The man who monetized community in the office space with the controversial WeWork has turned the same theory to residential properties with his newest venture Flow.
Adam Neumann, 43, has described how the company will transform how people interact with their homes and give them with a sense of ownership even though they’re renting. To illustrate the idea he said tenants would plunge their own toilets instead of calling supers.
In footage from a November conference, made public on Monday, Neumann discussed at length for the first time the vision behind his new real estate venture which will launch this year with properties in Atlanta, Miami and Nashville.
Flow will provide an ‘elevated experience’ and ‘find a way to share with the resident a portion of the value that they create’ to give them a sense of ‘equity’ in their homes.
During the 50-minute talk Neumann was joined by Marc Andreessen, a co-founder of the prominent Silicon Valley venture capital firm Andreessen Horowitz, which invested $350 million into Flow last August.
Adam Neumann, 43 who unsuccessfully attempted to revolutionize the commercial property industry with WeWork wants to change the way home rental works by giving renters a sense of ownership
The cash injection gave Flow a $1billion valuation. A website for the project just says: ‘Live life in Flow. Coming 2023.’ It is not clear when this year it is expected to launch.
Neumann spoke of ‘pillars’ to the business, which would allow his company manage and own buildings but also oversee the collection of rent.
Firstly, he said he would use ‘branded technology’ to ‘operate a management company that runs the buildings’. Second he would manage a portfolio of property like a traditional real estate fund.
Flow would also serve as a financial services company that would handle monthly rent payments, which make up 35 percent of a renter’s expenditure, he said.
A fourth and final pillar was the more abstract idea of finding a way to impart a sense of ownership in renters, but he also said that ‘ownership is a very complicated word’.
‘If you’re in your apartment building and you’re a renter and your toilet gets clogged you call the super,’ he said. ‘If you’re in your own apartment and you bought it and you own it and your toilet gets clogged, you take the plunger
‘It’s the difference when feeling like you own something to just feeling like you’re renting, from being transactional to actually being part of a community,’ he added.
‘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,’ he said. ‘If that value appreciates over time then I feel like I’m part of a community.’
Neumann said that for most Americans the majority of their equity is in their homes, but on the other hand renting is becoming more common, and people are needing to rent for decades and raise families in rented homes.
The new company will own and manage residential property in Atlanta, Miami and Nashville this year, it says
Marc Andreessen (pictured) is a co-founder of the prominent Silicon Valley venture capital firm Andreessen Horowitz, which invested $350 million into Flow last August
‘If you’re going to go into these multi-family buildings and you’re going to have this disconnected experience that you just said, but you’re not only going to be there for two years and then get married and move, you’re going to be there for 20. That sounds soul-crushing,’ he said.
Neumann put a lot of emphasis on the way technology would be used to enhance the renter’s experience. The company has posted job listings for more than ten engineering roles on its website, several of which are in New York and Texas and are related to the development of a ‘payments platform’.
In a blog post last August announcing his firm’s investment in Flow, Marc Andreessen praised Neumann who he said was a ‘visionary leader’.
He added that for all the scrutiny facing Neumann after his failed IPO and questionable management style, ‘it’s often under appreciated that only one person has fundamentally redesigned the office experience … Adam Neumann’.
In explaining the firm’s decision to invest Andreessen hailed Neumann as the person who could fix the current issues with the housing industry.
Flow will provide an ‘elevated experience’ and ‘find a way to share, with the resident, a portion of the value that they create’ to give them a sense of equity in the business
Neumann has bought up apartment complexes, like Stacks on Main in Nashville, Tennessee
An entity tied to Neumann also owns Society Las Olas in Fort Lauderdale, Florida
‘The demographic trends driving America’s housing market are impossible to ignore: Our country is creating households faster than we’re building houses,’ he wrote.
‘Structural shortages in available homes for sale push housing prices higher, while young people are staying single for longer and increasingly concentrating in highly desirable urban centers.’
And as a result of the pandemic, Andreessen wrote, ‘many people will live in places far away from where they work, and many more will shift to a hybrid environment.’
‘Many people are voting with their feet and moving away from traditional economic hub cities to different cities, towns or rural areas with no diminishment of economic opportunity,’ he continued.
‘The residential real estate world needs to address these changing dynamics. And yet, virtually no aspect of the modern housing market is ready for these changes.’
‘We think it is natural that for his first venture since WeWork, Adam returns to the theme of connecting people through transforming their physical spaces and building communities where people spend the most time: their homes.’
