

Shortly after announcing his changing role at MicroStrategy, Saylor tweeted this…

Bottom Line: Saylor made a choice.

My guess is that the board asked him to chose between being CEO (and running the company full time), and becoming the de facto global ambassador for Bitcoin.

  • Saylor chose Bitcoin.

What Are You?: The issue MicroStrategy have is that their stock price has become inextricably aligned to the price of Bitcoin. It no longer reflects the fundamentals of the firm’s financial performance, or the narrative of MicroStrategy as a software firm (whatever that is, does anyone know?)

It's a curious situation for shareholders, who must be questioning what it is they're invested in. Is MicroStrategy simply a front for a Bitcoin hedge fund now?

Other Web3 News


w/Markets


A Week In The Markets

🍎 Apple exceed earning expectations

Apple reported Q3 earnings with revenue of $83 billion, up 2% YoY and above estimates of $82.8 billion.

🚙 Uber is making money for the first time

It’s only taken 13 years and $25 billion of losses for Uber to report positive cash-flows for the first time. Uber recorded a $2.6 billion Q2 loss but doubled its quarterly revenue and generated $382 million in free cash flow. Uber stock responded by climbing 19% on the news.

📸 Snap misses on lower ad revenues

Snap reported a 13% rise in revenue of $1.1 billion. But the Q2 numbers were below expectations of 20-25% growth and the stock tanked after the earnings were announced.

  • The company cited lower advertiser demand largely impacted by Apple’s privacy changes (Google are the only ad rev business withstanding Apple's privacy changes, thanks to their Search business.)
  • Snap's Daily Active User number grew by a healthy 18% YoY to 347 million.

📈 Other Market Headlines


w/Snippets


Headlines from the Tech Economy

By The Numbers

  • $65 Billion: Global app spending reached $65 billion in the first half of 2022, slightly from the $64.4 billion during the same period in 2021.
  • 2050: The year that the global population aged 65+ will be nearly double what it is today. The number of people over the age of 80 will triple, approaching half a billion. An ageing population is a global concern, none more so than in Japan where more than a 1/3 of Japanese will be 65 or older by midcentury.
  • 1.59 milliseconds: Scientists reported that “Earth logged its shortest day in decades on June 29 when it completed one spin at just 1.59 milliseconds short of 24 hours.” It's a mystery as to why.

w/Hacks


Things to Make Your Life Better

📖 Book Of The Week - Elon Musk: Risking It All

Tracing his remarkable life, from his South African childhood to his move to Canada at 17 and then to the US (where Musk made millions out of PayPal and built Tesla and SpaceX into two of the world's most famous companies), this is the revealing new story of a man driven to preserve the optimism he sees in humanity and find a future for humans 'out there among the stars'.

🤖 Let AI find the content you most want to read.

If you read Newsletters then you will love The Sample. The Sample is an AI-powered newsletter recommendation machine. You tell it what types of newsletters you like to read and sit back and wait.

Every day, The Sample will recommend a newsletter based on your preferences. The more you sign up for, or don't, the more The Sample learns what you like.

🕸 The Future of Web3

In this two part podcast from Plain English, Derek Thompson talks to Molly Wood and Packy McCormick. It you're curious to know more about Web3, crypto, blockchain, NFTs and what the heck it all means, listen to both of them:

🧮 Mostly Metrics


If you missed it last week, I recommend you take a look at this newsletter called Mostly Metrics. It's a free weekly newsletter about financial metrics and business models. The writer, CJ, talks to top VCs, tech operators, and financial analysts in their quest to discover what makes startups tick. I love it and think you will too.


w/About Wiser!


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