Adam Newman’s latest big idea? To become America’s largest landowner | we work

aDam Newman presided over the most spectacular business collapse in recent history. A new-age talkative, barefoot business messiah, he managed to build and burn his last startup, office-sharing company WeWork, in such a grand fashion that even Hollywood took note.

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

Newman, it was reported this week, is at the helm of a new company that wants to reinvent apartment living. The 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 receive from Silicon Valley: a $350m investment from venture capital giant Andreessen Horowitz, known as A16Z. Is.

The announcement of the firm’s investment in Flow, which values ​​the company “pre-seed” – meaning it has yet to launch – shook the startup world at $1bn. Not only is this A16Z’s largest single investment to date in a venture, but it is also a major endorsement of Newman, who has become an anti-entrepreneur. The news immediately sparked a lot of jokes and a lot of anger on Twitter.

a16z: How can we trust you after WeWork?

Adam Neumann: I’m a Neumann.

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


a16z: How can we trust you after WeWork?

Adam Newman: I’m Newman.

– Douglas A. boneparth (@dougboneparth) 15 August 2022

After promising to reshape the office world, and successfully becoming the largest office landlord in several cities, including London and New York, WeWork fell into a shocking crash in 2019, when the company was found to have little more than investors thought. Value detected.

The company was planning to enter the stock market at a valuation of $47bn, but when investors began scrutinizing the company’s business model and corporate governance structure, its value fell and it shelved its plans. WeWork laid off 2,400 employees and Newman was given $445m to leave the company.

While the co-working company is by no means a failure, and is slowly finding its footing after Newman, it was a textbook example of startup boom and bust and the embodiment of the trouble ahead.

Investors began to realize that, pumped with venture capital cash, many “unicorn” companies—valued at over $1 billion—had too high a value and often priced services and products to beat out competitors. were giving subsidies.

Over the years, WeWork’s story has been told repeatedly in several books, documentaries and a film, many of which focus on the singularity and intensity of Newman’s leadership.

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

Andreessen wrote in a blogpost, “It is often under-appreciated that only one person has fundamentally reshaped the office experience and led a paradigm-changing global company in the process: Adam Newman.” “We understand how difficult it is to build something like this and we like to build on past successes while growing from the lessons learned by repeat founders.

“For Adam, the successes and the lessons are many.”

Newman kept a low public profile in the years after leaving WeWork, but he’s gradually been making more appearances. In November, he appeared at the New York Times Dealbook Summit, where he said that the development of WeWork “got over my head”.

“I have had a lot of time to think, and there have been many lessons and many regrets,” he said.

In the spring, he spoke to the Financial Times about his new ambitions, including the yet-to-be-named Flow and his new role as an investor in startups. According to the Financial Times, through his family office, Newman invests in more than 45 startups and has over 50 employees.

“The opportunity is tremendous,” Newman told the newspaper of his new idea. “We started out by buying this real estate, but then I started walking on buildings, just realized, and it felt like there was more that could be done to improve the lives of these tenants.

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

‘For Adam, successes and lessons are many.’ Photograph: VCG/Visual China Group/Getty Images

Even before publicly coming out with his idea for Flow, a Wall Street Journal report in January revealed that Newman had quietly purchased 4,000 apartments in the Sunbelt’s large metropolitan areas, including Miami, Atlanta and Nashville, priced at Rs. was over $1 billion. , Newman began telling friends and colleagues that he wanted to build a company that would make branded apartments that came with amenities. A Nashville apartment has a saltwater pool and dog park.

There is no argument that America has a housing crisis. Shortage of supply and rising prices have made home ownership affordable for many people and rents have skyrocketed.

As Newman pointed out: “If you stopped manufacturing today, you would [would] Running out of homes in less than two months. Crazy, huh?”

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

“We cannot build enough housing in our cities with increasing economic potential – resulting in 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.” Gone,” he wrote.

Despite this announcement, it’s unlikely that Flow’s first apartment will be in the upmarket neighborhood of Atherton, Calif., Andreessen. Earlier this month, The Atlantic reported that Andreessen and his wife, Laura Arillaga-Andreessen, sent a public comment with all-caps words against zoning for a multifamily housing development in Atherton.

Efforts to increase the supply of housing in the area “will drastically reduce our home values, the quality of life of us and our neighbors, and an immediate increase in noise pollution and traffic,” he wrote.

And it’s not just housing advocates who have rolled their eyes at Flow. A16Z has come under criticism for giving Newman a huge endorsement as women and black and Hispanic founders struggle to obtain funding. Recent data has shown that 2% of venture capital funding has gone to underrepresented founders in recent years.

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

THIS IS DISGUSTING.@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.

— Kate Brodock (@Just_Kate) August 15, 2022


This is lousy.@a16zThe biggest check is going to the (straight white male) founder of one of the most toxic companies we’ve ever seen. Such firms frequently perpetuate a traditional system that favors a small, homogeneous group of founders.

— Kate Brodock (@Just_Kate) 15 August 2022

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

“At the end of the day, we as VCs are essentially money managers – we glorify financial advisors. We take money from wealthy people or groups that have big capital, and our job is to make them more money. ,” Conwell, who is Black, said. “It’s not necessary to care about our work ethic, ethics, systemic racism or financial inequalities. There are many VCs who care, but it’s not work.”

Despite Newman’s past, Conwell noted that the founder made generous returns to WeWork’s early investors, which were sold off 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 is very common for VCs to reinvest in people they have invested in before, especially those who have made them money. Adam Newman made a lot of people a lot of money.”

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