In 2016, the WeWork co-founder Adam Neumann described home as “a feeling” rather than something you own. He introduced WeLive, his company’s rental apartment concept, where rental terms were flexible and apartments were delivered furnished, right down to bed linen and toiletries. The idea traded traditional rent for “membership,” allowing people to switch between WeLive apartments as easily as Equinox members could swipe to a gym in another city.
WeLive didn’t last long. It began to crumble along with the rest of the company in 2019, when WeWork’s offer to go public revealed that the company was losing more than $200,000 every hour. The company went into crisis mode and halted plans to open more apartments. The other two WeLive sites began to operate more like hotels until WeWork eventually sold them.
Three years later, Neumann is back with his second attempt at reinventing housing — and Silicon Valley’s commentary is unimpressed. Its new startup, Flow, is another apartment concept from a brand, which is expected to provide community functions and other amenities on flexible terms. Neumann reportedly owns 4,000 apartments in four cities (Atlanta; Miami and Fort Lauderdale, Florida; Nashville, Tennessee) to begin work on the project, which is expected to start in 2023.
Journalists and investors have suggested that Andreessen Horowitz’s $350 million investment in Flow, valued at $1 billion, could soon evaporate like so much of WeWork’s cash. Neither Neumann nor his investors have revealed much about Flow, but the reaction to the idea of giving the entrepreneur a second chance has been swift. On Tuesday, Forbes published claims — denied by a Neumann spokesperson — that Flow could compete with a rental facilities startup called Alfred in which it had previously invested.
All that does not mean that Neumann and Andreessen have not identified a market with potential. The deadlock in the US housing market needs new ideas about how and where people live. And unlike when WeLive launched in 2016, many startups are now trying to reinvent rental housing for a generation of people who are unlikely to buy homes. Flow could become part of a new industry that succeeds in fundamentally changing the way some Americans think about housing by creating benefits by staying tenants. That could be sustainable and profitable, even if it doesn’t mitigate many of the drawbacks of the US housing crisis.
Over the past two decades, a confluence of factors has led young Americans to give up buying homes, a pattern seen in the UK and some other European countries. New construction has come to a standstill, the existing supply has come to a standstill and the population explosion in urban areas has pushed up housing costs. Nearly one in five homes in the US are now bought by institutional investors, not private individuals, adding even more competition. As a result, the share of first-time home buyers has shrunk, pushing more millennials into their thirties and forties renting.
This new permanent rental class presents a troubling prospect for some economists: there is a housing shortage and that is pushing up prices for everyone. But it also offers an opportunity for startups. “It’s a huge trillion-dollar industry,” said Andrew Collins, founder of real estate startup Bungalow. “And yet there hasn’t been much innovation in the last 50 years.”
