The Cult Of WeWork And The FOMO Of Flow

December 2, 2024
  • Adam Neuman Is Personally Worth 110 Times The Value Of WeWork
  • His 2022 Miami Startup Flow Is Backed By a16z, A Leading VC
  • His Investors Seem Driven By FOMO, Not The Potential Upside

Adam Neumann, the well-known founder of WeWork and his new startup, Flow, has a personal net worth of about $2.3B. His former company is now only worth about $21 million. While I’ve been involved in several startup ventures during my career (Trulia is the biggest so far), I’ve always wondered how investors think about larger-than-life characters who always seem to be able to move forward. Admittedly, my real estate colleagues and I groaned at the news about the 2022 Flow launch. It struck us that the concept was tired, had been done many times before and it was a crowded field. But I was even more incredulous when I thought about the investors, like top venture capital (VC) firm Andreessen Horowitz (a16z), who gave him hundreds of millions of dollars and made Flow a unicorn before it even began operating. Making it even more confusing is the fact that a16z is no weakling follower-type, having just bucked the tech trend in Florida by leaving the state after testing the waters for two years.

Neumann was recently interviewed by Amir Korangy, founder of The Real Deal (also a trendsetter sock stylist as observed in the image below) at the South Florida Real Estate Forum. Neumann dubbed Flow as “revolutionary” because “it’s a feeling” as he goes down the crowded community-based housing rabbit hole. The initial plan is to offer concierge and management services to his 3,000 tenants and other landlords. When I met investors, I never thought to use “it’s a feeling” to pitch a startup idea since I thought investors expected tangible evidence to differentiate their value proposition. Perhaps that’s why I’m not a billionaire like Mr. Neumann.

It’s An Investor Cult

When WeWork unraveled in 2019 after its original failed IPO, I thought about the hundreds of talented employees working for peanuts for years in hopes of a big payday. Most lost all their upside but sadly that’s the gamble of startups. I knew several firms that rented WeWork space and I marveled at the beer keg installation in the elevator vestibule on each floor. In the commercial office world, landlords that converted to WeWork installations seemed extremely overexposed to risk from relying on one big tenant and its weak financial conditions at the time. Little did commercial office landlords realize what also lay in store for them the following year with the global pandemic and the Work From Home (WFH) phenomenon that would change everything about commercial offices as an asset.

WeWork launched in 2010, which makes it much older than I realized when sitting down to write this Housing Note. And the amount of real estate assets WeWork had acquired along the way was staggering. My office is adjacent to the former Lord & Taylor anchor store on Manhattan’s Fifth Avenue. WeWork acquired the building for $2 billion just before the failed IPO (the building is now owned by Amazon). That 2019 anchor store sale bummed me out because I frequented it to buy last-minute birthday gifts or get a better shirt/tie combination for last-minute TV appearances.

The New York Times brilliantly captured the WeWork soapbox in Adam Neumann and the Art of Failing Up after his IPO failed back in 2019 and he stepped down. Apple TV created a show called WeCrashed and Hulu launched a documentary WeWork: Or the Making and Breaking of a $47 Billion Unicorn. Also worth mentioning is the book: The Cult of We: WeWork, Adam Neumann, and the Great Startup Delusion. That book title is incredible and yes, I do think about his devout followers as being in a cult.

Final Thoughts

It’s all hard to process, but Neumann mastered the gift of creating FOMO. I’m not criticizing his track record – investors willingly gave him a lot of money to execute his plans. At this point, with his new venture Flow, the future outcome didn’t seem to matter given the ease of raising hundreds of millions from a package that oozes FOMO. His salesmanship acuity is at an elevated level that few can match, and to investors, that’s all that seems to matter.

In place of this, I hope everyone had a happy bananagiving.

Monday Mailboxes, Etc. – Sharing reader feedback on Housing Notes.

November 25, 2024, You Can Get Anything You Want At Alice’s Restaurant, Starbucks, and Whole Foods Because It Makes Housing Grow.

  • Your post today reminds me of the new Costco project coming to SoCal.
    https://www.sfgate.com/la/article/costco-housing-apartments-south-la-19541521.php
    I think I’d rather live above a Costco. 
  • Glad to see both ‘Alice’s Restaurant’ and Magic mentioned in the same article! I was a sophomore at MSU in 1978 and Magic was all over campus and approachable even after the Championship. Oh, and you can bet ‘Alice’s Restaurant’ will be broadcast throughout our home on Thanksgiving. It’s a tradition! Have a great T’Day!
  • Funny thing.  For years, I always played Arlo’s Alice’s Restaurant on Thanksgiving Day for my grandkids.  Now that they are teenagers, gave give me grief when I remind them of the song. 
  • Walk right in. It’s around the back. 

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