While Mark Zuckerberg is a well-known multi billionaire his business career has not always been straightforward and smooth. The initial creation of Facebook was well covered in a recent movie, suggesting he learnt his aggressive business skills at an early age, and the flotation of the company was a PR disaster. However, as quickly as they try to knock the Facebook CEO down he bounces back with new ideas and new investments. So, what does Mark Zuckerberg think about Facebook’s investment in virtual reality?
Oculus and Facebook
When Facebook acquired virtual reality headset maker Oculus back in 2014 for $2 billion many saw this as an income stream which would come online in the short to medium term. After all, virtual reality was the way forward for technology-based companies and a $2 billion investment put down a significant market. However, only this week the company has lost a lawsuit claiming it used stolen computer code and parent company Facebook has been ordered to pay $500 million in damages. Zuckerberg will probably appeal the judgement but the announcement did slightly overshadow Wednesday’s figures from Facebook.
While advertising revenue increased by 53% in these better-than-expected figures, Zuckerberg was effectively cornered by Wall Street analysts and quizzed about Oculus.
One for the future
In what Mark Zuckerberg described as a “chicken and egg problem” he believes that Oculus will take 10 years to fulfil its potential. Even though the company is already building components for virtual reality headsets sold by competitors like Samsung it is the ability to sell Oculus headsets which will bring in the big money. During his quizzing by analysts, Mark Zuckerberg compared his competitors to the BlackBerry v Apple war of years gone by and the fact that Apple came out on top. While this will go down well with investors we need to see progress with the company’s virtual reality investment and a more detailed plan of attack.
The problem with investors today is that they demand short-term profitability and are often wary of long-term investment programmes. The fact is that in the world of technology things change on a regular basis and a company acquired for $2 billion in 2014 could, if the company is not careful, be overcome by competitors. Also, these companies very quickly need to be cash flow positive to ensure essential ongoing investment in research and development because if this is curtailed then the company is effectively going backwards.
Trust in Zuckerberg
Mark Zuckerberg came under intense pressure when Facebook was floated on the US stock market amid suggestions that some of the pre-float data was possibly misleading. There was significant focus on mobile advertising income and while it took the company some time to perfect its delivery system, it is certainly starting to pay dividends now. There will be users who fear the over commercialisation of Facebook but this is a social media platform which touches every corner of the planet. The multibillion-dollar company valuation is supported by the potential to market an array of services and products direct to those who need them, when they need them.