SCAM?: Adam Neumann's BILLION Dollar Bid to "Solve Housing"
Summary
TLDRIn this episode of Beyond the Headlines, host James Lee discusses Adam Neumann's new venture, Flo, a real estate startup valued at $1 billion with a $350 million investment from a16z. Despite initial promises to address America's housing crisis, Flo appears to focus on luxury condos. Senior correspondent at Business Insider, Ben Bergman, shares insights from his visit to Flo's first apartment building in Fort Lauderdale, highlighting the four pillars of Flo's business model: branded technology, real estate, financial services, and community building. The discussion explores the slow incorporation of these pillars and the potential for Flo to expand its properties and impact the real estate sector.
Takeaways
- 🚀 Adam Neumann, former CEO of WeWork, has started a new real estate venture called Flo, which is valued at $1 billion.
- 💼 Flo received a significant $350 million investment from Mark and Andreessen Horowitz's venture capital firm, a16z.
- 🏢 The company owns 3,000 apartments and employs over 1,550 people, operating on a vertically integrated system.
- 🔍 James Lee, the host, went undercover in one of Flo's apartment buildings to understand the business model and community aspects.
- 🏗️ Flo's business model includes four pillars: a branded technology company, a real estate company, a potential financial services component, and a value-sharing mechanism with renters.
- 📱 Flo is developing an app to enhance the living experience, promote business among residents, and provide a seamless interaction within the Flo community.
- 🏙️ The real estate component of Flo doesn't differ much from traditional real estate investing, questioning its classification as a tech company.
- 🔜 Flo is expanding slowly, with plans to unveil the first branded property in early 2024 and a few more afterward.
- 💡 The initial idea of letting tenants build equity seems to have shifted towards a loyalty program rather than actual ownership.
- 🌐 The long-term goal for Flo is to build a huge brand and business, with no immediate plans for an exit strategy like IPO or sale.
- 🤝 Residents at Society Las Olas, the first Flo property, have a positive experience, finding the social commerce aspect beneficial for their businesses.
Q & A
What is Adam Newman's new venture after leaving WeWork?
-Adam Newman's new venture is Flo, a real estate startup valued at $1 billion.
How much investment did Mark and Andreessen's venture capital firm, a16z, make in Flo?
-Mark and Andreessen's venture capital firm, a16z, invested $350 million in Flo.
What is the business model of Flo as described in the transcript?
-Flo's business model is a vertically integrated system where they own the buildings, operate them, build the technology, and build the community and teams to run them.
What are the four pillars of Flo that Adam Neumann outlined?
-The four pillars of Flo are a branded technology company, a real estate company, a potential financial services component, and a mechanism to share value with the value creators, which are the renters.
What did Ben Bergman, the senior correspondent at Business Insider, discover about the technology aspect of Flo when he visited their building?
-Ben Bergman found that the technology aspect of Flo was quite low-tech and not unlike other buildings he had visited that were not Flo properties. He also mentioned viewing a prototype of their app, which aims to be a seamless connector for residents and promote business within the building.
How does the app developed by Flo differ from other apartment building apps?
-The app developed by Flo is designed to be more seamless and user-friendly than other building apps. It allows residents to connect with each other, promote their businesses, and have playlists within the building, making it a more comprehensive tool for community interaction and business growth.
What is the real estate component of Flo's business model?
-The real estate component involves owning and operating buildings. However, it's noted that real estate is asset-heavy and not traditionally considered a tech business, leading to questions about how Flo fits into the tech industry.
What is the timeline for Flo to incorporate new properties?
-The timeline is vague, but it's mentioned that one building will be unveiled as a Flo property in early 2024, with a few more potentially following.
What was initially suggested about tenants building equity through Flo, and has this changed?
-Initially, there was talk of tenants building equity, which attracted a lot of attention. However, this idea seems to have shifted more towards a loyalty program, similar to a frequent flyer program, without any actual equity being built into the apartments.
What is the community building aspect of Flo, and how do residents feel about it?
-The community building aspect of Flo focuses on creating a social commerce environment where residents can meet customers and grow their businesses. Residents interviewed in the transcript found this aspect lucrative enough to live there or maintain a space there even if they don't live on-site.
What is the long-term goal for Flo in terms of business development?
-The long-term goal for Flo is to build the business slowly and pay attention to details, aiming to create a huge brand and business, with no immediate plans for an exit strategy like an IPO or offloading the company.
Outlines
🚀 Adam Newman's New Venture: Flo
This paragraph introduces Adam Newman's new real estate startup, Flo, which is valued at $1 billion and has received a significant $350 million investment from Mark andreen and their venture capital firm, a16z. Adam Newman, known for his previous association with WeWork, is now focusing on this vertically integrated business model where the company owns, operates, builds, and uses technology to build communities. The paragraph also discusses the initial buzz around Flo and its potential to solve America's housing crisis, contrasting it with the reality of what has been presented so far, which seems to be luxury condos.
🏙️ Flo's Business Model and Integration
The discussion in this paragraph revolves around Flo's business model and its four pillars as outlined by Adam Newman: a branded technology company, a real estate company, a potential financial services component, and a value-sharing mechanism with renters. The conversation touches on the slow incorporation of these pillars and the challenges of branding properties as Flo properties. It also addresses the technology aspect of Flo, specifically an app designed to enhance the living experience and connect residents, which is said to be different from typical building apps due to its seamless design and social features.
🤔 Evaluating Flo's Impact on the Housing Crisis
This paragraph questions Flo's ability to address the housing crisis, considering the high-end nature of its offerings. It discusses the initial promise of letting tenants build equity, which seems to have shifted towards a loyalty program rather than actual ownership. The paragraph also delves into the financial aspects of Flo, including its $1 billion valuation, the $350 million investment, and the long-term goals of the company. The potential for Flo to become a major player in the real estate sector and its possible exit strategies are also considered.
Mindmap
Keywords
💡WeWork 2.0
💡Bankruptcy
💡Adam Neumann
💡Flo
💡Vertical Integration
💡Venture Capital
💡Community Building
💡Branded Technology
💡Real Estate
💡Financial Services
💡Equity
Highlights
Adam Neumann's new venture, Flo, is a secretive real estate startup valued at $1 billion.
Flo received a significant $350 million investment from Mark and Andreessen Horowitz's venture capital firm, a16z.
Flo owns 3,000 apartments and employs over 1,550 people, operating on a vertically integrated system.
The business model of Flo involves owning, operating, building, and technology development for the buildings they manage.
James Lee went undercover in one of Flo's apartment buildings to understand the company's operations.
Ben Bergman, a senior correspondent at Business Insider, was the first reporter to visit Flo's first apartment building.
Flo's four pillars include a branded technology company, a real estate company, a potential financial services component, and a value-sharing mechanism with renters.
Despite the initial hype about solving America's housing crisis, Flo's current model seems to focus on luxury condos.
The technology aspect of Flo is still in the early stages, with a prototype app designed to enhance the living experience for residents.
The app aims to provide seamless rent payment, maintenance requests, and resident interaction, as well as business promotion within Flo properties.
Flo's real estate component doesn't differ much from traditional real estate investing, raising questions about its tech company status.
Adam Neumann owns several properties across the country, with some under contract to eventually become Flo properties.
The financial services component of Flo might involve a loyalty program similar to frequent flyer programs, rather than equity building for renters.
Residents at Society Las Olas, Flo's first building, have a positive experience and find the social commerce aspect beneficial.
Flo's community building aspect aims to create a comprehensive living and working environment, reducing the need to leave the property.
The long-term goal for Flo is to build a huge brand and business, with no immediate plans for an exit strategy or IPO.
The current valuation of Flo remains at $1 billion, with no new funding since the initial $350 million investment from a16z and Adam Neumann.
Ben Bergman's insights into Flo were gained through his visit to Society Las Olas and his research on the company.
For more information on Flo, viewers are directed to Ben Bergman's Twitter and James Lee's YouTube channel for further investigation.
Transcripts
is we work 2.0 Upon Us my name is James
Lee and you're watching Beyond the
headlines on breaking
[Music]
points after his turbulent departure
from wework and amid new speculation of
a possible reconciliation as his former
company struggles in bankruptsy Adam
Newman has embarked on another venture
Flo a still very secretive real estate
startup which is now valued at $1
billion bolstered by a significant $350
million investment from Mark andreen and
his Venture Capital firm
a16z we own 3,000 apartments that we're
running we have over 1550 employees the
business model that we have is a
vertically integrated system we own the
buildings we operate the buildings we
build the technology we we build the
community and we build the teams that
running them vertical integration
technology Community buzzword after
buzzword so to try and figure out what
flow actually is I recently went
undercover inside one of their apartment
buildings the guy that found this
place um
yes do you see around here oh do you
really any comes here that video is on
my YouTube channel 5149 with James Lee
definitely check it out but today to
give us even more Insider knowledge into
flow we have with us a friend of the
show Ben Bergman he is a senior
correspondent at Business Insider where
he was the first reporter to set foot
inside Flo's first apartment building
which is located in Fort Lauderdale
called Society L Olas welcome Ben thanks
good to be here all right I want to
start uh first with the original a16 Z's
$350 million funding announcement of
flow which I would say was imbued
heavily with this rhetoric about solving
America's housing crisis the need for
more human connection but then the
solution it seems like now that they've
presented is just luxury condos so I
don't know maybe it's just me that's
missing the sauce but can you help us
Square those two ideas how do they
connect yeah I mean this wouldn't be the
first time that Silicon Valley oversold
something or made it seem more Grand
than it really was but yeah when when it
was announced a 16z andreon Horowitz one
of the most prestigious biggest Venture
firms out there said you know this is
what we're going to do to solve
America's housing crisis and so a lot of
people have been curious what exactly
are they going to do or is it like a
rent to own model are they going to use
crypto or how are they going to use Tech
and when I actually visited the building
when I was the first reporter to visit
in November it actually was pretty low
Tech and not unlike a lot of other
buildings that I've visited that aren't
flow properties yeah so they outlined
four or Newman specifically has outlined
what he calls the four pillars of flow
he's talking about a branded technology
company a real estate company there's
also potentially going to be a financial
services component and a mechanism that
will quote unquote share some of the
value or the ventures value with the
value Creator in this case it's the
renter I know they only have that one
building so far that's been branded but
based on your behind the scenes access
how many of these pillars have been been
able to incorporate in the business
model so far and are they looking if not
are they looking to do more yeah I mean
it's still very much in the preliminary
stages and even the building I visited
it is the farthest along but it's not
yet branded as a flow property no one
walking by or even living there would
really know that it's associated with
Adam Newman so I'd say that these things
are pretty conceptual unlike we work
flow is moving very slowly and that's by
Design we work I think a lot of people
associated with flow feel like move too
quickly they were pushed by SoftBank if
you accept that an explanation to just
expand so quickly so Flo is trying to do
it much
slower they so can you talk to me a
little did you were you able to see any
of the the technology side of things I
know that there's this app that they're
working on which in your article you
described it as a flow executive
described it as a a lubricant of the
building um I've stayed in apartments
before uh not even nice Apartments but
they also have an app so how is this
that much different yeah I mean I was
able to view the app or at least a
prototype of it and I you know a lot of
modern buildings yes you can pay rent
and you can um you know request
maintenance and other things but this is
different um it it for one thing it's
all seamless it's much easier to use it
also allows you to connect with other
residents um it could be something that
you could use at all flow properties it
allows you to do mer to you know promote
your business and to have playlists in
the building so yes a lot of buildings
use apps but the idea is that this would
be a lot better than that got it and and
to go to the second pillar the real
estate component of it is this is there
something different to this business
model than just say traditional real
estate um
investing well uh not really and that's
you know part of the puzzlement around
this right because um real estate is
very asset heavy you have to own the
buildings that's a business that's been
around for a long time it's certainly
not a tech business it's much lower
margins there's not like any secret it's
not scalable so just like we work I
think there's a lot of questions about
how this would be a tech company given
that you have to have the real estate
how quickly are they able or are they
wanting to incorporate new properties
because I know um based on my research
Adam Newman owns a number of different
properties all over the country so
what's the pipeline looking like in
terms of uh branding it as a flow
property yeah so he owns about five of
these and um you know but certain ones
of them are under contract so they can't
be run by Flo yet uh but eventually they
would be uh but there's also other
buildings where he can operate more
quickly so uh they've been vague about
the timeline this one I visited will be
the first one this year to be actually
unveiled as a flow property but they
haven't even said when they're doing
that they've said early 2024 and then
after that maybe a couple more and the
financial services component of it what
is that looking like is that an
incorporation of crypto or are there
other things you know is there going to
be some kind of model where the renter
is somehow going to be
more uh tied to the property than just
the traditional you know paying rent
there was talk of crypto when it was
first announced and Adam Newman did have
some crypto Ventures um but that that
doesn't seem to be the case as much now
uh I think the idea is that you know for
most people the biggest expense every
month easily is what they spend on rent
so they are already controlling that and
they can use that in many other ways to
help you know you spend money in other
ways and also make it all sort of an app
on your wallet um and also just like you
get credit card reward points you would
get rewards for being loyal there or to
businesses they select or there's also
the example of you know they know that
you are really into dogs um so they
could help you find dog walking services
or if you're a dog walker they could
help you advertise that so they really
feel like that's underutilized in
apartments right now what is this
community building aspect were you able
to talk to any of the residents at um
Society less ol less what's been their
experience what are they looking forward
to and is this really something that
renters are looking for I was able to
talk to a couple residents and and
granted the residents I talked to were
selected to me by flow so say they were
naturally predisposed to like it but
they did really love being there and
they they found that this social
commerce aspect so to speak was so
lucrative for them that they would live
there or at least have a place there
even if they weren't living there um
because they said you know they've been
able to meet a lot of customers and
really help grow their business and you
know I think that's certainly true for
certain businesses uh like you know one
I talked to one guy who was selling uh
insurance and there you're trying to
constantly meet people um if you're just
you know a professional not trying to
meet customers it's not as clear how
flow would help you um but this is
something they're very into and you know
I think actually makes more sense than
we work uh I've worked at we work for a
long time um but I've never actually
really met anyone else at we work aside
from my immediate colleagues but I think
when you're spending all day and all
night with people in a building you're
much more likely to interact with them
so it sounds like this building is is
all encompassing obviously you live
there but there's also an office
component you you have working spaces
it's they definitely have recreational
spaces pools lounges and things like
that um so is the aidea here that you
just never have to
leave uh yeah I mean that that is what I
was told several times by residents is I
never have to leave because yes it is
all there um you wouldn't need Wei work
right because there is like an a nicer
or As Nice co-working space there you
would have all your friends there you
would have the amenities and you would
have so many things going on I mean they
do help plan trips and other events but
the idea is that everything would be
under the flow and um and then the
ownership aspect
um this idea that Adam Newman threw out
there letting the tenants build equity
is that something that's actually on the
table at Flo or is this more of just
rhetoric from the initial announcement
to say hey we're going to solve the
housing crisis this was probably
something that got the most attention
the most heads scratching uh because
Adam Newman and also Mark andreon did
allude to this that you know Mark
andreon said well PE I kind of Marvel in
at how people will pay rent for 10 years
and never own anything um but that
really seems to not be the case uh Adam
Newman's Camp you know has been very
wary of any connotations with rent to
own and what it would look like is much
more like a loyalty program like a
frequent flyer program so you would have
loyalty to the building but not any sort
of actually getting equity in your
apartment okay um so I don't know about
you but I'm not personally sure how Flo
is going to do anything to solve the
housing crisis but I do want to touch on
the the business side of things um so
they raised $350 million initially from
Andrews and Horwitz what do you know
what is the current valuation right now
what's the long-term goal specifically
is there an exit strategy is this going
to go in the direction of of Wei work or
is this the next potentially Wall Street
Juggernaut in the real estate um sector
well so yeah they raised 350 Mill from
Andre and Adam Newman also put in 350
million uh that was at a billion dollar
valuation and that's still the valuation
there has not been new funding and I
think they're trying to you know I I'm
sure that uh Andre and Adam Newman did
not get into this to make a$1 billion
dollar company they would like a much
more valuable company um but they they
say at least they are trying to build
the business slowly really pay attention
to the details rather than what happens
with we work which is trying to make it
you know a trillion dollar company or
just something that grew so quickly um
that they kind of lost track of yeah is
this do you think this is something that
they're eventually going to offload um
or is it going to IPO I mean I think
that's a that's a ways off um I I don't
think that's that's really the thought
now I mean the the thought is to build
it into a huge brand and a huge business
and then worry about that later right
got it yeah so then eventually every
city will have a flow property
everybody's going to love it it's going
to be kind of a a
utopian uh little a slice of Utopia if
you might in every single City yes
exactly all right well so we'll have to
to see how that all shakes out um but
Ben I know you're on Business Insider
but anywhere else in particular you want
um to point viewers uh if they want to
find more of your work yeah you can just
find me on Twitter at the Ben Bergman
I'm on Twitter I guess it is now awesome
all right well Ben thank you so much for
coming on the show today uh really
appreciate your time and your insights
thanks so much anytime if you'd like to
learn a little bit more about flow I
also did a deep dive documentary style
investigation in which I even went
undercover at Society Los Olas the video
is posted on my YouTube channel 5149
with James Lee head on over check that
out give me a follow the link will be in
the description below as always like to
thank you for your time today and keep
on tuning in to Breaking points
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