Tech

Adam Neumann of WeWork has raised money for new real estate startup Flow.

There are problems with housing in the USA. And Adam Neumann, the charismatic founder known for successfully rebranding and running the shared office space into WeWork, thinks he has a solution: Flow. This residential real estate startup wants to address a wide range of issues, including housing affordability, lack of social interaction in a distant world, and tenants’ inability to achieve fairness.

Housing shortage is certainly a serious problem. USA were short nearly 4 million housing units as of the end of 2020, and the problem distribution across the country. The inability to buy a home has a huge impact on everything from Americans’ quality of life to their ability to create wealth. The problem is so big that the venture capital firm Andreessen Horowitz (a16z) writes its biggest check to date — $350 million, at a company valuation of $1 billion — to invest in Flow in the hope that the company can transform residential real estate with technology.

AT Blog post, a16z co-founder Marc Andriessen wrote that Neumann is returning to “the theme of connecting people by transforming their physical spaces and creating the communities where people spend the most time: their homes.” Andreessen added that addressing housing challenges “requires a combination of community-driven, experience-driven services with the latest technology in a way that has never been used before to create a system where tenants reap the benefits of owners.”

What all this means is not entirely clear. What we do know is that Flow plans to manage the more than 3,000 apartments recently acquired by Neumann and that the company will likely add community features and provide tenants with an opportunity to raise capital.

The big open question here is whether this failed founder and the look of the technology will actually help solve the US housing crisis. It is noteworthy that one of the main problems with housing in the United States is its shortage. While the issue here is with exclusive zoning, the frenzy of private investors to buy rental homes – like thousands of apartments were gobbled up by Neumann and friends – is without improving the situation.

By offering people the chance to get some sort of share in their apartments, they could help people accumulate wealth, Flow’s rent is likely meant for those who are already relatively wealthy. For example, the Nashville home that Neumann bought has a saltwater pool, a garbage collection service, and a dog walking area. Add to that all the premium services and community building aspects that Neumann properties are supposed to offer, and things get even more expensive.

It also looks like the project will include blockchain. There are several clues that suggest this, including several trademark applications disclosed by the Wall Street Journal. Applications for an entity associated with Flow mention real estate development, shared living space management, and cryptocurrency trading services. We also know that both Neumann and Andreessen recently teamed up on a project similarly named Flowcarbon, which aims to apply blockchain technology to the carbon credit market. Plus, it’s likely that Flow will have to leverage some nascent technology to justify its billion-dollar valuation before the startup does anything.

When WeWork filed for publication, many noted that the real estate company went out of its way to convince people that it was a tech company and, accordingly, justify its sky-high valuation. This time, you can almost see the wheels spinning in Neumann’s head. What could be more advanced than Web3? The rebranding of crypto and blockchain ostensibly could change the Internet as we know it, taking control of the network from big tech companies like Facebook and Google and returning it to its creators.

Of course it sounds great. But what does this have to do with real estate, community, and providing capital to tenants?

Arpit Gupta, a real estate expert and professor of finance at New York University Business School, suggests that Flow could try to combine a number of existing things and sell them into one. These include timeshare (flexibility!), co-ops (capital!), installment financing (access and equity!), and luxury buildings in trendy neighborhoods (rich millennials). Perhaps Flow wants to offer company-funded short-term apartments where you could increase your ownership stake the longer you live there.

“It’s like WeLive 2.0 combined with some kind of rent-to-equity system,” Gupta suggested. Oh, and they will probably launch a token – for finance and entertainment – that will allow more people to participate in the business and create a lot of buzz.

Flow will by no means be the only company trying to bring technology to real estate. Tech startups funded by venture capital, decide everything from investing in real estate to helping tenants finance their transformation into owners. Web3 real estate companies in particular tend to place ownership rights on the blockchain and tokenize stakes in buildings, Gupta said.

We also don’t yet know the full scope of Neumann’s latest plans. In addition to Flow and Flowcarbon, searching for related trademark applications reveals Flow Life (cryptocurrency investment and trading services), Workflow (workspace design), Flow Village (online professional networks) and Kibbutz (educational services and social media platform). ). Of course, just because you’re applying for a trademark doesn’t mean you’re actually going to do something.

But as we know from the fate of WeWork’s former umbrella organization, We Company, Neumann’s ambitions don’t quite live up to what’s possible. In addition to an ever-growing portfolio of coworking spaces, We has also expanded into seemingly unrelated businesses, including a school and an engineering firm that manufactures wave pools. Neumann is also well known for being a spendthrift and poor money management, a behavior that ultimately contributed to his company’s downfall.

However, Neiman’s reputation and wild ambitions do not limit his ability to raise money.

“There’s always money in Silicon Valley for a repeat founder.” – Eliot Brown, Wall Street Journal reporter and author of The WeWork candid book. Cult WeRekod said. “It seems that failure doesn’t stop people.”

It’s especially so here. Andreessen is partly responsible for the founder cult, a term that refers to the mythical status given to founders who are believed to do nothing wrong. Now his venture capital firm is funding Neumann’s return to stardom.

“One of the ironies is that a big driving force behind the rise and fall of WeWork was this fetishization of the founder,” Brown said. “Adam became a kind of paragon of a founder freaking out, and that was largely a creation of the mystique that Andreessen gave to the founders.”

However, for Andriessen, Neumann’s experience and failures are a virtue.

“We understand how difficult it is to build something like this and we love seeing recurring founders build on past successes while evolving from lessons learned,” Andreessen wrote in a recent blog post. “There are many successes and lessons for Adam.”

Presumably, this means that Flow will not have a wave pool.

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