PanamaTimes

Friday, Apr 19, 2024

Adam Neumann’s latest big idea? To become America’s biggest landlord

Adam Neumann’s latest big idea? To become America’s biggest landlord

The WeWork co-founder is reportedly at the helm of Flow, a new company looking to reinvent apartment living – but have any lessons been learned?

Adam Neumann presided over one of the most spectacular business collapses in recent history. A New Age-spouting, barefoot business messiah, he managed to build and burn his last startup, the office-sharing company WeWork, in such spectacular fashion that even Hollywood paid attention.

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

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

Flow is off to a flying start after receiving one of the most sought-after blessings a new venture could get from Silicon Valley: an $350m investment from venture capital giant Andreessen Horowitz, known as A16Z.

The announcement of the firm’s investment in Flow, which values the “pre-seed” company – meaning it has not yet launched – at $1bn rocked the startup world. Not only is it A16Z’s biggest single investment in a venture yet, but it is also a sizable endorsement of Neumann, who has become an entrepreneurial antihero. The news immediately lent itself to numerous jokes on Twitter, and a lot of anger.


After promising to reshape the office world, and successfully becoming the largest office landlord in many cities, including London and New York, WeWork came to a jarring crash in 2019 when the company was revealed to be worth much less than investors had thought.

The company was planning to join the stock market at a $47bn valuation, but when investors started scrutinizing the company’s business model and corporate governance structure, its value collapsed and it called off its plans. WeWork laid off 2,400 employees and Neumann was given $445m 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 startup boom and bust and an avatar of trouble ahead.

Investors started to realise that, pumped with venture capital cash, many “unicorn” companies – those valued over $1bn – had heavily inflated values and were often subsidizing the price of services and products to kill off competitors.

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

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

“It’s often under-appreciated that only one person has fundamentally redesigned the office experience and led a paradigm-changing global company in the process: Adam Neumann,” Andreessen wrote in a blogpost. “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 lessons are plenty.”

Neumann kept a low public profile in the years since leaving WeWork, but he 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.

In the spring, he spoke to the Financial Times about his new ambitions, including the then-not-yet-named Flow and his new role as an investor in startups. Through his family office, Neumann invests in more than 45 startups and has over 50 employees, according to the Financial Times.

“The opportunity is tremendous,” Neumann told the newspaper about his new idea. “We started by buying this real estate, but then I started walking the buildings, just feeling, and it felt like there’s so much more that could be done to make these tenants’ lives better.

“It felt like, frankly, there’s room for more community.”

‘For Adam, the successes and lessons are plenty.’


Even before he came out publicly with his idea for Flow, a report from the Wall Street Journal in January revealed Neumann had quietly bought 4,000 apartments, valued at more than $1bn, in large metropolitan areas in the Sunbelt, including Miami, Atlanta and Nashville. Neumann had started telling friends and associates that he was looking to build a company that would create branded apartments that come with amenities. One of the apartments in Nashville has a saltwater pool and a dog park.

There is no arguing that the US has a housing crisis. Lack of supply and soaring prices have made home ownership unaffordable for many and rents have risen sky-high.

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

Andreessen, too, sees the need for more housing, just not in his back yard. In a 2020 essay on his vision of the future titled “It’s Time to Build”, Andreessen proclaimed: “We should have gleaming skyscrapers and spectacular living environments in all our best cities at levels way beyond what we have now; where are they?”

“We can’t build enough housing in our cities with surging economic potential – which results in crazily skyrocketing housing prices in places like San Francisco, making it nearly impossible for regular people to move in and take the jobs of the future,” he wrote.

Despite this declaration, it is unlikely that Flow’s first apartment will be in Atherton, California, Andreessen’s upmarket neighbourhood. Earlier this month, the Atlantic reported that Andreessen and his wife, Laura Arrillaga-Andreessen, sent a public comment laced with all-caps words against zoning for multifamily housing development in Atherton.

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

And it’s not just housing advocates who have rolled their eyes at Flow. A16Z is coming under criticism for giving a sizable backing to Neumann as women and Black and Hispanic founders struggle to get funding. Recent data has shown that as little as 2% of venture capital funds in recent years have gone to underrepresented founders.

“This is disgusting,” tweeted Kate Brodock, CEO of Switch and a general partner at the W Fund. “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.”


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

“At the end of the day, we as VCs are essentially money managers – we’re glorified financial advisers. We take money from rich people or groups that have large pockets of capital, and our job is to make them more money,” Conwell, who is Black, said. “Our job is not necessarily to care about ethics, morality, systemic racism or financial inequalities. There are many VCs who care about that, but that’s not the job.”

Despite Neumann’s past, Conwell noted that the founder brought generous returns to early investors of WeWork who sold out before its crash.

“From a VC’s perspective, if you were an earlier investor in WeWork, you made a lot of money,” Conwell said. “It’s very common for VCs to reinvest in folks they’ve invested in before, especially those who have made them money. Adam Neumann made a lot of people a lot of money.”

Newsletter

Related Articles

PanamaTimes
0:00
0:00
Close
Apple warns against drying iPhones with rice
In a recent High Court hearing, the U.S. argued that Julian Assange endangered lives by releasing classified information.
Global Law Enforcement Dismantles Lockbit Ransomware Operation
Russian opposition leader Alexey Navalny has died at the Arctic prison colony
The President of Argentina Javier Mile does not fly private, he flies commercial, with the citizens he represents. And they LOVE him for it.
Bitcoin Reaches $50,000 for First Time in Over Two Years
Belo Horizonte: Brazil's Rising Carnival Hotspot for 2024
In El Salvador, the 'Trump of Latin America' stuns the world with a speech slamming woke policing after winning a landslide election
Tucker’s interview with Putin is over 50M views on X within the first 5 hours.
Finnish Airline, Finnair, is voluntarily weighing passengers to better estimate flight cargo weight
President Nayib Bukele has proudly announced El Salvador's remarkable achievement of becoming the safest nation in the Western Hemisphere.
Former Chilean President Sebastian Piñera Dies in Helicopter Crash
This farmer seems to understand science a bit more than the event organizer, Klaus Schwab.
Facebook turns 20: From Mark Zuckerberg's dormitory to a $1trn company
The Coolest Dictator in the World" on the Path to Victory in El Salvador
Macron, France and fake news
Indian-Origin Man 'King' Arrested For Smuggling $16 Million Drugs Into US
Can someone teach Americans that not every person with slanted eyes is Chinese?
Europe's Farmers Feeding the People, Protesting Against Politicians Who Do Nothing for Their Country and Serve Only Themselves at Taxpayers' Expense
Paris Restaurant That Inspired 'Ratatouille' Loses $1.6 Million Worth Of Wine
Brazilian Police Investigate Bolsonaro's Son for Alleged Illegal Spying
Police in Brazil Raid Residence of Bolsonaro Associate Over Allegations of Illegal Spying
Border Dispute Escalates as Texas Governor Vows Increased Razor Wire
OpenAI Enhances ChatGPT-4 Model, Potentially Addressing AI "Laziness" Issue
The NSA finally acknowledges spying on Americans by acquiring sensitive data
Report Reveals Toxic Telegram Group Generating X-Rated AI-Generated Fake Images of Taylor Swift
US Border Patrol States 'No Plans' to Remove Razor Wire Installed in Texas
Bitcoin Experiences Approximately 20% Decline in Value
Klaus Schwab recently appointed himself as the Earth's "trustee of the future."
DeSantis Drops Out, Endorses Trump.
Nikki Haley said former President Trump is "just not at the same level" of mental fitness as he was while president in 2016.
Residents of a southern Mexican town set the government palace on fire in response to the police killing of a young man
Samsung Launches AI-Driven Galaxy S24, Ushering in New Smartphone Era
Judge Questions SEC's Regulatory Overreach in Coinbase Lawsuit
The Ecuador prosecutor who was investigating the television studio attack, has been assassinated.
Is artificial intelligence the solution to cyber security threats?
Vivek Ramaswamy suspends his US election campaign and endorses Trump.
Viral Satire: A Staged Satirical Clip Mistaken as Real Footage from the 2024 World Economic Forum in Davos
The AI Revolution in the Workforce: CEOs at Davos Predict Major Job Cuts in 2024
Ecuador Reports 178 Hostages in Prison Gang Standoff
The Startling Cuban Espionage Case That Has Rattled the US Government
Two Armed Men in Ecuador, Dressed as Batman and The Joker Storm the Streets.
Armed Gang Raids Ecuadorian TV Station Following State of Emergency Declaration
Anti-Democratic Canada: Journalist Arrested for Questioning Canadian Finance Minister on Support of Terrorist Group
Ecuador's 'Most-Wanted' Criminal Vanishes from Prison
Mexican Cartel Supplied Wi-Fi to Locals Under Threat of Fatal Consequences for Non-Compliance
Border Surge Leads to Over 11,000 Migrants Waiting in Northern Mexico
Outsider Candidates Triumph in Latin American Elections
As Argentina Goes to the Polls, Will the Proposal to Replace the Peso with the Dollar Secure Votes?
Fatal Shark Attack Claims Life of Boston Woman Paddleboarding Near Bahamas Resort, According to Police
×