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Is Adam Neumann Worthy of Investment?

The rise and subsequent fall of WeWork has been well documented (see The Cult of We and WeCrashed). In hindsight it’s always easy to identify the charlatan – the promises too good to be true, the business idea that everyone else seemingly overlooked, the visionary and charismatic leader who promises to transform an ossifying industry. 

WeWork founder Adam Neumann checked all those boxes. At its peak, WeWork was valued at $47 billion (not as a public company, mind you). Today WeWork (now a publicly traded company) is worth about $500 million. To put some math to it – for anyone that invested in WeWork at its peak and still holds it today that’s a loss of roughly 98.5%. 

Care to guess who escaped WeWork with more money at the end than the beginning? Adam Neumann. Neumann netted a reported $1.3 – $1.8 billion from WeWork, selling shares of the company along the way to eager venture capitalists who bought (literally) into his vision. Most of those VC investments crashed and burned, and they were left muttering George Bush's lament

Neumann is back to market with another endeavor called Flow. He showed up at Fortune’s Brainstorm Tech last week to present attendees with his latest hustle. So, what exactly is Flow? According to reporting by Term Sheet’s Jessica Mathews, Neumann would only say that it is “it is a consumer-facing residential brand” that is integrating technology, community, and an operating team. Flow owns 3,000 apartments and has more than 150 employees, in a “vertically integrated business model.”  “We own the buildings, we operate the buildings, we build the technology, we build the community…And when you bring all that together…The moment the resident is happier, more fulfilled and stays longer, the building’s churn goes down.” Hmm…..this sounds oddly like……WeWork, but for residential. 

Neumann has stopped short of taking responsibility for the WeWork meltdown. " As an entrepreneur, there are many things you don’t control,” Neumann said. “One of the only things you control is the people you surround yourself with, and not just people you surround yourself with but exactly what kind of people they are.” This seems odd coming from a CEO who's former company  entangled personal holdings with company business and seemingly had little regard for fiduciary duty.
What’s even more amazing is that one well-known VC (a16z) has reportedly been the biggest investor in Flow's series A round that raised a reported $350 million. Call me cynical (or pragmatic), but it seems to me that character and integrity might be a good starting point in assessing whether to invest millions of other people’s money. On that topic, George Bush’s advice might be worth heeding.  

By Mike Palmer- Managing Principal