Invest in Flow | Andreessen Horowitz

Our country has a housing crisis.

The demographic trends driving the U.S. housing market are impossible to ignore: Our country is creating homes faster than we are. A structural shortage of homes available for sale is pushing house prices higher, while young people are staying single longer and increasingly concentrated in highly desirable urban centres. These factors are putting enormous pressure on rents in the nation’s most dynamic cities, starkly revealing the disturbing realities on both sides of the two historic housing market models.

The first model is: You own a house you call your own, usually with a multi-decade mortgage, near your current employer. IF you can find a house as these places are often not building new homes. IF you can afford this house as house prices in many of these places have skyrocketed. And even then, you’re stuck now: you can’t move, even if your financial opportunity or life path wants to take you somewhere else.

The second model: an apartment is rented, but: it is a soulless experience; do you even know your neighbors let alone have friends in your complex? Do you feel like home or just a place to sleep? Are you proud to bring friends and family to visit or are you hesitant? And you can pay rent for decades and still have zero equity, nothing. There’s a reason the federal government started subsidizing home mortgages: Someone who’s bought where they live cares more about where they live. Without this, apartments create no connection between person and place and without community, no connection between person.

Now drop the impact of the post-Covid world on that. Many people will live far away from where they work and many more will move to a hybrid environment. As a result, they will experience far less, if any, of the social bonds and office friendships enjoyed by local workers. For many of these people, increased screen time and reduced in-person interaction will lead to challenges that are not just limited to work, such as alienation and loneliness. This is not a good path for anyone and needs to be addressed head on, right now.

At the same time, in the last two years, we have seen a change in life priorities. For hundreds of years, ambitious young people have had to move into immediate geographic placement with employers to gain access to the best jobs for their skills and talents. This is suddenly no longer true. This new flexibility has triggered the “Great Resignation”, where people prioritized other factors over professional considerations. Many people are voting with their feet and moving away from traditional economic center cities to different cities, towns or rural areas, without diminishing economic opportunities. My colleague Katherine Boyle has written about this, and I think she’s right: Can Zoom Save the American Family? i Can Starlink save the American mother?

The residential real estate world must address these changing dynamics. However, virtually no aspect of the modern real estate market is prepared for these changes.

We are therefore delighted to partner with Adam Neumann and his colleagueis in Flow, which is a direct strike precisely on this problem.

Adam is a visionary leader who revolutionized the world’s second largest asset class, commercial real estate, bringing community and branding to an industry where it didn’t exist before. Adam, and the history of WeWork, have been exhaustively chronicled, analyzed and fictionalized, sometimes accurately. For all the energy put into covering the story, it’s often not appreciated that just one person has fundamentally redesigned the office experience and led a paradigm-shifting global company in the process: Adam Neumann. We understand how difficult it is to create something like this, and we love to see repeat founders build on past successes by growing from lessons learned. For Adam, the successes and lessons are many and we are excited to embark on this journey with him and his colleagues building the future of life.

We think it’s only natural that for his first venture since WeWork, Adam returns to the theme of connecting people by transforming their physical spaces and building communities where people spend most of their time: their homes. Residential real estate, the world’s largest asset class, is poised for exactly this change.

Welcome is one of our most basic needs. In a world where limited access to home ownership remains a driver of inequality and anxiety, giving renters a sense of security, community and genuine ownership has transformative power for our society. When you care for people in their own homes and provide them with a sense of physical and financial security, you empower them to do more and build things. Solving this problem is key to increasing opportunities for all.

Make no mistake, this type of mission is heavy lifting. Only through a seismic shift in the way industry relationships are structured and the mechanisms through which value is delivered can we hope to address the underlying problems in the current system and build the solution. Doing so requires combining experience-focused, community-driven service with the latest technology in a way that has never been done before to create a system where renters receive the benefits of landlords. This means rethinking the entire value chain, from how buildings are purchased and owned to how residents interact with their buildings and how value is distributed among stakeholders. And given the fragmented nature of the ecosystem today, we can only hope to achieve all of this by bringing together all aspects of the life experience.

We are delighted with the scope and aspirations of this project. There is no lack of vision or ambition, but only projects with such lofty goals have a chance to change the world.


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