To understand Mark Zuckerberg's obsession with the metaverse, you need to go back about a decade.
It was around this time fledgling start-up Oculus Rift caught the Facebook billionaire's eye.
Oculus' flagship product, a VR headset, had made waves at a string of technology trade shows in 2013, and the following year Facebook swooped, snapping up Oculus for $US2 billion, double the price they'd paid for Instagram two years earlier.
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Oculus was known primarily for its fully immersive headset, and the possibilities that opened up for gaming.
But Zuckerberg saw something else.
Explaining why Facebook had acquired Oculus, he called the headset "a new communication platform", and he described a new kind of social future, a vision of what become known as the metaverse.
"Imagine sharing not just moments with your friends online but entire experiences and adventures," he said.
"One day, we believe this kind of immersive, augmented reality will become a part of daily life for billions of people."
Oculus, Zuckerberg hoped, would give his company the competitive jump on rivals into the metaverse, a virtual world in which people live, work, shop and interact with others.
And Zuckerberg went in on this vision. Big.
Reality Labs Research was the division charged with creating a metaverse which would be dominated by Facebook, since rebranded as Meta.
Up to 15,000 people worked at 12 Reality Labs facilities around the world, and under Zuckerberg's direction, Meta invested billions of dollars in their work.
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But last year, as Meta shares declined by as much as 70 per cent, tanking to their lowest level since 2016, and with the company's valuation dropping by $1 trillion, investors started asking questions about Zuckerberg's colossal bet on the metaverse.
Was the visionary's gamble going pay off, they wondered, as the stock kept falling, or was one of the world's most powerful tech companies sailing into oblivion?
In trying to answer that question, Wired magazine's editor-at-large Steven Levy believes Zuckerberg – and Meta – will probably be victims of a phenomenon known as the innovator's dilemma.
Coined by Harvard professor Clayton Christensen, the theory unpicks the power of disruption, and why market leaders – such as Meta – will ultimately fail as technologies and industries change.
"The idea is that when the new paradigm comes, the masters of the previous paradigm are at a disadvantage because they're invested in what they're doing now," Levy said, speaking recently on the tech podcast Gadget Lab.
"So they're going to be doomed by the next wave of technology which comes over."
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The emergence of mobile technology was a "near-death experience" for Facebook, Levy said, and that experience had shaped Zuckerberg's metaverse strategy.
Levy said Zuckberg was "paranoid" about the next big tech trend.
"He doesn't want to be a victim of the innovator's dilemma … so he gets obsessed with virtual reality."
The rest is history, and in 2014 Zuckerberg acquired Oculus.
Eight years later, the jury is still out on the metaverse.
"He makes this giant bet … thinking this is the only way he could save Facebook," Levy said.
"And now, in 2022, he's losing his grip on being the master of this universe while chasing the next universe."
David Katz, chief investment officer at Matrix Asset Advisors, told 9news.com.au Zuckerberg had been "tone deaf" while pouring billions and vast resources into Reality Labs' work on the metaverse.
US technology stocks had dipped all year, Katz said, but Meta was "the worst performing" megacap tech stock of all, in large part because of the billions Zuckerberg had sanctioned towards the metaverse.
"One of the reasons that the market has been so frustrated with (Meta) is that the company has basically let costs run wild."
Meta's decision last month to layoff 13 per cent of its staff, or more than 11,000 employees, was a sign that Zuckerberg had started to listen to investors who were concerned about Meta's rising costs and expenses, Levy said.
Despite lingering doubts, Levy described Zuckerberg as a "genius" who should probably be given the benefit of the doubt to win his big bet, if he dialled in spiralling costs and did not lose focus on Facebook, Instagram, Reels and WhatsApp.
"He's a visionary who has run a spectacular business," Levy said.
Like Katz, Amanda Lotz, a professor at Queensland University of Technology's Digital Media Research Centre, said it would be foolish to write off Zuckerberg.
But there were a number of "big unknowns" about his vision.
At its core, Meta is a company that is all about "attracting your attention so that your attention can be sold," Lotz said.
"For the most part, we're all creating the content that is attracting that attention."
There is a lot of infrastructure – real and virtual – Meta must build to create its metaverse space, and the cost of that is unknown, she said.
"And the extent to which we are going to turn up (in the metaverse) and either pay to be there or buy things there or be advertised to there, those are just all really big unknowns."
