Not looking back.Credit…Calla Kessler for The New York Times
WeWork’s founder is going residential
Adam Neumann, the founder of WeWork, whose spectacular rise and fall has been chronicled in books, documentaries and a scripted television series, has a new venture — and a surprising backer.
Neumann’s new company Flow wants to transform the residential rental real estate market. Notably, it has the financial support of Andreessen Horowitz, the prominent Silicon Valley venture capital firm that was an early investor in everything from Facebook to Airbnb. The backing of Andreessen Horowitz, considered royalty among early-stage investors, is a powerful sign of support, and perhaps a rebuke to Neumann’s critics, who have described his leadership of WeWork as a cautionary tale of corporate hubris.
Andreessen Horowitz is investing about $350 million in Flow, according to three people briefed on the deal. The investment, the largest individual check Andreessen Horowitz has ever written in a round of funding to a company, values Flow at more than $1 billion before it even officially opens its doors.
Flow is expected to launch in 2023, and Marc Andreessen will join its board, these people said. Neumann is planning to make a sizable personal investment in Flow in the form of cash and real estate assets. “It’s often underappreciated that only one person has fundamentally redesigned the office experience and led a paradigm-changing global company in the process: Adam,” Andreessen wrote in a post on his firm’s website on Monday, explaining his rationale for investing in the company.
Neumann has purchased more than 3,000 apartment units in Miami, Fort Lauderdale, Atlanta and Nashville. His aim is to rethink the housing rental market by creating a branded product with consistent service and community features. Flow will operate the properties Neumann has bought and also offer its services to new developments and other third parties. Exact details of the business plan could not be learned. (Flow appears to be financially separate from the crypto company Flowcarbon, which was also co-founded by Neumann and raised $70 million in May in a round led by Andreesen Horowitz.)
Andreessen said in the blog post that he was interested in Flow because the rental real estate market is ripe for disruption. That’s especially true, Andreessen said, now that more and more people are working from home and “will experience much less, if any, of the in-office social bonding and friendships that local workers enjoy.” He also hinted that the company might try to address one of the biggest challenges renters face: “You can pay rent for decades and still own zero equity — nothing.” He added: “In a world where limited access to homeownership continues to be a driving force behind inequality and anxiety, giving renters a sense of security, community and genuine ownership has transformative power for our society.”
At its height, WeWork was valued at some $47 billion. After a botched public offering and tales of mismanagement, it imploded spectacularly. Neumann was ousted from WeWork in 2019, but walked away with hundreds of millions of dollars. Today, WeWork has a market value of about $4 billion.
Andreessen wrote that “we love seeing repeat-founders build on past successes by growing from lessons learned.” For Neumann, he added, “the successes and lessons are plenty.”
Watch: Andrew’s interview with Neumann at the DealBook Summit last year, which was recently nominated for an Emmy. In the interview, Neumann said of his rise and fall at WeWork that “I have had a lot of time to think, and there have been multiple lessons and multiple regrets.”
HERE’S WHAT’S HAPPENING
China’s economic activity slowed in July. Both retail sales and industrial production rose less than expected, following a two-month stretch in which an easing of Covid restrictions appeared to have put the country’s economy back on track. Instead the People’s Bank of China said today that it would cut two key interest rates by 0.1 percentage points in an effort to lift growth.
Russia’s military onslaught on Ukraine has shifted dangerously toward the south of the country, where fighting is raging around the Russian-controlled Zaporizhzhia nuclear station, Europe’s largest. That is stirring alarm about a radiation risk far beyond Ukraine. The U.S. and the European Union have called for the creation of a demilitarized zone around the plant.
A Saudi Arabian billionaire invested about $500 million in Russian energy firms shortly before and after the invasion of Ukraine. The recently disclosed investments by Prince Alwaleed bin Talal in February and March included Gazprom, Rosneft and Lukoil. Meanwhile, Saudi Arabia’s national oil company, Saudi Aramco, posted a 90 percent jump in quarterly profit.
Republicans are struggling to coalesce around a unified strategy to respond to the F.B.I.’s search of Mar-a-Lago. They are divided about whether to attack the nation’s top law enforcement agencies and how aggressive those attacks should be. Meanwhile, Trump has claimed he declassified the top secret files at the heart of the search, though that is legally irrelevant.
Growing unease over TikTok
TikTok, the popular short-form video platform, is quickly becoming a primary spreader of baseless and misleading election information ahead of the U.S. midterms. The app, which is owned by the Chinese tech giant ByteDance, is facing new scrutiny over misinformation as well as its ties to Beijing, write the Times’s David McCabe and Tiffany Hsu in two separate stories on why the app has become a major focus for U.S. lawmakers.
Baseless conspiracy theories predicting voter fraud in November have been widely viewed on TikTok, writes Hsu. Misinformation on the app has already been a problem for elections in Germany, the Philippines and Colombia. And video and audio clips — the bulk of what is shared on the app — can be far more difficult to moderate than text, especially when they are posted with a tongue-in-cheek tone, experts say.
U.S. lawmakers are also calling for more information about TikTok’s relationship with China, writes McCabe. Last week, officials in the House of Representatives warned staff members against using or downloading TikTok, citing security concerns, according to an email obtained by The Times. That warning followed a recent BuzzFeed report that the app’s employees in China have had the ability to access Americans’ data. (TikTok, whose C.E.O. wrote directly to senators in July about its data practices, has said it plans to keep data about its American users away from its Chinese parent.)
The White House may soon enact a new policy on apps that could expose data to foreign adversaries.Beyond an executive orderthatthe White House circulated a draft of earlier this year, the Biden administration is also expected to issue guidance soon to a committee that vets transactions involving foreign companies, advising increased sensitivity in cases that could expose Americans’ data to other governments.
Meanwhile, fears that social media is amplifying calls for violence continue to resonate. British police are investigating a tweet threatening the author J.K. Rowling. And on former President Trump’s social media platform, Truth Social, predictions of imminent civil war and calls for violence surged this week after the F.B.I. raided Mar-a-Lago.
“They kind of look at America and say, ‘You have been incompetent and lazy.’ There is truth to that. We have screwed up infrastructure. We have screwed up inner-city schools. But I think it is a mistake to say that America has the short end of the stick.”
— Jamie Dimon, C.E.O. of JPMorgan Chase, commenting on U.S.-China relations on a conference call last week with the firm’s top clients.
Big shifts in the C-suite
Bill George, the former C.E.O. of Medtronic and now a Harvard Business School professor, has spent many years leading or teaching how to lead large corporations. For the latest book in his “True North” series, “True North: Emerging Leader Edition,” co-written with Zach Clayton and due out later this month, George talked to over 200 executives about how they mix leadership with purpose and how to lead through today’s crises. DealBook talked to George earlier this month about what he learned. The interview has been edited and condensed.
What do you think of the state of corporate leadership?
We are going through a massive change, as the occupiers of corporate suites shift to the Gen Xers and the millennials. We are moving from the command-and-control power base leadership that was typical of the generation of leaders taught by Jack Welch to much more empowerment leaders. Instead of managers of people, these new leaders will be more like coaches. And we need that.
How should C.E.O.s like Howard Schultz at Starbucks address what seems to be a resurgent unionization movement?
I am not in favor of nonunion workplaces organizing. But I think that companies need to be employees-first. That’s how Starbucks used to be, but over time they have become more bureaucratic and that’s what has led to this effort. Companies have been neglectful of their frontline workers. C.E.O.s today need to be out with their frontline employees, need to lead with their heart as well as their head.
Do you think C.E.O.s should be speaking out more on issues like the recent Supreme Court ruling on abortion and other political and social issues?
Right now, there is a lot of concern on how to handle that. People are rethinking their lives after Covid. Does my company have a sense of purpose? A strong position on diversity and inclusion? A plan for climate change? People are reassessing their careers, and employees want to know this.
I wrote this new book to show how some younger C.E.O.s are stepping up and leading in a different way than when I was. We need to leave behind the idea — the Jack Welch model — that employees are a cost.
THE SPEED READ
Frontier will halt flights from Albany and other U.S. locations amid cutbacks following a failed attempt to merge with Spirit. (Times Union)
Ford’s F-150 is creating a Battery Belt that is tying the economic future of a portion of red America to going green. (NYT)
Thomas Piketty, Gabriel Zucman and other top progressive thinkers say Chile’s proposed Constitution would produce a “new global standard” in “shared prosperity.” (Economists’ letter)
Bank of America and UBS analysts call the Inflation Protection Act’s drug negotiation provisions “far less onerous” than Big Pharma’s investors feared. (Seeking Alpha)
Best of the rest
Mattel sues Rap Snacks for trademark violations related to its Nicki Minaj-branded “Barbie-Que” chips. (Reuters)
The software billionaire Larry Ellison’s Hawaiian resort company has run into trouble with a local. (Daily Beast)
Readers have been flocking to women-centric publications since Roe’s reversal. (NYT)
“The Independent Bookstore as Imagined by a Corporate Lobbyist.” (NYT)
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