When Marc Andreessen announced that he was sinking $350 million of a16z investors’ money into a new venture by WeWork co-founder and former CEO Adam Neumann, plenty of jaws dropped. For one, there was the massive sum and equally massive valuation for a company that, as of today, owns a few thousand rental units.
Then there were the claims that Flow could help solve inequality, anxiety, loneliness and a number of other social ills. Neumann’s ideas for Flow, Andreessen said, are “not lacking in vision or ambition, but only projects with such lofty goals have a chance at changing the world.”
That’s idealistic rhetoric, even by the standards of Silicon Valley.
Something didn’t feel right to us. Yes, there was the Neumann factor. But there was something more. Neumann and Andreessen were trying to privatize the neighborhood. Here’s why we think that’s not such a great idea.
Amanda Silberling: Venture capital won’t save us
There are some problems that venture capital can solve. For example, I find it pretty great that I can get a ride home from a vetted stranger if I’m out alone late at night and don’t feel comfortable walking to the subway, then transferring to a bus to get home.
But therein lies the crux of the problem: What if public transportation was simply just better? What if I didn’t need to decide between dropping $25 on an Uber and walking 15 minutes to the subway, standing alone underground, riding the subway, getting out, waiting for the bus outside alone, then taking the bus home at midnight?
By the same notion, Adam Neumann’s Flow wants to solve what investor Marc Andreessen calls a housing crisis.
I do agree with Andreessen — who has me blocked on Twitter — that our nation has a housing crisis. But the tech industry is so disconnected from the plight of average people that venture capitalists think that the problem is that “increased screen time and reduced in-person interaction will cause challenges that are not just limited to work, such as alienation and loneliness.” He’s right in some regard, but I think that the larger housing crisis is that so many Americans remain unhoused for reasons beyond their control.
It’s endlessly frustrating to think of how many millions of dollars were funneled into Neumann’s last venture, only for it to implode due to his own mismanagement — imagine if just a fraction of that money went toward, oh, I don’t know, building more affordable housing in places like San Francisco, where the tech industry has single-handedly pushed people out of their homes?
And yet, Andreessen recently helped shut down an affordable housing plan in his own backyard.
So is this really about helping people, or is it about profits?
Dominic-Madori Davis: Diligence? Are we doing it?
The U.S. rental market is broken in many ways.
A housing shortage has contributed to skyrocketing rent prices, on top of the usual gouging these proprietors conduct as they seek to gentrify neighborhoods and displace longtime residents. It’s nothing new for a minority to deal with aggressive landlords, and the traumatic history of redlining still stains many Black families as they seek to establish equity in their own lives.
I am hesitant to say that the solutions to these problems lie solely in the private market. When social issues such as these are placed in the hands of a few white men, it means we have to trust they have our best interests at heart and they will put purpose over profit. Access to shelter is a human rights issue and the idea that the lives of actual people can become one gimmick in a boys-club game is frightening.
Many venture capitalists live in their own bubble and seek to create solutions for those who exist within their bubble. The market for Flow is not going to be outside of the confines of the highfalutin lifestyles to which Neumann and Andressean relate. We could list hundreds of communities and nonprofits that could use $350 million right now to address real needs in housing, rather than conceptual ideas that will only waste time and money.
There is more empty housing than unsheltered individuals in this country, and the idea that more than 3,000 of those units have gone to Adam Neumann is a poignant indicator of the circles we go through to keep capitalism afloat. We can’t just solve the housing crisis, we have to do it in a way that makes money for the aspiring and existing barons of the day.
Hey Adam, what are the qualifications you are going to look at to decide who gets to live in these rental units? What neighborhoods are you looking to build these in and how will you deal with housing associations that don’t want you there? Will you house the communities you displace with the inevitable increase in property value this endeavor will cause? Are you building diverse communities?
Wait, I’m not finished: Will the equity be given in equal shares to all renters? What criteria will you use to determine who gets what — and if you never give up a controlling interest stake, how safe are their shares anyway? Do they have to buy them or take out personal loans to get them? How will you help them get the loan to do that if they don’t already qualify for them?
I’m convinced the only question Adam got about Flow was how many zeros would make him feel happy. No due diligence — just vibes.
This is a waste of time. The people who partake in it, I hope, have nothing to lose.
If — and probably when — Flow fails, it will be the average person who bought into this idea that is hurt, not the billionaires who put it up for sale. Often, I think that VCs come up with an idea to fix things but not in a way that fixes it too much. Alas, exploiting and disenfranchising people remains one of the surefire ways to strike gold in this country.
Tim De Chant: Neumann is right — you can’t force community
Adam Neumann gets a lot wrong — but even broken clocks are right twice a day. He’s right that humans crave community, that we have a strong desire to build IRL relationships. That’s why people live in cities, and it’s why social networks have taken over the world. It’s part of why people attend college rather than sit at home watching YouTube lectures, and it’s one of the main reasons people go to churches, synagogues and temples rather than read religious texts.
Neumann clearly thinks a lot about community. He grew up on a kibbutz, an Israeli commune, and community was a central thesis of WeWork. It also appears to be part of the pitch for Flow. He seems to understand the human desire for communities and how they can help people feel happier, safer and more capable.
Where he’s wrong is that building a community isn’t as easy as pumping buildings full of amenities and forcing social interactions via paid community managers.
Neumann, of course, would protest. “You can’t force community. Community is an organic thing that has to grow,” he told my colleague Frederic Lardinois in 2015, describing WeWork’s community-building efforts as “organic.”
In reality, it was anything but. Practically in the same breath, Neumann recounted how the WeWork team had worked hard to perfect its events, how they had created a social media-like app that also allowed top-down messaging and how they had hired community managers “whose job is to foster community and make connections.” Those managers were given bonuses based on how many connections they made in a month, he said.
“That doesn’t sound that organic,” Lardinois pointed out.
It’s unlikely that Flow will be organic, either. While we don’t know much about Flow’s business model or its community-building plans, there are some hints. Neumann previously dabbled in community-based rental properties while at WeWork. The company’s short-lived experiment in communal living, WeLive, was essentially an extension of dorm or Greek life aimed at 20-somethings. For a certain group of people, that sounds pretty appealing.
But unlike dorms, frats and sororities, which tend to inherit unique cultures developed over many years and are shaped by the overall vibe of the college or university, WeLive was created from scratch. It didn’t have a culture, so it tried to force the issue the same way Neumann and his colleagues did at WeWork by relying on planned events and stylish design. I don’t know about you, but I can tell when someone or something is trying too hard.
In Marc Andreessen’s post on a16z’s site, he paints rental apartments as “soulless” and something in which people are ashamed of living. Having spent nearly a decade renting rooms and apartments in a number of different cities, I can say that wasn’t my experience at all.
Now, is renting perfect? No. Do today’s rentals stifle community? Hardly.
Neumann is right that the best communities form organically, but he seems to think he can accelerate the process. Color me skeptical. Community isn’t something that happens overnight. These things take time, well beyond what investors will typically stomach.
Real estate investors know that the best neighborhoods carry a premium. They tend to have strong communities that were built up over generations. They have cherished amenities like public parks or locally owned coffee shops. They’re diverse, quirky and uneven, and they’re celebrated for that. The best communities are built from the ground up by the very people who are a part of them. Creating a community is a messy process, one that doesn’t jibe with the sort of top-down management that investors crave.
With $350 million, Neumann might be able to build a slightly better breed of rental property, but it’s hard to imagine that money will help Flow create real, lasting community. For that, you need time and patience, and it’s hard to imagine Neumann’s investors having much appetite for either.