WeWork founder Adam Neumann’s latest venture meets social media skepticism

It’s been either a bad week or a fantastic week for WeWork co-founder Adam Neumann, depending on who’s talking.

For Neumann, his new residential real estate company called Flow netted a hefty $1 billion valuation and a $350 million venture capital investment from high-profile tech investor Marc Andreessen of a16z, aka Andreessen Horowitz. That’s the fantastic part, for him.

The ugliness comes from the view that WeWork, a flexible workspace provider, was a hot mess when it canceled its initial public offering in 2019 and Neumann was pushed out of the company.

To understand the comments, it’s helpful to know some of the basics about WeWork, Flow, Neumann, and Marc Andreessen.

Another high-tech investor, Softbank Group SFTBY,
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had poured $18.5 billion into WeWork, a company executive said in 2019. At one point, WeWork had a private company valuation of $47 billion.

At last check, WeWork’s market cap is now $3.8 billion, after going public in late 2021 at a $9 billion valuation. Its stock price has weakened to under $5 a share now from a high of about $13 shortly after its debut.

We Co.’s rapid expansion and flexible business model. have helped it stay ahead of its competitors. But some investors say its public offering may not be worth the risk. Here’s why. Photo: David ‘Dee’ Delgado/Bloomberg

For his part, Neumann earned at least $1 billion from WeWork including the sale of $500 million in WeWork stock by himself and another WeWork co-founder. He also earned $200 million in consulting and other fees from Softbank Group and the sale of an additional $578 million in stock to Softbank, according to the Wall Street Journal.

Comments about WeWork’s flameout, Adam Neumann’s reputation, and whether Andreessen was smart or dumb in investing in Flow swirled on social media this week.

“I have no hatred for Adam Neumann,” he said @paulbiggar on Twitter. “It’s about to burn $350 million that funded endless crypto scams. Man does God’s work. A true companion.”

“If Adam Neumann can raise $350 million in a business bear market, you can ask for that 8 percent increase to keep up with inflation,” he said. @litcapital

“It’s still amazing that Adam Neumann became a billionaire in the process of turning $22 billion in invested capital into $4 billion in market value,” he said. @Noahpinion.

Some compared Neumann to Elizabeth Holmes, the former Silicon Valley darling and co-founder of Theranos, who was convicted in January of two counts of fraud and two counts of conspiracy to defraud in connection with product claims she made about the company’s blood analyzer.

“Elizabeth Holmes, founder of Theranos, lost investors $1 billion. He faces up to 20 years in prison. Adam Neumann, founder of WeWork, lost investors $11 billion. He then raised $350 million for his next startup,” he said @fintwit_news.

However, @kalavros said the comparisons to Holmes are invalid because Neumann gave life to a billion-dollar company and that losing billions in valuation is not a crime, while health care fraud is.

Others took issue with the fact that Neumann cashed a big venture check as a white man, while other startups led by women and people of color have trouble raising capital.

“There’s no way in hell my black ass is going to be given more than one chance, let alone the ones given to this particular mediocre, unremarkable white dude,” he said. @KimCrayton1 . “It has lost billions and still has the potential to lose more.”

The LinkedIn comments also prompted responses from business professionals.

“Who will be the hero and be the first person to give a woman $350 million in funding at a $1 billion valuation for a business that doesn’t even exist yet?” said Ashley Louise, CEO of Ladies Get Paid.

Other media joined the fray with bold headlines:

Adam Neumann’s $350 million return is a “slap in the face” for female founders and founders of color, Fortune magazine said.

Silicon Valley’s $350 million handover to a WeWork co-founder is a sign of VC apocalypse, Insider said.

Neither Neumann nor Andreessen had additional comment when contacted by MarketWatch.

Hints of Neumann’s new venture, Flow, surfaced in January when the Wall Street Journal reported that Neumann had acquired stakes in 4,000 apartments valued at $1 billion.

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