I read [this article](https://kotaku.com/facebook-metaverse-vr-2022-billions-13-billion-quest-2-1850062517) this morning about how ~~Facebook~~ Meta’s VR division “Lost $13.72 Billion In 2022”. The article later says that Meta is burning through money. But if they’re spending money to generate a product, doesn’t that money go somewhere? If Meta doesn’t have the $14 billion, who does?
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It takes money to ideate (heh), design, prototype and make things. A lot more than people realize.
lets say we want to make a new Flam. its the best flam ever. completely revolutionary flam. It will turn the Flam industry on its head.
Do you know how to design flams? no. hire an engineering/designer. they need an office? no work from home. ok where do you meet? his house? forget it. U need office space.
Engineer/designer has designed the new flam. He doesn’t have a CNC/SMT machine in his basement, so gotta go to a contract prototyping/mfg company. You gotta pay up front for the raw materials, a contract for set amounts of machine and machinist time. THEIR engineers point out how YOUR engineer is an idiot; redesign (at their $100/hr). Several design iterations. You haven’t even cut metal or made a board yet.
So the design is good, you make a few prototypes. When you’ll be making 10,000 flams at a time, the per unit cost will be (you think) $10 each. At qty under 20 its $1000. You make 20. That’s $20k on TOP of any NRE or non-returnable/refundable engineering aka the CNC machinist has to import your design file into the machine and make sure it doesn’t trash their $10M machine.
So you make your 20. Have some trial users. Send one for regulatory/safety testing. That’s $40k. Apply for a patent? $100k. Need to have your device safety tested for use in the UK? $20k. Needs to adhere to European recycling/material law? RoHAS/WEE/etc? $80k.
We haven’t sold a single flam yet and we’re already several hundred k bucks in. And you and YOUR engineer are working from home and renting an office at $100/hr to meet with vendors and potential investors.
Wanna show your new flam at Flam Expo 2023? Get a booth: $45k for the booth in Cincinnati, hotel, airfare etc. for you and your engineer. Scratch that, never take engineers to tradeshows. Hire a sales d00d. $$. Now you need PR. Buy ad space in Flam Monthly, full page spread in march edition: $100k.
YOu _still_ haven’t sold a single flam AND you haven’t even laid down the framework to make your flams in quantity. Contract manufacturing, warehousing, distribution networks, sales organizations etc.
The challenges are similar but different if we’re talking a software/app/service startup, but its more of the same. gotta hire developers. Servers. Software. Now you need IT guys. To hire the devs and IT guys you need HR guys. You haven’t shipped a single app yet and you’re several hundred k or millions in.
In the case of Meta’s VR crap: a whole (but much shittier) second life universe? from scratch? and custom VR hardware? $13Bn doesn’t seem so much to me given how many resources I can guestimate they’re throwing at the problem.
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