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Adam Neumann’s new company gets a big check from Andreessen Horowitz
- louwrentius 4y agoRitch people yet again probably trying to siphon value out of the economy without providing any value in return, just holding properties hostage. They prevent newer generations from ever accruing any kind of wealth or just their own home. Always beholden to some rent seeker.
- Quequau 4y agoI'd sooner see all residential spaces become nationalised and collectively maintained than to see this looser cooking up some new machination that promises investors will get rich quick through sneaky exploitation and delivers yet another bad debt inflated housing bubble.
- roenxi 4y agoYou'd get much better results seeing a world where good things happen to bad people. Adam Neumann can't do a fraction of the damage a nationalisation program would before it got rolled back. And the politicians who administer such programs are almost invariably more scummy than people like Neumann.
- kolbe 4y agoI don't know why you're getting downvoted so hard. People here really don't understand the corruption behind even things like section 8 housing. They get so blinded by jealously that Neumann made hundreds of millions in a failed enterprise, but don't care that there are a hundred people worse than him making hundreds of millions by renting out $400 places for $1000 using the taxpayer's money.
- drdrek 4y agoAnswer is pretty simple, its because people without strict anti-establishment sentiment do not believe that someone like Neumann is actually better than governments.
- lnxg33k1 4y agoI believe that people like Neumann are the reason why we have some bad people in governments, like the chicken and egg? Was the corruptor born before the corrupted? I think so? But yeah I trust government more than privates, if anything because there are three branches in governments that oversee each other and are independent and because people can try but somehow the justice comes And most importantly, are elected
- refurb 4y agoI don't think anyone argued Neumann was better than the government. The point was that when Neumann fucks up, a few limited partners get screwed over. Maybe a few building owners too. When the government fucks up, everybody gets screwed over, but mostly you and me, the taxpayer.
- pineaux 4y agoI live in Holland. It works quite well here. We only have a government that believes "the market" will fix the housing problems. The problem is that "the market" has no incentive to do so. So I am really happy that social housing is quite functional here.
- roenxi 4y ago> I don't know why you're getting downvoted so hard. Me neither. It is because of comments like this that I don't downvote people. The signal is too vague. I can report from the front that this is a surprisingly polarising comment; the early score is all over the place. Just in case the sibling theory is correct ... Contextualising to the US I would have thought it uncontroversial to say that a schizophrenic Bush-Obama-Trump-Biden producing system is not one you want controlling your house. Because that is what politics is. At least half that group should concern any reader, ideally 4 for 4 for people who are more interested in results than intentions.
- wil421 4y agoBush-Obama-Trump-Biden systems has almost 0 impact on what my city/county/state decide to do about housing. I don’t what the feds controlling my housing and they do not.
- roenxi 4y agoIf you take the national out of nationalisation that is an improvement. Then shove a "personal" in and we're at a good spot. We want more people to have control over their own home, not less. I'm accepting of the fact that I live in someone else's house and it isn't my choice if I'm here in 12 months - but it is hardly an ideal state of being. And pretending national politics isn't a big driver of what happens locally is a bit naive. Sticking to the US, the federal government is 20% of the economy. Most other first world countries are probably similar ballpark. That has a huge influence on everyone.
- refurb 4y agoNot only that, with the pace that government operates, the point around trashing the housing market, is true. It's often years between the time a government policy is recognized as a failure and when it actually changes. At least companies go under eventually if they aren't profitable. There scale is obviously much more limited as well. People seem to forget that NYC landlords paid people to burn down their apartment buildings due a combination of rent control and rising costs. Cheaper to just collect insurance than lose money on each unit you rent.
- shusaku 4y agoHe’s being downvoted because he turned a clearly hyperbolic statement in to a tired political argument.
- newsclues 4y agoGiven the private public partnerships, I fear geniuses like Adam are empowered and funded by the government to nationalize housing in a epic disaster.
- whack 4y agoWhy so angry? This "looser" was a guy who built a company from the ground up into something that is now a unicorn. a16z is hardly a gullible investor that is falling naively for some schmoozer. Who exactly are you worried he's going to exploit?
- wahnfrieden 4y agoit's a landlording scheme, it's obvious
- larksimian 4y agoHow is this meme of WeWork being a unicorn taken seriously?! They raised $22 billion and currently are valued at under $10 billion. All of that valuation is probably the real estate they bought. I can literally give you better returns. Give me $20 billion and I'll give you $11 bill back. Insulting to people who have actually built unicorns to put WeWork in the same category.
- vu0tran 4y agoehh... to be fair, lots of companies did much worse. Lots of companies in Fintech during the run up.
- ttyprintk 4y agoA legit but marginal worry is that Neumann is convincing enough that he will, at some point, succeed in a government bailout.
- rdxm 4y ago
- hk1337 4y ago> The firm’s investment in Flow is about $350 million, according to three people briefed on the deal, valuing the company at more than $1 billion before it even opens its doors. Seems like the same shit he did before.
- skellera 4y agoIt feels like a joke, how is this possible. I can understand investing big in people but Adam would be the last person I would trust to be successful. The lack of owning responsibility in the failure of WeWork is a huge red flag. Why would A16Z give their largest investment to him?
- nojito 4y agoIt's pretty much guaranteed returns. This investment is a no brainer if you are able to get in very early. The subsequent rounds are where there's little to no chance of success.
- hk1337 4y agoThe only thing I can think of is because the co-founder has the same last name as what’s in the VC name. Maybe that’s standard practice for VC to be named co-founder in this circumstance?
- tppiotrowski 4y agoWhy would AH not disclose the investment amount? Can we trust these "people briefed on the deal"?
- edent 4y agoCan someone explain why anyone would give this guy any money they wanted back? I appreciate that people who make mistakes often learn expensive lessons, and that makes them better performers in the long term. But WeWork - for all the hype - seemed to sub-let commercial space at a loss. Sure, those spaces were nice, and the co-working ecosystem helped recreate the University dorm vibe for those who like that. But the main attraction was high quality facilities at low quality prices. Is A16Z simply hoping he'll recreate the hype and they'll be able to cash out before it all comes crashing down?
- skrebbel 4y ago> Is A16Z simply hoping he'll recreate the hype and they'll be able to cash out before it all comes crashing down? Yes
- throw0330 4y agoSomeone once told me not to think of A16Z as a venture capital firm, but a publicity front that has an investment engine behind it.
- thedrbrian 4y ago>Can someone explain why anyone would give this guy any money they wanted back? Because they are hoping they can get out at the top. They're looking for someone else to take the massive loses. See the greater fool theory
- mrep 4y ago> Is A16Z simply hoping he'll recreate the hype and they'll be able to cash out before it all comes crashing down? Yes, this is the same VC firm that argues against 10 year exercise windows in the hopes that employees who leave will elect not to exercise their earned vested options in the normal 90 day window thus forfeiting their options and reducing investor dilution [0]. They'll do anything to make an extra buck. [0]: https://news.ycombinator.com/item?id=11963551 https://news.ycombinator.com/item?id=11963551
- sergefaguet 4y agohe is a genius and one of the most talented people in the world. just watch this video and check out his charm, communication skills, ability to speak: https://www.youtube.com/watch?v=Dgp-CM-gQik&feature=youtu.be https://www.youtube.com/watch?v=Dgp-CM-gQik&feature=youtu.be of course you want to bet on him, his talents are an unfair advantage in just about any business.
- neilv 4y ago> Mr. Neumann, who has purchased more than 3,000 apartment units [...] The investment thesis for Flow appears to reflect economic and social trends that are driving more people to rent homes rather than buy them at a time when there is a housing shortage. Could that be part of a causal relationship?
- edwnj 4y agoA very tiny part. The big reason is supply/demand, we are short hundreds of thousands of houses that needs to be built.. Yeh Blackrock buying tens of thousands of houses is not helping but thats not that main issue here let alone a few thousand apartment units bought by Neumann.
- tormeh 4y agoLand-use restrictions and NIMBYism drives up housing costs. I don't blame investors from wanting to make money off of that. They didn't start the fire, so why not roast some marshmallows? It may be in somewhat bad taste, but they're not doing anyone any harm. Direct your anger at the local governments that block cheap mass housing from being built. Of course the real reason is that people want property values to increase and rents to decrease. This is a circle you can't square. Many voters are homeowners who have all their savings tied up in their home. In legislations without safety nets this might be their retirement plan and social security, too. In practice this turns into a destructive political force that crushes everyone who doesn't own their home. Incentives, baby!
- afavour 4y ago> They didn't start the fire, so why not roast some marshmallows? I think the metaphor would be “they didn’t start the fire so why not throw some more fuel onto it?”
- nradov 4y agoIf you actually talk with the most active NIMBYs, they tend to be more concerned with quality of life than with property values. They have lived in the same home for many years and don't plan to sell. Building more housing in their neighborhood means less privacy, more noise, more traffic, more crime, and a shortage of street parking. You might consider them selfish but their concerns aren't irrational.
- sherinanigans 4y agoWhy doesn't Elizabeth Holmes start a new company? I bet she could get a lot of funding from her track record and learning from her mistakes.
- Finnucane 4y agoBecause Adam Neumann, for some reason, is not going to jail, but remains free and rich.
- WJW 4y agoAdam Neumann talked Softbank into willingly investing a whole bunch of money into WeWork at a valuation that was unlikely to be realized in all but the most optimistic scenarios. While Softbank could/should have been more prudent, being irrationally optimistic is not illegal. I don't understand why anyone would be willing to give him another shot given his track record, but I guess A16z is free to do with their money as they please. Elizabeth Holmes endangered the public by knowingly selling them fake blood test results, which is a crime. That is why she is in jail and Neumann is not.
- ok_dad 4y agoNo, she’s in jail for defrauding investors. No one cared about any actual humans, just a few dragons hoarding gold who were duped.
- jostmey 4y agoActually, she is in jail for wire fraud, not because she sold fake blood test results. I think she claimed contracts that did not exist, among other things. Reading this thread, it doesn’t sound like Adam Neumann did this
- differentView 4y agoShe's actually out on bond. Sentencing is scheduled for October 17, 2022.
- sergefaguet 4y ago
- Apreche 4y agoEveryone deserves a second chance. But only after everyone else gets a first chance.
- almog 4y agoIs that Marc Andreessen's modern day's equivalent of a stuntman putting his face into a Lion's mouth? Whatever A16z's reason's might be, I can only assume (and hope) it'll end up not unlike the story of the scorpion and the frog.
- Havoc 4y agoThe Twitter banter around this has been pretty good at least
- DebtDeflation 4y ago> Mr. Neumann, who has purchased more than 3,000 apartment units in Miami, Fort Lauderdale, Atlanta and Nashville, aims to rethink the rental housing market by creating a branded product with consistent service and community features. Flow will own and operate the properties Mr. Neumann had bought and also offer its services to new developments and other third parties. Exact details of the business plan could not be learned. > In the case of Flow, the business is effectively a service that landlords can team up with for their properties, somewhat similar to the way an owner of a hotel might contract with a branded hotel chain to operate the property. In other words, a Property Management Company. There are literally thousands of them out there. This is an industry that has existed forever. It's also largely non-scalable. But he's going to somehow remake the industry by offering consistent branding like paint colors, deco schemes, and coffee service. Why exactly is a tech-focused VC interested in this?
- popcorncowboy 4y agoHaha, I'm only laughing because if you swap "Property Management Company" with "Managed Office Space" in your sentence you could have been talking about WeWork.
- DebtDeflation 4y agoDidn't AN's wife have a side project in the WeWork days focused on residential? I know she had one focused on schools. Just looked it up. She did. It was called WeLive. The school one was WeGrow.
- pclmulqdq 4y agoThinking about this from a good faith perspective, I would assume the VC wants to get some exposure to the property market while still pretending to be a "VC" fund. Alternatively, this might be a bailout of sorts after Adam Neumann's crypto-based carbon trading platform went bust (along with $70 million from AH). It's hard to look at this from a charitable perspective, though. Adam Neumann is basically Elizabeth Holmes, so I don't know why people keep giving him money.
- xrd 4y agoAirbnb said recently their biggest increases were in long term rentals. Seems like A16Z and AdamN are skating toward that puck. WeWork destroyed many small business co-working spaces as the pyre of VC money burned. I expect the Airbnb world to get really interesting, probably screwing a bunch of small owners along the way.
- sybercecurity 4y agoMaybe they think this "tech nomad" thing is going to get big? Personally, I don't think it will be a big market. Maybe young people starting their working careers or consultants/contractors who travel to go on-site for jobs lasting longer than a week. I can see that: you buy in so you have the same sort of apartment/living space wherever you need to be.
- mabbo 4y agoGiven the history of WeWork, my best guess is that Neumann's chief skill is convincing people to give him money and let him do whatever he wants with it. He ran WeWork poorly. He convinced the board to let him scam it (legally). And he walked away with an unbelievable amount of money that came from VCs. Given he has this skill, if I were a VC I wouldn't let him enter the building. I would have his email addresses on block lists. And I sure as hell wouldn't let him into a meeting where he can use his skills to convince me to give him money.
- danielrpa 4y agoYour approach - which makes total sense - reminds me of the notion that normal human beings wouldn't be able to resist an Artificial Superintelligence because it would always be able to press the right human buttons, no matter how smart the individual is. The only solution, then, would be to find a way to completely isolate oneself from it. Perhaps Neumann is like a "scam superintelligence"...
- mabbo 4y agoBut what if Neumann is some sort of financial Roko's Basilisk who will punish me for not helping him scam everyone out of money? Then logically I should help him scam me and everyone else!
- notacoward 4y agoA lot of what happens in both business and politics makes more sense if we consider that some people have an innate ability to evade even smart people's BS detectors when they're together in person. Doesn't matter if it's animal magnetism, pheromones, subliminal body language, or scam superintelligence. Is it so hard to believe that we all have heuristics we use to decide whether to trust someone? Where there are heuristics, there are ways to game those heuristics. Practically none of us are as immune to non-rational persuasion as we think/claim we are. Whatever it is, I've known people whose ability to get what they want was extremely hard to explain any other way. I literally avoid being in their presence, and that has been good for me. I feel like I'm better than most at detecting BS, at least 90th percentile, but I'd be a fool to think I'm the best in the world. When I can sense that I'm outmatched, the rational thing to do is change the game. Con men have known since forever that egotists are the best marks.
- merricksb 4y agoEarlier discussion here: https://news.ycombinator.com/item?id=32479652 https://news.ycombinator.com/item?id=32479652