If there's a single immutable law in human biology, it's that no one lives forever. The same goes for corporations.
The latest big company to confront the fact that the Grim Reaper spares no one and no thing is Meta Platforms, formerly known as Facebook.
Meta on Thursday suffered the largest one-day loss in U.S. stock market history, following an unexpectedly sour report of fourth-quarter earnings.
The company's chairman and chief executive, Mark Zuckerberg, tried to reassure employees and investors that he and his management team had matters in hand for the long term.
It's true that Meta remains a potent force in the tech space. The stock traded midday Monday around $225, about where it was as recently as late June 2020, and its current market capitalization of $659 billion is the seventh-largest among U.S. companies. Some market strategists say it may be undervalued at the current price.
But it's also possible that the company is facing an inflection point in its business model with existential implications.
Meta is braving what its chief operating officer, Sheryl Sandberg, endearingly labeled "headwinds" during a conference call with investment analysts Wednesday.
Zuckerberg tried to calm investors' nerves by noting that the company had overcome what at first appeared to be existential challenges in the past: "We've made these types of transitions before ... where we took on headwinds in the near term to align with important trends over the long term."
Yet Meta hasn't had to deal before with so many challenges coming together at once.
Even a short list seems daunting. Start with the immense popularity of TikTok, which established itself as the preferred platform for short-form videos before Facebook's copycat, Reels, could find its footing. There's Apple's new privacy options for iPhone users, which will cut deeply into Meta's access to advertising dollars, costing as much as $10 billion in revenue this year.
And a reinvigorated Federal Trade Commission, which last month won permission to pursue an antitrust lawsuit against the company from a federal judge, who found the FTC's allegations "robust and detailed" and rejected the company's attack on FTC Chair Lina Khan.
Add the perhaps inevitable aging of the company's platforms. Facebook, its core product, suffered the first drop in daily average users in its history, falling by about 1 million in the fourth quarter of 2021 compared with the previous quarter. That was the first such decline at least since the company went public in 2012.
Another difficulty is the company's deteriorating reputation for trustworthiness amid doubts about its social impacts.
It's blamed for undermining the health and self-image of teen girls through its Instagram photo-sharing app, as whistleblower Frances Haugen told a congressional committee in October. Its role in spreading political disinformation was documented in the wake of the 2016 presidential election.
The company's cavalier approach to its users' privacy is well-established, which contributed to the recent collapse of its effort to create its own cryptocurrency.
Despite a corporate rebranding intended to distance the company from its scandals, Meta's corporate personality is inextricable from Zuckerberg, who continues to have supermajority control of the firm's stockholder vote.
As successful as he has been in capturing the social media zeitgeist with well-times acquisitions of emerging competitors such as WhatsApp or Instagram, he has so far had little success proving to investors that the company's forays into other business models represent a real future.
That's true of last year's rebranding as Meta Platforms. Zuckerberg offered a murky picture of the "metaverse," the marketplace the company would henceforth be addressing: "There's a lot of ambiguity around what the metaverse means," he acknowledged on Ben Thompson's "Stratechery" podcast.
But his specific ideas seemed less than compelling. "You're going to be able to have a message thread going on when you're in the middle of a meeting or doing something else and no one else is even going to notice," he posited.
The interview prompted Siva Vaidhyanathan, a longtime Zuckerberg critic, to observe that "investing billions of dollars through thousands of highly trained experts to solve a problem no one seems to want solved is a bad way to deploy resources."
The most fundamental difficulty in Meta's future is the natural limit to the life span of even the most innovative companies. Examples of major enterprises that overcame changes in their core technologies or markets are thin on the ground.
That should strike a cautionary note in the executive suites of other companies that seem to hold impregnable positions at the summit of the business world, such as Alphabet (the parent of Google) and Amazon. (As the old English proverb warns, "time and tide wait for no man.")
For many years, the quintessential industrial survivor was General Electric, which was an original component of the Dow Jones industrial average in 1896 and remained in the index continuously starting in Nov. 7, 1907.
That streak ended after more than 110 years in June 2018; the company, brought down by hubristic investments in financial services and forced to sell off its iconic manufacturing units, no longer resembled the strutting emperor of the U.S. economy of its heyday, and was unceremoniously kicked off the Dow.
Another company that had nimbly and serially remade itself to remain atop the roster of American corporations was IBM.
Over its long history, as Steven Cherry of the University of Pittsburgh observed last year on his podcast, "Fixing the Future," IBM pivoted from manufacturing the tabulating machines for the 1890 census, to mainframe computers, to personal computers, to networking, and to artificial intelligence machines that beat chess grandmasters and "Jeopardy!" champions at their own games.
The company's ability to find and dominate every new technology seemed unlimited. Yet it began to run out its string over the last decade or so, unable to find purchase in the market for cloud-based business services or to financially exploit advances in quantum computing or AI.
Last month, IBM suffered the humiliation of selling off Watson Health, an AI platform launched in 2015 with the goal of helping doctors and hospitals analyze patient data on a vast scale. But the company's claims were shrouded in hype, and the investment needed to keep it running in the face of losses was more than IBM considered worthwhile.
Some companies become prisoners of their own success. That was the case with Xerox, which collected majestic profits from its 914 office copier, which was introduced in 1959 and became the most successful industrial product in history up to that time.
Devised by an eccentric inventor named Chester Carlson, the 914 was so successful that the entire company was structured to serve and distribute the machine and its successors.
Yet Xerox "was fundamentally cursed by the Chester Carlson vision," the company's former chief technology officer, Paul Strassmann, told me in 1998. "This is the immaculate conception view that all you have to do is give us the right technology and the world will come to us. Unfortunately, when it happens like that, it's a fluke."
The limits of that vision came home to Xerox in the 1970s, when it built and staffed its legendary Palo Alto Research Center, or PARC, in Silicon Valley with the goal of finding the next big office technologies before others could do so and cut into its franchise.
PARC's scientists and engineers invented the personal computer, graphical displays and other technologies we take for granted today, but Xerox couldn't bring them to market profitably.
"Xerox could have owned the entire computer industry today," Apple's Steve Jobs declared in a 1996 documentary. "Could have been the IBM of the '90s. Could have been the Microsoft of the '90s." At the time, of course, the stumbles of both companies lay unforeseen over the far horizon.
It's not unheard of for a corporation to face down a near-death experience and reestablish itself. Apple did so, having come close to extinction after Jobs himself was forced out of the company in 1985 by John Sculley, whom he had lured from Pepsi to bring traditional corporate standards to Apple as chief executive.
Jobs returned to the drifting and money-losing company in 1997 and set it on the path to spectacular profitability by introducing such new products as the iPod, iPad and iPhone.
Microsoft too shook off the torpor it was suffering earlier in this century when it missed out on the mobile computing revolution and allowed its operating systems to become stale. Under Satya Nadella, who became chief executive in 2014 and chairman last year, however, the company has staged a revival, its shares gaining a market-beating 52.5% in 2021.
It's possible that Zuckerberg can follow in the footsteps of Jobs and Nadella, and defeat his company's multiple challenges. Most executives facing even lesser challenges have failed, however.
Whether Zuckerberg can turn his vision of the metaverse into profits is a wide-open question. It will be a challenge he has never faced before, because it comes in an atmosphere of growing skepticism about his company among the public and among investors.
"Zuckerberg has never received a signal from the marketplace that he should ever be more modest or change how he has always done things," Vaidhyanathan wrote last November, after the Meta rebranding. That signal is sounding now, loud and clear.
