--:-- Ben Horowitz: Adam, tell me how you're doing. And I jumped straight into my lessons learned and this had an answer. And you were like, "Oh, you're still in that stage." And we don't know each other, but I was like, "Mark, please tell me what that stage is."
--:-- Marc Andreessen: Because, you know, the stage when you forgot everything you did and believe everything that was written about you. It's a stage that will pass.
--:-- Ben Horowitz: What happens when a founder follows a single powerful idea across decades, refining, evolving, and reimagining it at every step? Our guest on the Ben and Mark show is Adam Neumann, founder and CEO of Flow and someone whose vision for how we live has remained remarkably consistent. Community, connection and belonging at scale.
--:-- In this conversation, Adam shares the personal formative experiences that have shaped his thinking and why Flow is more than just a real estate company. It's a full stack approach to redesigning residential living. Ben and Mark dig into the origins of their partnership with Adam, the architecture behind Flow's vertically integrated model, and what it means to build a company where the product is the experience.
--:-- This episode is about long-term vision, systems thinking, and building for how we actually want to live. Let's get into it.
--:-- As a reminder, the content here is for informational purposes only. It should not be taken as legal, business, tax, or investment advice, or be used to evaluate any investment or security and is not directed at any investors or potential investors in any a16z fund. Please note that a16z and its affiliates may also maintain investments in the companies discussed in this podcast. For more details, including a link to our investments, please see a16z.com forward slash disclosures.
--:-- Adam, welcome to the Ben and Mark show. I'm glad we have another head of hair on the podcast.
--:-- Adam Neumann: That's a very brave thing to say.
--:-- Ben Horowitz: We were just talking at lunch about how some entrepreneurs have many ideas. But Adam, you have one idea that you've been refining over your life, just getting it better and better and better. So why don't we go back from the beginning and talk about your background and how we can find a thread to how that led to Flow today.
--:-- Adam Neumann: I was born in Israel and my parents got divorced when I was eight. My parents are both doctors. And we moved 13 times in my childhood. So I remember moving from community to community, from place to place.
--:-- Ben Horowitz: What generated all the moves?
--:-- Adam Neumann: First of all, I think in Israel, being a doctor, because it's such a small place, you study in one place, you follow in another, then you go from one thing to the other. So I think that generated about three of them. Then my parents' divorce generated another one. I think my mother could not stand to be in the same country as my dad, at least for two years, which actually pushed us – not a lot of people know about it. I lived in Indiana, Indianapolis. I was a Hoosier for two years. I went to Pacers games and saw the Indy 500 and learned about the three S's. So those were some of the moves.
--:-- But the other one – my mom, and she's actually comfortable speaking about it, she's bipolar and she's an oncologist and she's very good at her craft. But being an oncologist and also having the mood swings, she would fight very hard for her patients. No matter what happened, if you were my mom's patient, she would go to war, including with the head of the hospital, to fight for you. Israel has this medical basket and not everything is included. Some people could afford things, some people couldn't, and she was always finding a way to get people the best treatments she could. But because she was such an excellent doctor, whenever one head of hospital had enough with her, there was always two other heads of hospital ready to recruit, which is something we know about great talent. Great talent always finds a home. So I think that led to a lot of those moves.
--:-- But for me as a kid, moving is a very difficult thing. I think it's good because it makes us stronger, but also difficult. When you enter a new community as a new kid, you have no friends, and you always find yourself looking – who are you going to be with? I used to be attracted to, also they were the only ones who would have me, the uncool kids. So I was the ones who were a little different. I would get to a new place, I already knew my place. I'd go immediately to the different kids. My thing in life was I would befriend them. We would become great friends. Then I would make my way into the social structure of whatever community I went to. And I would bring with me those kids. That was my big winning moment.
--:-- The toughest community I ever went to was when I lived on the kibbutz. For those of you who don't know, that's also where I lived the most. The kibbutz is almost like a commune. The kids live together from – in our kibbutz, they stopped it, but a lot of them live together from age two to 18. They go to their parents for dinners and they spend the weekends, but there are more kids than not kids. They were so tightly put together that it was the hardest group to connect to. But also I think the place that affected me the most shaped me with what I think about community and about togetherness. Once you do become part of that community – my mom was a doctor, she would come home very late at night, she would be on call sometimes – there was a whole community taking care of my sister and I.
--:-- Ben Horowitz: Oh wow. And then as you grew up and got into the world, what did those early experiences teach you about community living, how people exist together that led to the vision that started as WeWork and then is now Flow?
--:-- Adam Neumann: First of all, I think there are multiple kinds of communities. There are great communities when a group of people gets together to build something greater than themselves. And then there are communities, which we've seen more and more of, where you get to a mob mentality and that mentality actually bounces to the lowest common denominator.
--:-- Ben Horowitz: Yeah.
--:-- Adam Neumann: Luckily enough, the kibbutz and the communities I was experiencing were actually the kind where people come together to do something greater. It really made me feel that there is more happiness, more fulfillment, more things to do. It's a better way of living when you're surrounded by other people, especially for me, because my childhood was difficult.
--:-- So we said about my mom – she would take amazing care of her patients. But by 8 p.m., it was a very long day and she would come home. My sister and I, we only had one chore. We just had to wash the dishes. We never did. We never did one thing. She just wanted us to come. Because I used to walk my sister home from school and I would make the meal and I did a lot of other things that were important, but they weren't considered a chore. The chore was you wash the dishes. My mom would come home and the dishes weren't washed. Many times those dishes would start flying and a lot of times end on the floor. Or everywhere, actually, in the house. So that was very extreme as a kid.
--:-- I remember the day once – my mom, we didn't have a lot of money growing up, as well as the social medical system. Doctors don't earn a lot at all. So I remember growing up, it was always either we were at zero or in an overdraft. I grew all my life where you're negative or you can make it back to zero. When you don't make it back to zero enough times, you get a call from the bank. Then you call grandma. Grandma helps a little bit. Then things go back to zero and down to negative.
--:-- Ben Horowitz: Yeah.
--:-- Adam Neumann: I remember one time where my mom bought this new set of dishes. She comes home, again the same fight, and she starts throwing the dishes. But my sister noticed – not the ones she just bought, only the other ones. Which started telling us that there was some method to the madness. So it was very difficult back then. Living in a community always made it better. No matter what happened at home, no matter how tough the night was, the next morning, everything was okay. There were neighbors, and they heard, and things happened. People were looking out for us.
--:-- I also remember – we were just at your father's memorial on Sunday, which was very moving, and I learned a lot about him. You said the Mark Twain quote there, something like, "When I was 14, I thought my father didn't know anything, and by the time I became 21, he learned so much." I could really relate to that. As a kid, I always focused on the fact that my mom was so difficult with us. But as I got older and started having – I'm married today with six kids – and started having my own kids and realized how difficult it is when everything is great and you have access to everything, it can get very difficult. I realized that for my mom to be a single mom, a doctor, dealing with my personality, which now I see in my kids, must not have been easy. There are certain qualities. It's a lot of personality to deal with.
--:-- I actually think that in hindsight, what I thought was a challenge was actually exactly what made me who I am today. As I was building businesses, it was never tougher than when I was a kid, so there was nothing that could happen that was that bad. I think because I do want to make a difference in the world and I do want to make it a better place, it comes from her and from how she took care of all those patients. In hindsight, I loved the childhood that we had.
--:-- All of that led me to the Israeli army, where I became a Navy officer. Anybody who knew me would have never guessed, because you need a lot of discipline. Something nice about going to the army is it forces discipline. Either you're going to be disciplined or you're going to be in trouble. The big punishment in the Israeli army at the beginning is you don't get to go home on the weekend because Israel is so small. As opposed to the U.S., you serve in the Navy, you're very far away from home. You come home every three months, every year. In Israel, the furthest you could go is four hours. My Navy base was an hour from home. So you get to go on the weekends for 24 hours, you go home. It's an amazing thing and you're supposed to rest, but no one rests. You go out, you party. It's a great 24 hours.
--:-- For the first nine months, every week I would get punished. I couldn't make it. By the time I gave up, the week would start. The commander would walk and say, "Adam, you have Shabbat," meaning you're not leaving. Then the week would start. It took me nine months. Actually, a very smart officer told me, he said, "Look, Adam, I think you're going to do great things when you grow up. But you can't be a great leader if you don't know how to be a soldier."
--:-- Ben Horowitz: Brother, that's true for CEOs, too. Unless you learn how to be a great employee, some way, somehow, it's hard to be a great CEO. And I think it's true for partnerships. Unless you really learn how to be a great partner, then you're never going to make things work.
--:-- Adam Neumann: It really stuck with me. He said the Navy officer course in Israel is two years. He said, "You only need two years. You're not even a soldier. You're a cadet. You just need to make it for two years." And I did. I credit a lot of my ability to get things done, no matter how complicated they are, understand how to work in a team, understand leadership – there's natural leadership that we're born with, but there's things we learn. All of that came together and made me who I am.
--:-- Then I moved to the U.S. four days after I finished the Army. My sister was a supermodel living in New York City. The family said, "Adam, go check on your sister. See what's happening there." No one knew what was happening there. So I flew to New York and we lived together. For the next six years, I lived with her, but for the first four years, I went to CUNY Baruch College, City University of New York. For me going – and I know it's not an Ivy League school – but for me going to school was very easy because compared to the army, there weren't any tasks that were so hard.
--:-- I think one more thing that shaped me is growing up, I am still extremely dyslexic. You guys know, because I send my texts. I'll soon start using AI to send my texts. I don't yet. So a lot of spelling mistakes. I couldn't read until I was in the third grade. Being dyslexic throughout my life forced me to learn how to deal with things. Dealing with communities really shaped me. Going to the army taught me how to be a soldier and then how to be a leader. When I brought all of that back and came to the US, things seemed very doable. Everything was possible.
--:-- I think what I like about this country so much is that's the American dream. Coming as an immigrant from a different country, a kid that in school couldn't necessarily read or write and had to always work out a system of how to get something done. Coming here, having an idea, building a business, failing multiple businesses, then building a bigger business. Maybe not succeeding as much as we wanted to, then building another business. That second chance, that concept of anything can happen. I heard it a lot again at the memorial on Sunday. That concept of a country where we all have the ability to achieve what we can and be what we can be. That is for me what the American dream is. That's why I'm so proud to be here.
--:-- Ben Horowitz: There are a bunch of super high profile, very successful people in modern American life who were dyslexic as kids, who really struggled with dyslexia as kids. What connection is there? What is the thing? What is the experience? What's the strength that goes with the difficulty?
--:-- Adam Neumann: First, you get very good at hiding it. My parents, we said, are both doctors. Second grade, parents getting divorced. Grandmother is taking me out to lunch just because she wants to see how I'm doing. Hands over the menu and says, "Please order." It takes her exactly 20 seconds to realize the kid can't read. She marches me to the principal's office. She was a lawyer. "What kind of school are you building here? My grandson can't read. This is horrible." He looks at her and says, "I actually know your grandson. He comes here two to three times a week. We know each other well. He's going to be just fine. He's going to have one person reading for him and another person writing for him. He can do anything he wants."
--:-- At the beginning, being dyslexic, you learn how to mask it. You have to use your ears and your listening – especially my dyslexia was both in numbers and in letters, so on the heavier side of dyslexia. You really learn how to find solutions. You get embarrassed a lot at a young age. It's very embarrassing when everybody else can read and you can't. You must make friends because if you don't make friends, who's going to help you study for the test? It teaches you that there's always a solution and it 100% teaches you to think outside of the box. Whatever solution everybody else has, it's not going to work for me. So now let's see what I can do.
--:-- I think it's changing today. Technology is doing something. I have a lot of dyslexic friends now. Everyone keeps calling me about how they're using AI to write stuff because they're not making mistakes anymore. My kind of dyslexia, even when you dictate it to the phone, you still get – especially with my accent – spelling mistakes. Then you can't fix them. But when you use ChatGPT, you can actually get over that.
--:-- Ben Horowitz: Oh, okay. So it's just another little use case that works very well.
--:-- Adam Neumann: Yeah, that's great. I think the other thing having any disability does – it makes you, when you see someone else who is disabled, it doesn't matter what kind of disability, because each one of us has something that bothers us. We think it's big for us, but someone else might think it's not. It makes you care. Or be very angry. Or a little of both.
--:-- Ben Horowitz: Tell us about when you had the thread of the idea that would one day become Flow. You were telling us off camera about how at your college you approached a professor with an idea.
--:-- Adam Neumann: When I went to Baruch College, I joined the entrepreneurs club. I thought I wanted to be an entrepreneur. Didn't really know what it was, but I took entrepreneurship and I minored in marketing. And one more thing – nothing with studies.
--:-- Ben Horowitz: No studies.
--:-- Adam Neumann: No studies. That's from my father. I'd already done Middle Eastern studies by that point.
--:-- Ben Horowitz: I was already past that.
--:-- Adam Neumann: I did. I did Middle Eastern studies. Applied Middle Eastern studies. I've been applying it ever since. I'm sure we're going to get to it.
--:-- Adam Neumann: There was a competition. It was the first entrepreneurship competition. First prize, $50,000. And a seed investment into that idea. I was sure I was going to win that competition. I talked in the class and I found the best writer. Whoever I thought were the best teammates – again, something from my dyslexia, I was very used to finding the best kids in class. We said, "We're going to win this." I had a huge idea. It was called Concept Living.
--:-- Concept Living was going to be a new way of living because I used to live in an apartment building with my sister. I was blown away by the fact that we would go up and down the elevator. This is New York City, 2002 to 2008, right after September 11. No one would say hello in the elevators. I just found that fascinating. We used to play games at how we're going to say hello to enough people. I thought I noticed that if you talk to enough people and brought them together, the building's energy changed.
--:-- We presented Concept Living and everybody except for us made it to the second stage of the competition. Every single – the stupidest ideas you've ever heard. My team was very disappointed in me because I led us into a horrible idea. I marched into the Dean of Business office, who I knew for other reasons. I said to him, "I get it. I missed it. We're not going to go to the next stage, but you got to tell me why." Because he was on the panel, on the judges. He said, "Adam, the industry is too big, you are too young, and this is unrealistic."
--:-- Ben Horowitz: Oh, my God.
--:-- Adam Neumann: I think, Ben, you were sharing before. I don't think I'm the only one who has experienced that kind of...
--:-- Ben Horowitz: Well, this is the story of Fred Smith on Federal Express. Or would he get a C-minus on the paper?
--:-- Marc Andreessen: Yeah, so Fred Smith, the legendary founder of Federal Express, which is one of the great companies of the 20th century, he went to, I think it was, one of the Ivy Business schools. Harvard. Harvard Business School. Yeah, he had the entrepreneur class. He wrote his paper on the idea for Federal Express, and they gave him a C-minus. It was brilliant at having the hub in Memphis and how it was. It wasn't just a C. C-minus. It was a C-minus. Just that final little...
--:-- Adam Neumann: Yeah, yeah.
--:-- Marc Andreessen: And because it was a completely neat idea, but totally impractical.
--:-- Ben Horowitz: Yeah, it never worked.
--:-- Marc Andreessen: Difference in that story, he goes right out and starts it.
--:-- Adam Neumann: Yeah. I wait 10 years. I think I've always had a lesson from that. If you're a dean of anything, if you're a teacher and you have a young student full of passion wanting to do something, tell them how to achieve what it is they're going after, not why it's impossible. Because you never know who you might be speaking to.
--:-- Ben Horowitz: So that started. I think then also you said something interesting about that, which again, for me, the partnership with Mark and Ben is amazing separate from the fact from our business partnership – I learn a lot and I enjoy the partnership and the friendship. You shared something about the fact that because people ask you about what ideas Adam has, it's always been one idea.
--:-- Marc Andreessen: Yes, yeah, yeah. It was an earlier conversation where I forgot the question that Eric asked, but I was like, "No, Adam's only had one idea. This is the idea. How he navigated the idea maze." There is no maze. This is it. He's been following this idea for his whole life now. It's the thing that makes it so powerful. He and I actually had a conversation with a potential investor the other day. They said, "Well, how come somebody won't be able to replicate the technology?" My answer was, "The technology by itself is somewhat interesting, but it's part of an integrated vision that literally one person has."
--:-- The analogy for me has kind of been Apple. If you look at what Steve Jobs did in particular when he built the product line, there was no piece of software. There was no piece of hardware. There was no nothing that wasn't already done. All these ideas were done. It was the integrated product line with a design sensibility, with a usability idea, with the way the technology worked with the person that made it so special and so hard to replicate. Nobody was able to replicate that.
--:-- I think that when we get into Flow, what I see is it's a single idea about how people live that's enabled by design and technology and a business model and a culture and a whole set of things. If you remove any one of them, it's not Flow. It's a Windows PC, Windows 95, whatever it was. It's that kind of thing.
--:-- Ben Horowitz: Well, we'll get deeper into Flow, but first I want to make sure we cover the backstory here, which is, Mark, why don't you talk about how you met Adam or what you guys saw in Adam, and then let's talk about how this partnership was formed.
--:-- Marc Andreessen: Yeah, so we didn't actually – I don't think we ever really met Adam prior to that first phone call. When I first called you. Part of it was a Hatfield-McCoy thing because he was with the Hatfields and we're the McCoys. He was the best friend of our founder. Those were the days when we actually had a rivalry. We're across the street from those guys. That's not our side of the street. So we never really met.
--:-- But we followed the whole saga, all the way up and all the way up and all the way down. We noticed a whole bunch of things that went through that. But we did notice right up front basically what Ben just described, which was the integrated vision. I told Adam this early on. I had a conversation with a guy who's one of the top real estate people in the world – this was actually in the middle of it, when things were starting to go pear-shaped at the time. I said, "What do you think of this thing?" He said – I remember his direct quote – "There's only two people in the world who have ever successfully branded and differentiated commercial real estate. One of them is currently president of the United States and the other is Adam Neumann."
--:-- Ben Horowitz: Yeah, we thought that was pretty cool. Like, what an achievement. It was right at the time when every newspaper was shellacking him and all that kind of thing. But the thing we couldn't stop thinking about was, wow, he's one of two.
--:-- Marc Andreessen: Yeah, one of exactly two. What my friend said was, "Look, this business has been the way it's been forever, for hundreds of years. For as long as there have been commercial buildings, there's been a certain specific way of doing it. We've all been trained in how to do it. It's all a very specific way of operating. At the simplest level, we build a shell and then we lease it for 15 years. Then the tenant does all the work on deciding what the interior is like, what the experience is like."
--:-- I had another conversation like that with an entertainment industry mogul some years back when the movie theater business started to cave in. The theatrical box office started to collapse. I said, "Why don't they upgrade all this? Why don't they reinvent the movie theater? Why doesn't it have –" There was this famous movie theater in L.A. called the Arclight. It had this incredible experience. It had valet parking, reserved seating, real food delivered to you in the seat, special screenings where there were no kids allowed, and other screenings where kids were definitely allowed and fully encouraged to yell and scream. I said, "Why aren't there more Arclights? Why hasn't this experience been reinvented?" This guy was CEO of an entertainment company. He looked at me and said, "Because they're all owned by real estate guys who have absolutely no interest in what happens inside the building. They literally don't care."
--:-- Anyway, back to my discussion with my real estate friend. It was the same thing. He said, "Look, Adam is completely reinventing our industry. It's always going to be like this going forward. It's never going back. He's going to unearth the entire thing. We work in some way is going to survive this. They'll figure out the specific thing with the company. But the industry is getting reimagined. There's only one guy who's ever been able to do that in this business."
--:-- Then you pause for a moment and you think about the sheer size of the industry. As you always remind us, this is one of the biggest industries on earth that matters to everybody. As Ben and I were talking about it more and more, watching the whole thing happen, it was just like, all right, there's something very special happening here, independent of the day-to-day blow-by-blow aspects of the business. Independent of the financial stresses.
--:-- Ben Horowitz: The other thing is we keep very good track of what our portfolio companies use. They're a really good indicator of the best new products because they really care about products. Almost all of them were customers. We thought, wow, that's super interesting. So we always thought he was a really interesting guy, but because he was with Benchmark, we couldn't call him.
--:-- Ben Horowitz: Okay, so what was the first conversation like?
--:-- Adam Neumann: Yeah, so I mean, you may remember it better than I do, but yeah, I just – I was actually, I think it was, was it during COVID?
--:-- Adam Neumann: It was COVID. It was during COVID. I looked it up before the podcast, May 2020. When the COVID lockdowns hit hard out here, I didn't have a home office really set up because we always worked out of the office. I was at my dining table with a chair. After about eight hours of Zoom calls, the entire side of my body from my neck all the way down to my ankles would be seized up and in pain. I was like, I can't live like this. I'm going to die. Not of COVID, but of crippling whatever this is.
--:-- So I started taking three-hour walks every morning. I went over to the Stanford campus, May 2020, completely deserted except for me taking a long walk. There was one staff guy stationed at the head of the quad area where I would park, and his job was to yell at me for not wearing a mask. As far as I can tell, that was the only thing he did all day. I would see him every morning and he would yell at me. I would wave my mask at him and just keep walking.
--:-- Then I would do three hours of calls. I actually remember standing in a field at Stanford having that call with you. It was basically just, "Look, we've always really admired what you've done. We understand what you're going through from the press."
--:-- Marc Andreessen: I can't remember if I told you this, but our philosophy on this is that one of the key ways you evaluate founders is what difficult challenges have they been through in their lives that they were able to overcome. The best forecast of being able to overcome a profound challenge in the future, which every entrepreneur deals with, is having overcome profound challenges in the past. Many of the great founders in history have had significant blowups at various points along the way. Including Henry Ford. Thomas Watson Sr., who founded IBM in his 40s. In his 30s, he was convicted by the federal government of antitrust for running his previous company, NCR. He was already completely taken down by the government at that point, and then started IBM.
--:-- There's a long history of people who have been through these things. Some people get punched in the face hard and they never get up again. Other people get punched in the face and they're just like, "Wow, it's another opportunity for me to stand back up and show what I'm capable of." So we always felt that if somebody goes through something very difficult and they're able to navigate their way through it and demonstrate their character, they often have great potential.
--:-- Ben Horowitz: There are a couple of things that go with that. One is that anybody who's ever had a great success knows that the margin between that and a total failure is very, very thin. The bigger the success, the thinner the margin. All of us who have been through that go, "Wow, one bad piece of luck and it could have gone completely the other way."
--:-- Philosophically, very early on in the firm, we always felt that what we're looking for is great strength. Every person has a weakness, and some of them show up in crazy ways. But that doesn't even matter, because everybody's got that. What matters is, are you world-class or best in world at what you can do, not what you can't do? And Adam was clearly, as Mark said, top two in one thing. There are very few people on earth that are top two in anything.
--:-- So it was one of those things where we were excited to meet him. It wasn't, "Oh boy, WeWork got all messed up." That was never a thing.
--:-- Marc Andreessen: One more thing, just a general observation. There's the old adage that success has a thousand fathers but failure is an orphan. I don't know if I've ever asked you this, but what a lot of people who go through a big public takedown experience is that all of a sudden, everybody they know, the phone's not ringing. I've heard this from lots of people. I don't know if it happened to you, but I've heard it happen where all of a sudden you develop leprosy and people just don't want to talk to you. It's a completely bizarre thing because this is a person who people had a super high opinion of, lots of relationships with, and then poof, vanishing.
--:-- Every one of those people is probably telling themselves some story about how they're making the right call by separating from the person. But what's happening is what Ted Kaczynski, the famous philosopher, called over-socialization. People are too worried about what everybody else thinks. They get wrapped up in the mob scapegoating cycle, this perceived need for everybody to agree on everything all the time. That has the effect of too many really promising people being abandoned in key moments.
--:-- I don't know if that happened to you or how much that resonates, but I have talked to many other people who have been through this kind of thing. To be able to talk to somebody at that time, I think it's a blow against conformity, which I think is always a good thing. It's a time when people actually could use a call.
--:-- Adam Neumann: The phone completely was not ringing when you called. Some people are social. I think I was extra social, so my phone was really stopped. I had a thousand friends a week before and I went down to ten, and five of them were family members. For me, some of my closest friends were working with me because that's part of our ability. There was a moment where even people who knew me, who were there for the story, suddenly believed what they were reading.
--:-- I do believe we live in a different world. We're talking now 2019 and we're now 2025. Hopefully the world has changed enough that people know not to believe everything they read. But that was still the end of an era, and we were right place, right time for that. So it definitely stopped ringing.
--:-- Something that was greatly appreciated was that phone call. What's interesting about it is there was no business transaction in that phone call. The phone call was just, "How are you doing? Tell me what you think." You said, "Adam, tell me how you're doing," and I jumped straight into my lessons learned. You said, "Oh, you're still in that stage." I said, "Mark, please tell me what that stage is." You said, "It's the stage when you forgot everything you did and believe everything that was written about you. It will pass."
--:-- You also told me the same thing Ben is speaking about. You said, "Let me tell you what I think about what you did." It was very nice. But at the end of it, you said, "There's only going to be one decision that you need to make moving forward. Are you going to get back in the ring? Or are you not? I feel like you're the guy who's going to get back in the ring." And that's where it ended.
--:-- The other beautiful thing you did, Mark, about six months later, you called me again. "Hey, I haven't spoken. What's up? What are you working on?" I was starting to work on residential as an investment. It was COVID, interest rates were at zero, cap rates were wide. When cap rates compress, the value of real estate goes up. So when Mark called and said, "What's up now?" I said, "We're doing this and that, but nothing that special." Mark said, "Okay, let us know if something interesting happens."
--:-- Between that and the third time we spoke, I started walking the buildings. Something amazing about Corona was so much change in the world. Something that was obvious in Corona is people are not going to give up their homes. Where your home is, is where your heart is. You get back home and you need some version of community. People were connected digitally more than ever before, but had no one to talk to. Add the mask barrier, tell people they're not allowed to be in the same physical space, and you've got yourself an anti-kibbutz moment. The peak anti-kibbutz moment was in the middle of Corona.
--:-- My team and I were like, "Let's go buy some real estate." My head of real estate, his name is Mark, said, "Adam, how am I going to buy this real estate? We only know how to buy by talking to the landlords because we don't use brokers. We want the deal. We want to find the seller that really needs to sell." I said, "Go meet them." He said, "They won't meet me." I said, "Meet them outside, put them across the table, make sure they have a beer over there, you have a beer over there, and scream to each other." He said, "No one will do it." I said, "Everyone will do it. No one's calling them." And everyone did it. Our first five acquisitions turned out to be amazing acquisitions.
--:-- Sometimes all you need to do is call the guy or show up. In Corona, you didn't have to do that much to be very different.
--:-- So how did it change from making some investments to taking a massive swing on residential? Two ways. One, real entrepreneurs can't help themselves. Another test: what did they go through? How did they deal with challenges? And also, can they help themselves? Is this a problem they must solve? Or does it just sound good? If they think it sounds good or they want to be a founder because they saw *The Social Network*, that's not going to be a good reason. Great movie, by the way. But if it's burning from the inside, no matter how many people say they have to do it...
--:-- I started walking the buildings. It was lonely. It was soulless. It was depressing. These buildings we bought were 400 to 600 apartments with shared gyms that look as nice as Equinox, swimming pools, kitchens, all these rooms designed assuming people are going to get together. Not only was no one there, even when people were there, they weren't talking to each other. I looked at it and thought, "I could do so much better than this."
--:-- Step one was to find a little bit of technology. We found a company that already existed and bought it, just to connect them a little bit, not with big intentions. Step two was to find a great property manager. We had five assets, so we hired five different property managers. One of them is going to be great, and then we'll tell them what to do as asset managers. In real estate, you have the property manager that runs it and the asset manager that deploys the cash. They all had the same problems, the same story, the same pitch. Their occupancy was completely controlled by supply and demand.
--:-- We started working and immediately started seeing positive results. So we were like, "Okay, this is a good direction."
--:-- By the third time Mark and I spoke, Mark read an article in the Wall Street Journal. Today we try very hard not to have any articles about us, but that one slipped. Mark called and said, "Hey, I read in the Wall Street Journal about a billion dollars. You're not telling me you're starting a business." I said, "No, it's actually us. We are starting a business." He said, "You have an idea for a brand." I said, "I do, but we're doing it just us, taking our time." Mark said, "Sounds awesome. Maybe you guys can come and share it with us." I said, "I would love to," without really expecting anything.
--:-- The thing about this relationship is it formed organically. It took time. There was no rush to do anything. That's what made it so real.
--:-- We went to dinner at Nobu. Mark hosted. Ben was actually not at that first dinner. DG was there, who runs Growth, and Chris Dixon was there, who runs crypto. We sat down and Mark said, "So tell us about this new idea." I said, "I actually want to start by talking about lessons learned from WeWork." Mark said, "Adam, we wouldn't have invited you here if that's what we need to talk about. We know a lot about you. We might know more about some of your mistakes. The good news is it was very well documented. We read the book. We watched the miniseries. We talked to your employees. I know your board members. I spoke to them. You're here because we want you to come. Let's talk about the idea."
--:-- I said, "I really appreciate that, but I actually want to learn. I'm sure you have a different take than me. Let me share." For those of you who don't know Mark, once you let Mark go, he has a lot to say. I started, and within minutes, you gave me things I still remember today. One of the things Mark said that was so obvious was, "What research did you do about what investors you took? What did you know about their history? What research did you do about what employees you took? What did you know about your tech leaders? I get it, Adam. You move really fast and you're passionate and you make things happen. But how much diligence did you actually do?"
--:-- The answer was none for my first investors. They came to me. I didn't know anything. I didn't know any better. Didn't know what else existed. But if I did, maybe I would have come here and we would have been in a different place.
--:-- Ben, you've said it to me. We talk about it sometimes. I believe in a bigger picture. I genuinely believe that we go to the place that we need to be, as long as we're willing to learn lessons and change. I know that today I'm exactly where I need to be. This partnership, this discussion we're having now, wouldn't have happened.
--:-- We had that dinner and it was excellent. We started talking about the future of living. We talked about a pure vision and what we see. I explained what we already had and why we could already start leveraging it to take it to the next level. Mark then said, "So what do you think? Maybe we should explore something?" I said, "Look, I don't know you. You don't know me. I was a little burned in the past. We're using all of our own money for this." Mark said, "How about you take time and get to know us? We'll get to know you. Let's see what happens."
--:-- It took six months from that point. A lot of people think this happened fast. It didn't. It took six months from that point to the actual investment, which in this August will be three years.
--:-- Adam Neumann: One thing I just want to say that's so remarkable is you not only got back in the ring after you already built an iconic company, you already made more money than you know what to do with, but you also put a large chunk of that liquidity back into the company. A triple down in a way that it seems like Elon is the only person who continuously does that. I give a lot of credit to Mark and Ben.
--:-- When we started talking about the business, I immediately leaned into asset light because we should be asset light. I heard so many times that WeWork was asset light for all the wrong reasons. I said we need to be asset light. Mark, you flew down to Miami multiple times, again before the famous dinner. We were sitting in the car talking about real estate. You talked about your father-in-law and shared a lot of things you learned from him over time. He sounds like an amazing person who's done a lot for the Valley and for California.
--:-- You said to me, "Adam, forget what your team and my team is talking about for a second. Not because we don't respect them. We respect everybody and we're going to hear everybody's opinions. But I just want to know what you think. If I wanted you to build the largest, really disrupt this industry and imagine it the way you imagine it, would you need to own real estate?" I said at the beginning, "I would." You asked me why. I said, "Because I want to be allowed to do whatever I want. I want to try everything. I want to fail fast. I want to fix fast. I want to deploy fast. I want to change everything. The technology of how it's run. The operating people of what they do. The design. The smell. The uniforms. Everything about it until it gets to something that I know is right." You asked me, "How would you know when it's right?" I said, "It's a feeling." You said, "Great."
--:-- Then you said, "I have a suggestion for you. It's not traditional. You have this large portfolio. Take out of this portfolio whatever you don't think is a fit for Flow. Sell it. But the rest, what you think is your best stuff, put it with us, aligned, on the top together, and we're with you. We go up, we go down. Whatever you do, we do."
--:-- It took me a second. In the beginning, I thought this was some fancy negotiation tactic. It ended up being one of the smartest things we've done. I genuinely believe that the reason Flow today is where it is was because of that decision. Mark, I've asked you this before. I think the reason you made that decision was alignment. Something that I think a16z is really good at.
--:-- Marc Andreessen: In part, that was based on watching WeWork. By the time you get in a situation where you're fighting with your investors, things just do not end well. We've seen that across many companies. Building a business is so hard if everybody's aligned. If everybody's not aligned, it becomes punishingly difficult.
--:-- Adam Neumann: I'll push you on it a little bit because for venture capital to say, "Let's go own real estate," is not obvious. Let's talk about that for a moment because this also goes into what Flow is doing.
--:-- Marc Andreessen: The way I think about this is there are two iconic business models held out in Silicon Valley as best in class. One is Microsoft. The great lesson of Microsoft was you build a horizontal layer of technology—software operating systems and applications—and you run across thousands of different hardware implementations, computer makers, chips, and so forth. You never, ever vertically integrate because you want to run on everything.
--:-- Lesson number two is Apple, where the lesson is you 100% always want to vertically integrate. You never want to be a horizontal layer because you don't have nearly enough control over the user experience. Steve Jobs' old line is that people who love software need to build their own hardware. You need to control the entire thing. You need to be completely vertically integrated because if you're not, you can't control the user experience, and if you can't control the user experience, you can't deliver against the vision.
--:-- Of course, as is true in so much in business and life, those lessons are diametrically opposed. They're irreconcilable. There have been great tech companies built with the Microsoft model and great tech companies built with the Apple model. The moral of the story is it really depends. Specifically, if you want to control the actual customer experience end-to-end, you have to vertically integrate. It's the only way to do it, because otherwise you're in the role of having to cajole people who don't share your vision into doing the things that are required.
--:-- Having said that, there is an extraordinarily large number of properties out there that could benefit from the brand, the vision, the technology, the platform. One of the very interesting things at the heart of the business model for Flow is to what extent, in the long run, should it be vertically integrated—where we own our own real estate—and to what extent should it run across all real estate?
--:-- Adam Neumann: We can learn a lot from hotels. Hotels have gone through their process. Take Hilton and Marriott. They started by owning a lot of it. Today, less than 1% owned. No matter how much money you could raise, and when we talk about raising money, we're talking about raising money for real estate funds, not for a Flow parent company—that door is closed—no matter how much you would raise, it would always be tiny compared to how big the asset class is.
--:-- Real estate is so large. For people to understand, we're talking about a $250 trillion asset class. A normal multifamily building is $200 million. You buy 10, you're at $2 billion. 100, you're at $20 billion. 100 is not a big number. We're in downtown Miami. You could stand on our roof and point to 100 buildings that could be Flow buildings. There are five different neighborhoods like that in South Florida, and that's just one area. Then you go to New York, and all over the planet.
--:-- That decision allowed us to be who we are. When the time comes, we have two choices. We can do the flag business. We can come to a person who owns multifamily and put our flag, just like the Four Seasons puts their flag, and do a management deal where it's our brand, our technology, our experience, but the expenses are on the landlord. What's nice about our alignment is we don't have to make that decision yet. Right now, we have to build the best product.
--:-- Ben Horowitz: Can we share more about the thesis underlying our bet into Flow? How we saw why this was going to be one of the biggest companies in the world?
--:-- I think it starts with, okay, who is Adam? Forget Adam the entrepreneur. Who's Adam the person? What is he good at? What is he not as good at? What are we good at? Can we get along? We had a seven-hour dinner.
--:-- Adam Neumann: Oh, yeah. Talk about that dinner.
--:-- Ben Horowitz: What was so remarkable about that dinner?
--:-- Adam Neumann: Mark called me. I saw Mark twice already. I didn't know back then that Mark wasn't traveling as much. Mark jumps on the plane, he comes, he sees you. Mark calls and goes, "Hey, I know we hung out twice. We need one more time. My partner Ben, you haven't met him. He wants to come hang also." I said, "Great, we'll have dinner." That turned out to be a seven-hour dinner.
--:-- Marc Andreessen: Yeah, it's a long dinner. A lot of how you get to know someone is to get into the things that you shouldn't even talk about. They're not polite. Adam asked me, "Looking at me, what do you worry about? What are you really worried about? What do you need to think about?"
--:-- Marc Andreessen: And I can't remember exactly what I said. It was something like, Adam, people look at you. And I watched the show. And in the show, the great moment for you was being on the cover of some magazine, Fortune, whatever. I was like, I could see you didn't even care about that. That was nothing. The great moment for you was when the company went to the brink and you saved it. And what I need to know is, I don't want you to chase that feeling because that will cause you to take chances. There are chances that you have to take, and then there's chances you don't have to take. And I don't want you taking the chances you don't have to take because your vision is so incredible. It would be horrible to put it at risk for a non-valid reason.
--:-- Adam Neumann: Yeah.
--:-- Marc Andreessen: And so we kind of got into that. And I said, look, I know the feeling because you did it too. I've been in, I've saved a company like that. I know exactly what that is. You never can feel as good as walking back into the building when everybody thought the company was over and you saved it. You just pulled it out of the fire. That's the most unbelievable thing in the world. But you don't want to be in that position.
--:-- Adam Neumann: Well, and it is worth saying there are founders who, if they do not have a crisis, they will create one. They absolutely seek out disaster.
--:-- Marc Andreessen: Yes. And look, we all like that. There's a bit of it in everyone. And if you look at Elon, he takes very aggressive chances. And he's not afraid of it. And he calculates risk. But the chances have big payoffs. And the danger is always when you take the chance and it doesn't pay out, but you could lose the company over it. And so, we just had a very honest conversation. It's very hard to have an honest conversation about something like that. It's almost like people don't really want to look at themselves like that. And I was impressed with how introspective and honest Adam could be on a number of topics like that. And so my conclusion is, look, I think that this is somebody that we can work with. The things he wasn't good at at WeWork, like we're very good at putting together a tech team, understanding which of the six ideas are good and which ones we should probably wait on or not do. That's the strength of us.
--:-- Ben Horowitz: It's been a few years. You've been on the board. You've tracked the company. Why don't we talk about how the company's progressed and where we're at, because you haven't been super public about it and there's some exciting things happening. So why don't you share from your perspective?
--:-- Adam Neumann: Well, it's been an amazing start. First of all, the thesis of the value of the community, the technology, everything that we talked about, the design, has proven out. The product is maybe 5% done, but it's already able to generate much higher demand, resulting in people willing to pay much higher rent for the exact same space and exact same location as other places, which has resulted in returns on the buildings that are unprecedented. We've also had the foresight to expand into Saudi Arabia, which is not something that most entrepreneurs would think of. We will finish selling them 24 months from when we started. We closed last August. We will sell our first asset in a month, and we'll keep a management deal for the unforeseeable future.
--:-- The other thing is we've built a strategic technological advantage. Real estate software has been hampered by old, very crafty technology. I won't name the company, but everybody in real estate knows the company. The Flow team has basically reimagined what living means. Rather than orienting around a building, the software is extremely flexible and can organize itself around the citizens, the people who live in the buildings, in the communities, in the world. And meet their needs where they are in the best way possible, the most usable way. Even just signing up for a building, it's going to take you 100x less time. Something that seems obvious and simple, but because of the way these other things are architected, it's very difficult for them. And that's just the beginning, because what's possible technically, particularly in a connected world and an AI world, is just unbelievable if you have the right architecture.
--:-- So you've got the technological advantage. You've got the community idea working fully. The business is working. It's definitely way exceeded our expectations. And our expectations were high. We thought we put a lot of money into this. The time was the biggest investment we ever made.
--:-- Ben Horowitz: Real estate hasn't had a ton of tech innovation. What exactly is happening here? What's the opportunity?
--:-- Adam Neumann: Well, there's so many things in the architecture, but it kind of starts with how do you model what's going on? There's all sorts of components that in a normal real estate world get completely ignored. As a customer, you care about everything from your neighbors to the building to your furniture to how you get your mail to how the parking lot works to how security works. And you not only care about it, but you really don't want a system keeping your information about you. You'd like that to be on your phone and the system to be able to query it but not store it so it doesn't get stolen. And if you had that, then you'd be comfortable with a lot more about yourself being accessible. And then you can publish what you want to publish. The way that the company's already taken advantage of that is incredible.
--:-- For example, let's say I'm a yoga instructor. Maybe I want everybody in my building to know that. And maybe they really want to know that I can do that because wouldn't it be great to take yoga lessons without leaving my apartment building? What's happened already in Flow is not only has the commerce between residents, accountants, yoga instructors, personal trainers, everything you can think of, completely flourished. There are people who have all of their clients for their business living in the building that they live in. This kind of incredible technological flexibility where you have a single platform that knows everything about its citizens while keeping things private, having every service not only that Flow provides but that every other person provides all in one place, it changes the whole way you live. And it changes what's possible. I think we're at the beginning of that.
--:-- And no other system does this. We started with the other systems and they're ridiculous by nature. People are an attribute of a building in that software. Think about that. I as a human being am an attribute of a building to a real estate piece of software. It's insane. But this has been completely re-architected. The chief technology officer of Flow is an architectural genius. The way he's designed it has enabled not only everything that I envisioned, but so many things beyond that, where every time an opportunity comes up, it's there.
--:-- The other capability of the software that's amazing is because it's so flexible, yes, this could be multifamily living, or this could be condos, or this could be a hotel, or this could be office space. And it can change literally with the press of a button, which are all separate, completely separate software packages everywhere else in the world.
--:-- Ben Horowitz: To add to what Adam just said, once you're able to use that architecture, which again is something that I do not believe would have been built with other partners, it's another benefit of this partnership.
--:-- Adam Neumann: Once you're able to do that, you take that multifamily and it really came out of need. We had a multifamily. And I just walked in one day and said, hey, furnished apartments. Everyone's doing it in Europe. Why wouldn't the young generation want that? I'm 22. I finished college. I can't buy my furniture. It never looks right. Give me a furnished apartment for an extra $300 a month. And the team literally said, no, no, the system can't do it. We were using one of the traditional systems. I said, what do you mean it can't? It physically can't. I said, well, I want to do it. So they replicated the building. So we had two buildings. And then I said, OK, no more 12-month leases. We want to give shorter term leases. Some people only want it for eight months. Other people want it for 20 months. Oh, no, we can't do that. And I said, well, how about short-term stay? What if some people want day to day, week to week, month to month, year to year? Oh, no, you're going to need four different systems.
--:-- So you take that architecture, you take that system, you build it in the back end. You build a system in the front end. You have one brand, and you train one team to be able to operate all of that, and the result will be higher NOI, higher buildings that are more profitable. Just to use the little numbers for that, our building in Fort Lauderdale NOI, net operating income, is 30% higher than when we took over. It's 95% full today. It was 95% full when we took over it. It's not higher occupancy. It's lower churn, higher rent, obviously better experience.
--:-- Another interesting thing, which brand does: 80% of most leases in South Florida come from brokers. 90% of all inbound into Flow is direct to us, direct to the website. Our brand is still young. But even a young brand, and we didn't say this, but 70% of 40-year-olds and younger in the United States are renters. They spend a third of their wallet, a third of their pocket on that rent. There's not one brand. You have them in hotels, you have them in condos, not one brand. There wasn't one in office before we did that also.
--:-- Marc Andreessen: One of the things that is so exciting about this business, we got to where we got with no such technological platform. Just the brand. This also goes to the conversation we had early on about the changing nature of housing in the U.S., which we've talked a lot about since. There's a bifurcated housing market in the U.S. There's plentiful cheap housing out to places that don't have great jobs where people don't really want to live. And then there's impossible bottlenecks on housing stock in especially the cities where lots of young people want to live and where the really great jobs are and where the economic growth is. So as a young person starting out in life, you have a very...
--:-- Adam Neumann: It's an assault on young people. It's an absolute attack on young people.
--:-- Marc Andreessen: It's actually hard to even discuss this without getting enraged because we're sitting here in California where they have the infamous Prop 13, which is this very explicit handout to boomers at the expense of basically the entire young generation coming up now. But basically, if you want to live and work as a young person in a place where you're going to have access to top flight economic opportunity and all these growth industries, number one, you're not going to own a house. Owning a house is going to be completely unaffordable. So you're going to be in some sort of multifamily, some sort of rental situation.
--:-- And then the other thing is there's a really fundamental stress point. And I think this is coming fast enough for Gen Z, which is: are you ever going to be able to get married and have a family? And what is that going to be like? Because can you really do that in a small apartment? All the data indicates that in all these cities, all over the world, birth rates are crashing. Populations are declining. People are not even reproducing at reproduction levels. So there's this fundamental social, political, cultural, economic vice that young people are in. And in the absence of something like Flow and the absence of a thoughtful approach where you could actually imagine having a positive experience and being able to have a fulfilling life and a fulfilling experience, I think young people are really in trouble.
--:-- Adam Neumann: Let's add two thoughts. First of all, I think this is a main issue globally. Sometimes a lot of other issues become louder, but this might be the biggest one. Because if a person doesn't have a home, a shelter, something that they feel is theirs, how do you expect them to treat other people the way they want to be treated? How are you even going to ask them to go to that next level of behavior that we expect from all of us if they can't afford a house?
--:-- I think that's probably the worst deal a young person can have, paying rent. Traditionally, at the end of every month, you pay that rent, and the only feeling you have is, I just threw the money away. This goes a thousand years back, this word "landlord." These lords, and you had to get a piece of the land, you'd work the land for the lord, and then you'd give that piece. If you're lucky, you got to keep a little bit. And it was all up to them. The entire concept of real estate is the haves and the have-nots. We hear a lot of noise about a lot of haves and have-nots, but this is where it's really playing out.
--:-- So with a reality like Flow that we're dreaming of, we started multifamily, so we said you could take a multifamily. Now it's rental, furnished, unfurnished, short-term, long-term. We didn't talk about condos, but Flow launched a condo project five months ago. So you can own, you can buy, you can rent, you can do anything between. But that's when you're living in these towers. Flow sees a future. There are a lot of single-family homes also, which is another huge part. There are more single-family than multifamily. So another part of where Flow can come in and offer all these services. And if you can prove, which you can already see with the numbers in Flow, that the returns on the real estate are actually higher, then landlords and investors all over the world will be very happy to deploy their cash that way.
--:-- We like to call it a win-win-win. The investor can win, Flow can win as running it, and the user can win. If everybody can feel like they're a winner and they're getting something much better, then you really have a new solution. There's a lot, not for today, but to complete that solution you would have to at some point tackle that word of ownership. But as we said, we're 5% into the journey, maybe even 3% into the journey. We're just starting.
--:-- The other interesting thing is you're seeing the properties in Miami already delivering on both top revenue and profitability. The reason profitability is such an important metric for us: if we just spent more and made more, that's not going to do anything. You're not going to encourage any investment. We need to spend the same and make more or spend less and make more. That's why NOI, your net operating income, is such a good metric in these buildings.
--:-- But then to Ben's point, they're starting to do business with themselves. You spoke about the people who don't have any other business. The way we like to talk about it is: how many classes does a yoga teacher need to close the month just to pay rent? The answer is not as much. About five classes a week. Every week is enough if it's one-on-ones, and then they can do group classes. That's just one example.
--:-- Also, you talked about it as a citizenship. Once you become part of the Flow community, we do billing, for example. We built everything. We're completely vertically integrated. We built every single piece, and the pieces we haven't built yet, we're building. It doesn't mean we can't use third-party software on video cameras or different things they need for security or parking lots. We don't have to invent everything, but we do have to have it all connected. And when you do that and you do it on the right architecture, you're able to see things.
--:-- I'll give you another example. Events. 60% of the events in Flow are run by residents. Because of the tech, they created it. They published it. They invited people. People registered. If they wanted to charge people, they can charge people. And it all happens. 60% is now when we're early. That number is going to go up to 90%. Great communities run themselves.
--:-- One sign: when you go to tour a university, hopefully a student that's really proud of the school they go to is the one touring you, not the salesperson trying to pitch you. Same thing in the buildings. When someone tours the building, we're trying to let everyone be a leasing agent. Because if you're holding the app, and that piece is called the host app, you can make a lease very quickly. And everybody has the same information. As you walk around, you just introduce the person touring to residents, and everybody's excited to talk.
--:-- Ben Horowitz: I think this is a good segue into... if we didn't make it clear enough, Flow is a vertically integrated real estate company that started in long-term rentals, then introduced all the other aspects of everything you can do in a building including condo and office, and then we started offering services that put the resident in the front and allow them to work with each other. Our technology, our brand, and our operations coming together yield this experience, which is already proven that it's doing a higher return for the owners of the buildings. But before we talk even about that, I think the going to Saudi was a very interesting thing.
--:-- Adam Neumann: Again, interesting about our dynamics. Think of that board meeting. You have a few buildings in Miami, they're going great. And now you're coming to the board to say, okay, so our third building is going to be... and let me guess, New York City? No. Austin, Texas? No, very nice place but no. And then you say Riyadh. I think that's not your obvious thing. But again, this is something else you talked about: the division between success and failure being so small. I believe in God, so for me it's this. Mark and I have different discussions about how we define God differently, but we believe in something greater than ourselves.
--:-- After the investment was made, you guys got quite a lot of phone calls from your LPs. And you reached out to me and said, yeah, I think you might have told me from every single one. You have a lot. So that's a lot of calls. And I remember you asked me, Ben, hey Adam, do you mind coming with me to the Middle East? I'm going anyway, and let's share with not everyone but top 10, 12 LPs, tell them what Flow is. I'm sure it will be great for you in the long run, and it's great to do. You meet great people. And that's what we did.
--:-- We walked around and there are two very funny things that happened. One, we would walk in. No matter what meeting you take with Ben, at the end of the meeting, forget Flow. Ben gets offered money. It happened to us again last week. It's an interesting experience to go with Ben. People think I'm great at raising money. I'm a beginner. So we go to these meetings and we told them about Flow, and Flow was only in Miami at the time. What was interesting is without fail, every one of these LPs from the Middle East said, we think this concept would be great for the Middle East, specifically Saudi Arabia for Riyadh, and even in Abu Dhabi they said the same, and in Dubai they said the same, for a variety of reasons. Once I heard it for the 10th time, Ben was like, hey, maybe we should check it out. And we did.
--:-- I went to Saudi. What's interesting: first of all, Saudi is phenomenal for those of you who haven't had a chance to go. What I get excited about Saudi is the optimism, the vision. I think Mark might have coined the term "a founder-led country." There's a vision, it's very clearly articulated, it's Vision 2030, but there's also now visions for 2034 and further. As part of that vision, you're taking an entire economy that used to depend on oil and you're diversifying it. 70% of Saudis are 40 years old or younger. It's a very young population. A lot of them are educated in the West. English is spoken everywhere. And MBS, the leader, has not even slowly, but quite fast, changed a lot of rules that have made foreigners and foreign investors welcome, and changed rules internally and externally, inviting a lot of people in. I think last week, a lot of us saw Trump there and a lot of people are talking about it, but we've been going there for some time.
--:-- Choosing to go to Saudi was a very big choice for us as a company. In hindsight, it worked extremely well, but it was also very difficult because there were a lot of challenges that were happening as we were there. But we got to deploy everything we did. We went to Saudi. We still want to be vertically integrated. So we chose five buildings that were going to be condos, which means they were going to sell them. We bought them from the developer. We changed the condos into rentals and we started deploying the brand. We put our design from the outside, we brought our furniture, we launched it on our tech. It was also the first time we got to launch it on our back-end system, not just our front-end system. So it was a very good opportunity for us. Our team, our uniforms, our smell, our music, our art, everything that we do, but also very localized. Because of my past, I have a lot of experience entering into new countries, so it's not something that I haven't done before, but it was definitely different.
--:-- The way we wanted to do it is not just use our own money. We were going to raise a local fund because the theory was, we're only going to raise it from local investors, not go to the big investors that run Saudi, but local families. I've learned many times: if the local families of a country want to support you, they know what's going on in the country. If you go to all the local families and no one wants to invest, maybe your idea is not as good as you thought. That's what we did. We raised it from actually 33 different investors. We put it on equity. We got debt from the local bank. We bought these five properties. It was about a billion SAR, which is about a $300 million fund. We started in August. Then we started operating. We opened our first building in January. We achieved over 90% occupancy within 60 days. We opened our second building right after, and we opened our third building last month. Our fourth and fifth building, we've already pre-leased to an enterprise that's going to lease it for the next five years. So the entire portfolio is going to be stabilized over the next 90 days. That's when you opened in January and it took six months to become NOI positive. For those real estate people that are listening to this, that's extremely fast for buildings that were at zero.
--:-- We also have to do everything they do when you go to a new country, which is hire a local team. We're very lucky with a local leader named Fawaz that came from government and was a CEO himself. But we're very lucky having a local team. Something beautiful that happens in Flow: whenever anyone needs to go to Saudi, you have too many people volunteer. If Flow says, who wants to move to Saudi? You're getting half the employees in the company raising their hands. Because in Saudi and in Riyadh, we get to take all these visions that we have, but we're the only ones doing it. And as good as our product market fit is in South Florida, and it really is excellent, it's phenomenal in Saudi.
--:-- Marc Andreessen: How amazing is that that everybody wants to move to Saudi? If you went back 12 years, the people in Saudi wanted to move out of Saudi. That's completely turned around.
--:-- Adam Neumann: I really think it is. And it also forced us as a company to launch the technology even before we were fully ready. Forced us to see what's working, what's not. It also shows you the power of the platform. It's back to that agility. In Saudi, you have to be connected to the government for the rent, for a variety of reasons. It actually allows you to take people out who don't pay rent. There's a lot of reasons for it working out really well. Our team did it in four days. We didn't think it was a big deal. We talked to people because the system is built to be flexible. It's built to need to connect to external things if it needs to. Because our architect Scott, who is our CTO, knew that he needs optionality, both because he knew how I operate as a leader but also because we knew that we just don't know yet what we don't know.
--:-- When we meet people, they say, so when are you going to connect to the system? I said, what are you talking about? We're already connected. Then other people ask us, when are you going to become a Saudi company? I heard that takes two years. I don't know. We have Fawaz, and it took us exactly 60 days. So not only are we operating in Saudi, we're operating as a Saudi company, which I think is very important. Without comparing, the experience that we're delivering right now in Saudi is not just second to none, but it even competes with our local experience in South Florida.
--:-- Ben Horowitz: Wow. Talk more about the real estate fund, because I know the one in Saudi did tremendously well. But is this a model that you're planning to roll out across regions? Talk more about how that's going to work.
--:-- Adam Neumann: Let's start with the real estate fund in Saudi. It was launched and closed and actually got oversubscribed, mainly because not only are they really up, it's also great to send to your investors back money. So we're very excited to do that. We're planning to send the first check soon. So that's very exciting. Also, when we sold it, the people are buying, they want Flow to manage it, which is the beginning of the business model that it's going to become. That is the flag model. At the beginning, I think you have to be vertically integrated because you have to prove it on yourself. You have to put your own money there. But after it's proven, there are a lot of real estate investors that would like to invest in an above market offer. And connecting it to what Ben said about why the technology is...
--:-- Ben Horowitz: Wow. Talk more about the real estate fund, because I know the one in Saudi did tremendously well. But is this a model that you're planning to roll out across regions? Talk more about how that's going to work.
--:-- Adam Neumann: Let's start with the real estate fund in Saudi. It was launched and closed and actually got oversubscribed, mainly because not only are they really up, it's also great to send to your investors back money. So we're very excited to do that. We're planning to send the first check soon. So that's very exciting.
--:-- Also, when we sold it, the people are buying, they want Flow to manage it, which is the beginning of the business model that it's going to become. That is the flag model. At the beginning, I think you have to be vertically integrated because you have to prove it on yourself. You have to put your own money there. But after it's proven, there are a lot of real estate investors that would like to invest in an above market offer.
--:-- And connecting it to what Ben said about why the technology is... The moment you have technology that allows you not just to deliver a better service in the building, that creates more loyalty, that lowers churn, that increases rents, that connects the community internally, that allows all these things to happen. By allowing yourself to move from a multifamily to a hotel, extended stay, furnished apartments, corporate housing, it gives you so much flexibility.
--:-- So Saudi, for example, a lot of expats are moving in. We learned very quickly that these expats are getting one month from the company that hired them. So some numbers for everyone about Saudi: Riyadh has 7.8 million citizens, is growing to almost 10 million by 2030. So over the next five years, about 5 million expats, big numbers. They get hired by these local companies, a lot of them. They get one month that the company pays them and then they're supposed to find their own place to live.
--:-- So we said, okay, great. Let's give one month because that's what fits them. And then we'll see how many of them stay. The conversion rate has been phenomenal. 90 something percent of anybody who took the month is able to stay. But if you're any other landlord and you had a great building manager, that building manager said, hey, I want to sell this new offering. I'll give a month, then I'll give them a lease. The system wouldn't be able to—I know it sounds crazy—the system wouldn't be able to. You'd find a way to do it if you're very savvy. Pen and paper, do a deal, call someone. You do something, but it's not scalable.
--:-- And I think the other thing about our system that maybe we didn't say enough: we're building it for scale. If we were building this for just multifamily, you don't have to go as deep as we went in the architecture. If we were building this for just one country, for just one use case... I think a lesson for me from the past, I have zero fear that we're going to grow to be very big. The time, and when the time comes, when it's time to put food in the gut, I enjoy it. It's my favorite part probably. Taking our time now to build a product that's actually scalable, learning from our mistakes, taking the time to make these decisions.
--:-- Building. I wanted to recruit tech engineers faster than Ben and Mark thought was correct. So we made it harder to recruit them in the right speed. I had visions of a huge number of teams that we needed. Mark's very big on great products are built with small teams. That was before AI came. Now that AI came, actually, I think a lot of people are starting to understand that.
--:-- So when you put all those things together, you start seeing a very good offering for raising funds against that. In Saudi, in the US, we actually bought 30% of a publicly traded company in Israel. We're non-controlling shareholders. That company has access to retail investors and institutional investors. And with partnership with that company, we have bought two developments in Miami, South Florida—one in Aventura and one in a place called El Portal.
--:-- And again, now you're thinking of Flow, not just as "we're going to run the building," but actually how are you going to run the entire neighborhood? And all those themes that we just said that work so well for the single buildings will work even better in a neighborhood. So those two fund structures exist. And because we have all this flexibility built into it, we've already proven that we deliver above market returns.
--:-- So the people who are going to want to invest in our fund are going to understand that by getting access to Flow, to Flow's technology, to Flow's brand, they're going to get access to above market returns, which at the end of the day in real estate, as you said, Mark, only two people did that. But I think the one thing in real estate that's very consistent: if you can deliver the highest returns in real estate for a certain asset class, you're going to attract the kind of money that's interested in investing in that asset class.
--:-- If you can move between asset classes, you might attract the kind of money that in the past felt uncomfortable with real estate. Because even though it's a safe return, we learned something in the past 10 years. Before Corona, office was great and it went to zero. Hotel, apartments—everybody wanted one and then it changed. So it's actually not just the largest asset class in the world, it's changing.
--:-- The thing that the funds give us is really twofold. And I didn't realize this before. So the first thing is obvious: just scale. So as Adam said, there's a lot of real estate out there. There are a lot of people who would love to live in a Flow community with kind of, be part of something bigger. And doing that just through the Flow balance sheet would be insane. So it gives us a lot of scale.
--:-- But the other thing that it does is the people we partnered with are real geniuses in evaluating real estate and getting the right buildings for the right deal in the right locations. And that's been really amazing to watch, how these people think about how they do that and how it works. So it's—and we have lots of demand. We're trying to figure out what to do with all the demand.
--:-- Ben Horowitz: Ben, we're talking to engineers all the time who are pursuing AI ideas, who are pursuing crypto ideas. There hasn't been that many amazing real estate opportunities for the most brilliant technical minds to sink their teeth into. Why is this an opportunity? As an engineer, you want to build things that really impact people's lives and make their lives better. There are many things that you can do that have small impact or questionable impact. But this is something where you're building an environment where for young people, as Mark kind of alluded to, it's been much worse than what their parents' opportunity was, and even what their parents' opportunity was, which is a new phenomenon. And this is a chance to make it much better, much better than how their parents lived. There's not more meaningful work than that.
--:-- And it's an extremely complex technological problem, particularly coming out of legacy world and all these. You have to basically start from complete first principles because you're starting with who's living there. And the software has to be oriented around them, not buildings or apartments or a bill. Those are features of the person, not vice versa.
--:-- Erik Torenberg: Yeah. Let's close this conversation on some big ideas around the future of living. Mark, in your great blog post about the Flow investment and just in our conversations in general around COVID, you'd been struck by how COVID enabled some unique opportunities for us to rethink how we think about the future of cities, remote work, in office, etc. And I know you guys have had some back and forth on that. Why don't you reflect on—there were some things that played out. There were some things that didn't play out exactly as we thought. Some things reversed. A few years later, what are your broad reflections? What have we learned?
--:-- Marc Andreessen: So I feel like COVID threw almost every aspect of how, at least in the U.S., how we live and work up in the air. And some of those pieces have landed a little bit, but some of those pieces still feel like they're quite high up in the air. So just a bunch of observations.
--:-- One has looked like there had been a 60-year history of video conferencing not being a thing and not working. The first video conferencing system was rolled out in 1965. It was AT&T Picturephone. Completely flopped. There were 50, 60 years. And there was a whole theory about people didn't want to be seen when they were talking on the phone.
--:-- Ben Horowitz: Yeah, exactly.
--:-- Marc Andreessen: Yeah, yeah. It's the same kind of theory that you wouldn't want to see actors talk in motion pictures of sound.
--:-- Ben Horowitz: Yeah, exactly.
--:-- Marc Andreessen: So there's all these arguments. Every science fiction movie had video conferencing, but the real world never had it. And then all of a sudden, just like boom, COVID happened. And that stuck. That's now a standard technology everybody's used to. So that really opened up the aperture. So that stuck.
--:-- Then there was the idea that basically all work becomes remote, or at least all knowledge work becomes remote. And I would say that has not stuck that well. It stuck somewhat. And I would say it stuck somewhat in two circumstances. One is a lot of CEOs are really struggling, even when they want to get everybody back in the office, they're having a very hard time doing it.
--:-- And again, this brings up this issue of where and how do people live? Because if you could have a much better lifestyle living and working remotely, then it's harder for you to come back in the office, but you as a human being are much happier and more satisfied. And so a lot of CEOs found that many of their best people had actually left the vicinity of the office by the time COVID came back, and they have this very difficult choice of trying to coerce them into coming back two days a week or three days a week. And so that's going poorly. So that's a real struggle.
--:-- Another thing that happened, which I think was a big net negative, which hasn't really been fixed yet, is new people entering the workforce had a much worse experience. COVID was sort of a dichotomous experience where if you were a 20 or 30 year veteran of a company and a high-ranking official, it was absolutely fantastic to work remotely because you got to go to your beach house and be with your kids, your grandkids, and be on the golf course. It was just this amazing thing.
--:-- But put yourself in the shoes of a newly graduated college grad who's 22, stuck in some box apartment somewhere. The whole idea of mentorship is just straight out the window because you can't get mentored by a face in a Zoom panel. And so there's this failure to launch problem with young kids and their careers. And I think that hasn't been solved.
--:-- But then finally, I would just say, it's not like everybody's just going to go back to work in the office. And the reason for that is because there is this massive shift that happened that I think is still underestimated. I describe it as follows: it used to be the case that to have access to the best job opportunities, you had to be in very specific places. So there was this old adage that the thing that made Silicon Valley so special is that if you lived and worked in Silicon Valley, you could get 20 other job offers as a database administrator or as a Java programmer without changing your parking spot, because the employers were clustered. And by the way, that's still true. That's still the case.
--:-- But if you're remote, you can have 20,000 job offers from companies that are dying for people with your skill set, many of which are not located in Silicon Valley, and they're all available on video and you can just do that. And there are lots of people now who just work remotely because they can do that.
--:-- And by the way, there's this incredible book called *Job Stacking* that I always recommend, which is sort of this how-to manual on how to hold down two jobs—
--:-- Ben Horowitz: I was just gonna say something about multiple, yeah.
--:-- Marc Andreessen: —remotely without letting them know. It's a very careful how-to guide to make sure each employer doesn't realize that you have the other job. And then there's another chapter, which is how to do it with three jobs simultaneously. There's a whole subreddit dedicated to it.
--:-- Ben Horowitz: There's a whole subreddit.
--:-- Marc Andreessen: And now there's the AI version of it, which is why you can have ChatGPT do your job anyway. So it's very helpful to be remotely because it's easier to do that. And so the remote thing continues to stick.
--:-- And so anyway, like this is all just still up in the air. And we talk to a lot of Fortune 500 CEOs. And I would say that they're all struggling with this. They actually don't know how to recover the in-office experience that they used to have. And they don't know if it's possible to do that. And they're literally still at the point where they're issuing threats and orders to people of, "We're going to watch your badge." You pay somebody a half million dollars a year to be a senior engineer, and you tell them you're going to watch their badge reading in and out to track their motions and then somehow figure out you're going to penalize them.
--:-- Ben Horowitz: Right. Everybody ends up in a punch card world again.
--:-- Marc Andreessen: And so I think this is all just still up in the air. And then we talked earlier about what this means especially for younger people in this question of economic opportunity and then family formation and then ability to have and raise kids. And I think the whole concept of how people live and work has been upended and I don't think it's landed again. And I think there's interesting questions on every single topic.
--:-- Adam Neumann: I discovered there are all these concepts of in the past, you would have people live, work, go to school, do all those things at the same place. I think part of Flow reimagining the future, also I think Corona actually helped us in a big way.
--:-- Let's take Flow, for example. To build a company of the magnitude that Ben and Mark were talking about, very hard for us to do things remotely. So let's say our engineers—we hire engineers that want to be in the office. And the ones we hired before who weren't, we let them be wherever they were because when they were hired, that was the deal that was made with them. But we're finding a lot of people who want to be in office because that's what they want.
--:-- But to create a holistic product, the reason you need sometimes people all in the same room, especially in our world—if the team doing the brand, the team doing the development, the team doing the engineering, the team doing the product—if they don't interact with each other, they just don't know the things that motivate each other. And you can't get that consistent, perfect experience. So for a company like Flow, it's even more important.
--:-- Now let's think about enterprise sales. You go to an enterprise in the past, you'd say, "I'll get you office. I'll build for you." We used to do WeWork. We're very good at enterprise. We created office. But maybe office is not enough for a solution. What if I can give you the rental apartments, certain number of nights in a hotel, a school for your kids in the development or outside of the development, and the office, and experiences all around, and the retail? And before you know it, you're creating something very unique.
--:-- Now, a lot of times when developers have tried to do it in a way that was like Disneyland, it's soulless. If you can then do it in a soulful way that really makes people—and Flow's mission is to connect people to themselves, their neighbors, and their natural world. If you could do those three things, leveraging technology, leveraging operations, leveraging everything and make people feel that way, I think for today's world, it is more relevant and more important than ever before.
--:-- And as we said before, people are so connected digitally. They've never been so disconnected. And not for everyone, but for a lot of us, that connection is so important. Mark was talking even about the birth rate that's going down, all the different stuff. We need physical interactions. And those physical interactions need to be meaningful.
--:-- And imagine if an enterprise could not just give you a great job with a great salary, but could actually give you directionally a community that you would want to be part of. Suddenly, here's what I do with my family and here's what I do with my kids. And there is, I think, a solution that gives a little bit of the good things about working remotely, but also solves the bad things, which is there's a limit to how often we don't want to have social interaction.
--:-- And I think the future of Flow has a tremendous amount of potential. I think we need to keep taking it one step at a time. I think we need to deliver on all the different aspects of the business. So now you heard us talking about funds and raising capital to deploy to people. But only people understand why Flow delivers a higher value and how it's going to give them a higher return. Keep focusing on the resident as it grows to be a citizen, as Ben likes to call it. Commit to the architecture and keep building the right architecture, both in the back and in the front end, and create a culture of service and hospitality of people that are excited to be part of delivering this version of the future that we see.
--:-- I think it's great for the US. We know it's great for Saudi. I think it's a global challenge and a global solution. And I couldn't be more excited to tackle this with our two partners, with a great team that we've assembled.
--:-- Erik Torenberg: Adam, thank you so much for coming on the show.
--:-- Adam Neumann: Thank you.
--:-- Ben Horowitz: Thanks, Adam.
--:-- Marc Andreessen: Bye.
