Tech founder’s cult rebounds

WeWork founder Adam Neumann’s score for a gargantuan new venture capital investment shows that Silicon Valley’s love affair with freewheeling, high-spending startup founders remains hot, even in a declining market.

Driving the news: Andreessen Horowitz announced on Monday he would finance Neumann’s Flow —a real estate company aimed at “disrupting” the residential real estate rental market how WeWork set out to reinvent commercial office space – to the tune of $350 million.

Neumann fell out of favor in 2019 and took WeWork’s IPO with him after news reports of a potty party on a private jet, accusations of a culture of sexual harassment and concerns about alienated investors and the company’s board of directors.

Yes, but: Either way, what made Neumann unfit to run the trendy coworking space giant didn’t flinch anyone at Andreessen Horowitz, who described his investment in Flow as the biggest paycheck he’s ever had. he has ever poured into an investment cycle, according to the New York Times.

Why is it important: Neumann’s return shows that the people who run technology capital still believe the industry’s most valuable resources are entrepreneurial experience and epic boldness.

• “We are thrilled with the scope and aspiration of this project…only projects with such ambitious goals have a chance to change the world,” Marc Andreessen wrote in a post.

The big picture: In the face of the recent market downturn, a number of once high-flying company founders – including Pinterest, Airbnb and Medium – have announced they are retiring from their businesses. At the same time, some investors began to cut new seed money.

• This has led some observers to claim that the cult of the founder was losing its grip. “The visionaries’ patience was wearing thin. Founder-led companies started to appear as liabilities, not assets,” writes Erin Griffith of The Times.

Be smart: Andreessen Horowitz — also known for his embrace of cryptocurrency and blockchain-focused businesses — might be an outlier.

• More likely: The tech industry’s thirst for handing over money to people experienced in turning great ideas into great companies is so great that it will continue to ignore their failings and failings.

Catch up fast: Founders have always been a driving force in the tech economy.

• The personal computer revolution of the 70s and 80s and the Internet revolution of the 90s and 2000s both highlighted the role of obsessive founders who clung to their visions and persevered through setbacks to gain traction. wealth and “change the world”.

• In the 2000s, startup founders were gobbling up the book “Founders at Work” and turning a word that had long been a catch-all term in legal documents into a mythical title laced with reverence.

Between the lines: The main novelty introduced by Google 20 years ago was a two-tier governance structure that gave founders additional voting power to protect them from being ousted by investors or boards of directors – the fate of the founder the most famous in the industry, Steve Jobs.

This invention is a cornerstone of today’s tech world – it’s what allows Mark Zuckerberg to define his course for the metaverse, investors be damned.

• In the end, however, all those votes did not protect Neumann: the financial walls simply fell too quickly for him to survive.

The bottom line: Ultimately, the role of a founder is about sticking to a vision while maintaining the trust of a company’s stakeholders. Adam Neumann quickly lost that confidence three years ago. Andreessen gives him another chance.

• In the words of Andreessen: “We understand how difficult it is to build something like this and we love to see repeat founders build on past successes by building on lessons learned. For Adam, the successes and the lessons are many.”

What to watch: Keep a close eye on his new venture’s voting structure to see exactly what lessons Neumann learned.