Founder Adam Neumann describes why Marc Andreessen invested $350 million in Flow, his brand-new business that sounds a lot like WeWork

WeWork creator Adam Neumann is back, and he’s beginning another property business.

Flow, which will concentrate on making houses into work areas, currently raised $350 million from billionaire Andreessen’s a16z. Neumann stated the brand-new endeavor will either take on WeWork or partner with it at Fortune’s Brainstorm Tech conference in Deer Valley, Utah.

Given the incredible fall of WeWork—and Neumann’s departure—lots of marvel he got such a big financial investment for an extremely similar-sounding business.

But in an interview with Fortune’s Michal Lev-Ram, Neumann insisted he has actually gained from his errors.

Watch the complete video interview or check out the records listed below.

Michal Lev-Ram: Why are you here? You understand, undoubtedly we welcomed you to come speak, that’s part of the factor. But I need to know, why are you back in front of this specific audience? And why are you at it once again with another business? 

Adam Neumann: I believe, first off, thank you for having me. And constantly great to see an excellent face and audience. And Park City is stunning. I’ve never ever been here in the summer season. It’s amazing, extremely great to see. I believe in life, we go through lots of journeys. And as we go through these journeys, we, we have various lessons that we discover. But if we discovered our lessons, and we don’t get a possibility to do it once again, then I don’t believe you can actually use it. And I believe when things occur in your life, if you took some time to think of it, and gain from it, and after that you use it, that’s an excellent journey. But if you really didn’t gain from it, and you stopped, and something occurred, it ends up being a disaster. So I’m here since I enjoy entrepreneurship. And I believe this classification, and this issue is genuine. And we’re delighted to do our part in attempting to resolve it. 

Michal Lev-Ram: So we’re gonna enter Flow and what you’re making with it today, what your hopes are. But I wish to discuss those lessons found out, first off, and simply ask you, you understand, you’ve had a fair bit of range and time now from WeWork. Looking back with the area that you have, and the point of view, what do you believe were the greatest errors? What are the greatest knowings that you take with you today? 

Adam Neumann: So when I stepped down in 2019, I really made the effort to believe a lot and had an excellent group around me that had the ability to talk and talk about all the various things. And there are lots of lessons. But first off, I would state I’m incredibly happy in what we performed in WeWork. I’m proud of the group. Today WeWork has more than 700 areas, it’s in 39 nations, it’s in over 70 languages. And I don’t believe there’s an individual on earth who’s constructing brand-new workplace today who’s not believing what would or wouldn’t WeWork believe. So I believe that part was excellent as far as the lessons, there are lots of, and we don’t have adequate time today. This is a brief interview. But I’ll concentrate on 2 that enter your mind today. One, as a business owner, there are lots of things you don’t manage. One of the only things you manage is who you surround yourself with, and not simply who you surround yourself with, however precisely what sort of individuals they are, I believe and WeWork, we’re surrounded by extremely wise individuals. But progressing, what I surround myself is not simply extremely wise individuals, however likewise individuals who are extremely comfy informing me what they believe. And when you require to inform somebody, what do you believe, and they don’t concur with you, you require to have the nerve and you require to be empowered to return once again, and state it once again, and once again. And once again. So my very first lesson, surround yourself, not just with the very best individuals and the most intelligent individuals, however likewise the ones who are going to inform you what they believe. And it implies if you don’t listen, they’re going to keep at it up until you either never ever see them once again or up until you concur. That’s one. The 2nd one is listening. The very first lesson doesn’t work without the 2nd one. When I stepped down from WeWork, I had the chance to end up being a financier. And our household workplace purchased over 50 various business. And I got to be the financier offering the business owner recommendations and seeing that the business owner is not listening, and getting a little disappointed, up until I understood that perhaps this belongs to how I utilized to act. And I understood that part of being an excellent business owner is not simply listening, however listening to the tough fact. Listening to the important things you don’t desire. So If I needed to select 2, select who you surround yourself with, and end up being an excellent listener. And excellent listeners like to listen to what they don’t wish to hear, not what they wish to hear. 

Michal Lev-Ram: So do you, if I’m to put like put all that together, do you believe that your financier at the time at WeWork could have played a bigger function in not assisting to develop what was a magnificent increase and after that a magnificent fall? I suggest, what was your function there? And what was your financier’s function? 

Adam Neumann: Again, as I stated in the past, I am so pleased with what we did. And Monday night quarterbacking, is that what you call? And doing that now with the financiers and what they ought to have done… I can inform you something, nobody from the outdoors ever understands what takes place in the within. And once again, I believe extremely couple of individuals interrupt classifications and extremely couple of business transform classifications. Office is the 2nd biggest classification on the planet. And I’m extremely pleased with what was accomplished. 

Michal Lev-Ram: Okay, I wish to ask you about – my understanding is that there existed were a number of elements of your exit bundle, which was questionable at the time. But among those elements was likewise a non- complete contract. And when does that end? 

Adam Neumann: Our non-compete ends – it’s really a non-compete and a non-solicit, which ends October 30th of this year. 

Michal Lev-Ram: Okay. So what takes place then? Does this mean that you with your brand-new business, which we will get to in a 2nd, take on WeWork? 

Adam Neumann: To response that concern, I will need to describe what Flow is since I believe the response is a little more complicated. So for those of you who don’t understand, Flow is constructing your – I heard the objective you stated in the past, I’m not exactly sure that is really our objective, however sounded fascinating.  But Flow is constructing a consumer-facing property brand name. And we’re doing it through incorporating innovation, neighborhood and a world class operating group that puts the homeowner initially. And simply some numbers. For those of you who don’t understand, 66% of young people in this nation are tenants. And they invest 34% of their overall earnings on lease. And yet there is no brand name, no guarantee, no raised experience. In the past, Howard Schultz was an excellent business owner, and likewise a business that I actually appreciate, created the principle of the 3rd location. He would state the top place was the house. The 2nd location was the workplace. And the 3rd location was Starbucks, where you might get a cup of coffee, fulfill somebody, and be surrounded by other individuals. I believe in a pre-Corona world, that was remarkable. I believe in a post-Corona world, what Flow is observed is that it’s not any longer the top place, or the 3rd location, it’s the one location. And in the one location, you need to incorporate whatever. Our citizens, which we survey frequently, 70% of them invest in between 2 to 5 days working from house. In a truth where work from house and living has actually turned into one, a location where our house has actually altered, and our relationship to our house has actually altered. I don’t believe a great deal of us believe there’s anything more crucial than that. The brand-new option for the future of living requirements to be more the one location instead of the very first or the 3rd. And that is what Flow is going to do. To address your concern you stated is Flow, I believe what you’re asking is, what’s Flow gonna do? 

Michal Lev-Ram: Well, and does Flow, where does WeWork end? And where does fFow start? And where do they dovetail? 

Adam Neumann: So you’re asking, is Flow going to complete?  

Michal Lev-Ram: Yes.  

Adam Neumann: I believe, not I believe I understand, in a world where the one location is the brand-new option, where work and living has actually been incorporated, we’re not prepared really, for these services, since these structures have actually not been created for that. The running systems are not there. The tech is not there, the groups are not there to run it. I believe Flow has just 2 options, complete, or partner. 

Michal Lev-Ram: Okay, so complete is among the options. 

Adam Neumann: Compete or partner.  

Michal Lev-Ram: All right, well, perhaps it would assist if you you understand, I believe we get sort of the approach and the requirement in the market that you see for Flow. But provide us a bit more of a concrete breakdown of what is business design? Do you own these structures or not always? And how does the business generate income? 

Adam Neumann: So I’m going to include another thing and after that I’m going to respond to that. In May, the Surgeon General created a research study specifying isolation as an epidemic in the United States. He was stating that it’s going to trigger isolation is going to trigger mental disorders, is going to trigger sudden death, he was offering all these various meanings and pricing estimate incredible quantity of research study. We reside in a world where we’re so linked, we’ve never ever been more detached. Even though we enjoy innovation, and Flow is tech very first and item initially, we utilize innovation as the tool to accomplish the objective and the objectives that we have, not as completion objective. And with that in mind, it needs to all be united completely. So we believe the very best method to do that service design, we own 3000 homes that we’re running, we have more than 150 staff members, a bulk of engineers, item designers, both digital and physical, we’re really trying to find a lot more excellent staff members. And business design that we have is a vertically incorporated system. We own the structures, we run the structures, we develop the innovation, we develop a neighborhood, and we develop the groups that running them. And when you bring all of that together, the minute a local is better, more satisfied and remains longer, the structure’s churn decreases churn is the quantity of times individuals leave a structure. And the structure is instantly more successful. Happier citizens, more satisfied citizens equates to more successful structures. We’ve currently shown this on our very first 2 structures. And this is something that in property, you don’t see frequently since property is not dealt with as a customer item, although it actually is. The factor it’s not dealt with as a customer item is since it’s a supply difficulty, not a need difficulty. 

Michal Lev-Ram: You raised $100 million from Marc Andreessen. Correct? No, no, sorry, just how much? 

Adam Neumann: $350 million. 

Michal Lev-Ram: Excuse me, I ought to have taken a look at my notes. $350 million. That’s a lot more mind boggling. I wish to find out about, simply extremely quickly, inform us about simply why you believe this is an excellent match – Andreessen Horowitz and you – and likewise curious to hear, you understand, not everyone gets a 2nd possibility and not on this sort of level, obviously, $350 million. Why do you believe Marc thought in you and wished to put his cash in you? 

Adam Neumann: So a couple of things. First, we discussed lessons found out. And we stated among them is surround yourself with the ideal individuals. Marc and Ben and a16z boggle the mind financiers. They’re really financiers who began as business owners, they’ve run several companies and produced several companies. When they’re in the conference room, and we’re talking about, not just is noone holding anything back, the sort of recommendations we’re getting has a lot to do with constructing a long-lasting service. Also, and this is something remarkable about Marc, after our very first board conference, Marc calls me the next day. And he goes Adam, I wished to provide you some feedback about something I heard in the board conference. And I stated, obviously, and after that he offered me the list of all the important things he disagreed with. Not the important things he stated in the board conference however there were a great deal of other things that he thought of later on. And he stated, I don’t wish to come too tough. But that’s what I believe. And I stated, Marc, the offer we made when we did this offer, is that you will constantly inform me precisely what you believe. And I will do my finest to be an excellent listener. And that’s been the relationship since. They’ve ended up being even higher partners then I would picture. Specifically to what you’re asking, I make sure there are individuals who are worthy of to get financial investments more than me. I’m sure there’s a great deal of individuals deserve who who don’t get it. And I hope since I actually think in entrepreneurship, that individuals who are worthy of to get this financial investment will get it since I likewise believe that to develop the future, we require start-ups and we require development. And that’s what this conference is everything about. I believe it shouldn’t matter what race they originate from, what gender they originate from, where they originate from, absolutely nothing must matter. And everyone must get the chance. Specifically why I got the 2nd possibility, that you ought to ask a16z. 

Michal Lev-Ram: Okay, concern from the audience, please raise your hand. We’ll bring a mic over to you rapidly. We’ve got one right here. 

Audience Member: Mark Johnson, CTO,Stand Together. What’s your regulative barriers do you believe you’re gonna deal with in structure Flow? 

Adam Neumann: So excellent concern. There’s a great deal of standard things in property property that are in result. So we need to follow all the guidelines that exist. It’s really an extremely innovative classification when it pertains to that. But an extremely early classification when it pertains to really development, or innovation, or offering, in your experience. Whatever they are, we take them incredibly seriously. But they alter in between one state to another, and it depends if you’re owning the structure, constructing the structure, running the structure, and after that Flow begins there. But in time most likely grows beyond these multifamily structures. There’s incredible chance to where this brand name can go to 

Michal Lev-Ram: Do you, by the method, I understand, among the knocks, after this, one  was released, remained in how you explain the business and earlier on too, you understand, the reality that the assessment was where it was, which, you understand, there was yes, there was tech included, however it was property. Are you comfy today explaining Flow as a property business? Or what is it? What classification is it in? 

Adam Neumann: So I can’t respond to completion without responding to the start. I’m a little bored of discussing the past. But if we must. Our assessment was provided by the most advanced valuers on the planet, it was Goldman Sachs and JP Morgan and Morgan Stanley. It was Softbank and Benchmark and all the other financiers that are thought about the very best financiers on the planet. So when individuals knock our assessment, they’re actually knocking all individuals that considered that assessment. Valuation is something that’s provided by an individual that wishes to really invest the cash. Putting that aside, we utilized to explain WeOperate in various methods. Flow is extremely comfy being a domestic consumer-facing property business. It is the biggest property class on the planet. It has no brand name that we understand of. And prop tech because classification is still extremely early. Because whenever you resolve these issues, everybody is fixing them as a single point issue, instead of really fixing them as a vertical combination issue. So the method we’re pursuing it is going to take longer, we’re going to need to develop an extremely strong structure. But when we do, I believe our option is going to really assist resolve issues like isolation, neighborhood. And I’ll state another thing. And I believe we reside in this world today where I’m not exactly sure we require more fans. I believe we require more pals. And I believe we can all value a lot more in person interaction, and perhaps a little less FaceTime. 

Michal Lev-Ram: Well, Adam, we value you coming getting dressed up for us no tee shirts today. But thank you a lot for coming. And eagerly anticipating seeing what you finish with Flow.  


News and digital media editor, writer, and communications specialist. Passionate about social justice, equity, and wellness. Covering the news, viewing it differently.

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