Adam Neumann’s latest big idea? Becoming America’s Biggest Landlord

Adam Neumann presided over one of the most spectacular corporate failures in recent history. A new-age-spouting, barefoot business messiah, he managed to build and burn his latest startup, office-sharing company WeWork, in such a spectacular way that even Hollywood caught the eye.

And now he’s 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, is aiming to tackle the global housing crisis with “community-driven” rents — basically WeWork for renters.

Flow has got off to a flying start after receiving one of the most coveted boons a new Silicon Valley company could receive: 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 been formed yet — at $1 billion shook the startup world. Not only is it A16Z’s largest single investment in a company to date, but it’s also a significant endorsement for Neumann, who has become an entrepreneurial anti-hero. The news immediately caused numerous jokes on Twitter and a lot of anger.

a16z: How can we trust you after WeWork?

Adam Neumann: I’m a Neumann.

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

After promising to reshape the office world and successfully becoming the largest office leasing company in many cities including London and New York, 2019 saw a staggering crash when the company turned out to be worth a lot less than its investors had thought.

The company planned to go public at a valuation of $47 billion, but as investors began to question the company’s business model and corporate governance structure, its value plummeted and the company scrapped its plans. WeWork laid off 2,400 employees and Neumann was paid $445 million to leave the company.

While the co-working company is by no means a failure and is slowly gaining traction according to Neumann, it has been a textbook example of startup boom and bust and an avatar of the troubles to come.

Investors were beginning to realize that many “unicorn” companies – valued at over $1 billion

In recent years, the WeWork story has been told time and time again in numerous books, documentaries and a film, many of which have focused on the eccentricity and intensity of Neumann’s leadership.

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

“It’s often underestimated that only one person has revolutionized the office experience while leading a paradigm-shifting global company: Adam Neumann,” Andreessen wrote in a blog post. “We understand how difficult it is to build something like this, and we love it when repeat founders build on past successes by growing from the lessons learned.

“For Adam, the achievements and lessons are plentiful.”

Neumann has kept a low profile in public in the years since leaving 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 “got to my head.”

“I had a lot of time to think, and there were multiple lessons and multiple regrets,” he said.

In the spring, he spoke to the Financial Times about his new ambitions, including the then-unnamed Flow and his new role as an investor in startups. According to the Financial Times, Neumann invests in more than 45 startups through his family office and employs over 50 people.

“The opportunity is enormous,” Neumann told the newspaper about his new idea. “We started buying this property but then I walked through the buildings and just felt like there is so much more that can be done to improve the lives of these tenants.

“Honestly, it felt like there was room for more community.”

Adam Neumanns latest big idea Becoming Americas Biggest Landlord“For Adam, the achievements and lessons are plentiful.” Photo: VCG/Visual China Group/Getty Images

Even before he went public with his idea for Flow, a January Wall Street Journal report revealed that Neumann had secretly bought 4,000 homes worth more than $1 billion in major Sunbelt metropolitan areas, including Miami, Atlanta and Nashville. Neumann had begun telling friends and co-workers that he wanted to start a business that would create branded homes with amenities. One of the Nashville apartments has a saltwater pool and dog park.

It is undeniable that the US has a real estate crisis. A lack of supply and rising prices have made home ownership unaffordable for many and rents have skyrocketed.

As Neumann pointed out, “If you stop building today, you [would] will be without a home in less than two months. Crazy, right?”

Andreessen also sees a need for more living space, just not in his backyard. In a 2020 essay about his vision for the future, titled It’s Time to Build, Andreessen proclaimed, “We should have gleaming skyscrapers and spectacular living environments in all our best cities, far beyond what we have now; where are they?”

“We can’t build enough housing in our thriving cities — leading to insanely skyrocketing home prices in places like San Francisco, making it almost impossible for ordinary people to move in and take the jobs of the future,” he wrote.

Despite that statement, Flow’s first home is unlikely to be in Andreessen’s upscale neighborhood of Atherton, California. Earlier this month, the Atlantic reported that Andreessen and his wife Laura Arrillaga-Andreessen broadcast a public comment in all caps against zoning for apartment buildings in Atherton.

An attempt to increase the supply of housing in the area would “massively reduce our home value, the quality of life for us 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 has come under criticism for providing significant backing to Neumann, while women and black and Hispanic founders compete for funding. Recent data has shown that only 2% of venture capital funds have gone to underrepresented founders in recent years.

“This is gross,” tweeted Kate Brodock, CEO of Switch and general partner of the W Fund. “A16Z’s biggest check goes to a (straight white) founder of one of the most toxic companies we’ve ever seen. Firms like these continue to perpetuate a traditional system that favors a small, homogenous group of founders.”

THAT’S DISGUSTING.@a16z‘s biggest check goes to a (straight white male) founder of one of the most toxic companies we’ve ever seen. Firms like these continue to perpetuate a traditional system that favors a small, homogenous group 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 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, as VCs, we are essentially money managers — we are glorified financial advisors. We take money from rich people or groups that have large pockets of capital and our job is to make them more money,” said Conwell, who is black. “Our job is not necessarily to concern ourselves with ethics, morality, systemic racism or financial inequalities. There are a lot of VCs that take care of that, but that’s not the job.”

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

“From a VC perspective, you’ve made a lot of money as a previous investor in WeWork,” Conwell said. “It’s very common for VCs to reinvest in people they’ve previously invested in, especially those who made them money. Adam Neumann made a lot of money for a lot of people.”