Adam Neumann is back, and, more surprisingly, so too are his legion of followers. Some are the Silicon Valley investors nodding with approval at his latest idea, some are the journalists writing thousands of words on how he is set to shake the world of property to its core all over again. Either way, they all have one thing in common: they all see Neumann as a visionary.
Their biography of Neumann is that he founded WeWork (US:WE) in a moment of genius, but that the company struggled because of his eccentric behaviour. We are encouraged to believe that despite Neumann’s past foibles his creation of WeWork changed the nature of office leases forever and that his newest venture will revolutionise the world of residential property in much the same way.
It is tough to buy this Great Man history. To begin with, WeWork was not a revolutionary idea. Not even close. WeWork was – and remains – a serviced office business that has not made a profit. It takes out leases on office buildings and sublets them to other companies on flexible terms. IWG (IWG), formerly Regus, had been doing the same thing for decades before Neumann’s “revolution” started in New York. Where Neumann does deserve credit was his ability to make the old idea look new thanks to a combination of strong branding, heightened language and free beer. But saying that he invented serviced offices is like saying the US invented pizza.
This penchant for branding and ebullient prose is again at the heart of his newest venture, albeit this time much of it has been left to his supporters. Named 'Flow', the idea was described by investment firm Andreessen Horowitz, which has put $350mn (£350mn) into the company, as a “community-driven, experience-centric service with the latest technology”.
In plain English, however, Flow sounds like it will be a co-living operator, which means it would provide accommodation to renters alongside other services with an emphasis on shared living spaces. It is hard to say for certain because information about this $1bn-valued company is currently limited to Andreessen Horowitz’s post and a single website page comprising the words “live life in flow”, “coming 2023” and “join us”. But as it is with WeWork, nothing about the way Flow is being described implies Neumann has invented anything. Only a salesperson like Neumann could create a '$1bn' company that does not yet exist based on an old idea.
Co-living operators have existed in the UK and US for years and many build-to-rent developers – such as listed companies Grainger (GRI) and Watkin Jones (WTJ) – use words like “experience-centric service” and “latest technology” in their own communications with investors. Indeed, WeWork even had a go at co-living itself, but its short-lived WeLive venture was abandoned last year.
What Flow will likely be is speedy and well branded. WeWork did not have a first-mover advantage, but it was the largest, coolest and most bullish mover. A fabled story in the property world says that during the Neumann years, WeWork tried to rent out the entirety of City of London skyscraper 22 Bishopsgate, which was still being built at the time. It is impossible to imagine any other flexible operator being as bold.
If Flow goes the same way, it will certainly be remembered. One industry participant I spoke to recently referred to the flexible space in which she was working as “a WeWork thing”, even though it was a different business. Flow could become just as synonymous with co-living – but that does not mean it will be a success.
