Sheryl Sandberg is leaving a Meta that is at a crossroads
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Long-time Meta (FB) COO Sheryl Sandberg is stepping down from the role she held for 14 years. And for Meta, that means losing a key executive at a time when the business is undergoing a major transition from a social network to a metaverse company.
Without Sandberg, Meta loses a strong leader who guided the company, and a young Mark Zuckerberg, through numerous controversies, including appearing before Congress in 2018 to answer for Facebook's role in Russia's interference with the 2016 presidential election.
Sandberg’s expertise, however, lay in building up businesses and their ad sales capabilities. And with Meta already a juggernaut in online ad sales and the company changing its focus to the metaverse, not to mention Zuckerberg no longer in need of a mentor, Sandberg’s days at the company were likely already numbered. Still, that doesn’t make her departure any less of a blow to the tech giant.
“Obviously this is a big change,” said Dorie Clark, executive education professor at Duke University’s Fuqua School of Business.
“[Sandberg’s] background is in ad sales. That's the realm where she has a huge amount of knowledge and has been quite successful,” Clark explained. “But as the company moves forward in a new direction, that is outside of the realm of her expertise, It certainly seems like a logical time for her to move on.”
Meta is in the midst of a massive transformation
Sandberg joined Facebook in 2008 when she was 38 and Zuckerberg was just 23. The two had contrasting styles, with Sandberg rising early and understanding the politics of business, and Zuckerberg, well, not. As a result, she provided the company with a steady hand during its early growth years.
“[Zuckerberg] was a young inventor coming out of Harvard, but in many ways she brought what I would consider to be stability to the leadership ranks, and was his mentor in doing it,” said Bill Klepper, academic director of executive education at Columbia Business School.
“Personally, I can't imagine mark would have made it without her.”
Sandberg helped grow Meta's ad sales business dramatically, pushing annual revenue from $272 million in 2008 to $117.9 billion in 2021. She did the same thing as VP of global online sales and operations during her time at Google, molding the company’s ad sales business into one of the most formidable on the planet.
Now Meta is pouring billions of dollars into its next endeavor, the metaverse. In 2021 alone, the tech giant spent $10.2 billion, or 8.6% or its total annual revenue, on its Reality Labs business, the arm of Meta focused on building out the company’s AR and VR headsets and software. And while Meta will continue to rely on ad sales, the metaverse is far from Sandberg’s expertise.
Still, the COO’s decision to leave now could leave Meta at a disadvantage, especially as it contends with a slowdown in ad sales and user growth, not to mention rising competition from TikTok.
“[Sandberg’s] departure comes at a time when the company is at a pretty major crossroads,” said Forrester VP and Research Director Mike Proulx.
“This is a move where…the legacy nature of Facebook, of which Sheryl has represented their core product, is being deprioritized at the company level in order to focus on other endeavors,” Proulx added.
Meta’s push into the metaverse is expected to stretch into 2027. Zuckerberg himself said Meta will have to invest a significant amount in its metaverse business over the next 3 to 5 years to begin to see real progress in the technology.
Meta’s president of global affairs, Nick Clegg, meanwhile, wrote in a May Medium post that it could take 10 to 15 years before the technology behind the metaverse reaches its full potential. While Zuckerberg has been pushing the metaverse narrative to the max, Sandberg has been relatively quiet about the move, not even joining Zuckerberg when he announced the company’s name change to Meta during his October presentation.
“In terms of public visibility in recent years, Sheryl Sandberg has not been front and center with issues related to the metaverse,” Clark said.
Meta’s problems run deeper than a pivot to the metaverse
Sandberg’s departure would leave a hole in Meta’s core regardless of when she left the company. But her decision to leave now comes at a particularly tumultuous time for the firm.
And that’s not the only negative Meta has to deal with as Sandberg heads for the door. It’s also fighting for its share of the global online ad market amid rising inflation and the war in Ukraine, facing off against rival TikTok, which continues to grow its user base as Meta’s slows.
The company is also having trouble reaching the all-important teen demographic, with younger users opting for TikTok instead. Meta initially had plans to launch a version of Instagram for kids, but put the service on hold over objections from lawmakers and parents groups.
“Our own data at Forrester shows year-over-year declines of online adults who use Facebook on a weekly basis and Instagram usage has remained relatively flat,” Proulx said. “Meanwhile, TikTok usage continues to rise across generations and Meta itself has yet to effectively monetize its Reels product. And that's the product that is supposed to be competing with TikTok.”
Meta’s stock price has also taken a hit over the last few months, falling 41% year-to-date as of Thursday compared to the broader S&P 500, which has fallen just 13.95% in that time.
How Meta and Zuckerberg handle the company’s change to a metaverse business while taking on a strong and growing rival could determine the fate of one of Silicon Valley’s largest firms. And how that will all play out is still very much up in the air.
“They've basically...made a transformational change of the business,” Klepper said. “Is it a good change? That’s to be determined.”
And while Sandberg will remain on Meta’s board, Meta’s grand transition will be far less of a daily concern for her when she steps down later this fall.
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