Adam Neumann’s latest big idea? To become America’s largest landlord | We work

ADam Neumann presided over one of the most spectacular corporate collapses in recent history. Barefoot and vociferous business messiah of the New Age, he managed to build and burn his latest startup, the shared office company. We workin such a spectacular way that even Hollywood took notice.

And now he’s back, on a quest to become America’s biggest landlord.

Neumann, was reported this week, is at the helm of a new company that seeks to reinvent apartment living. Details are sketchy, but the company, called Flow, aims to address the global housing crisis with “community-driven” rentals, so basically WeWork for renters.

Flow is off to a great start after receiving one of the most sought-after boons a startup could get from Silicon Valley: a $350 million investment from venture capital giant Andreessen Horowitz, known as A16Z.

The announcement of the company’s investment in Flow, which values ​​the “pre-seed” company, meaning it hasn’t launched yet, at $1 billion rocked the startup world. Not only is it A16Z’s largest single investment in a company to date, but it’s also an important endorsement for Neumann, who has become a corporate antihero. The news immediately lent itself to numerous Twitter jokes and much anger.

a16z: How can we trust you after WeWork?

Adam Neumann: I’m a Neumann.

— Douglas A. Boneparth (@dougboneparth) August 15, 2022


a16z: How can we trust you after WeWork?

Adam Neumann: I am a Neumann.

—Douglas A. Boneparth (@dougboneparth) August 15, 2022

After promising to reshape the office world and successfully becoming the largest office owner in many cities, including London and New York, WeWork collapsed in 2019 when it was revealed that the company was worth much less than investors thought.

The company planned to go public with a valuation of $47 billion, but when investors began to scrutinize the company’s business model and corporate governance structure, its value plummeted and cancelled your plans We work fired 2,400 employees and Neumann was given $445 million to leave the company.

While the co-working company is by no means a failure, and is slowly finding its footing post-Neumann, it was a textbook example of the rise and fall of startups and an avatar of the problems that they are coming

Investors began to realize that, injected with venture capital cash, many “unicorn” companies (those valued at more than a billion dollars) had vastly inflated values ​​and were often underfunded. subsidizing the price of services and products to eliminate competitors.

In recent years, the WeWork story has been told over and over again in numerous books, documentaries, and a moviemany of which focused on the eccentricities and intensity of Neumann’s leadership.

Lessons have been learned, according to Marc Andreessen, co-founder of A16Z. This week he described Neumann as “a visionary leader” who had revolutionized commercial real estate and was ready for his next adventure.

“It is often underestimated that only one person has fundamentally redesigned the office experience and led a global company that changes the paradigm in the process: Adam Neumann,” Andreessen wrote in an article. blog post. “We understand how difficult it is to build something like this and we love seeing repeat founders build on past successes by growing from lessons learned.

“For Adam, the successes and the lessons are enough.”

Neumann kept a low public profile in the years after his departure from WeWork, but has slowly been making more appearances. In November, he appeared at a New York Times DealBook summit where he said WeWork’s growth “went to my head.”

“I’ve had a lot of time to think, and there have been multiple lessons and multiple regrets,” he said. said.

In the spring, he spoke with the financial times about his new ambitions, including the then-unnamed Flow and his new role as an investor in startups. Through his family office, Neumann invests in more than 45 startups and has more than 50 employees, according to the Financial Times.

“The opportunity is tremendous,” Neumann told the newspaper of his new idea. “We started by buying this property, but then I started walking through the buildings, just feeling, and felt that much more could be done to improve the lives of these tenants.

“He felt that, frankly, there is room for more community.”

'For Adam, the successes and the lessons are enough.'
‘For Adam, the successes and the lessons are enough.’ Photo: VCG/Visual China Group/Getty Images

Even before he went public with his Flow idea, a report from the Wall Street Journal in January it revealed that Neumann had quietly purchased 4,000 apartments, valued at more than $1 billion, in large Sunbelt metropolitan areas, including Miami, Atlanta and Nashville. Neumann had begun telling his friends and associates that he was looking to build a company that would create brand-name apartments that come with amenities. One of the apartments in Nashville has a saltwater pool and a dog park.

There is no arguing that America has a housing crisis. Lack of supply and skyrocketing prices have made home ownership unaffordable for many and rents have skyrocketed.

As Neumann has pointed out: “If you stopped construction today, [would] run out of houses in less than two months. Crazy, huh?

Andreessen also sees a need for more housing, but not in his backyard. in a 2020 trial On his vision of the future titled “Time to Build”, Andreessen proclaimed: “We should have gleaming skyscrapers and spectacular living environments in all our best cities at much higher levels than we have now; Where are they?”

“We can’t build enough housing in our cities with growing economic potential, resulting in skyrocketing home prices in places like San Francisco, making it nearly impossible for ordinary people to move in and accept the jobs of the future,” he wrote. .

Despite this statement, Flow’s first apartment is unlikely to be in Atherton, California, Andreessen’s upscale neighborhood. Earlier this month, the atlantic reported that Andreessen and his wife, Laura Arrillaga-Andreessen, submitted an all-caps public comment against zoning for the multi-family housing development in Atherton.

An effort to increase the supply of housing in the area “would MASSIVELY decrease the value of our homes, the quality of life for ourselves and our neighbors, and IMMENSELY increase noise pollution and traffic,” they wrote.

And it’s not just housing advocates who have rolled their eyes at Flow. A16Z is being criticized for providing considerable endorsement to Neumann as women Y black and hispanic founders struggle to get funding. Recent data has shown that as little as 2% of venture capital funding in recent years has gone to underrepresented founders.

“This is disgusting,” tweeted Kate Brodock, CEO of Switch and general partner of the W Fund. “A16Z’s largest check goes to a (straight white male) founder of one of the most toxic companies we’ve ever seen. Companies like this perpetuate over and over again a traditional system that favors a small and homogeneous set of founders.”

THIS IS DISGUSTING.@a16z’s largest check going to a (straight white male) founder of one of the most toxic companies we’ve seen. Firms like this perpetuate over and over again a traditional system that favors a small, homogenous set of founders.

— Kate Brodock (@Just_Kate) August 15, 2022


THIS IS UNPLEASANT.@a16zThe largest check ever goes to a (straight white male) founder of one of the most toxic companies we’ve ever seen. Companies like this perpetuate over and over again a traditional system that favors a small and homogeneous set of founders.

—Kate Brodock (@Just_Kate) August 15, 2022

But for all the shock and surprise of Neumann’s resurrection, McKeever Conwell II, founder and managing partner of RareBreed Ventures, said we really shouldn’t be surprised. Neumann is an example of the norm, rather than the exception, in venture capital.

“At the end of the day, we as venture capitalists are essentially money managers, we are glorified financial advisors. We take money from wealthy people or groups that have deep pockets of capital, and our job is to make them more money,” said Conwell, who is black. “Our job is not necessarily to worry about ethics, morality, systemic racism, or financial inequalities. There are a lot of venture capitalists who care about that, but that’s not the job.”

Despite Neumann’s past, Conwell noted that the founder provided generous returns to early WeWork investors who were sold before its collapse.

“From a VC perspective, if you were a previous investor in WeWork, you made a lot of money,” Conwell said. “It is very common for venture capitalists to reinvest in people they have invested in before, especially those who have made them money. Adam Neumann made a lot of people make a lot of money.”

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