Real Estate

what flow? Adam Neumann’s new real estate startup is worth his $1 billion before launch

After a surprise announcement last week calmed down the hype, Israeli entrepreneur Adam Neumann, the famous co-founder of shared workplace company WeWork, said: Raises approximately $350 million from Andreessen Horowitz (a16z) Two things have come to light about the yet-to-launch and murky New York real estate startup Flow.

First, there are more questions than answers about what Flow is and how it will address the US housing crisis. Second, the global tech community, both investors and entrepreneurs alike, has voiced their opinions on such a large investment in WeWork’s acting and leadership as the CEO of the person who contributed to its failed public offering. are separated. That peak, and the loss of thousands of jobs and billions of dollars in venture capital, plus Neumann’s own very public downfall and cost to his family.

The Man Who Crashed WeWorkSome criticize the investment industry in general. Silicon Valley’s top investment firm — known for early-stage backing of everything from Facebook, Airbnb, Slack, and Instagram — has managed to send the biggest check ever (in a single round) to someone can be thrown into The man who founded ‘he’s one of the most toxic companies you’ve ever seen’ according to An investor and entrepreneur.

WeWork’s dramatic setback in 2019 is largely due to Neumann’s antics, erratic nature and management style. The critically acclaimed Apple podcast series called “WeCrashed”, which has been extensively covered in many books, has also been turned into a TV show of the same name (Neumann starring Jared Leto), the 2021 documentary “WeWork: Or Making and Destroying a $47 Billion Unicorn”.

Some female tech entrepreneurs blamed the investment climate in which the $350 million deal took place, blaming Andreessen Horowitz. challenging A single investment amount is the largest “failed, ethically questionable man”, and female founders and entrepreneurs have solid business models and trajectories. struggle to get VC funding. Neumann was fired as his CEO in the fall of 2019, nearly $1 billion as the company quickly ran out of cash, canceled its IPO and accepted a bailout by its biggest backer, Japanese investment firm SoftBank. left and walked away.

Other critics and observers responded to the news by stating: meme When joke.

and still others welcomed Neumann’s second move is due to his entrepreneurial spirit, his controversial success building the company from scratch, and the concept of second chances.

Perhaps the most important of these is Marc Andreessen. I have written Neumann is “a visionary leader who revolutionized commercial real estate, the second largest asset class in the world, bringing community and brand to an industry that never existed before.”

Signs marking the location of WeWork office facilities in Chicago, Illinois, August 14, 2019. (Scott Olson/Getty Images/AFP)

According to Andreessen, the stories behind WeWork’s rise and fall are “thoroughly documented, analyzed, and fictionalized—sometimes even accurate,” but “only one person can bring the office experience to life.” Leading the way in radically redesigning and paradigm-changing the world is often underestimated.The company in progress: Adam Neumann.

“We understand how difficult it is to build something like this, and we love to see repeat founders build on past successes by growing from lessons learned. For Adam, successes and lessons abound…” said the world-renowned investor.

Whether WeWork succeeded is still up for debate. The company raised nearly $10 billion in venture capital, but failed to develop a profitable business model. It relied on long-term leases of often upscale commercial real estate in major cities, turning buildings into shared workspaces that it rented out to members and subscribers for short periods. WeWork took a lot of risks during the volatility.

In this Jan. 16, 2018 file photo, WeWork co-founder and CEO Adam Neumann is in the center as he attends the opening ceremony at the Nasdaq in New York. (AP Photo/Mark Lennihan)

WeWork will eventually go public at a valuation of $9 billion in 2021, with a greater focus on companies with over 500 employees looking for space in city centers. It is currently valued at around $4 billion.

So what is flow?

and Position Last Monday, Andreessen said Neumann’s new startup, Flow, would be a “direct attack” on the nationwide housing crisis.

In a lengthy preface, he described the problems—changing America’s demographics, inadequate construction rates, rising housing prices, concentration “To young people who will have families later” in life— and delved into the solutions available so far: Given the shortage of homes, buy them if you can find them, or buy them for decades even if house prices are soaring. Take out a loan or rent.

“But it is a soulless experience,” he wrote. And you can pay rent for decades and still “own zero equity.”

Andreessen reasoned that lifestyle changes following the pandemic, along with hybrid and work-from-home options, could mean more Americans have to rent, given prices and scarcity. Did. Today, one-third of Americans rent Their home and city rentals are on the rise.

But people still want social interaction, connection, and community. Andreesen said Neumann and his partners are beginning to tackle the “largest asset class in the world” in Flow — residential real estate, especially multi-tenant rental properties — with shared features and, again, brands.

According to The New York Times, Flow will manage and operate the thousands of apartments Neumann purchased in the U.S. in cities such as Nashville, Atlanta, Fort Lauderdale and Miami, and will sell these and other homes. provides concierge-like services and property management to. The Wall Street Journal in January report A company affiliated with Neumann plans to purchase a majority stake in the approximately 4,000 apartment houses in these cities and become the principal landlord.

Illustration. In this February 17, 2016 file photo of him, his home stands under construction as pedestrians walk along the Atlanta Beltline. (AP/David Goldman)

The concept sounds similar to WeWork’s short-lived WeLive project. It is a communal living idea that offers furnished apartments, communal spaces, shared facilities or, as it is advertised, ‘urban kibbutz’ in major urban areas.

Forbes this week report That Flow also sounded a little too similar to Neumann’s previous investment in a startup named Alfred. Neumann appears to have launched a rival company, sources told the magazine.

It’s not entirely clear how Flow plans to effectively provide a solution to the US housing situation, which is characterized by a housing shortage. falling interest rates Affordability of housing that fewer and fewer people can afford to buy with a mortgage, and investors (individuals and large businesses) market flood Buying homes and pushing prices up.

But Andreessen hinted at the possibility of a leasehold scheme for Flow tenants.

WeWork co-founder Adam Neumann attends the opening ceremony at the Nasdaq in New York on January 16, 2018. (AP/Mark Lennihan, File)

“In a world where limited access to home ownership continues to be a driver of inequality and insecurity, giving renters peace of mind, community and true ownership is our It is a transformative force in society,” he wrote in a blog post.

“In his first venture since WeWork, it’s only natural that Adam would transform physical spaces and return to the theme of connecting people by building the communities where they spend most of their time: their homes. I think,” he said.

(Flow is Neumann’s second venture since WeWork. Earlier this year, Andreessen Horowitz hired Neumann for a cryptocurrency startup called Flowcarbon, intended to sell tokenized carbon credits on the blockchain. gave $70 million, and it has been on hold ever since.)

Andreessen separately headlined earlier this month report He and his wife objected to plans to build small multifamily homes in several neighborhoods of the posh city of Atherton, California, where they live, and said that such homes would reduce home values ​​and quality of life. He insisted on lowering it.

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