SCAM?: Adam Neumann's BILLION Dollar Bid to "Solve Housing"

Summary

In 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

00:00

🚀 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.

05:01

🏙️ 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.

10:04

🤔 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.

Keywords

💡WeWork 2.0

WeWork 2.0 refers to the concept of a new business venture that is similar in nature to WeWork, a company known for its shared workspaces. In the context of the video, it suggests that Adam Neumann is embarking on a new venture, Flo, which is a real estate startup with a similar vibe to WeWork but focused on residential properties rather than office spaces.

💡Bankruptcy

Bankruptcy is a legal process that allows a person or business that cannot pay their debts to get a fresh start. In the video, it is mentioned in relation to WeWork's struggles, highlighting the financial difficulties the company faced before Adam Neumann's departure.

💡Adam Neumann

Adam Neumann is the co-founder of WeWork, a company that provides shared workspaces. In the context of the video, he is associated with a new real estate startup called Flo after his departure from WeWork. His role and influence in the new venture are central to the discussion.

💡Flo

Flo is a secretive real estate startup founded by Adam Neumann, valued at $1 billion, which has received a significant investment from Mark and Andreessen Horowitz's venture capital firm, a16z. It aims to provide a vertically integrated system for residential properties.

💡Vertical Integration

Vertical integration is a business strategy where a company owns or controls different stages of its production and distribution process. In the context of the video, Flo's business model is described as vertically integrated, meaning they own the buildings, operate them, build the technology, and foster the community, aiming for a streamlined and efficient operation.

💡Venture Capital

Venture capital refers to the investment in start-up companies or other businesses that are believed to have long-term growth potential. In the video, it is mentioned that Flo received a significant $350 million investment from a16z, a renowned venture capital firm, indicating the potential of Flo's business model and its appeal to investors.

💡Community Building

Community building refers to the process of creating a sense of belonging and connection among people in a particular area or group. In the context of the video, Flo aims to build communities within its residential properties, fostering social and business interactions among residents.

💡Branded Technology

Branded technology refers to software or hardware products that are developed or customized by a company under its own brand name. In the video, it is mentioned that Flo is working on an app that would serve as a lubricant of the building, facilitating seamless interactions and connections among residents, which is a key component of their branded technology.

💡Real Estate

Real estate refers to land along with any buildings or other structures, natural resources, and personal property located on or in it. In the video, Flo's business model revolves around real estate, with a focus on owning and operating residential buildings, which is the core of their venture.

💡Financial Services

Financial services encompass a broad range of economic services provided by individuals and institutions, such as lending, insurance, and investment. In the context of the video, Flo is considering incorporating a financial services component, potentially offering residents loyalty programs or other financial benefits tied to their租住 experience.

💡Equity

Equity refers to ownership interest in a property or a business. In the video, there is a discussion about the idea of tenants building equity, which initially was a selling point for Flo but has since been clarified to be more akin to a loyalty program rather than actual ownership of the apartment.

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