Adam Neumann’s plans for the residential market remain mysterious, but his latest backer has said they will “change the world”.
Keen followers of Neumann’s career will be used to that level of hyperbole, which helped propel WeWork to a $47bn (£39bn) valuation back in 2019. They will also be accustomed to seeing a sometimes-rude return to reality – Neumann was booted out of the business he founded, now worth a more modest $4bn.
But investors still have faith in Neumann’s messianic approach to reinventing real estate. This week, one of Silicon Valley’s top venture capital funds has thrown its weight – and cash – behind his new property venture, Flow.
Andreessen Horowitz, which has previously backed Airbnb, Skype and Facebook, has declared Neumann to be a “visionary leader”. More importantly, it has handed over a cheque for $350m, valuing Neumann’s new company at more than $1bn.
Not only is this the single biggest investment Andreessen Horowitz has ever made, it is the biggest external investment Neumann has attracted since January 2019, when SoftBank put a $47bn valuation on WeWork.
“Residential real estate – the world’s largest asset class – is ready for exactly this change,” it said.
How will it “change the world”?
So what is Flow? And how will it “change the world”? The company’s website gives little away, except that it is preparing to launch in 2023. The only other information on the holding page is the nebulous phrase “Live Life in Flow”.
However, there are clues. Earlier this year, it emerged that Neumann had invested in several thousand apartments across Miami, Atlanta, Nashville and Fort Lauderdale. Exactly what he plans to do with them is unclear.
Some more clues have been offered by Andreessen Horowitz founder Marc Andreessen. In a blog post last night he praised Neumann as “a visionary leader who revolutionised the second-largest asset class in the world – commercial real estate – by bringing community and brand to an industry in which neither existed before”.
Andreessen added: “We think it is natural that for his first venture since WeWork, Adam returns to the theme of connecting people through transforming their physical spaces and building communities where people spend the most time: their homes.”
The aim of Flow, he wrote, is nothing less than “a seismic shift in the way industry relationships are structured and the mechanisms through which value is delivered”. That will be achieved by “combining community-driven, experience-centric service with the latest technology in a way that has never been done before”. That will in turn “create a system where renters receive the benefits of owners”.
And it appears this does not simply mean giving tenants a sense of ownership, but some form of actual ownership. “This means rethinking the entire value chain, from the way buildings are purchased and owned to the way residents interact with their buildings, to the way value is distributed among stakeholders,” Andreessen said.
The special sauce
For some, this is evidence that Flow will attempt, once again, to bring an element of the kibbutz to real estate. Neumann has previously referred to his experience of growing up in a kibbutz in Israel as “the special sauce” that he brings to his shared spaces.
“We are thrilled by the scope and aspiration of this project,” Andreessen concludes. “It is not lacking in vision or ambition, but only projects with such lofty goals have a chance at changing the world.”
It would not be a Neumann project if it did not have ambitions to change the world, but Andreessen said we should not write that off as hyperbole. “Only one person has fundamentally redesigned the office experience and led a paradigm-changing global company in the process: Adam Neumann.”
The industry will have to wait and see whether Flow will deliver on its ambitions.
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