Adam Neumann is back.
After documenting his remarkable rise and fall in books, documentaries, and scripted TV series, the WeWork founders have embarked on a new adventure.
Neumann is starting a new company flow, is focused on the residential real estate market, reports the DealBook newsletter. Notably, he is financially backed by Andreessen Horowitz, his capital firm, a well-known Silicon Valley venture who was an early investor in everything from Facebook to his Airbnb.
Andreessen Horowitz is considered royalty among early-stage investors, so his endorsement is a strong sign of endorsement, perhaps criticizing Neumann’s leadership at WeWork for corporate arrogance. This is Mr. Neumann’s rebuke to the critics, which he explained as a lesson.
The company’s investment in Flow is about $350 million and the company is valued at more than $1 billion before opening, according to three people briefed on the transaction. The investment is the largest personal check ever written by Andreessen Horowitz in a corporate funding round.
Flow is set to launch in 2023, and venture capital giant co-founder Marc Andreessen will join its board of directors, these people said. Neumann plans to make significant personal investments in the company in the form of cash and real estate assets.
Andreessen writes: A note posted on his company website On Monday, I’ll explain his rationale for investing in the company.
At its peak, WeWork was valued at about $47 billion. After a failed public offering and talk of poor business, WeWork went bankrupt spectacularly. Neumann walked away with hundreds of millions of dollars, even though he was kicked out of his WeWork in 2019. Today, WeWork’s market value is around $4 billion.
Andreessen writes: For Neumann, “there are many successes and lessons learned,” he added.
Having purchased more than 3,000 apartments in Miami, Fort Lauderdale, Atlanta, and Nashville, Neumann aims to reimagine the rental housing market by creating branded products with consistent service and community features. increase. Flow will operate the properties purchased by Mr Neumann and provide services to new developments and other third parties. I was not able to know the exact details of the business plan. (Flow has nothing to do with the crypto company Flowcarbon, which he also co-founded with Mr. Neumann. Raised $70M in May in a round led by Andreessen Horowitz.)
Neumann’s business appears to follow a much different model than WeWork. WeWork rented office space for the long term and then re-leased it to clients at a higher rate for a shorter period of time. This created a unique risk if WeWork was unable to find a lessee.
For Flow, the business is effectively similar to how hotel owners contract with branded hotel chains to operate their properties.
Flow’s investment themes seem to reflect economic and social trends. Increase in people renting housing One-third of Americans are renting, and more than half of urban Americans are renters, rather than buying when housing is scarce.
Neumann made a small foray into the residential real estate market during his tenure at WeWork. The company has created a division called WeLive, which offers short-term rentals and experiences. The business was derided as a runaway social experiment and quickly shut down, and he’s one of the few divisions like WeGrow and Rise by We to move WeWork away from its core focus. Neumann says the company expanded too quickly into too many areas.
The investment in Flow is huge by venture capital standards, but still far smaller than the $9 billion SoftBank founder Masayoshi Son invested in WeWork. When WeWork was on the brink of bankruptcy, Son invested another $9 billion into the company to bolster its finances, leading to Neumann’s ouster.
In a memo, Andreessen said he was particularly interested in Flow. Because he believed rental properties were ripe for disruption. The social bonds and camaraderie enjoyed by local workers. ”
He also hinted that the company could try to address one of the biggest challenges renters face. “In a world where limited access to home ownership is a driver of inequality and insecurity, giving renters peace of mind, community and true ownership will transform our society. have the power to bring about
It is unclear if Flow will offer a program for renters or other mechanisms for renters to create equity. Andreessen and other tech moguls recently opposed plans to build multi-family homes near their property in the town of Atherton, Calif.
Neumann declined to comment.and Interview at DealBook Summit Last year, he said of his ups and downs at WeWork, “I’ve had a lot of time to think, a lot of lessons and a lot of regrets.”
