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Adam Neumann's Flow State

The ex-WeWork CEO has a new startup that leases residential real estate and does financial services and something else that no one can figure out.

Adam Neumann (TechCrunch/Flickr)

WeWork’s ex-CEO, Adam Neumann, is back with a new startup. It's called Flow. And his explanation – or attempted explanation – of what precisely the company does has been all over Twitter the past couple of days.

As you probably remember, Neumann was the co-founder and CEO of WeWork as the office leasing company burned through billions of dollars on its way to a $47 billion valuation before its attempted IPO blew up and Neumann was forced out in 2019.

The venture-capital firm Andreessen Horowitz has invested $350 million into Flow, the largest single investment check the company has ever written. Neumann explained his new venture a few months ago in a video recorded by Andreessen Horowitz. They released it just this week. Here's a clip:

Got it? There’s a residential real-estate management company, branded as a tech company. There’s also a residential real estate investment company (Neumann himself owns 3,000 apartments spread across cities in the Southeast U.S. and Flow will operate them). There’s also a financial-services company and then a fourth, magical thing.

Let’s go back to Neumann:

Now the reason they’re going to use the financial services — the first thing you do in buildings is you charge rent every month, and that’s 35 percent of their total wallet. So the payments company that’s charging your rent already has a real relationship with the user. If that financial services company is going to do what we it want to do and create services that are actually meaningful, we think of it as financial wellness, then that, again, is going to drive more users. And then if we are able to take this value-creating mechanism and share with the residents a portion of the value, it’s going to make them feel ownership. And it’s not just ownership ‘I feel like I’m part of something,’ it’s actually ‘I own part of something,’ and again the word ownership is a very complicated word – especially in this place [Andreessen Horowitz’s offices] – but if there is perceived value and value appreciates over time, then I feel like I am part of a community. A very funny example that we like to give is if you are in your apartment building and you’re a renter and your toilet gets clogged, you call the super. If you’re in your own apartment and you bought it and you own it, you take [out] the plunger.

Flow is a residential real estate investment, leasing, financial services toilet-unclogging company where renters think-to-own.

Are the renters actually owners? Unclear. As Neumann says, “the word ownership is a very complicated word” but it seems that renters will hopefully “perceive” that they are owners.

If you remember WeWork's "community-adjusted EBITDA" kerfuffle, Neumann waxing on about belonging and financial wellness to is more than enough to make you wonder if this is all going to end badly for everyone involved, bar Neumann and Andreessen Horowitz.

It seems like the idea is that renters will have the thought “I own part of something,” as Neumann says, and that that thought replaces the legal reality of “owning something” and this thought will make them want to pay rent, take out loans and other financial services directly from their landlord and unclog the toilet.

What exactly do renters get in return for paying their rent? If I had to wager, the whole financial-services angle makes me think renters get some tiny share in a faux co-op structure and or some kind of frequent-flier miles or credit-card points for using Flow’s payment system.

We’ll see – Flow is coming sometime in 2023, its website says.

Real-estate investment, real-estate management, leasing, layering on financial services, all draped in rhetoric about wellness, belonging and community, a venture capitalist writing Adam Neumann a huge check while Adam Neumann is also personally investing alongside the corporate entity he leads – it all feels very familiar.

And that leads us to the most perplexing aspect of Flow: Masayoshi Son is, somehow, not involved. At least, not yet.

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