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WeWork founder Adam Neumann's new startup is backed by Andreessen Horowitz

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WeWork founder Adam Neumann, whose remarkable rise and fall has been documented in books, documentaries, and scripted TV series, is embarking on a new adventure.

Neumann has launched a new company called Flow that will focus on the residential real estate market, reports the DealBook newsletter. Notably, he is financially backed by Andreessen Horowitz, a well-known Silicon Valley venture capital firm that was an early investor in everything from Facebook to Airbnb.

Andreessen Horowitz is considered royalty among early-stage investors, so his endorsement is a strong sign of endorsement, perhaps criticizing Neumann’s leadership at WeWork for corporate arrogance. This is Mr. Neumann’s rebuke to the critics, which he explained as a lesson.

The company’s investment in Flow is about $350 million, and three people briefed on the deal said the company is valued at over $1 billion even before it opens. The investment is the largest personal check ever written by Andreessen Horowitz in a corporate funding round.

Flow is set to launch in 2023, and venture capital giant co-founder Marc Andreessen will join its board of directors, these people said. Neumann plans to make significant personal investments in the company in the form of cash and real estate assets.

“It is often underestimated that there is only one man, Adam Neumann, who led a global company that fundamentally redesigned the office experience and changed the paradigm in the process.”

At its peak, WeWork was valued at about $47 billion. After a failed public offering and a story of mismanagement, it imploded spectacularly. Neumann said he was kicked out of WeWork in 2019, but walked away with hundreds of millions of dollars. Today, WeWork’s market value is around $4 billion.

Andreessen writes: For Neumann, “there are many successes and lessons learned,” he added.

Having purchased over 3,000 apartments in Miami, Fort Lauderdale, Atlanta, and Nashville, Neumann aims to reimagine the rental housing market by creating branded products with consistent service and community features. increase. Flow owns and operates the properties purchased by Mr. Neumann and provides services to new developments and other third parties. I was not able to know the exact details of the business plan. (Flow is unaffiliated with FlowCarbon, a cryptocurrency company also co-founded by Neumann that raised $70 million in a round led by Andreessen Horowitz in May.)

Neumann’s business appears to follow a much different model than WeWork. WeWork rented office space for the long term and then re-leased it to clients at a higher rate for a shorter period of time. This created a unique risk if WeWork was unable to find a lessee.

For Flow, the business is effectively similar to how hotel owners contract with branded hotel chains to operate their properties.

Flow’s investment themes seem to reflect an economic and social trend where more people are renting than buying homes when housing is scarce. A third of his Americans rent a home, and more than half of all urban Americans rent.

Neumann made a small foray into the residential real estate market during his tenure at WeWork. The company has created a division called WeLive, which offers short-term rentals and experiences. WeWork, like WeGrow and Rise by We, was ridiculed for being one of the few divisions to move WeWork away from its central focus as the social experiment ran wild and was quickly shut down. Neumann says the company expanded too quickly into too many areas.

The investment in Flow is huge by venture capital standards, but still far smaller than the $9 billion SoftBank founder Masayoshi Son invested in WeWork. When WeWork was on the brink of bankruptcy, Son invested another $9 billion into the company to bolster its finances, leading to Neumann’s ouster.

In a memo, Andreessen said he was particularly interested in Flow. Because he believed rental properties were ripe for disruption. The social bonds and camaraderie enjoyed by local workers. “

He also hinted that the company could try to address one of the biggest challenges renters face. “In a world where limited access to home ownership is a driver of inequality and insecurity, giving renters peace of mind, community and true ownership will transform our society. have the power to bring about

It is unclear if Flow will offer a program for renters or other mechanisms for renters to create equity. Andreessen and other tech moguls recently opposed plans to build multi-family homes near their property in the town of Atherton, Calif.

Neumann declined to comment. In an interview at his DealBook Summit last year, he said of his own rise and fall at WeWork, “I’ve had a lot of time to think, a lot of lessons and regrets.”