October 4, 2022
  • October 4, 2022

WeWork’s Adam Neumann to launch new real estate company

By on August 15, 2022 0

WeWork co-founder Adam Neumann returns to the real estate game three years after his sudden exit of the troubled shared office company.

His new company, called Flow, aims to transform the residential rental market and has secured a significant investment from renowned Silicon Valley venture capital firm Andreessen Horowitz (a16z), known for its early investments in companies such as Airbnb and Facebook.

Marc Andreessen, co-founder of a16z, announced the investment Monday in a blog post on the company’s website.

“Adam is a visionary leader who has revolutionized the world’s second largest asset class – commercial real estate – by bringing community and brand to an industry where none existed before,” Andreessen wrote.

“We think it’s natural that for his first venture since WeWork, Adam is returning to the theme of connecting people by transforming their physical spaces and building communities where people spend the most time: their homes,” he added.

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Former WeWork CEO Adam Neumann speaks onstage during a company event at Microsoft Theater on January 9, 2019 in Los Angeles, California.

Michael Kovac

WeWork was once valued at nearly $50 billion, making it one of the most valuable venture-backed startups in the world. But its outlook has darkened after a failed initial public offering and mismanagement of the company led to the layoff of thousands of workers. Today, WeWork is worth $4.3 billion. Neumann left the company in 2019 with a reported exit package worth $1.7 billion.

Andreessen has invested around $350 million in Flow, The New York Times reported, citing three people familiar with the deal. The venture capital firm did not immediately respond to CBS MoneyWatch’s request for comment. Adam Neumann could not be reached for comment.

Flow, which its minimalist website says is set to launch in 2023, aims to redefine the rental housing market by creating branded living units that are “community-driven” and “experience-centric”, according to a16z’s blog. It is unclear how Flow will achieve this and what types of services will be provided.

In his article, Andreessen highlights the current disadvantages of owning and renting a home. Although homeowners have a place of their own, they typically take out long mortgages that tie them to a particular geographic location, even if their circumstances change and they wish to move. Renters have more mobility, but may be less invested in their community and have no equity in housing.

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The Covid-19 pandemic has also led to changes in the residential and commercial real estate markets. The shift to remote working means that many workers no longer meet regularly in offices, making it difficult for them to make social connections and find community through their work. Andreessen’s perspective: Building community where you live, which Flow aims to do, is more important than ever.

Neumann first made his foray into residential real estate with WeLive, a bankrupt short-term rental company.

Preparing to launch Flow next year, Neumann has purchased more than 3,000 apartments in Miami, Fort Lauderdale, Atlanta and Nashville, according to the Times.

Rents are skyrocketing in the United States, especially in densely populated urban centers. In Miami, the average rental cost for a one-bedroom apartment is $3,225, up 24% from a year ago, according to Apartmentguide.com.

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