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The Comeback of Adam Neumann

I read an article written by Sam Sawyer, a former Dallas area agent with whom we shared brokerages at both Sotheby's & Compass, that was an interesting update on Adam Neumann, an entrepreneur worth watching:

 

Adam Neumann, the founder and former CEO of WeWork, who has become an infamous character in the startup world is making a second act with a new company called Flow.

At this point, it is not 100% clear what Flow is building, but Marc Andreessen from a16z, one of the most prominent venture capital firms in the industry, is writing a record breaking size check into the company. They announced this week that they are investing $350 million into Adam’s new venture with a pre-launch valuation north of $1 billion dollars. This will be the largest single investment they have ever made in the history of a16z.

The company does not even plan to launch publicly until 2023, but there has been a lot of speculation online what Flow will be doing. Adam & his family office 166 2nd Financial Service have been quietly buying up thousands of apartment units over the last few years in Miami, Fort Lauderdale, Atlanta, Nashville, and other hot-spot cities in America. Flow definitely has something to do with this housing strategy and will be operating in the “living” space.

While at WeWork, Adam had aspirations to launch a worldwide concept called “WeLive” that was going to be a shared housing type community where people could subscribe to the housing service and access apartment units in cities all over the world. I have a feeling Flow will incorporate some of these original thoughts and concepts.

A lot of people think Adam is somewhat of a controversial character due to the epic bombing of WeWork just before they were set to go public, but he is still an incredible entrepreneur who built a worldwide brand and upended an industry in a record amount of time. He is not a crook or anything like that and I feel like he gets thrown into that arena of judgment from time to time.

Hate him or love him, I would never bet against a guy like Adam to build another massive business especially given how much he probably learned during the rise and fall of WeWork. Flow will undoubtedly have a great chance to build something industry changing yet again but this time more focused on the residential living space.

Marc Andreessen posted a note on the a16z blog about this investment, and here are some pertinent highlights giving us a more detailed look into what Flow is seeming to focus on, and I have shared my guesses and thoughts below too:

“The first model is: you own a home you call your own, typically with a multi-decade mortgage, near your current employer. IF you can find a house, as these locations often aren’t building new housing. IF you can afford that house, as housing prices in many such places have skyrocketed. And even then, you’re now stuck — you can’t move, even if your economic opportunity or life path wants to take you somewhere else.

The second model: you rent an apartment, but: it’s a soulless experience; do you even meet your neighbors, much less have any friends in your complex? Does it feel like home, or just a place to sleep? Are you proud to bring friends and family to visit, or hesitant? And you can pay rent for decades and still own zero equity — nothing. There’s a reason the federal government started subsidizing home mortgages: someone who is bought in to where he lives cares more about where he lives. Without this, apartments don’t generate any bond between person and place and without community, no bond between person to person….

The residential real estate world needs to address these changing dynamics. And yet virtually no aspect of the modern housing market is ready for these changes.

And so, we are excited to partner with Adam Neumann and his colleagues on Flow, which is a direct strike on precisely this problem.

Adam is a visionary leader who revolutionized the second largest asset class in the world — commercial real estate — by bringing community and brand to an industry in which neither existed before. Adam, and the story of WeWork, have been exhaustively chronicled, analyzed, and fictionalized – sometimes accurately. For all the energy put into covering the story, 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. 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 and we are excited to go on this journey with him and his colleagues building the future of living.”


Sam Sawyer's thoughts and guesses on what Flow is building:

  • subscription-based housing service with furnished units in cities all over the world

  • some component of crowdfunding and the ability for members to buy shares in the community where they live or in the entire apartment portfolio

  • short-term leases and ability to make money off your “stake” in the assets

  • possibly some component of crypto or a “Flow Coin” that members use to trade securities or ownership of their stake in the platform

  • ability to build up “equity” through normal rent payment where a portion of each month’s rent can be set aside for the “investment pool”

Source: ResiRe Weekly by Sam H Sawyer

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