Adam Neumann's new startup is reworking WeWork's old business model

Andreessen Horowitz-backed Flow was founded by Neumann to revolutionize residential living.

Romain Maurice/Getty Images

• Adam Neumann is launching a WeWork rival called Workflow.
• Workflow has a different business strategy than Neumann's previous company, Bloomberg reports.
• Neumann told the outlet that investors at Andreessen Horowitz will help keep him disciplined.

Adam Neumann isn't done with shared workspaces — and this time the founder of WeWork suggested he's learned his lesson.

Just months after he was cut out of buying back WeWork, Neumann is now launching a rival flexible office service with a tweaked business model, according to Bloomberg.

Neumann's new coworking venture, called Workflow, will operate under Flow, the residential real estate company that he started in 2022, the outlet reported.

And much like WeWork's stated focus on community-building, Flow's website describes its mission as "oneness," or "connection with ourselves, our neighbors, and the natural world."

A co-working space at Flow's Las Olas residential tower in Fort Lauderdale as it appeared in 2023 when Business Insider's Ben Bergman visited.

Ben Bergman/BI

"The lack of community and the disconnection that people feel is even more relevant today" than in the days of WeWork, Neumann told Bloomberg of Workflow.

Workflow's new take on coworking spaces

Workflow will rent office space to both Flow residents and outside companies, but will focus on a different business model than WeWork to avoid repeating the startup's now-infamous struggles, Bloomberg reported.

Whereas WeWork signed long-term leases and rented out office space in the short term, Workflow will lease out space in residential buildings that Flow already owns, and manage other spaces in partnership with landlords, according to Bloomberg.

The pool at Flow's Fort Lauderdale high-rise, Las Olas, photographed in 2023.

Ben Bergman/BI

Flow owns four apartment buildings in Miami, Fort Lauderdale, and Atlanta, and has minority investments in two Nashville buildings, according to Bloomberg. The company has also expanded into Riyadh, the capital of Saudi Arabia, where it will own and manage three apartment buildings in partnership with local investors, Bloomberg also reported.

A rep for Flow told BI that Neumann has previously discussed getting Flow involved in the shared workspaces world, but did not respond to Business Insider's request for more information about Workflow's strategy.

That model of renting out spaces in buildings it already owns could help Workflow avoid the vulnerabilities that contributed to the downfall of its predecessor.

WeWork — which by June 2023 had 777 locations across 39 countries — typically signed 15-year leases on its buildings, yet the short-term renters who took up space in those buildings could move out in as little as a month, Business Insider previously reported.

The disparity between how much WeWork spent on long-term leases of its massive buildings and the return it got from its short-term renters was, at its peak, enormous.

At one point, WeWork was committed to $47 billion in future lease payments on its buildings, while it only had $4 billion of committed revenue locked in, BI previously reported. And the company was spending two dollars for every dollar it made.

WeWork was also criticized for the sheer size of the large buildings it rented.

WeWork's huge coworking spaces were once a common sight in many city centers.

Justin Sullivan/Getty Images

In 2019, Neumann parted ways with WeWork after the company's planned IPO fell apart, and by late 2023, the company had filed for Chapter 11 bankruptcy.

"It has been challenging for me to watch from the sidelines since 2019 as WeWork has failed to take advantage of a product that is more relevant today than ever before," Neumann said in a statement following WeWork's bankruptcy announcement in 2023.

"I believe that, with the right strategy and team, a reorganization will enable WeWork to emerge successfully," he added.

Neumann had submitted a bid earlier this year to buy WeWork back, in partnership with Flow Global and other financing partners. He told BI at the time that "the future of living has working integrated into it."

But in April, WeWork announced a restructuring plan that cut out Neumann, and by May, Neumann had backed down from his bid — though he said the company's plan without him was "unrealistic and unlikely to succeed."

Neumann says he's learned his lesson

Critics didn't just zero in on WeWork's business model but also on Neumann's management.

In 2019, a Wall Street Journal report detailed allegations of Neumann partying hard and taking drugs, while investors worried about possible conflicts of interest that emerged in WeWork's S-1 filing before its failed attempt to go public.

But Neumann told Bloomberg that he's ready to slow it down, and that investors Ben Horowitz and Marc Andreessen, the founders of Andreessen Horowitz, will help Flow stay disciplined.

"I know my priorities because of what I went through," Neumann told the outlet. "It taught me so many things. But one of them was 'Slow down.' The other one was 'Listen,' and not just listen to what you want to hear — listen to what you don't want to hear."

Neumann also said to Bloomberg that "the lesson was learned" after Andreessen once told him the company couldn't make plans based on assumptions.

Adam Neumann at TechCrunch Disrupt NY in 2017.

Noam Galai/Getty Images for TechCrunch

Neumann added that he's approaching his new venture with humility, according to the outlet.

"The common theme for the whole story is we're learning. We're really not sure that we know the answer, therefore we're taking our time," Neumann told Bloomberg. "We're not rushing."

Read the original article on Business Insider

from All Content from Business Insider https://www.businessinsider.com/adam-neumann-launching-wework-rival-different-business-strategy-2024-10
via gqrds