WeWork’s Adam Neumann receives support from Andreesen Horowitz
WeWork founder goes residential
Adam Neumann, the founder of WeWork, whose spectacular rise and fall has been chronicled in books, documentaries and a scripted TV series, has a new business — and surprising support.
Neumann’s new company To flow wants to transform the residential rental real estate market. He notably has financial backing from Andreessen Horowitz, the prominent Silicon Valley venture capital firm that was an early investor in everything from Facebook to Airbnb. The backing of Andreessen Horowitz, considered royalty among early-career investors, is a powerful sign of support, and perhaps a rebuke to Neumann’s critics, who have described his leadership of WeWork as a cautionary tale of corporate pride.
Andreessen Horowitz invests around $350 million in Flow, according to three people briefed on the deal. The investment, the largest individual check Andreessen Horowitz has ever written in a corporate funding round, values Flow at more than $1 billion before it even officially opened for business.
Flow is set to launch in 2023 and Marc Andreessen will join its board, said these people. Neumann plans to make a significant personal investment in Flow in the form of cash and real estate assets. “It’s often underestimated that one person fundamentally re-engineered the desktop experience and led a paradigm-shifting global company in the process: Adam,” Andreessen wrote. in a post on his company’s website Monday, explaining his reason for investing in the company.
Neumann has purchased over 3,000 apartments in Miami, Fort Lauderdale, Atlanta and Nashville. Its goal is to rethink the housing rental market by creating a branded product with consistent service and community features. Flow will operate the properties that Neumann has purchased and will also provide its services to new developments and other third parties. The exact details of the business plan could not be learned. (Flow appears to be financially separate from crypto firm Flowcarbon, which was also co-founded by Neumann and raised $70 million in May in a round led by Andreesen Horowitz.)
Andreessen said in the blog post that he was interested in Flow because the rental property market is ripe for disruption.. That’s especially true, Andreessen said, now that more people are working from home and “will experience far less, if any, of the social connections and friendships in the office enjoyed by local workers.” He also hinted that the company might be trying to address one of the biggest challenges facing tenants: “You can pay rent for decades and still own zero capital – nothing.” He added: “In a world where limited access to home ownership continues to be a driver of inequality and anxiety, giving tenants a sense of safety, community and authentic ownership has transformative power for our society.”
At its peak, WeWork was valued at some $47 billion. After a botched public offering and stories of mismanagement, it imploded spectacularly. Neumann was ousted from WeWork in 2019 but walked away with hundreds of millions of dollars. Today, WeWork has a market value of around $4 billion.
Andreessen wrote that “we love seeing recurring founders building on past successes by building on lessons learned.” For Neumann, he added, “the successes and the lessons are many.”
look: Andrew’s interview with Neumann at the DealBook Summit last year, which was recently nominated for an Emmy. In the interview, Neumann said of his rise and fall at WeWork that “I had a lot of time to reflect, and there were multiple lessons and multiple regrets.”
HERE’S WHAT HAPPENS
Chinese economic activity slowed in July. Retail sales and industrial production rose less than expected, after a two-month period in which an easing of Covid restrictions appeared to have put the country’s economy back on track. Instead, the People’s Bank of China said today that it cut two key rates by 0.1 percentage point in order to revive growth.
The Russian military attack on Ukraine has moved dangerously towards the south of the country, where fighting rages around the Russian nuclear power plant in Zaporizhzhia, the largest in Europe. It is alarming about a risk of radiation far beyond Ukraine. The United States and the European Union have called for the creation of a demilitarized zone around the plant.
A Saudi billionaire has invested around $500 million in Russian energy companies shortly before and after the invasion of Ukraine. The recently revealed Prince Alwaleed bin Talal’s investments in February and March included Gazprom, Rosneft and Lukoil. Meanwhile, the Saudi national oil company, Saudi Aramco, recorded a 90% jump in quarterly profit.
Republicans are struggling to coalesce around a unified strategy to respond to the FBI’s search for Mar-a-Lago. They are divided on whether to attack the nation’s top law enforcement agencies and how aggressive these attacks should be. Meanwhile, Trump claimed to have declassified the top secret files at the heart of the search, although this is legally irrelevant.
Growing unease with TikTok
TikTok, the popular short-form video platform, is fast becoming the main disseminator of baseless and misleading election information ahead of the US midterm elections. The app, which is owned by Chinese tech giant ByteDance, is facing new scrutiny for disinformation as well as its links to Beijing, write David McCabe and Tiffany Hsu of The Times in two separate articles explaining why the app he application has become a major focus for the United States. legislators.
Baseless conspiracy theories predicting voter fraud in November were widely seen on TikTok, writes Hsu. Misinformation about the app has already been an issue for elections in Germany, the Philippines and Colombia. And video and audio clips — most of what’s shared on the app — can be much harder to moderate than text, especially when posted with a tongue-in-cheek tone, experts say.
US lawmakers are also asking for more information on TikTok’s relationship with China, writes McCabe. Last week, House of Representatives officials warned staffers against using or downloading TikTok, citing security concerns, according to an email obtained by The Times. This warning followed a recent BuzzFeed report that app employees in China were given the ability to access Americans’ data. (TikTok, whose CEO wrote directly to senators in July about its data practices, said it plans to keep data about its US users separate from its Chinese parent company.)
The White House may soon adopt a new policy on apps that could expose data to foreign adversaries.Beyond a decree this the White House circulated a draft earlier this year, the Biden administration is also expected to issue guidelines soon to a committee that reviews transactions involving foreign companies, advising heightened sensitivity in cases that could expose Americans’ data to other governments.
Meanwhile, fears that social media is amplifying calls for violence continue to resonate. British police are investigating a tweet threatening author JK Rowling. And on former President Trump’s social media platform, Truth Social, predictions of an impending civil war and calls for violence surged this week after the FBI’s raid on Mar-a-Lago.
“They kind of look at America and say, ‘You’ve been incompetent and lazy. There is some truth in that. We messed up the infrastructure. We screwed up the downtown schools. But I think it’s a mistake to say that America has the short end of the stick.
—Jamie Dimon, CEO of JPMorgan Chase, comment on US-China relations during a conference call last week with the company’s top clients.
Big Changes in the C Suite
Bill George, former CEO of Medtronic and now a professor at Harvard Business School, has spent many years leading or teaching how to run large corporations. For the latest book in his “True North” series, “True North: Emerging Leader Edition”, co-written with Zach Clayton and due out later this month, George spoke to over 200 leaders about how they combine leadership with purpose and how to lead through today’s crises. DealBook spoke to George earlier this month about what he learned. The interview has been edited and condensed.
What do you think of the state of business leaders?
We are going through a massive shift, as the occupants of the corporate suites turn to Gen X and Gen Y. We are moving from the basic leadership of command and control power that was typical of the generation of leaders taught by Jack Welch has much more empowering leaders. Instead of managers of people, these new leaders will be more like coaches. And we need it.
How should CEOs like Howard Schultz at Starbucks approach what appears to be a resurgent union organizing movement?
I am not in favor of unionization in non-union workplaces. But I think companies have to be employees first. That’s how Starbucks used to be, but over time they got more bureaucratic and that’s what led to this effort. Companies have neglected their frontline workers. Today’s CEOs must date their frontline employees, must lead with their hearts as well as their heads.
Do you think CEOs should speak out more on issues like the recent Supreme Court decision on abortion and other political and social issues?
Right now there is a lot of concern about how to handle this. People are rethinking their life after Covid. Does my business have a purpose? A strong stance on diversity and inclusion? A plan for climate change? People are re-evaluating their careers and employees want to know about it.
I wrote this new book to show how some young CEOs are mobilizing and leading in a different way than mine. We have to let go of the idea — the Jack Welch model — that employees are a cost.
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