Why Capital Allocation is so crucial, And How Zuckerberg is Messing it up

I just would like to start off and say i really respect Zuck and think he is truly one of a kind, and he really has impacted the world in a great way, with facebook and its other companies all under META. While one could go on about his greatness and accomplishments, ignoring his mistakes would do nobody justice. Today i want to really talk about capital allocation, and how that relates to META, which i believe a lot of you know about already.

I really belive that a CEO has three major tasks year in year out -

Operations

Investor Relations

Capital Allocation

Zuckerberg can do the first two all right, but his track record for the number three is infamous in the wrong way. I will Bring up two famous instances this has been evident. But first Lets talk about capital allocation.

So capital allocation is the activity of attempting to allocate capital in different areas of one’s business. This can look very different based of the complexity of the business. One can only begin to think the different areas where capital could be allocated at places like Google. Allocating capital correctly or incorrectly can be very the much the difference between great returns, and bankruptcy.

So now we look at the acquisition of Oculus, a big mistake, the recent AI frenzy and crazy hiring, and then the freeze. Essentially, everyone has their own circles of competence. For Zuckerberg, that circle of competence does not include capital allocation. If he is to actually lead META in the future long term, that is something he will need to incorporate in his circle of competence.