Kim Kardashian and Kylie Jenner are smarter than Mark Zuckerberg
I don’t usually pay much attention to the whereabouts of the Kardashian-Jenner clan. They do not own or operate publicly traded securities. I find their show extremely boring. And while their fashion may delight, it’s so hard to know who’s wearing what when, frankly, why would I?
But earlier this week, after Kylie Jenner and Kim Kardashian came to the defense of their beloved social media platform Instagram, I suddenly realized their business savvy far surpassed that of tech titan Mark Zuckerberg. It all started when Instagram owner Meta announced that the platform would start showing users more content from strangers and put an emphasis on videos rather than photos. The move would have effectively turned Instagram into something less than TikTok – and Kim and Kylie were quick to warn Zuckerberg that was a colossal mistake.
“Make Instagram Instagram again,” the stepsisters advised in posts on the platform, circulating a petition to stop the changes. “I just want to see cute pictures of my friends.”
Lo and behold, Thursday, just three days after Kim and Kylie came up with their favorite business model, Instagram pulled the plug on its product reboot. It was a startling admission of what has long been clear: that Mark Zuckerberg basically has no idea what he’s doing.
He was right, at least, to take Kim and Kylie’s advice. Companies often try to emulate the best performing attributes of their rivals; in the market, imitation is the sincerest form of profit. But Zuckerberg should have known he can’t solve his Instagram problem by trying to replicate TikTok’s viral appeal. If Meta doesn’t figure out how to turn its products into something more than a minor photocopy of someone else’s business, it will eventually go the way of Yahoo – another identityless tech/media zombie that is went from business strategy to business strategy until it became a shadow of itself. Yahoo’s market capitalization reached $125 billion in 1999. Last year, a private equity firm acquired it for just $5 billion.
One day we might look back and compare Meta’s $1 billion purchase of Instagram to Yahoo’s ill-fated and mishandled 2013 acquisition of Tumblr for $1.1 billion. bottom line. And Zuckerberg can’t say that Kim and Kylie didn’t warn him.
Zuck, the copier
Around the same time Kim and Kylie slammed Instagram’s lack of vision, Meta announced that its second-quarter ad revenue was down year-over-year for the first time in its history. Its outlook for the third quarter shows that the company expects revenue to decline further. Meta’s stock is already down 50% this year, and Wall Street analysts are downgrading their ratings left and right. This after Facebook – Meta’s former crown jewel – in February reported a loss of users for the first time.
There are myriad reasons for this – Apple is tightening its privacy settings is one, and the reputational damage Facebook has suffered from its years of spreading misinformation and political hatred is another. But it all boils down to the fact that Meta no longer knows how to innovate its product. The company is not only boring, it is lost. Zuckerberg may be laser-focused on spending billions to pivot to “the metaverse” (whatever that is), but in the meantime, he still has to sell ads.
One way to tell you’re boring is to see what kids think of you. And by that measure, Facebook is about as cool as a “Happy Days” replay. Since 2019, teen app usage has dropped 13%, and the company expects it to drop another 45% over the next two years. “Aging is a real problem,” a Facebook researcher warned in an internal memo last year. Hence the desperate pivot to copy TikTok.
Meta tried to counter Kim and Kylie by presenting the coolest person he could find. That, tragically, turned out to be Adam Mosseri, the executive in charge of Instagram. Earlier this week, Mosseri explained that the photos will still be part of Instagram, but insisted the app needs to “evolve”. And that evolution, as Kim and Kylie acknowledged, meant making Instagram more like TikTok, relying more on algorithms and video content.
Facebook bought Instagram at the time because Instagram was an innovative and hot product – and Facebook didn’t have one. The sale took place and life went on. Instagram’s founders are gone, and now Meta is free to ruin the app (at least from Kim and Kylie’s perspective) as it pleases. But that same acquisition strategy won’t serve Meta as well now that regulators are watching Zuckerberg so closely. Earlier this month, when the company attempted to acquire a virtual reality app called Within for $400 million, which would be a dramatic departure from past Meta acquisitions, the Federal Trade Commission ruled. filed a dispute. In the best case for Meta, this slows down the transaction. In the worst case, the FTC could crush it entirely.
“It’s better to buy than to compete,” Zuckerberg said in emails discovered by the FTC during its antitrust lawsuit into the Facebook acquisitions.
Well, that may not be the case anymore.
Fly a plane in a virtual mountain
Now, none of this is to say that Meta isn’t making money. If the company were a country, its second-quarter revenue of $28.8 billion would put it just below Kuwait in terms of gross domestic product. But Meta knows money is about to be tight. In his investor call on Wednesday, Zuckerberg said the company’s plan is to “steadily” cut staff over the next year to “transfer energy” within the company.
Obviously, he’s talking about moving to the metaverse. In the second quarter, Meta’s virtual reality division, Reality Labs, lost $2.8 billion on revenue of just $452 million. Zuckerberg also announced this week that he would raise the price of the Reality Labs Quest 2 headset. He’s heading to the Metaverse because he feels he can dominate it. And he has to dominate a space because – from what happens to his social media platforms – if he doesn’t dominate, he doesn’t know how to compete.
All of these changes at Meta seem like a big mistake, but there’s no one in the company to stop Zuckerberg from flying him into a virtual mountain if he wants. This is why so many executives at the top of Meta are looking for their parachutes. The company’s chief operating officer, Sheryl Sandburg – who was once considered the adult in a room full of kids in hoodies – will soon be taking her leave. And late 2021 saw a big shake-up of executives fleeing the publicity team. Meta is now Zuckerberg’s stronghold, and he can build it or burn it as he sees fit.
But he didn’t count on the contribution of Kylie Jenner and Kim Kardashian, two women who have proven their business acumen beyond a shadow of a doubt. As they told him unequivocally, the world doesn’t need another copy of TikTok. He doesn’t need weaker ties with strangers, he needs stronger ties with friends and relatives. This was once the goal of Facebook. Just because one app — TikTok — is popular for doing something else, doesn’t mean the whole internet has to change.
The fundamental problem with Yahoo was that it never understood what kind of company it was after being beaten by Google. He never figured out how to be more than a C-grade version of Google. Its identity has become synonymous with clunky graphics, the same way Facebook’s identity has become synonymous with political crackpots and embarrassing old people. In the world of technology, it’s not enough to turn into an inferior clone of someone else’s product. As Yahoo has discovered, there is no price in the digital age for positioning yourself as the second best. On the Internet, you’re either number one or nothing, and the days of an imitator are numbered. Zuck would do well to internalize that.
Linette Lopez is a senior correspondent at Insider.