I see a lot of confusion over why anyone would want to take a stake in an Adam Neumann biz. Some guesses…

VCs are looking for return, and quickly, which is why they have glommed on to crypto projects. In the old model, you invest money, wait 5-10 years, and get a payoff when the company goes public or gets sold. With crypto, there is a much more immediate payoff with unregistered securities, AKA “tokens”. And then maybe a second payoff in 5-10 years.

There are no details from a16z or Flow on what this actually is, but I am guessing tokenized rent payments on a blockchain in some fashion, promising some sort of equity to renters, and quick returns to a16z. They came out with a splashy investment and a high valuation, and are hoping to make their money back on the unregistered securities, AKA tokens, and who knows, maybe more in 5-10 years.

Never underestimate the cynicism of a16z.

I think not everything needs a venture-backed, take-over-the-world solution.

For the issues being raised here (home ownership is inaccessible to many, renters don't have stability, security), aside from greater protections for renters, another class of existing solution is Community Land Trusts. These organizations retain ownership of the land, have a charter that's targeted at keeping housing affordable (or some related mission), lease out land on very long terms (like 99 years) with contracts that place limitations on resale of any improvements on the land. These restrictions can make housing permanently affordable, and removes housing on that land from being an asset for speculation. Residents get security from the very long terms of their loans, the governance of their CLT, and ownership of improvements on the land. The CLT can use revenue to create and maintain community amenities.

Sometimes good arrangements already exist, but they're not going to be rapidly scaled up across the country because no investor stands to get a windfall from rapid expansion.

My guess:

A network of apartment complexes across the country that you can own equity in the entire enterprise instead of one single home. You can "freely" move between the apartments without having to go through financing etc.

This can be interesting with a massive capital and enough time to build out the network but seeing this cocaine addict's name in the mix make me feel this is going to fail fast. Real estate is a slow industry, VC money doesn't have patient for it

I am surprised to see so many negative responses.

I bet most of the people here agree 100% with the problems and structural shifts this memo identified, and that technological innovation in the housing space to facilitate both social cohesion and affordability would be a *very good thing*.

Sure, Adam had some highly publicized issues at WeWork. Also, a16z is on a lot of people's shit list right now. Still, why do so few people seem to be rooting for their success? If you're prone to cynicism I get it - the only way this can end is grift - but personally I would like to see more companies trying to address these issues and Adam seems like he genuinely cares about it. Maybe a little too much, even.

> In a world where limited access to home ownership 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.

To paraphrase, "we will continue hurling investment money into residential real estate to create a permanent serfdom of renters."

It's notable that there are no references in this article. We actually have a 9 month supply of new housing now (which is a lot, that's up from a low of just a few months). Population growth in the US continues to go ever lower (but isn't going negative). Here is a nice data-driven video overview of this current economic situation and also about how this likely indicates a worsening recession ahead: https://www.youtube.com/watch?v=Z6JBX8Y8XQM

It would be nice to see this data explored in a more localized way. I know there are excesses of new housing in some places and shortages in other places. I also don't know how much of the current excess housing supply is due to houses being built in less desirable locations.

I think A16Z needs to invest more in character references

Anyone know what this magical idea is?

Color me skeptical, but the deliberately vague strawman arguments in the post read between the lines to be something like: "If you're a homeowner we want to your equity and if your a renter we want your rent". I don't harbor any illusions that flow wants to help anyone but themselves.

I have no idea what flow actually is, but if it's something like "airbnb but permanent on the blockchain" like we work was "Airbnb but for your work desk", then no. Heck no.

> The second model: you rent an apartment, but: it’s a soulless experience; do you even meet your neighbors, much less have any friends in your complex? Does it feel like home, or just a place to sleep? Are you proud to bring friends and family to visit, or hesitant?

Excuse me, what? I've absolutely met my neighbors. In past buildings in Brooklyn I've gone out to dinner with some, spent hours on the stoop having conversations with others, taken care of their kids while they ran an errand, and had all sorts of positive (and negative) experiences with them. That's what living in apartments in a dense city community is like. People come hang out in my place all the time.

It's hard to even comment on what they're proposing, since there are no details, but the last thing we need is more single family homes and corporate landlords.

That's a lot of words to find out exactly zero about Flow and what it's doing, for which the buried link to the website also does nothing to explain.

Also, it's kind of rich to hear a billionaire wax poetic about the woes of the real estate market. According to a quick search, he of no surprise owns several properties, including a $177 million property.

Let me see if I got this right. Instead of a16z using its resources to actively push for YIMBY changes in society and politics that would actually have positive outcomes on the problems stated, it's investing in the next idea from the WeWork dream seller / scammer, and we don't even know what the venture is? Is this what the venture capital world has become in 2022?

> 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

This sounds very disingenuous. Starbucks was arguably the first 'community brand' where people would associate one with an informal meeting place rather than to drink a coffee. Even in Silicon Valley, there are cafe chains renowned for this meeting vibe.

And then there are country clubs, which are newer and more bourgeois.

Even the neighborhood newspaper kiosk in historical European cities did a better job of bringing community and brand to real estate than WeWork.

This is really gross. Andreessen, who’s used his sway to stop any slight increase in housing density in his own town, talks about the broken housing system and how investing billions into a failed scammer will revolutionize housing in a way that’s completely unstated, but presumably involves attempting to find ways to collect rent from people who need housing while also putting all the capital risk onto those individuals as well. The worst thing we can do for housing is to give any credence to this company’s plans.

Adam Neumann is what happens when you put all your SPECIAL stats into charisma

This is almost certainly going to be a rent-seeking venture that attempts to sell "freedom of movement" by having something that feels like student accommodation for adults and small families... a kind of shared living space that can be rented month-to-month with some perks like community spaces and services, pre-furnished, etc. To sell a lifestyle.

Of course that comes at a cost, one that very few people can afford. At least, it will be unaffordable to most. It is always true that more people than one realises is actually awash with money (thanks to the prior generation benefiting from incredible growth of their assets) and for them this freedom of movement by renting on a rolling short-term basis and upping on a whim will allow them to further access high paying work.

I'm really not sure that what housing needs is for large-scale VC money to be poured in (and the corresponding expectations of return on that).

Will it be profitable? Yes. Is it ethical? No.

Fool me once, shame on you. fool me twice, you’re a visionary Adam.

So how's Flowcarbon doing? Was that a good idea?

WeWork 2.0 - Elizabeth Homes Edition.

The disclaimer at the end is nearly half the length of the post.

> There’s a reason the federal government started subsidizing home mortgages: someone who is bought in to where he lives cares more about where he lives.

Hasn't this thought process proven wrong in europe. Renters were similarly engaged in local communities where there were sufficient protections for long term renters.( I can't find the study now ).

I really don't understand why govt need to be in the business of providing home ownership subsidies. Seems like it has contributed to exacerbating current situation in US.

So did Adam buy a bunch of houses and apartments at peak valuations which he'll generously be offering to sell to Flow for a very modest profit?

Housing is absolutely not an issue that more consolidation and VC money can fix. Watching the US just nosedive right into becoming a renter society and giving up on the prospect of ownership is pretty wild...

Easy for AH- they charge fees on the capital they deploy. Adam and his BS are ultimately the problem of your poor grandmother’s teaching pension getting invested in a noted charlatan.

I used to have a high opinion of venture capital, seeing them as tech visionaries and folks with access to deep pockets that fund the best technology that is truly changing the world. Maybe something has changed, but now all I see are just financial hustlers, working markets, trying to capture or corner spaces with "unicorns", looking for M&A activity that might have already been pre-negotiated looking for something to fill that spot, and weird market plays that never seemed to make sense financially (Web3? WeWork?). My perception now of VC is much like any other private equity play. They're in it for the financial hustle, and I don't feel that their "ideas" really hold much water. Why we look up to VCs as thought-leaders and visionaires when they are financial creatures beats me.

While the top VC players may have earned the respect by themselves being visionary entrepreneurs (once, decades ago in many cases), the rest of the VC market is filled with also-ran investors who have never been practicing entrepreneurs, following markets like lemmings and looking for a relatively quick buck while not even understanding the markets they invest in. When I hear someone is an investor, especially if they're not one of the handful few of well-known investors, I just think to myself "banker". I don't know if it's always been like this, but it certainly feels like it's gotten worse.

> Adam is a visionary leader who revolutionized the second largest asset class in the world

I was of the opinion that Adam made a serious and flawed business decision of taking long term leases with borrowed money, but selling short term fluid leases for revenue leading to books that are incredibly risky. At the time of collapse, the sky high valuation was basically a branding exercise, rather than actual business value (adjusted for risk)

> it’s often under appreciated that only one person has fundamentally redesigned the office experience and led a paradigm-changing global company in the process

How is that A16z is oblivious to the fact that astronomical valuations were tempered after scrutiny of the business of WeWork?

>We understand how difficult it is to build something like this

Again. They took cheaply available VC money, turned it into long term leases. That is a terrible business to be in, risk wise.

Not to mention bullshit about "community" and what not that they tried to build around 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.

What is novel about this? Aren't Cul de Sacs supposed to be this? Or even apartments?

Cronyism is alive and well on Sand Hill road but "Adventure" left Venture capital long ago.

A lot of the negativity comes from the fact that Adam Neumann is involved. He's incredibly dishonest and a borderline scam artist. He set fire to billions and came out incredibly wealthy. You may not care about the people he took money from, but what he did was still wrong.

Another point is that there is no concrete business or idea. The memo at least doesn't explain the actual business. It's vaporware. There are thousands of people with track records that want to open real cashflow businesses and can't get funding. And then there's someone like this that can manifest billion dollar companies with an idea. It just strikes them as unfair.

> technological innovation in the housing space to facilitate both social cohesion and affordability would be a very good thing.

Sure, just not one led by Adam Neumann or a16z, certainly not one led by both.

Maybe they will do something legitimately good, but from what we know of both of them, it's highly likely that they will optimize for what will increase their respective net worth as fast as possible, no matter the consequences and not for what will have the best impact on society.

And sure they don't have any obligation to optimize for social good, but you can't ask us to be excited about it.

Neumann already had bought close to 4000 apartment in January, presumably linked to this venture. So if you are somehow expecting them to come up with a solution to the affordability crisis, I think you are deluding yourself. It's far more likely that we end up with an airbnb-like for long-term stays that will continue to push the cost of the housing market ever higher, greatly enriching Neumann and a16z in the process. But hey, at least you will be able to book your place for the next 6 months right through an app with a nice UI, you won't need to line up to visit an apartment and it will even come pre-decorated WeWork-style to make you feel right at home!

The problem is that Neumann walked away with an absolute fortune, leaving investors and much more importantly employees holding the bag. He operated with what could charitably described as accounting methods of questionable ethics.

If this investment has some term that makes it so Neumann does not personally see one penny of this money unless the company is wildly successful and everyone else involved gets paid first, maybe it'd be worth considering. Instead, there is a very likely outcome here where he takes home tens to hundreds of millions while once again doing nothing of actual substance to change the market.

Basically, he's a huckster who enriched himself at the expense of others. People tend to root against people like that, and they don't like it when they're handed huge sums of money.

The problem is that you can be a well meaning person, take a bunch of capital and unintentionally cause huge problems. Look at Airbnb, for example, which is causing havoc in the rental markets of major and minor cities across the globe. Airbnb certainly didn’t set out to cause harm, and I’m sure the founders would actively argue to this day that what they’ve done is for the greater good… same with Uber.

If you accept that the markets are inherently good and the most profitable outcome is the best outcome, then it’s easy enough to look at this as a positive move… but if you see capital + technology as a force for bad when unchecked, this is just more of the same — success for Flow could come at the expense of others.

Adam’s history is one of not caring about rules or expectations, he caused significant financial harm to a lot of people with WeWork and while I am not particularly cynical about Flow, I think the cynicism from others deserves more credit — it’s not just contrarianism, the housing market is very vulnerable (see all the private equity that pushed up American house prices recently).

Perhaps it's because:

[1] Marc Andreesen himself is NIMBY. Which is what is contributing to the housing problem across the USA (and parts of Europe). The inability to build new housing leads to the insane property pricing and the very housing crisis that they are trying to solve https://www.theatlantic.com/ideas/archive/2022/08/marc-andre...

[2] Adam Neumann is a self dealing grifter.

You have two dishonest actors proposing a solution for problems they may be causing directly...

> and that technological innovation in the housing space to facilitate both social cohesion and affordability

My gut reaction to the news is totally negative. I agree with your above point, but I see that innovation coming from outside Silicon Valley-VC bubble. We need communities to organize and modernize zoning. We need modular housing to drive down the cost of construction. We need to focus on the basic economics (supply & demand) of housing.

If I had to guess, a16z & Adam are going to throw money into being shitty landlords. They are going to get their cut. I'm very skeptical they will make the world a better place.

What are you talking about? What "technological innovation" would Adam possibly bring to housing that improves social cohesion and affordability? Like, an app?

I sure hope you work in pr at A16Z

This is so classist (not your comment but op). To imply that folks who don't own their home shouldn't/couldn't be "proud" to bring their loved ones there. Are you kidding me? Entire generations, communities, families have lived and died in rental housing. Entire swaths of the population. This shows very little respect for them.

The suggestion that renting is bad is wrong and insulting.

The US has made a series of poor choices to try to treat housing as a means wealth generation.

Housing can be affordable or a good investment it cannot be both. Ownership incentivize's NIMBYism, which has huge detrimental effects. Renting does not.

I guess the only frame of reference this set of VC/founders have to go on is the last time they rented before becoming millionaires.

This stood out as the weakest part of the thesis to me as well, but I think in general it's true that apartment living trends towards atomized, low-community existence. Even classics of modern high-density architecture like Unite d'habitation with its multi-floor, windowed interior hallways don't really function in their stated intent of building social spaces. Not that Adam Neumann is the person to solve it, but creating vertical communities that are as deeply integrated as horizontal ones has been a central open question in architecture and urban planning for nearly a century.

> While the top VC players may have earned the respect by themselves being visionary entrepreneurs (once, decades ago in many cases), the rest of the VC market is filled with also-ran investors who have never been practicing entrepreneurs, following markets like lemmings and looking for a relatively quick buck while not even understanding the markets they invest in. When I hear someone is an investor, especially if they're not one of the handful few of well-known investors, I just think to myself "banker". I don't know if it's always been like this, but it certainly feels like it's gotten worse.

Funny you say that because a16z was a top-5 (maybe even better) performing VC in the 2010s and the guy who wrote this article is the Marc Andreessen who created Mosaic/Netscape.

I think this just goes back to the classic "live long enough to see yourself become the villain". I mean seriously, a $350 million round to a company that doesn't yet exist and is led by a bona fide fraudster. Boggles my mind.

I figured it's valuable that he did create something that's valued at nearly $4 billion dollars today, but then I looked at it and he did raise $22 billion.

The question is, is it trivial to take $22 billion dollars and create a $4 billion business? In some cases I would say yeah, its still valuable. I'm not entirely sure I could create a $4 billion business regardless how much money you gave me. On the other hand its real estate, so I could just buy $22 billion of real estate and hopefully come out somewhere just shy of that amount. I'm not sure but the spread between $22 and $4 leaves plenty of room for error.

But there is something to say about failing. Traders that have lost a lot of money are more valuable than those that have never had any downs. But from hearing Adam Neumann speak, it strikes me as though he hasn't learned any lessons. He's a master at deflection and has an excuse or explanation for everything. He has no self awareness or humility. You can listen to his interview from 2021 and it's really incredible.

Anyway, that's all to say I'm surprised anyone would give him another chance.

https://www.youtube.com/watch?v=Dgp-CM-gQik

Andy Grove's response when John Doerr decided to leave intel for kleiner

"Come on, don't you want to be a general manager and own a real P&L? I'll let you run Intel's software division. John, venture capital, that's not a real job. It's like being a real estate agent."

Occasionally, VCs fund something that changes the world, but I don't think that is necessary (and maybe also not even strictly sufficient) to make money in that business.

I think VCs reflect the market. Alot of the fundamental new things have been done already. So if you’re looking for new sources of huge returns, you’re looking for ways to do things differently vs inventing some new technology.

The other thing is that you have more really rich people who control lots of money without a lot of governance.

Adam should write a book “how to fail upwards in silicon valley”

What is infuriating is that there is so much great work done by great people on building strong resilient and affordable towns which are a pleasure to live and work in, but the easy VC money flows to the wierdo charlatans instead.

>How is that A16z is oblivious to the fact that astronomical valuations were tempered after scrutiny of the business of WeWork?

Do they care? If they cashed out on Masayoshi Son's money then it was still a great deal for them.

Meh A2z or whatever they’re called doesn’t really care about the OPM. I’d fund him just for entertainment factor. The world needs more spirituality in its valuations. And they’ll just dump their shares on a bigger fool like SoftBank.