Meta CMO: How Advertising Works Under the Hood

25:03It just so happens it's not in the US, so Americans don't notice it, but it is massive. WhatsApp has payments in India. It just got awarded the best payments platform in India. The government fought us for a long time on that one and now is really supportive of WhatsApp payments, which is a wonderful turnaround. So WhatsApp actually has payments in India. They're growing very rapidly. The interesting thing, though, about WeChat is going back to growth. Why did WeChat turn the corner so dramatically on payments? And it comes down to two things in the Chinese market. Thing number one is China has red envelopes.

25:41And nowhere else on the earth had the red envelopes, cash in envelopes that you get with the, yeah. And thing number two is China had not the credit cards. And so what happened was you have to connect your bank details to WeChat if you wanted to partake in WeChat red envelopes. And WeChat allowed people to give their friends red envelopes, but also gave people red envelopes. And one in 50, 100, whatever, had a large chunk of cash in it, but most of them didn't. And WeChat got people to connect their bank accounts before they could receive the red envelope. So WeChat wired up the payment system in China in a way it had never been wired up before through this viral growth mechanism that couldn't exist anywhere else on Earth.

26:22So we are building a super app. It's called WhatsApp. It is the largest place for broadcast sharing on Earth, and it has a lot of success in commerce and in particular in payments growing. But it's a lot harder to do it anywhere else on Earth than it is in China. Yeah, I was going to say, I mean, WhatsApp really is like the business communication layer. And it's funny, Americans don't use it because they all use messages, which is funny because it's like only Americans would flex using an inferior product. It might say, oh, no, no. Like there was this viral tweet. It's like, oh, I don't live in a third world country.

26:54I don't use WhatsApp. It's like, bro, messages sucks. I can't even synchronize across two devices. The message thread and WhatsApp, I never have that problem. But like I was in Lisbon randomly for a conference and like the dry cleaner on the corner only did it via WhatsApp. And like I had to WhatsApp them. and like somebody magically appears, the clothes came back, all via WhatsApp. Like no other touch point, WhatsApp, the whole thing, right? And I assume in India, it's probably even more sophisticated than that. But I think people in America don't quite understand like calling a business is like backwards or like even text, like no, no, no, no, no.

27:23There's whole business WhatsApp accounts where you can just transact business with WhatsApp and that is the communication layer. And like you said, also as a social thing, right? Like group chat started as like a WhatsApp thing. And it's like, I also did a wire piece, you know, it's like Facebook got so much flack during the whole post-2016 16 thing for like feed and ranking. It's like, bro, there's no ranking and feed in WhatsApp and it still causes both good and bad. Like technology always has positive and negative externalities. And so of course there are some negative externalities to come out of tech, but that all happens on WhatsApp too.

27:52It's not the ranking. It's just putting a network computer in everyone's hand and connecting everybody to everybody is obviously kind of a shock to the system. Right. And so that's, it's always going to have, you know, it's going to convulse the system a little bit. So you see some negative outcomes, but net, I think it's positive. And again, having a communications layer that everyone can communicate on, that's just, to me, it's crazy, right? And WhatsApp is that layer. So one thing that actually has changed in the past 10 years of ad tech is retail ad networks. And you mentioned a little bit inside your book, Alex.

28:21And for those who aren't familiar with it, and I haven't played in that pond too much, but one of the unique things, and it actually reflects another topic that we haven't gotten into, which is privacy and GDPR and all that, that basically inside large retailers like Walmart, like Amazon is probably what, the number three ad system after Meta and Google at this point, or like number three or number four. And it's unique because what retail ad network means is you're showing ads inside a retailer that already has a first-party experience with the user, which again is somewhat unusual, right? Like typically the classic ad network is advertiser A, advertising and publisher B, and A and B have like nothing to do with each other.

29:01But in this case, advertisers are actually paying for placement inside like a native Walmart shopping experience. And part of it is it's very efficacious, right? Like you control the entire, like you say in your book, friction kills everything. And so having a single form of payment, whether it be Amazon Pay, Walmart, or Shopify, for example, who also does the same thing, is absolutely key. But the other thing, of course, the way privacy law works, if you have a first-party relationship with the user, you can do things with data that you can't as a third party. I mean, arguably, it's a good reason for that, but it does skew the market a little bit.

29:31Walmart can sit there and construct a certain segment around users because they can legally do that because they have a first-party relationship. But then they leverage that data for a third party who's buying an ad inside that system. And so it's a combination of both easing the funnel and, frankly, getting through existing privacy law that's kind of driven that. But I'm curious, yeah, what you think about that? Because that world, I think, didn't really exist when I was at Meta, and it's only come recently. I'm curious what your take is on that. Yeah, there's one other thing that you're missing off, which goes on deeper in the retail ad network funnel than necessarily in the Walmart and Amazon.

30:08But like the smaller retailers that do it, they also buy off other companies with the data they have on first party. So the retail ad network becomes a third party ad network as well, which is space for opportunity for things to go awesomely and space for opportunity for things to go really badly in terms of fraud attribution and your ads showing up in the wrong place. yeah i mean i think when you look at it from the perspective of an fmcg company and i'd add in um for a lot of quick serve restaurants qsrs doordash is a retail ad network as well uber eats has a retailer network as well and so they're seeing this situation where they're getting a double bite of the cherry from the people who are retailing their goods both at walmart and amazon and also with uber eats and doordash where they have to pay for placement to promote themselves, and they have to pay a commission to the vendor.

31:01So this sounds terrible, right? This sounds like it's a real squeeze from the distribution channels onto the FMCG companies and the quick serve restaurants. But it's also just the history. And this gets back to a lot of what I feel and have put in the book. This gets back to the history that Benedict Evans likes to say. Amazon got the Sears catalog from 1950 and just implemented everything in the Sears catalog for the internet. You paid for placement in the shelves when you were on Walmart in the big megastore. You paid for placement in the Sears catalog. Retail ad networks have existed for as long as retailers basically have existed.

31:38And so all it's done is modernized that and brought it online. It's going more to below the line media budgets. So kind of direct response, placement related media budgets, discount related media budgets, and less to above the line, typical media buying. So it's competing for different budgets. But it's a major, major factor in terms of the ad industry right now. And the whole thing does boil down, as you say, to data and algorithms and first party data having advantage over third party data. So these big companies have a really good legs up to be successful in this space. Which if you're being charitable, you would say, well, that was a good outcome of GDPR, right?

32:17I mean, it's true. Like the sketchiest part of ads was always the third-party data vendors. I won't name names, but we know who the companies are or were for that matter because the world has died a little bit. But like that part of it always kind of sketched me out a little bit. I think the reason why I think you should privilege first-party data is because if you have the user relationship, you'll safeguard that user relationship because you have a long-term incentive in making sure that user is comfortable and doesn't, you know, bail or turn out of Amazon Prime or stop buying on Walmart and buy some targeted steb, right?

32:44they're not just a random user that you have a very transactional relationship with. There's actually like an arc of a relationship there. And if they were to turn out, that same growth leader is going to get dinged in the next report. Like, well, why did their retention rate go down to 75 % or whatever? It's like, well, because you burnt them out on ads or the ads are terrible or what have you, right? So I think it actually aligns incentives very nicely. A hundred percent. But it is directly incentivized in the privacy laws. But yeah, a hundred percent. Is there anything else worth sharing about how the industry is going to change with the platform shift to AI?

33:16Alex, you gave a couple examples earlier, but anything else, high-level or concrete, that's worth mentioning? Yeah, I think ads to AI agents are going to be nuts. I think the interesting question is, you have to pass that personal context somehow. Like you mentioned, like, it's funny, you know, one of the interesting exercises is go ask your favorite chat to BT, like your open session when you're logged in. So, but what do you know about me? And it's amazing how much it knows about you. And it's not even scraping the internet. It's just like literally, so what do you think my political opinions are?

33:43What do you think my tastes in clothing are? And he just sits there and rattles off the most informed opinion that knows me better than my fiancee does. And, you know, how you activate that in a kind of ads-sponsored sort of way I think will be interesting. I think there's going to be billions of dollars of billable hours for privacy lawyers that have to figure this out. But at some point, you're going to get to the point where, in fact, you have even better personalization than you have now. And again, in a way that you yourself control and is probably centralized in one place and all that good stuff.

34:13But it'll be interesting to see that play out. It's funny, though. Cookies are still around, Alex. Everyone's been predicting the death of cookies for 10, 15 years. And yet, here they still are. And Google has reversed sports. So that's actually quite easy on that one. Yeah, I think this point is also like, if you think about which ads are going to be disrupted, you've already got a bunch of disruption happening for Google Search, for Metro Advertising. There's going to be more disruption. There's going to be more creative stuff happening. We talked about that already. I think the thing we haven't talked much about is direct mail and how direct mail was a letter and then direct mail was an email and then direct mail was an SMS and then it was a push notification and now it's a chat thread.

34:52It has a lot of stuff in common across all of those different areas. But when your direct mail is sentient and can interact with you, that is going to completely change the value of direct mail marketing and having a chat thread with your client, with your customer. And so I think that is probably the field inside marketing that's going to get revolutionized the most. Because I mean, definitely, I mean, I was talking to one very large luxury cosmetics company at Pan. And they were saying in one country, like of their DTC sales, 30 % online were coming to chatbots now, a large company. and the startups in the beauty space, there are some that are totally chatbot first in terms of sales.

35:40And if you look at India, if you look at Thailand, so much of what's happened in tech came out of Southeast Asia and Asia in general. So look, Kakao was the first real breakthrough in messaging. Yes, there was WhatsApp, Line, WeChat, all the others, but Kakao was like the first one we looked at that woke us up. Kakao's story was there before Snapchat brought it to the US by a year, and then Snapchat made it disappear, which was really smart, but like a cow story was first. You know, TikTok came out of Southeast Asia. You're in this place where at the moment you're looking at TikTok shop, you're looking at some of the other stuff that's going on that's come out of Southeast Asia.

36:16And the stuff, or Asia in general, sorry. And the stuff that I'm looking at a lot is for businesses, they are now replacing a chat thread with a human being, with a customer, with a chat thread, with a chatbot, an AI chatbot. and in the US, that's not working. And in Western Europe, that's not working. But in Asia, that is working right now. And in the developing world, Brazil, Africa, that's working really well and it's scaling. And so I think that's something that'd be really big that comes across is direct mail will be completely revolutionized by AI. It's funny you mentioned direct mail because it's, I mean, direct mail is where this all started.

36:52I mean, I actually, in Chaos Monkeys, I kind of draw a line between, at the time, I don't remember, Alex, when we were doing like custom audiences and stuff, it was like, yeah, Bed Bath & Beyond and there's like 20 % off coupons or whatever. And the reason why Direct Mail, people were wondering like, what the hell is Direct Mail about? The reason why is because the primary key to use database language for the American consumer was the address, right? And that was the way that you would address, like a lot about ads to get a little philosophical about it is about identity and addressable media.

37:18Like how do I actually reach out to that person and then follow that identifier throughout the entire conversion funnel? It used to be literally the address because then you'd order something, it'd arrive at your address and that was the attribution system, right? You received the thing and then that would be cataloged by that. But of course, everything going on the internet meant a total reshift, whether it be mobile device identifier, Facebook user ID, cookie, what have you. It's just interesting that how the notion of who you are as an individual actually informs a lot of the marketing and in the crypto context, just to go to what I do right now a little bit, your on-chain wallet address is kind of that identifier, right?

37:53And that's a whole different namespace for the user. And so it's just interesting to see how, I think you say this in your book, the details change, but the fundamentals always persist. So the primary key on the database shifts from mailing address to cookie, to mobile device identifier, to Facebook user ID, to blockchain address, but the actual principles don't change, actually. They're exactly the same across all these channels. Couldn't say that to myself. So I want to play a little bit of alternative history, but it's like four or five questions. What if Instagram was an independent company and wasn't bought by Facebook?

38:31Antonio, because I'm not sure if Alex can comment on it. Antonio, imagine you can comment on it. The antitrust trial is over, and I just spent two months in D.C. I can comment on it. Great. So maybe imagine a world where Instagram said, no, no, played the Snap route. What would that look like? They look like Snap, maybe smaller. I mean, I think if you look at what Kevin has testified to, like he's explicitly testified to he said it could go either way um you know on whatsapp i think whatsapp was tremendously successful and i would not say that i as a growth leader did much for the success of whatsapp we helped them a lot with infrastructure i think we kept them free i think there was a bunch of things that we enabled to happen for whatsapp but bluntly whatsapp was a great great product with higher attention instagram i think was touching go as to whether it could be either a Twitter or a Snapchat or just a complete also ran like path.

39:27When we announced we were buying it, there was a massive spike in their growth just caused by the PR. Literally the global news that Meta was buying, Facebook was buying, Instagram caused their growth to accelerate. And there's a whole stack of things I can go into in the details of like their infrastructure was on the verge of falling over. They were in a position where they had real, real issues with spam filtering and massive issues with comments. that they were failing to get on top of. Now, the flip is, obviously, it could have gone either way. And that's exactly what Kevin said. And I can see how it could have gone either way.

40:01Another company that got there. But, and Mikey and Kevin were astounding. You can see a front of what Mikey's doing today. But Mikey and Kevin were just so brilliant. And I loved working with him. At the start, we fought so much. Like, Kevin and I fought so much. And by the end, I'm like, he's one of my favorite people to work with. You fight, Alex? No way. I don't believe it. I know. But we did. We fought. And by the end, we were like, hopefully aligned. And so I think it could have gone either way. My gut is it would have been maybe Snapchat, maybe Twitter. It wouldn't have been zero, but it certainly wouldn't have been the Instagram it is to death.

40:38What were some of the biggest, what was the crux underlying the fights? So there was some organizational stuff which literally came up in the trial. My team really, you need to have a product and engineering team on growth. You can't just have a marketing team. And the magic in Meta is that we have really made it a capability that is so ingrained in the company that every product and engineering team gets growth now. And it is really special about the company and it's different about Meta. And I have a product growth team, but it's only like 100, 150 people for an 80 ,000 person company. It's not a massive, massive team who then go in and help teams implement growth best practices throughout the company.

41:23At that time, Instagram didn't have a growth product and engineering team. And so we had a big disagreement over that. In the end, they built one out. It was really successful for them. And actually, it's a place where we ended up being super aligned and super happy with each other. But we've done a fight. The other place that was massive was called the Connections Pivot. So Instagram was focused on public figures, and it was not focused on friends and family. You remember, it was public photographers and cool celebrities and everything. And we said, no, people you may know, which on Instagram is accounts you should follow or suggested users, is really important to get that happy blend of friends and family with public figures, you know?

42:07And Instagram was a modern social network where there wasn't a distinction between business account account and friend account, whereas Facebook, MySpace, others, they had some of these distinctions back in the day. And so we had a disagreement over like importing contacts, focusing on friends, all of those things, focusing on algorithmic follows and all of those. So those were the two, I think, larger disagreements that ended up being quite front and center in the antitrust case. And so I feel I can mention them because they have been covered in the press and they are literally a matter of court record at this time.

42:40Okay, continuing our alternative history theme, and Antonio, why don't you take this one? What if Libra was allowed to sort of exist in its full vision without regulatory challenges? Yeah, I mean, I wasn't there for the Libra period, to be honest. But obviously, I'm at a crypto company now. It's amazing how much the regulatory landscape changes everything. I think recently Stripe announced that it's building an L1. Every company and their brother seems to be announcing a stablecoin. We had major crypto legislation passed that was favorable to crypto. We've had members of the admin say that they want the U.S.

43:16to be the capital of crypto, which obviously is something I'm supportive of. it's just yeah I mean I think if Libra were to launch now or something it would be a very different conversation and it seems like it was doomed from the start at the time it's a shame but yeah I think you're going to start seeing crypto be sort of the rails under the hood people are going to be on chain and not even realize it actually which is fine and actually arguably is the way you should build these things and I think it's again what's the positive shine on all that I think I tweeted about it yesterday right The fact that you're going to have investors around the world who can hold dollars freely or who can invest in American equities but have them on chain with all the rigmarole that it takes to buy a U.S.

43:56stock in some other country, that's going to be magical in a way. And it's going to open a level of economic freedom that you haven't seen to date. I know that's probably a little bit beyond the purview of whatever Libra's goal were back in the day, but just to give an example of how it actually opens up the world and makes it freer and drives more economic growth, that's kind of a good thing. And that's kind of part of the reason why I got CryptoPill. that's like, man, it does seem like a lot of traditional institutions are actually choking innovation rather than fomenting it. And sometimes you kind of need a different paradigm to kind of kickstart that process.

44:24And I'm old enough to remember Web 1 and Web 2 and now Web 3 if we're still using that term or on-chain or whatever. Yeah, I think obviously Libra now would be a very different scenario. Maybe Alex has thoughts on this one. I'd add one thing, which is, look, it's public now. that one of the places we go when we are sourcing terrorist material to take off of Facebook and Instagram is Telegram. Like, we go to Telegram, we subscribe to the terrorist groups, we take the data, and for prescribed organizations in the United States and the United Kingdom and so on, we take down the terrorist information.

45:03That is illegal content by anyone's standards. It's not sort of one of these debatable areas of content moderation. If you were in a place where Libra had succeeded, you would have WhatsApp, Messenger, Instagram, front ID, US-friendly messaging apps be the successful ones with crypto. And instead, you don't. And I think that probably matters to national security and matters to a lot of things that the people who beat us up on this actually care about. Continuing our alternative history, Antonio, we'll start with you. What if Hillary had won the 2016 election? Oh my God, I'm not even going to go into that topic.

45:42I have no idea. Absolutely. No clue. Is there anything to say? Totally different. I have no idea. Going back to sort of AI for a second, it seems that mobile was more of a sustaining technology than it was a disruptive technology. Sure, we got Uber and Snap and Instagram, but more of the gains went to Facebook and Google than the entire startup industry from the time. Do you think something similar is going to happen in AI? maybe Antonio will get your first take where companies invented pre-2016, pre-open AI are going to just accrue so much more value than the companies after it? I don't have a hard answer.

46:27I find myself somewhat unopinionated. I do think it's one of the great questions. Are you going to have the incumbents? I mean, Microsoft seems to be playing the AI game pretty well and actually have it bootstrap or boost their growth. Are they going to be totally and utterly disrupted? I mean, I think another way of framing the same problem is, is OpenAI and ChatGPT and some of the other foundational models who currently own the consumer experience? Are they going to own the consumer experience forever? Are people going to actually be building apps on top of a more API-ified version of, and it's, like Alex said, it's intelligence too cheap to meter and it just infiltrates every product, you know, bots, whatever.

46:58I really don't know what the answer there is, to be honest. I think it's going to be, it's a standard yin-yang thing of like, can Amazon become Walmart before Walmart can become Amazon thing, right? In which can the old become the new faster than the new can eat the old? And we're going to see that play out again. Yeah, and I challenge you a little bit on mobile, how sustaining it was versus disruptive it was. I think, maybe I'm being a Chinese dipper here, I think it is too soon to tell because a lot of stuff couldn't happen without mobile in the current wave of disruption that's coming with the chat interfaces for AI.

47:41So we will see. The thing for me that's been the realization is when I got into this 20 years ago and Google was maybe the previous generation of company and then you had Apple and Microsoft. And Yahoo and eBay were the most valuable companies on the internet. And you know what? Google, Amazon, Microsoft, they made it through Yahoo and eBay are much less relevant today. And the question is, are we the leadership team that does the Google, Apple, Microsoft, Amazon, or are we the leadership team that does the eBay, Yahoo, is a question that really does keep me up at night and makes me think about this moment of transition.

48:18We've gone through a lot, but there's another one coming and now we're the little age company leadership, which is interesting. I think Meta's recruiting strategy from how I understand it as an outsider is just absolutely brilliant. And I'm surprised more sort of, you know, big tech companies haven't done it sooner and have more just sort of antiquated sort of understanding of sort of aligning compensation to true value. Antonio, do you have any perspective on whether or any thoughts on whether that's going to be the norm going forward? or? That's so above my pay grade, Eric. I wouldn't know what to tell you there.

48:53I mean, obviously, you know, I think one of Mark's famous saying is that we judge you based on your outputs, not your inputs, right? And that was like the party line, even at Meta like in 2011, and I assume it hasn't changed. And I think every sane, you know, successful company I've worked at has had some version of that as a company principle. Yeah, I mean, I think the thing that certainly is being talked about and conversations I'm having is people who can successfully use AI as individual contributors in particular, it is a force multiplier. Like you give a 10x engineer access to AI, like they become a 100x engineer.

49:34And it is showing, therefore, the best talent when they can use the tools that currently exist becomes way more valuable. and then being able to produce the tool is way more valuable too. If that continues to play out, that will mean there will be a massive differentiator in how pay works out for the 10X, 100X engineers than there is today, which is already, like they come in at VP level, they are paid significantly more than the typical IC, but clearly, clearly there's going to be more. The other alternative is these tools make it easier. Now, my perspective is the tools help you implement a lot of stuff that's been implemented before, but they don't solve logic for you.

50:21They don't solve creative thinking for you. And so they push things up the value stack in terms of where the work is happening. Whether you're talking about marketing, or I run data science and data engineering for the company, you talk about DS and DE, they take away routine data pipeline coding, but they don't get you to the creative analysis that actually does something that changes the direction of the company. So I think there's a good chance that value accrues to the most creative, best logic thinkers and value gets taken away from the routine work, which therefore would say compensation is going to go up for the best employees.

50:58Yeah, the best encapsulated effort is you're not going to lose your job to AI. You're going to lose your job to a human who uses AI better than you do. That's who you're going to lose your job to. I mean it's still kind of a harsh lesson but that's the reality of it Do you think these companies in the future have fewer employees or more employees? What's the way to think about it? So this is a really interesting one two things one it depends how weird you think it's going to get like do we actually get to a S-I-A-G-I if we do that's not you know AI 2027 is not the table um Look, this comes back to three different things, which we are talking about a lot internally.

51:40Thing number one for the framing is doing existing stuff more efficiently. Existing stuff is going to be done more efficiently with AI as it exists today without more breakthroughs. Like a lot of stuff can be automated. A lot of stuff can be done more efficiently. So that work, there will be less of it. Thing number two is things that literally weren't possible before will become possible. that can open up a lot more jobs. And thing number three is things that were possible but just were really effing expensive suddenly become over the threshold of reasonable to do. That's the support example I used recently.

52:19So thing number one, let's just rank ads better. We could already rank ads. We can now do it more efficiently. We can rank them better. Thing number two was semantic understanding of content to lead to content ranking to enable short-form video and unconnected content could not exist without these models. It now exists. Thing number three is support chatbots. You could do it with human beings before. It was just prohibitively expensive. And now AI does a hell of a lot better than a phone true. So there are those three different categories. And what matters is jobs will go down in category number one.

52:52They were. How many jobs category number two and category number three create will determine some of these companies may even get bigger. like literally, because so many things are now ROI positive to do. So this is just, I think it's still up in the air, but what is certain is all three of those things go on. Yeah, no, I think in the short term, one of the biggest problems here is what's called a lump of labor fallacy, which you assume that there's a certain fixed amount of work in the world. And it's not true for manual labor. It's not even true for knowledge. It's certainly not true for knowledge labor.

53:22I think in the short term, you might have, AI might have a negative impact on hiring ever so slightly in certain places, maybe interns or junior engineering. but overall I think I agree with the latter I think was the last scenario that Alex set out which is no it actually increases jobs I mean take the example of stagecoast drivers and the introduction of a car right it's like yeah the poor stagecoast driver who had a team of horses through you know New York whose streets used to be full of horses with horsemen around the streets I'm looking at New Yorkers why I'm citing the analogy cars created hundreds thousands of new roles that didn't exist in the past from motel owners to gas stations everything you can possibly imagine so the thought that we're just going to sit around with 99 % of people just getting paid UBI from OpenAI that's the least likely scenario I see playing out actually to be clear I think there'll be disruption between here and that point but I just don't see no I think there's going to be more demand, there's going to be more code there's going to be more companies like Alex said there's going to be things that weren't even physically possible or possible just so expensive you couldn't possibly use them which are suddenly seizable and so no I think it's going to be actually a net positive on society.

54:28It's just going to change. And change is scary. But that's it. I mean, generally kind of positive AI. I think if anything, it's funny because you think, oh, this cognitive elite of AI builders, like, dude, if you have intelligence on demand, does that make intelligence more or less valuable as a thing that just exists in the world? It's like, no, no, the human touch, EQ rather than IQ, and I hate those buzzwords because they sound very LinkedIn. But you know what I mean, right? Actually, the raw intelligence is just going to be a thing you buy just like a server on AWS, that actually matters a lot less than actually framing the problem or the human touch tool.

55:03What if Snap had sold to Meta? I think Snap would be Instagram. I genuinely think we have the tools and the ability and the know-how to make things more successful. So I genuinely think it would be significantly more successful if it had. But, you know, that's a woulda, coulda, shoulda. and I'm sure they might not agree with me, but that's what I believe. Five plus years after the acquisition of, well after the acquisition of Oculus, after sort of the big bet on the metaverse, help us conceptualize where we are five plus years later and where we're going. Yeah, I mean, the thing I would do is, we spent an awful lot of time and an awful lot of money on a video that was the mother of all demos of what the future looks like.

55:54and that video contains AI assistants, it contains audio glasses, it contains glasses like our Orion glasses we put out last year, which have sort of the visual overlay. And what's really interesting to me is, despite everyone saying the metaverse is over or whatever, a lot of stuff in that video is coming true. And so my perspective on this is, these are a smash here. So the glass is total smash here. It's AI with you at any stage. You can ask it questions. I now ask it all the time to give me a reminder. I think of something and I say, hey, Metra.ai, remind me in three hours of X, which I know is a minor use of it, but I don't have to take my phone out and send myself an email.

56:37And I'm finding myself just, because it's with me all time, all day, I'm thinking of things to use it for. These have a lot of active users at this stage. And that is one of the things we feature in the video. So my perspective is, you know, where are we? It's a research and development space. Actually, amazingly, the AI jumped forward far faster than we thought, which means that it got ahead of the waveguides that are needed to do the overlaid, like augmented reality experience that we think is the end game. So, yeah, that's going at the pace that we expected it to. The AI is going far faster than we expected it to.

57:17And I think you'll probably see 10 years from now people walking around with these glasses, with always on AI, with a visual overlay of the real world, helping them navigate their lives better. What is your prediction of, Antonio, as now an outsider of what the legacy will be of Meta's big bet, you know, rebrand and sort of big financial bet on the category? I mean, this is definitely an outsider view because of all the companies we talked about, the VR thing didn't exist at all when I was at Facebook. So this is a completely uninformed view. It's still to me the big investment. I mean, and again, you know, Alex has a deeper knowledge here, but it seems to me that Mark's obsession was always mediating human social behavior in different forms.

58:02And how many touch points could that possibly take? I think Facebook played its cards with the mobile revolution very well. And I guess the thinking there was like, well, VR is the next way that humans are going to interact with each other. And so we're going to build a social grass around that. It hasn't quite played out that way. I'm not quite sure why, because I used to be an AI skeptic as well, because for the past 20 years in tech, It's like AI is the constant technology of the future, and it seems like the future is finally here. But similarly, virtual reality has always been this perpetual technology of the future.

58:28And somehow that ship hasn't really quite come in yet. That said, over the longer term, I suspect something like the VR headsets that I think Alex mulled for us a second ago probably will be in production and at scale. But sometimes things are just too early. I think people, if you actually read technological history, you realize that technology has developed a lot longer to develop than you think they did, right? There was 20 years between the transistor and the integrated circuit, another 20 years between the integrated circuit and the PC, another 20 years between the PC and the internet, and like 10 years between the internet and mobile.

58:59So these are like decade long things that play out. So it might just be too early, I think, in the case of VR. Is there any world which Facebook, Amazon, Microsoft could have made an actual competitor to the iPhone? Or was it just too complex and a better try for the next platform, VR? Maybe if everyone had spotted it early enough. But everyone said it was the year of mobile for years and then stopped saying it. And then suddenly it actually became the year of mobile and we all missed it because it actually happened around 2010. and so I think the issue is everyone missed it. Yeah, maybe, maybe, but I think probably not.

59:39Gearing towards closing here, Alex, the book is Click Here. It's a history of the industry, it's a history of the company. Meta, Facebook, obviously it's one of the most, if not the most iconic and important company of the last 20 years, not just the technology, but globally. And it's had a lot of different evolutions and phases in its substance and its perception. What do you think is not fully appreciated about where the company is now or what's a misperception or misunderstanding that's worth correcting? You know, I'm going to come back to what I said at the beginning, but this is obviously my personal take on it.

1:00:12I'm sure if you asked Mark, you'd have a different opinion. The biggest thing is that advertising is good. And I think there's this whole thing about like, you know, surveillance capitalism, ads are bad, you know, and it's all protecting people from slightly better ads for personalized trainers. and I actually think like the way that it gives people access to things that they like, like people prefer personalized ads to non-personalized ads. We have tested that again and again and again. If we just personalize the ad based on your demographic, you will not like what you get. But if it's based on what you truly like, you'll get a better experience.

1:00:49And I'm still struggling to see what European customers have been protected from, that US customers are suffering from, when it comes down to a lot of this privacy regulation and a lot of this hatred of ads. And so the number one perfection I want people to ship is ads are a good thing. People like personalized ads. And, you know, yes, the book has a bit of history in it of the company. It has a lot of context on each of the channels. And I think it is really important that we as an industry care about advertising and learn how to do it well. A lot of startup founders just still believe in like, oh, they clicked on my ad and they converted.

1:01:26Therefore, the ad drove that conversion. there's some really obvious stuff that people can learn. And this book is, I think, at a good level to get people to know how to do the basics really, really, really well. The book is Click Here, The Art and Science of Digital Marketing and Advertising. Alex, it's been a fantastic conversation. Thanks for coming on. Thank you very much. And thanks, Antoine. Thanks for listening to this episode of the A16Z podcast. If you liked this episode, be sure to like, comment, subscribe, leave us a rating or review, and share it with your friends and family. For more episodes, go to YouTube, Apple Podcasts, and Spotify.

1:02:03Follow us on X at A16Z and subscribe to our Substack at a16z.substack.com. Thanks again for listening, and I'll see you in the next episode. As a reminder, the content here is for informational purposes only. Should not be taken as legal, business, tax, or investment advice, or be used to evaluate any investment or security, and is not directed at any investors or potential investors in any A16Z fund. Please note that A16Z and its affiliates may also maintain investments in the companies discussed in this podcast. For more details, including a link to our investments, please see A16Z.com forward slash disclosures.