This morning, Andreessen Horowitz announced that it had invested $350M into Adam “WeWork” Neumann’s new startup, Flow. Whereas WeWork revolutionized the commercial real estate business and made ad-hoc office space easier for startups, Flow attempts to do the same for residential real estate.
A lot of ink has been spilled on whether it’s okay for A16Z to have invested this money given Neumann’s well-documented, disastrous track record with WeWork, in an environment where lots of other people find it hard to raise even a tiny fraction of this amount. I agree with these comments in the sense that it’s obviously unfair: a sign of an unequal system. It just is.
But for a moment, look at it from a mercenary venture capitalist’s perspective. WeWork is everywhere, which happened under Neumann’s watch — and although Neumann is not the one doing it, it’s finally approaching profitability.
And then there’s housing, which is in need of major reform. I’m not going to shed any tears at the loss of today’s batch of rental agencies and real estate management firms, which have helped hike rents up to astronomical levels, and have often lobbied for preferential legislation that hurts ordinary renters. At the same time, investment properties leave many homes completely vacant in the middle of a housing crisis that is leaving millions experiencing housing insecurity.
The trouble is, Flow is highly unlikely to help with any of that. Marc Andreessen’s announcement hints at as much:
Many people are voting with their feet and moving away from traditional economic hub cities to different cities, towns, or rural areas, with no diminishment of economic opportunity. […] The residential real estate world needs to address these changing dynamics. And yet virtually no aspect of the modern housing market is ready for these changes.
Based on these words, Flow is gentrification as a service: a way for the technorati to rent cushy spaces in lower-cost parts of the country and build community with each other without having to engage with the people who are already there. It’s not a stretch to see what the racial and socioeconomic dynamics might be here, and the effect it might have on local economies…