In 2016, the WeWork co-founder Adam Neumann described home as “a feeling” rather than something you own. He was pitching WeLive, his company’s rental apartment concept, where lease terms were flexible and apartments were furnished, down to linens and toiletries. The idea swapped the traditional lease for “membership,” allowing people to move between WeLive apartments as easily as Equinox members could move to a gym in a different city.
WeLive was short lived. It began to crumble, along with the rest of the business, in 2019 when WeWork’s IPO bid revealed the company was losing more than $200,000 every hour. The company went into crisis mode and halted plans to open more apartments. The two remaining WeLive sites began operating more like hotels, until WeWork eventually sold them.
Three years later, Neumann is back with his second move to reinvent housing, and Silicon Valley commenters are not impressed. His new startup, Flow, is another branded apartment concept, which is expected to offer communal features and other amenities, on flexible terms. Neumann reportedly owns 4,000 apartments in four cities (Atlanta; Miami and Fort Lauderdale, Fla.; Nashville, Tenn.) to start the project, which is slated to launch in 2023.
Journalists and investors have suggested that Andreessen Horowitz’s $350 million investment in Flow, valuing it at $1 billion, could soon evaporate like 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 spokesman, that Flow could compete with a rental services startup called Alfred in which it had previously invested.
None of this is to say that Neumann and Andreessen haven’t identified a market with potential. The deadlock in the US housing market has required 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 likely won’t buy homes. Flow could be part of a new industry that manages to fundamentally change the way some Americans think about housing, creating advantages for staying a renter. This could be durable and cost-effective, even if it doesn’t mitigate many of the downsides of America’s housing crisis.
Over the past two decades, a confluence of factors has led young Americans to give up on buying homes, a pattern also seen in the UK and some other European countries. New construction has stagnated, existing supply has remained tied, and population booms in urban areas have driven up housing costs. Nearly one in five homes in the United States are now being bought by institutional investors, not individuals, adding more competition. As a result, the share of first-time home buyers has shrunk, leading more millennials to rent into their thirties and forties.
This new permanent rental class presents a troubling vision for some economists: Housing is in short supply, and that’s driving up prices for everyone. But for startups, it also presents an opportunity. “It’s a massive, trillion-dollar industry,” says Andrew Collins, founder of real estate startup Bungalow. “And yet it hasn’t really been innovated in the last 50 years.”