It’s sad that what I’m about to share is so polarizing. It shouldn’t be! But hopefully, this less biased approach helps some people take a more objective look. That’s vital when it comes to investing!
I’m sharing this article to go along with another one I recently published. With the other article, you’ll see what I think about investing in Facebook after its recent name change to Meta.
Facebook is a Punching Bag
Let’s get this out of the way… lots of people love to hate Facebook. And Mark Zuckerberg goes hand-in-hand. Based on the recent quarterly filing, he still has majority voting control over the company.
Politicians on both sides, along with their followers, continue to take jabs at Facebook. I’ve spoken with good friends on both the left and right about the company. It’s interesting how the same arguments come up on both sides… but they’re catered to fit their different beliefs, along with anecdotal examples. For example, content moderation in favor of the other side.
If you’ve taken some statistics and programming classes, you’ll know it’s not that simple. Facebook reaches over 2.9 billion monthly active users. Of course, there are plenty of challenges to overcome… but they’re complex! If it was so simple, regulators would have already given hard rules to follow. But when it comes to large scale systems, every decision has tradeoffs that can impact millions of people.
It’s an incredibly tough position to be in and traditional media companies use it to their advantage. Facebook is a punching bag for old media outlets. Although, is that because Facebook is disrupting their business models? Throughout history, the old guard always pushes back on disruptive innovation. The Luddites are one of my favorite examples.
… but are Facebook and Mark Zuckerberg bad? When these two names come up, I often see and hear emotional responses… ones that have strayed from an objective approach.
Most people have already made up their minds on this… and if you’re in the “Facebook is evil” camp, have fun making up excuses for these facts (to reduce your cognitive dissonance).
1. Free to Use and Plenty of Alternatives
Facebook and its family of apps – such as Instagram and WhatsApp – are free for anyone to use. No one has to use them but they continue to do so. And there are plenty of alternatives. Technology has leveled the playing field. In less than a day, I could create my own basic social media website for less than $100, emphasis on basic.
Facebook spends billions each year trying to create and improve useful and enjoyable products that anyone can use for free. Facebook Marketplace is one of many examples. You can connect with people in your community to buy and sell goods. You no longer need to spend hours setting up a garage sale or buy ad space in a newspaper to get more customers. Old fashioned advertising wasn’t very good for small businesses…
2. Facebook Helps Small Businesses and Creators
In return for creating valuable products that billions of people use for free, Facebook collects data to further improve its products… and attract advertisers. For small businesses, Facebook is one of the best places to go to find customers. For example, if you run a small yoga business that mainly attracts women in their 30s, you can better target potential customers with Facebook.
For creators, many of Facebook’s free services have been huge! People can build followers on Instagram and its other platforms. This can help them share and sell what they create. During the past two years, these digital platforms have helped tens of millions of creators and small businesses.
3. Mark Zuckerberg and His Wife Priscilla Chan Have Signed the Giving Pledge
With the birth of their first daughter, they pledged to give away 99% of their Facebook shares over the course of their lives. Initially, they’re focusing on personalized learning, curing disease and connecting people.
I’ve mentioned this fact to friends on both the left and right that hate Facebook and Mark Zuckerberg. In all cases, I’ve heard… where’s the proof? Once they realize there’s plenty of proof, they go on to say they still don’t believe it and donations only help the other side’s agenda… but once again, just an attempt to reduce their cognitive dissonance.
Already, Mark Zuckerberg has donated $2.7 billion to a wide range of efforts such as COVID relief. That’s according to a Forbes article from the beginning of 2021. It ranked him as one of the most philanthropic billionaires in the world.
Now one common response I hear along these same lines is that billionaires should pay more in taxes. This is a common rally cry… but it shows a misunderstanding of how the U.S. economy and taxes work. And to be honest, I’d prefer that most self-made billionaires determine where they donate their money. They likely have a much better understanding of how to create value in society than most career politicians.
Once again, this topic is a bit out of line from my normal content on building wealth. Although, it taps into psychological pitfalls that we all fall prey to. Learning how to better incorporate facts and ideas we don’t want to agree with helps us make better decisions for the future.
Personally, there are still many areas I have to improve when it comes to confirmation bias, cognitive dissonance, etc. And just being aware of these tendencies can help counter the downsides that come with them. An objective approach is paramount to becoming a better investor!