Neumann reveals his vision for Flow renters to “feel ownership”

Adam Neumann bills his comeback real estate venture, Flow, as a chance to turn traditional apartment living into a community with shared experiences. That could include allowing renters to share in the spoils — or at least feel as if they are.

“We want to create an elevated experience for the resident, and we want to find a way to share with the resident a portion of the value that they create,” the WeWork founder said at an event held by his chief backer on the new company, venture capital firm Andreessen Horowitz.

At the summit, Neumann outlined four pillars of Flow: A branded technology company that will manage the real estate, a real estate company used to purchase properties, a financial services arm, and a mechanism that will share some of the venture’s value “with the value creator,” or the renter, Neumann said.

If Flow creates a “better experience,” then the asset becomes more profitable, he said. In turn, this allows Flow to raise more, buy more, and have more renters.

“If we are able to take this value-creating mechanisms and share with the residents a portion of the value, it’s going to make them feel ownership,” Neumann said. “And it’s not just ownership [like], ‘I feel like I am part of something.’ It’s, ‘I actually own part of something.’”

Only renters will not actually accrue equity in the units, according to sources familiar with the venture, nor will they have the opportunity to buy them — they will remain tenants.

Representatives for Neumann declined to comment.

Neumann made his comments while discussing the challenge that young Americans face in building equity. Roughly 70 percent of people 35 and younger rent, he said.

“Well, where are they going to create equity?” he said.

Neumann announced Flow last year and received a $350 million investment from a16z. His venture into apartments didn’t come as a surprise, as entities tied to him already had started accumulating properties, such as the 34-story, 639-unit building Society Las Olas in Fort Lauderdale, the 444-unit Caoba tower at Miami Worldcenter and the 268-unit Stacks on Main in Nashville. His family office started to look into real estate in early 2020 and settled on betting on multifamily. It has amassed 4,000 units, he said at the summit.

But the a16z deal was not structured as a straightforward venture investment: As part of the agreement, a16z also took control of part of Neumann’s apartment holdings, according to the Wall Street Journal.

Although Flow is Neumann’s new act, it mirrors his old one. His WeWork was built on the concept of shared office spaces and building community, culminating in a failed IPO that revealed its made-up “community-adjusted EBITDA” metric. Flow is meant to take a similar approach to apartments, transforming what Neumann sees as an isolationist way of living with little interaction among residents into a community with a shared purpose.

“The word ownership is very complicated. … But if there is perceived value and that value appreciates over time, then I feel like I am part of a community,” he said. “It’s the difference from feeling like you own something to feeling like you’re renting. From feeling transactional to actually being part of a community.”