The Magic of Adam Neumann

There’s no denying that Adam Neumann is a magician of sorts. I’d otherwise have a hard time explaining how he can raise massive sums of money off good vibes. 

Neumann is an instantly likable guy — something I witnessed firsthand during my brief employment at his company circa 2016. But, even then, I had trouble understanding how WeWork – whose stated mission is “to elevate the world’s consciousness” – could be worth what it was. The markets couldn’t make sense of it either. 

What puzzled me most was Neumann’s ability to walk into investor meetings and walk out 12 minutes later with a HUGE check. Whatever he did then, he was able to do again for his latest venture, Flow.

Andreessen Horowitz, popularly known as a16z, wrote their largest ever individual check to Neumann to the tune of $350 million. Astonishingly valuing his company at $1 billion before they’ve even launched. Neumann stated that he has contributed at least as much as a16z. Presumably, hinting at his real estate portfolio being part of the deal – some 4,000 properties spread across multiple cities. The exact details still need to be clarified.

Currently, Flow remains ambiguous. The website is bare except for a gradient logo, a tagline that reads “LIVE LIFE IN FLOW,” and some open positions for hire. Neumann himself has been understandably quiet since being ousted from WeWork in 2019. 

In his announcement of Flow, Marc Andreessen of a16z correctly asserts that our current housing crisis is driven by short supply and high demand — making both home ownership and rentals unaffordable for the average American. It's worth noting, Andreessen has reportedly opposed new multi-family zoning in his zip code even as he urges others to build more. Flow intends to solve the problem by bringing together every aspect of the living experience, from purchasing buildings to the resident experience to how value is shared among stakeholders. Nevertheless, it is unclear exactly how this solves the housing crisis.

Interestingly, both Neumann and Andreessen fail to acknowledge that part and parcel of the recent housing crisis are the investors snatching up homes in bulk and outbidding the average buyer. So how does Flow plan to avoid this problem? 

In a recent interview, Neumann and Andreessen further outlined their perspective on the problem and their proposed solution — though it will leave you with more questions than answers. Among the most salient points: The housing crisis is the worst it’s been… Indeed it is. Renters spend a significant portion of their income on rent… Sure. The rental experience is bad… I guess? Americans don’t greet each other in elevators and don’t know their neighbors… Really? Flow is going to fix all of this… Assuming this is even required — how? 

Neumann went on to highlight four key pillars of Flow. The first, a technology-first property management company, is likely the most straightforward component of his plan. Second, a real estate asset management company. Curiously reminiscent of tactics that got him in trouble before when he bought buildings and leased them back to WeWork during his tenure as CEO. Third, a financial services company, which makes sense if he is selling units, not renting them. And lastly, a “mechanism that’s going to take some of the value and share it with the value creators.” Huh? 

Neumann illustrates his point about ownership poorly by stating, “if you’re in your apartment building and you’re a renter and your toilet gets clogged, you call the super. If you’re in your own apartment, and you bought it and you own it, and your toilet gets clogged? You take the plunger. It’s the difference from feeling like you own something to just feeling like you’re renting. From being transactional to actually being part of a community.”

Contrary to what Neumann believes, the decision to call a landlord or “take the plunger” myself has very little to do with my sense of ownership or community. It wholly depends on how badly I need to go!

It’s worth noting that this isn’t Neumann’s first attempt to revamp the living experience. WeWork rolled out WeLive, which promised to revolutionize living by challenging “traditional apartment living through physical spaces that foster meaningful relationships.” In other words, good vibes. 

Neumann projected that WeLive would generate $600 million in revenue by 2018. WeWork ultimately shuttered the project, never expanding beyond its two initial locations. Which leaves me wondering, what will be different this time around?

Like most, I’m having trouble making sense of Flow and the investment from a16z. Neumann claims he’s learned hard lessons from WeWork, yet much feels the same this go-round. I like a good redemption story, but I feel like we’re getting another Neumann special, big promises with lackluster results. Besides, the idea of a corporate-crafted community sounds like a nightmare. 

Still, I am not totally counting Neumann out. He crafted a good experience for his members at WeWork and the business still stands today. Flow can likely find a large enough premium market willing to pay for “an elevated experience” to make a healthy business. 

Is it worth billions? We’ll see. 

Will Neumann solve the housing crisis? Not a chance. 

If he proves us all wrong, I will personally cheer him on from the side. The housing crisis is a significant problem, and I generally like entrepreneurs that take on big challenges rather than building $800 I.O.T Juicers. Hopefully, a16z and the Flow team put together strong governance rules to avoid past mistakes. 

Whether we get a repeat of WeLive, WeWork, or WeGrow (yes, he tried revolutionizing education too) remains to be seen. 

But why invest in Neumann at all? Is the entrepreneur that mismanaged his way to a billion dollar payout really the right person to fix problems plaguing the average American? 

It’s hard to believe that a16z couldn’t find other entrepreneurs capable of tackling the housing crisis. In fact, they could have seeded multiple companies over to work on the problem with their large investment. Notably, Flow is a16z’s second investment in Neumann. He was given another $70 million last year for a financial tech startup. 

Which begs the question, what exactly is the magic of Adam Neumann?