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Real estate investing has fully caught up with the wheeling and dealing generally linked to the tech world — a point proven by the recent nine-figure funding of a new real estate startup headed by a notorious bad-boy entrepreneur by a well-known venture capitalist.
Adam Neumann is the former WeWork CEO who stepped down in 2019 due to internal pressure after a failed IPO launch. While he still owns 10% of the company he c-founded, he’s on to different ventures these days: Flow.
The precise details of Flow remain a mystery to most, but the people involved have released some clues and reporters have been busy digging up details. The main objective seems clear. The company will potentially give renters the ability to do something previously reserved for homeowners: earn equity.
Here’s what we know about Flow so far.
The Short Version
- Flow is a real estate startup founded by Adam Neumann looking to offer community living to hundreds of thousands of renters across the country.
- Flow is still shrouded in secrecy, but renters may get the chance to invest in their own rentals, growing their equity.
- Neumann has a history in the startup market, and while it’s a lucrative history, it’s also a controversial one.
- Neumann has received $350 million in funding so far for Flow, which currently has a $1 billion valuation.
Flow’s Founder Has a Checkered Past
In order to fully understand the potential behind Flow, investors need to understand its creator: Adam Neumann. Neumann is an eccentric entrepreneur — many may know him from his interview with The Washington Post where he declared he would become the “world’s first trillionaire.”
Aside from his exuberant personality, Neumann is best known as the creator and CEO of WeWork, a startup that offers users access to coworking spaces all over the country for a monthly subscription fee. WeWork was set to go public and had an implied value of $47 billion. However, amidst allegations of a toxic work culture and Neumann’s personal spending, WeWork’s IPO launch was delayed and Neumann stepped down.
It was later reported by WeWork employees that Neumann often used company funds to try out personal side projects. He was noted to have a lavish lifestyle including private jets and multiple luxury homes. Neumann also faced criticism when he bought the trademark “We” and then sold it back to the company for $5.9 million.
Unfortunately, Neumann’s noted issues don’t stop at the entrepreneurial level. Back In 2018, WeWork was involved in a sexual harassment lawsuit with a former employee. She claimed that during her initial company interview, Neumann continuously “plied” her with tequila shots. Once she got the job, she reported that the company was home to an “entitled, frat-boy culture” that ultimately led to her sexual assault.
Neumann’s unstable reputation and antics are what ultimately led to his ousting at WeWork. In fact, Neumann’s fall from WeWork inspired an Apple TV show, aptly called WeCrashed, starring Jared Leto.
Since then, Neumann and his wife, Rebekah, have spent their time ramping up for their next big venture: Flow. While the exact details of Flow are mostly being kept under lock and key until the company’s official launch, there are a few details that potential investors should know.
Flow Is Already Stocked And Funded
After leaving WeWork, Neumann and his wife received a $1.7 billion payout and have spent the majority of their time traveling with their family.
He has also picked up real estate properties around the U.S. From New York to California to Florida, his almost 4,000 properties are reported to be worth a total of $1 billion. These properties are likely to be the basis for Flow.
Since announcing the idea for Flow in August 2022, the company has secured $350 million in funding from major venture capitalist firm, Andreessen Horowitz. Additionally, Flow already has a valuation of $1 billion.
Neumann’s real estate empire will be vast. Flow plans to operate thousands of apartments comprised of Neumann’s real estate holdings. These properties will be in major cities like Atlanta, Nashville, Miami, and Fort Lauderdale.
Flow’s Aim Is to Address the National Housing Crisis
Flow has an ambitious goal: To be a “direct strike” against the housing crisis in the U.S, according to Marc Andreessen, co-founder of Andreessen Horowitz, in a post announcing the funding.
He writes:
“In a world where limited access to homeownership continues to be a driving force behind inequality and anxiety, giving renters a sense of security, community, and genuine ownership has transformative power for our society.”
The goal, at least in part, is to put more power into the hands of renters and let them invest in their own rental units.
In the statement, Flow is described as a “community-driven, experience-centric service with the latest technology…where renters receive the benefits of owners.” It’s still unclear what exactly this means, but Neumann clearly has remote workers as a target demo, just as he did when creating WeWork.
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Crypto Might Be Involved
There’s also another aspect to Flow that hasn’t been fully uncovered yet. There’s speculation that crypto could make an appearance. A Bloomberg report hinted, with the help of anonymous sources, that Flow may incorporate crypto into some sort of rewards program. Additionally, the report indicates that Flow may include a digital wallet that can handle this crypto.
Still, there are no definitive statements from Neumann or Andressen Horowitz on what exactly Flow’s business plan is. What is clear to most, however, is the fact that Flow won’t be the first company with this community-based structure. In fact, Neumann himself invested in another company that has eerily similar goals.
Flow Keeps Close Company With Its Potential Competitors
WeWork and Flow aren’t the only startups Adam Neumann is associated with. In fact, he’s invested in 49 startups with his family fund. In 2020 and then again in 2022, Neumann invested specifically in Alfred, a rental management software startup. He still owns 10% of the company but gave up terms from his investments that would eventually have given him majority owner status. Forbes reported recently that he’s since stepped away from the company.
According to Forbes, Alfred and Flow share some similarities. Both focus on offering technologically advanced rental properties that want to provide a community-centric appeal. Two of Neumann’s appointed board members also stepped away. Sources were cited as saying that “they might soon work on a project with the potential to compete with Alfred.” However, a spokesperson for Neumann has said that Flow won’t compete against Alfred.
Flow Demonstrates a New Trend in Real Estate Investing
Flow and Neumann’s former investment, Alfred demonstrates that real estate investing is changing rapidly. Over the last decade, real estate crowdfunding, fractional ownership, and REITs have helped diversify the real estate investing market. Investors have other options besides buying a property outright and renting it out to regular tenants.
Just as Flow is set to somehow turn renters into investors in the properties, other companies have risen up to level the playing field for renters.
The Brooklyn-based startup Up&Up, for example, has put a twist on traditional property rentals. Properties — mostly single-family homes — are rented out, and tenants are given the option to put aside two months’ worth of rent in a Up&Up Wallet.
This wallet continues to grow, offering potential profits. As your home’s value increases, your Wallet grows as a landlord’s would. You can choose to cash out the end of your lease or put these funds towards a down payment on the rental you’re living in.
The rise of real estate companies like these is clearly here to stay, and that’s because all types of investors are looking to get in the game. A study by PwC and the Urban Land Institute, points to a desire for alternative real estate investment options that are inclusive of low-level investors.
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The Bottom Line
From the crumbs of information they’ve dropped, Adam Neumann’s new real estate venture sounds like it could be a bold idea for this generation of real estate investors. And with $350 million in capital and thousands of properties in their portfolio, they’ve got a promising head start.
Despite that, it’s difficult to know if the company has the potential for success. Neumann has a complicated and controversial history. And the field is stacked with competitors. Without much to go on for potential investors just yet, we’ll just have to go with the flow to until we find out more about Flow’s future.
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