Flow, a residential real estate company helmed by a famous tech CEO, and a famous tech venture capitalist, is worth $1 billion and has 0 revenue.
Adam Neumann is back!
If many have forgotten, Neumann was that guy who shook down Softbank’s Masayoshi Son by buying up commercial offices and subletting them as shared office space with a pay-as-you-go subletting model.
This was bizarrely branded as a tech company called WeWork (WE).
From the get-go, the business model sounded illogical, but Softbank went with it and before downgrading the valuation to $9 billion, it was supposed to be worth around $50 billion.
Neumann exited the business with a $480 million payout after Softbank negotiated the payout down from $960 million.
The hefty golden parachute is the capital he’s leveraging for his new residential real estate business that now has venture capital backing it.
Famous venture capital giant, known for investments in 100-baggers like Twitter, LinkedIn, and Facebook, Andreessen Horowitz led by Marc Andreesen said it would invest $350 million in Adam Neumann’s residential real estate company Flow.
Andreesen comically claimed that Neuman is a “visionary leader.”
In the same blog, Andreesen explains that renters need a “sense of genuine ownership.”
Smaller housing is now what developers are doing to combat inflation.
My guess from Andreesen’s blog is that giving “renters a sense of security” could mean taking Neumann’s massive real estate portfolio and creating an atrocious tiny house or sleeping pod network.
They could then resell these mini clusters for a giant profit before Neumann’s next victory lap.
Neumann might install free artisanal coffee or frisbee golf for the “making it cool” effect like he did for his office sharing space as well.
According to a Wall Street Journal report in January, Neumann had acquired majority stakes in over 4,000 apartments, valued at $1 billion altogether.
Why not chop them up into 20,000 units, claim these assets are $5 billion, and double the rent or sell them for a higher price?
It’s low-hanging fruit, right?
Flow is scheduled to launch in 2023 and I can tell you there is nothing “visionary” about Adam Neumann and his insidious entrepreneurial spirit.
This is just a glaring example of the late cycle euphoria of tech that will most likely result in the median American living worse off and Andreesen losing $350 million.
This is not only a late cycle but the latest this cycle can get with this type of idea.
We are still living off the Apple (AAPL) iPhone technology and we are on version 13 and up to well beyond a $1,000 price point.
Innovation has hit a saturation point, and once we start getting to iPhone 15 or 17 at a $3,000 or $5,000 price point, the diminishing returns will accelerate.
Investing in a “transformative” big tech-infused residential real estate company headed by Adam Neumann sounds like a suicide mission for Andreesen’s reputation.
Monetizing small apartments is bad optics for Andreesen. It’s not his bread and butter…it’s not cutting edge.
Andreesen’s behavior most likely reveals that one of the leading VCs thinks the metaverse is just a bunch of castles in the sky.
However, these developments also show how minuscule the opportunities are in the land of big tech today.
Lastly, Flow has kept under wraps the master plan for this revolutionary company because of fear of giving away the new secret sauce to residential real estate.
It’s most likely because the secret sauce is not that tasty.
THE GENIUS TECH CEO THAT IS NOT A TECH CEO
