WeWork's Adam Neumann to launch new real estate company
WeWork co-founder Adam Neumann is jumping back into the real estate game three years after his abrupt exit from the troubled shared office space company.
His new company, called Flow, aims to transform the residential rental market and has secured a sizable investment from noted Silicon Valley venture capital firm Andreessen Horowitz (a16z), which is known for its early investments in companies including Airbnb and Facebook.
Marc Andreessen, co-founder of a16z, announced the investment on Monday in a blog post on the firm's website.
"Adam is a visionary leader who revolutionized 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 wrote.
"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," he added.
WeWork was once valued at close to $50 billion, making it among the most valuable venture-backed startups in the world. But its prospects dimmed after failing to engineer an initial public offering and corporate mismanagement, resulting in the layoffs 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 roughly $350 million in Flow, the New York Times reported, citing three people familiar with the deal. The venture firm did not immediately reply to CBS MoneyWatch's request for comment. Adam Neumann could not be reached for comment.
Flow, which according to its bare-bones website is scheduled to launch sometime 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 blogpost. It's unclear how Flow will achieve this, and exactly what kinds of services will be provided.
In his post, Andreessen highlights the current drawbacks of both owning and renting a home. While homeowners have a place to call their own, they typically take out lengthy mortgages that tether them to a given geographic location, even if their circumstances change and they want to move. Renters have more mobility, but might be less invested in their community and have zero equity in the unit.
The COVID-19 pandemic has also driven change in the residential and commercial real estate markets. The shift to remote work means many workers no longer regularly gather in offices, hindering them from making social connections and finding community through their jobs. Andreessen's take: 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 failed short term rental business.
According to the Times, in preparing to launch Flow next year Neumann has purchased more than 3,000 apartment units in Miami, Fort Lauderdale, Atlanta and Nashville.
Rents are shooting up across the U.S., particularly in densely populated urban centers. In Miami, the average cost of renting a one-bedroom apartment is $3,225, up 24% compared to a year ago, according to Apartmentguide.com.
