5 lessons every entrepreneur should take from the recent Facebook stock market crash
In early February, the title of Meta, formerly known as Facebook, fell by a huge 26 percent in one day, resulting in a $230 billion reduction in its market capitalization. Mark Zuckerberg himself almost lost $29 billion of his personal wealth due to the accident. This meant wprlx’s biggest one-day drop.
Such a significant loss begs the question, what lessons can you learn from this catastrophic event? Here are some takeaways that every entrepreneur should pay attention to.
Don’t be so comfortable with success.
Facebook is a huge social media platform. So what happened that caused the stock to drop? The platform’s daily users have grown from 1.93 billion daily active users to 1.929 billion. While to you and me this may seem like a small, insignificant drop in the number of daily active users, it’s not about the numbers. Rather, it’s the fact that for the first time in its history, Facebook’s user base has shrunk.
Entrepreneurs at the top of their game might feel the urge to go sit somewhere on a beach with a margarita in hand. After all, they accomplished everything they set out to accomplish. But this Facebook crash teaches us that success is temporary unless you keep building and shipping.
Or as someone told me recently, whatever happens to you in life, whether it’s a positive thing or a negative thing, always remember, “that too will pass.”
Don’t put all your eggs in one basket.
The day Zuckerberg announced he was changing the name of the parent company that owns Facebook, Instagram, WhatsApp, and Oculus to Meta, I had a really bad feeling in my stomach. It was no small bet. As I saw it, Zuckerberg put all his billions of eggs in a basket called the metaverse.
Now don’t get me wrong, the world is most definitely heading to the metaverse, but maybe it would have been a better idea if Zuckerberg had hedged his bet just in case this whole meta thing didn’t work out.
Never underestimate the underdog.
This is an incredibly important lesson that people fail to learn. It’s hard to forget this time Steve Balmer mocked the iPhone when it came out saying that Apple can’t make phones and no one will buy the phone. Or that there were other search engine market leaders when Google was launched, few thinking it could one day dominate the market like it has.
Well, today I would say that underrated underdog is TikTok, and even though Zuckerberg tried to buy themI’m pretty sure he, or anyone else for that matter, would never have imagined that TikTok would eat Facebook breakfast the way it is.
While Facebook was growing so rapidly, the company and its executives may have missed the speed of growth of TikTok and dismissed them as a real threat. Well, it looks like they learned the hard way how much people love TikTok.
Confidence is your most important asset.
Here’s the thing with Facebook… people don’t trust him and I’m not sure you can blame them.
It turns out that trust is an important asset in business, and exponentially more important when you’ve just built your entire business around the metaverse, which essentially requires users to trust you enough to live in an environment that you have created.
Always be innovative.
If you look at Facebook’s strategy over the years, it was pretty simple. Every time a competitor appeared, Facebook would buy it. They did it with WhatsApp, they did it with Instagram, and they really wanted to do it with TikTok. When Facebook realized it couldn’t buy TikTok, it changed strategy and tried to copy it.
Now, this is by no means a one-size-fits-all strategy. It seems like everyone is copying everyone these days. Snapchat, Instagram, Facebook, YouTube, LinkedIn, and others all seem to copy ideas from each other, including stories, reels, and many other examples.
The thing is, there comes a time when users want the original and not the scam. Facebook and Instagram have tried to copy TikTok but so far it hasn’t worked too well and while Facebook is falling, TikTok is exploding in popularity. And the lesson? Well, you should always innovate to the point where competitors want to copy you.
All in all, I think the reason Facebook stock has crashed the way it has is because investors are concerned that Facebook is getting too comfortable with its ownership of the market and is now headed for the graveyard to join MySpace, BlackBerry, Nokia and countless other companies that were once market leaders. If you don’t want to join them, learn from the lessons described here.