Adam Neumann is returning to the real estate industry three years after his sudden departure from the problematic shared office space business WeWork.
His new startup, Flow, intends to alter the home renting sector and has attracted a substantial investment from Andreessen Horowitz (a16z), a prominent Silicon Valley venture capital firm renowned for its early investments in Airbnb and Facebook.
Monday, co-founder of a16z Marc Andreessen revealed the investment in a blog post on the company’s website. Andreessen remarked, “Adam is a visionary leader who reinvented the second biggest asset class in the world – commercial real estate — by introducing community and brand to an industry where neither previously existed.”
“We believe it is inevitable that for his first endeavor after WeWork, Adam will return to the subject of connecting people by improving their physical environments and creating communities where people spend the most time: in their homes,” he continued.
WeWork hosts the second annual Creator Global Finals at the Microsoft Theater.
Former WeWork CEO Adam Neumann talks onstage at a business event held at the Microsoft Theater in Los Angeles, California on January 9, 2019.
MICHAEL KOVAC
WeWork was originally valued at over $50 billion, making it one of the world’s most valuable venture-backed firms. Inability to design an initial public offering and business mismanagement, resulting in the layoffs of thousands of employees, diminished the company’s chances. WeWork is now valued $4.3 billion. Neumann reportedly departed the business in 2019 with a $1.7 billion departure payout.
Andreessen has invested over $350 million in Flow, the New York Times reported, citing three individuals with knowledge of the transaction. The venture capital company did not immediately respond to a request for comment from CBS MoneyWatch. Adam Neumann was unavailable for comment.
According to a16z’s weblog, Flow seeks to change the rental housing sector by developing branded living units that are “community-driven” and “experience-centric.” The company’s website indicates that it will start in 2023. It is unclear how Flow would do this and precisely what services will be offered.
In his piece, Andreessen discusses the present disadvantages of both house ownership and renting. While homeowners have a property to call their own, they often sign long-term mortgages that bind them to a certain geographic region, even if their circumstances change and they choose to relocate. The mobility of renters is greater, but they may be less involved in their neighborhood and have little equity in their dwelling.
Additionally, the COVID-19 epidemic has influenced the residential and commercial real estate sectors. Due to the move toward remote work, many employees no longer assemble in the office on a daily basis, making it more difficult for them to make social ties and find community via their professions. Andreessen believes that it is more crucial than ever to build a local community, which Flow attempts to achieve.
Neumann began his residential real estate career with WeLive, a failing short-term rental company.
According to the Times, Neumann has bought more than 3,000 residential units in Miami, Fort Lauderdale, Atlanta, and Nashville in preparation for the debut of Flow in 2020.
Rents are soaring throughout the United States, especially in heavily populated metropolitan areas. Apartmentguide.com reports that the average cost of renting a one-bedroom apartment in Miami is $3,225, up 24% from a year earlier.