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EVERY SPOKEN WORD
65 min read · 12,587 words- 0:00 – 1:14
Introduction
- ANAdam Neumann
And I just want you to know that it's part of the game to get punched. And the question is not are you gonna get back in the game, the question is, is when?
- SPSpeaker
Back in August, after a16z announced their investment into Adam Neumann's new company, Flow, it felt like almost everyone, whether it was other VCs, founders, or journalists, had something to say. But the one person you didn't hear from was Adam himself. In this never-before shared footage from our American Dynamism Summit back in November, Adam sits down with a16z co-founder Marc Andreessen, and a16z venture general partner David Ulevitch. They start by discussing why Adam's chosen to step back into the arena, but also why Flow. That leads into the inevitable conversation around how the pandemic fundamentally shifted both work & home, as they touch on a16z's move to the cloud, cities as startups, and ultimately what it might take to disrupt the world's largest asset class. We also get an inside scoop into how Adam is thinking about the four pillars of Flow, from technology to financial services. Finally, this video was recently published alongside our full library of American Dynamism Summit recordings, which you can find at a16z.com/ad-summit.
- DUDavid Ulevitch
[upbeat music]
- 1:14 – 8:45
Getting back in the arena
- DUDavid Ulevitch
Thank you, gentlemen, for being here. I'm gonna just jump right into it. Those of you that have, uh, heard Adam and Marc speak know that they have a lot to say, and they're very smart, so we aren't gonna waste any time. Adam, three years ago you stepped down from your role as CEO of WeWork, one of the most well-known real estate companies ever created. You could have sailed off into the sunset. A lot of founders do that, hang out in the Mediterranean. Uh, but you decided to start another company again. You're not naive. You know it's hard. You know that there's a lot of attention on you. Uh, so how did you decide that you wanted to chase and build a new impactful company and, uh, chase a big vision and dedicate your time to building? Why, why get back in the game? Get back in the arena?
- ANAdam Neumann
[clears throat] First of all, thank you for having me. Thank you, Marc. Thank you, David. I apologize about the sandals. I broke my toe. I was supposed to wear different shoes. You know, when I stepped down three years ago, the first thing I actually did was I took a moment, and I just wanted to take a second and think of the successes, but also think of the mistakes and the lessons and all the different things that, uh, that I did and that we did as a team. And even though I was very proud of what we built, I really felt like there was a lot of thinking to do, and that was sort of my first thing. As that was happening, I started building a family office, and with my family office we invested in about fifty venture investments. We did private equity investments. We did liquid market trading. And each one of those things taught me something new that I wasn't aware of before. Um, liquid markets actually taught me about Wall Street. And as I was sitting with the team and we were doing different investing and listening to earning calls, I was like, "Oh, wow, that's what you guys are listening to, and that's what interesting for you?" And that gave me a perspective that I didn't have before. When I was sitting with entrepreneurs, as we did our venture investing, the first part when you invest and write the check is a lot of fun, but then comes the part where you're talking to them and listening, and they have problems, and I got to give advice to these entrepreneurs, and they didn't always listen. And I was like, "Okay, that's how it feels when an entrepreneur is on the list." [laughing] I was like, "Okay, I get that." And that taught me a lot, and actually made me understand Marc and Ben and, and venture capital more. And as we're doing all of this, and this is now where COVID is happening, this is March twenty twenty, we were looking at real estate 'cause it's something we care about, and we just felt that there was gonna be an opportunity in multifamily. It was a simple trade. It was cap rates were at four-eight, and we thought they were gonna compress, and we saw interest rates, and we thought there was an opportunity. So we decided to go as a, as a family office very deep into multifamily. We bought approximately four thousand apartments. And as we're doing that, I started walking these buildings, and even though initially it was a trade, I started feeling like there was something more that can be done. I started feeling like the residential experience is not what it should be. And just to backtrack this a little bit, so going backwards again to twenty nineteen, we're stepping down and now it's early twenty twenty. As the whole thing is happening, and maybe you wouldn't be surprised, but the phone is not ringing as much as it used to be, uh, just a few months before. I got a phone call from Marc, and we never met. And Marc introduces himself, "Hello, I'm Marc Andreessen." I said, "I, I know who you are, Marc. Thank you so much for calling me." And he sort of-- We, we're having a discussion. We're talking about something, but very quickly turned to Marc asking, "So Adam, how are you doing?" And I told him this and that and this and that, and he says to me, "Oh, you're still in that stage." And I look... I, I was like, this was on the phone, I said, "Uh, Marc, what stage is that?" And he goes, "The stage where you believe everything the media says." And I said, "Well, I'm not in that stage, and I know we built a great company, and of course I don't believe, but you know, they are saying quite a lot of things." And Marc says to me, "Adam, we don't know each other, but let me tell you something about venture capital and high-growth companies, and the bigger the venture, the bigger the growth, what I'm about to tell you is more true. It's hand-to-hand combat. Anybody who doesn't know that venture is hand-to-hand combat doesn't actually understand or has never done it before. And when you fight, once in a while you get punched." And he said, "I guarantee you," because he was very nice, he said, "a lot of our companies use your products, not just in the US, but all over the world." And he said, "I guarantee you that for every mistake you made, there's a hundred things that you did right. And I just want you to know that it's part of the game to get punched. And the question is not are you gonna get back in the game, the question is, is when? And just so you know, you have a friend here that you've never met before, but we've been tracking you. And if you ever decide to do anything, then, uh, then call us." And now fast-forward... Well, I'll say one more thing about it 'cause it was very meaningful. I hung up the phone, and I still remember this. I walked to Rebecca, my wife, and I was like, "I just had the most amazing phone call. This guy, Marc Andreessen," and I explained to her who Marc is, "called me and basically was very encouraging and gave me a different perspective to look at what just occurred." And she thought it was amazing, and I thought it was amazing. And Marc, I don't know if I've ever had the chance to actually tell you, it was a meaningful moment for me, and I really appreciate it. And fast-forward now a year and a half, we kept these buildings that we bought ended up being a really good trade, and everything that we thought was happening was happening. And we started building this brand. It didn't have a name yet, but we started building this business, and we saw all this opportunity, which we'll talk about a little bit later. And around February, uh, we spoke again, and Marc asked me what's up, and I told him what was happening and that we've been developing, and the business by this point is, is over a year old, and we've been doing more and more, and we started building technology, and we bought a company, and we did a few different things. And Marc said, "Why don't you come and present it to the team?" And we went, and we met the team. And the first thing I noticed when we all met is that the Andreessen Horowitz team was not like the venture capitalists that I was used to, and I had quite a lot of experience with venture capital before. And it didn't feel like investors. It actually felt like businessmen, like entrepreneurs. And I actually asked-- I just asked Marc behind the stage, I said, "How many partners do you have that are entrepreneurs?" And he said, "Twenty." And I gotta tell you, that's very different from other businesses. And as, um, as we're having the discussion, one of Marc's partners asked me, "Adam, are you raising money?" And I said, "I'm not sure. We're gonna build this one on our own. I'm not sure because one of our lessons was you gotta choose your partners really carefully." And he said, "Well, maybe you should consider us. Let us look into the business and see if it's interesting. And if so, maybe you should consider us." And then DG, uh, led a very, uh, rigorous diligence process, and they asked us a lot of questions and learned everything about our business. And as we were getting to know Andreessen, I realized that these are the kind of partners that I was always looking for but never really knew that, uh, existed. So to answer your question, I was always building it, but building it with a partner was something that only happened because of this team and because of the way I met them. And I can just tell you that we had our first board meeting, and one minute afterwards, Marc called me and said, "Adam, can I give you some feedback?" I said, "Of course, Marc." He said, "Well, when your team said this and this and this, I don't agree with that. Let me tell you why. And here's the experience I have, and here's what I wanna warn you from." So I welcome the feedback. I'm so excited to be a partner. I'm excited to be back in the game, not alone, but with a team. And we're just getting started, but the future is... There's a lot of potential.
- 8:45 – 17:16
The opportunity in housing
- DUDavid Ulevitch
That's, that's awesome. Uh, and I will say, um, there's a whole bunch of venture capitalists in the room, and we are all very happy that WeWork exists so that our portfolio companies are not signing these long-term leases in this dynamic world that we live in, and they get to go into the offices that they wanna be in, in the right cities at the right time. So what-- we're gonna talk more about Flow and, and the new business in a moment. Um, Marc, I wanna shift to you. You know, you and I have talked about housing for a long time, long, long before this investment. It's something you've, you've thought about for a long time. Um, why, why is housing important? Why is it particularly relevant? Why is it even a part of American dynamism?
- SPSpeaker
Yeah. So there's a critique of Silicon Valley and the tech industry that, you know, on various days, sometimes I agree with, sometimes I don't. But, um, you know, there's a critique that basically says, "Look, you guys have done a great job. You know, Silicon Valley's done a great job over the years at, like, the really, like, unimportant things." Um, and so, like, you know, um, you know, you've, you've consumer electronics and video games and media and e-commerce and, like, it's all great, it's all fine, it's all good. And, and by the way, like, we, we do those things. We're, we're very proud of our efforts in those spaces. And, and, and we actually think, we actually think they're very important. But, you know, they're basically, they're small slices of GDP. Um, and then if you look at basically the GDP pie chart, which is also the consu- you know, sort of consumer spending pie chart, the, the, the things that people spend money on that really matter in their lives, there's basically three really big ones, uh, right? Healthcare, education, and, and housing. Um, and if you look at kind of all the economic statistics by sector, healthcare, education, housing are basically increasing, uh, uh, you know, in terms of cost, you know, at a much faster rate than, than, than all the others. Um, and they're the sectors where the, the tech industry has had the least impact, um, historically. And, you know, and, and of those, the biggest one is housing, right? It's sort of the... Housing is the single biggest, uh, you know, kind of thing that most families spend money on. Um, and so, you know, it's really central, you know, fr-fr-from, from that standpoint. Um, you know, it's very central from a, from a, from an economic standpoint in the life of a family because, right, there's this, you know, very big question, which is, you know, if you, you know, if, if you own, there are, you know, potentially big downsides 'cause you might be stuck, you know, in one place where maybe you don't want your family to be for the next thirty years 'cause maybe opportunity shifts around. Um, you know, but if you rent, you don't necessarily, right, build up equity by default, you know, with the, the way that most, uh, most, uh, most apartment, um, uh, offerings work. Um, so there, there, you know, so there's big economic, uh, consequences. Um, there's also big social consequences and political consequences, right? Which is, um, you know... And this is something that's kind of been deep in the American character for, you know, for, for many decades. But this idea that if you basically... If, if you, if you have a sense of commitment, uh, if you have a sense that you are actually invested in the place where you live, um, you are more connected to the society, you're more connected to the culture, and then ultimately you're more conne- you know, you're more connected to the politics, you know, to, to the polity, to the, to the political, uh, to the political body. Um, and so, you know, there's been long-running policies in, in, you know, the United States to encourage homeownership. Now, [chuckles] it turns out those can be overdone. They can end up with problems, and we saw a lot of the problems that kinda, you know, came out of that approach and, you know, kind of the historical approach in the, in the two thousand and eight financial crisis. But nevertheless, there is, like, a very kind of big, deep, meaningful, you know, kind of sense of identity that comes with, uh, comes with housing. Um, why does this matter, um, you know, kind of from a, from a broad standpoint? Um, so the reason I think this matters so much is because, uh, geography is so, um, uh, central to economic opportunity. So, right, so So basically, take a step back, uh, the role of cities, right, in, in human society. So like cities are a human invention. You know, there were many hundreds of thousands, millions of years where, you know, peop- you know, people were running around without, you know, in clans and tribes, uh, not forming into cities. Then about four thousand years ago, cities were basically invented and, and people started to cluster, uh, that way. Um, why were cities invented? Um, a bunch of reasons, but one of the big ones is there's, there's economic payoff to being in a city. And that a way that it works is if you are, you know, if you have a, a certain level of productivity and you're in a rural environment, you don't have many opportunities to work with other people, right, who are highly productive. If you move to a city, all of a sudden you're surrounded by lots of other people who are highly productive, and all of a sudden there's a, a catalytic effect, basically this, this, this positive feedback loop that forms where kind of ev-everybody becomes more productive. And, and so basically it's, it's the, the cities are basically the, the, the foundation of, of, of modern economic growth. Um, economists call this the agglomeration effect, which is basically if you like slam people together, you, you know, so sort of, uh, you know, you, you can get a lot of good things out of that. Um, you know, the, the, the, the, the West developed, you know, we-- the, the, the story of the West is the story of cities and the, the creation of, of all these, the, you know, these, these amazing cities. Um, and then, you know, over the last fifty years, you know, that, that kind of trend has gone into hyperdrive, and you've had this emergence of what economists call superstar cities, where you've got these specific cities like Washington DC, New York City, Boston, San Francisco Bay Area, Los Angeles, you know, um, and, and then, you know, internationally, London and Tokyo and Singapore and so forth, and Paris, w- that are kind of these cities that are like irresistible draws for people who are, you know, highly ambitious and, and want to be around a, a lot of other highly ambitious, highly productive people. [laughs] It turns out, as a result of that superstar city clustering thing, there's been a bifurcation in the housing market, right? Where basically those superstar cities, they become, you know, basically occupied at some point. You know, people end up with a political agenda, and then they stop building housing, right? And so the, the places where people want to go and want their kids to go are very difficult to get to, and the San Francisco Bay Area is like a, a, you know, a classic example of this. You know, San Francisco last year like authorized I think six thousand new housing units, right? Which it was just, just like an absurdly low number relative to the, the, the demand for people who want to move there. Um, and then the places where, that do not have this kind of clustering agglomeration superstar city effect, you know, they build plenty of housing, but the, there's not, there's not as much opportunity there. So, so heading into COVID, you just, you saw this incredible bifurcation, and you saw it in the American economy and you, you see it in American politics, where basically you're either in a city, you buy a home, you know, you've kind of got, got, you've, you've got that level of commitment, you've got that level of opportunity for you and your, your family, right? Or you're in a more rural environment and you're basically stuck and you don't have access to good jobs and your kids are not gonna have like high-tech jobs, and it's, you know, basically it's, you're gonna have a lower quality of life. Um, this was becoming a very big issue. This became a very big issue, by the way, for, for, for us, 'cause we were kind of... We, we were basically getting stuck in the geographic confines of Silicon Valley. Like we were, our companies were like penned in, and it was becoming very hard for companies to grow in that area. And then basically, you know, a horrible tragedy struck that turned out to also be in some ways a, a miracle in terms of, I think, the long run consequences, which is COVID, right? And, and, you know, none of us would have hoped that COVID would've, would've happened, and it has been a, a horrible tragedy for, for many people, and I think, you know, broadly for our society. But nevertheless, COVID was a system shock, right, that caused all big companies to basically instantly move online in a hard cutover, you know, in kind of a way that I never imagined was possible. Um, it was also an instant proof that companies really can run, at least for some time, they can actually run, uh, online, right? Basically, like no, no big company actually stopped operating as a consequence of this dramatic shift from, from in person, uh, uh, to online. Um, and then all of a sudden, like that opened the door to, you know, every CEO, every manager, every entrepreneur, every investor thinking, "Oh, um, okay, the post-COVID world is not going to be like the pre-COVID world. The post-COVID world is going to be an opportunity to rethink and reinvent how companies are organized. It's gonna be an opportunity to reinvent how industries are organized. It's gonna be an opportunity to reinvent, you know, how geography works, right? What the role of cities is. It's gonna be an opportunity to spread the economic activity from cities much more broadly, you know, potentially throughout the country." Um, you know, ev-every employer, every company, every CEO here, you know, is, is, is having some version of this conversation, you know, with, with their own company. We talk about this with our, our founders all the time. Um, and then there's a corresponding question that's opened up, which is how are people going to live? Um, and some people are going to continue living the way that they were, and some people are going to undertake a radical change in how they live, and they're gonna, you know, they're gonna go, they'll go remote, and all of a sudden, you know, you go remote and you have access to, you know, thousands of jobs anytime you want, which is a totally new phenomenon. Um, and then there, you now have the opportunity to rethink how, how families live, right? And so, you know, is it necessary for ambitious kids to leave the place where they grew up in order to have access to first class ec-economic opportunity? In two thousand nineteen, the answer to that was frequently yes. Today, maybe not. Um, and so, and, and I should also say like it, it, there's no, like this is not a zero or a hundred percent thing. This is not like a hard cutover. It's not like the whole world goes remote or stays remote, right? Which is not what's happening. But there's this moment in time that we're in right now, which is like we can actually rein- we can rethink and reinvent how companies are organized, um, and how work happens, and then we can also reinvent how peop- how people live and give people a lot more options in how that happens. Um, and so I, I think basically the presumptions that have underlied the whole structure of how the housing market works and how the industry works, uh, and how people live and work, I, I think it's basically all up for grabs. I think we have about a five-year window, I think, as a society to kind of figure out what this means and how to adapt. Um, yeah. Let
- 17:16 – 20:34
Lessons from WeWork
- SPSpeaker
me pause there.
- DUDavid Ulevitch
That was awesome.
- SPSpeaker
Yeah. Good.
- DUDavid Ulevitch
Um, perfect answer.
- SPSpeaker
Good. [laughs]
- DUDavid Ulevitch
Uh, which is a good, it's, it's a good segue to what I wanna go into, which is, uh, we, we have seen work become more dynamic. People now sometimes go into an office some days a week. Sometimes they go in for a couple months, and they go to a different office in a different city. Um, you know, like W-WeWork was quite e-uh, equipped for this kind of dynamic work lifestyle. What are the lessons that you have learned from WeWork that you're gonna apply to Flow or things that maybe you didn't, you didn't do at WeWork, but you thought about that you're gonna apply to Flow, particularly around sort of this changing way people live and work and how people, a- as we get to rethink the way that we sort of organize ourselves and, and bring ourselves to, to work and to home?
- ANAdam Neumann
I think you're right. I actually think flex, flexible work is more relevant today than ten years ago. So I actually think it's a better idea today than it was. The obvious lesson is community. I think corona-- I think on top of everything that Marc just said, and I'm not gonna repeat any of it, but, but that's the data that pushed us into being as interested as we were in this category. But on top of all of that, we, for a lot of time, I think a lot of people argued, Howard Schultz used to say Starbucks is the third place. I remember once having an argument with him. I told him, "WeWork is the third place." He was like, "Starbucks is the third place." Well, I think the first place turned out to be the third place. I think the home is the most important thing. I think COVID taught us that. I think you can take your, your work into your home, but you can't take your home into your work, and that's affecting a lot of change. Also, to put a little numbers behind what Marc is saying, seventy percent of thirty-five-year-olds and youngers are currently renters. They don't actually buy. And this number is not because of the interest rates that have been going up for the past six to ten month. This is a number from twelve month ago. And we believe that that number is actually only gonna grow. So seventy percent are renters. You said it's a big piece of their spend. It's about a third of their total wallet. So you have this huge asset class, largest in the world. Seventy percent of its users are renters. It's a third of their spend, and yet they're not getting an experience that is actually up to par. Not to talk about the financial, you mentioned, Marc, that they're not creating any equity, and they're not creating any equity. And when you put those two things together, you see a real challenge. And what it's going to do, and we're already seeing it, people are starting to work where they live and not just live where they work. And therefore, you're starting to see these movements between cities. Uh, you can even say without becoming too political, but we're in the heart of politics. Maybe some of the results in midterms now showed Democrats that were actually traveling to new cities and moving to different places. A lot of things are shifting, and the way we live has an opportunity right now to change because I think if we weren't clear about it before, how important the home is, everybody's reminded. And a great home and a great experience, an elevated experience is more important than ever before, and then work has to accommodate. And Marc and I, I actually think, see the world a little differently about what if, if our-- is every company gonna be a remote company or in-person company? But the answer is obviously hybrid of the two. And as you think through, well, how am I gonna solve work? And how am I gonna solve the future of way people live? What I see is an opportunity to really affect that change. And, uh, it's exciting that we're in DC because this is one of the places where opportunities like this
- 20:34 – 29:54
Work & home post-pandemic
- ANAdam Neumann
become a reality.
- SPSpeaker
Well, if I could put, put, put a, put a, put a point on something that, that Adam said. So the... You know, there's sort of this-- There's, uh, Richard Florida, uh, to analyze these things, talks about what he calls the creative class, which is kinda, you know, the sort of cl-- up, say, say upper middle class. You know, it's, [chuckles] it's us, it's our kids, right? Um, uh, it's, it's sort of, you know, uh, uh, uh, highly educated, you know, kids who are gonna basically go into a kn- a knowledge or creative profession of some kind, right? Work, work, work, work at a keyboard as opposed to, you know, what they're doing, doing some form of manual labor or manufacturing. And of course, you know, this is not most of the economy, but this is sort of the, you know, kind of the upper middle class, um, you know, in many ways, the, the cultural vanguard for the, you know, for the country. You know, they, they define a lot of the trends. Um, and so there's this experience, right? That I'm sure a lot of us have had, um, and a lot of, a lot of, a lot of younger people we know, um, have had in the last especially twenty years, you know, really, really twenty, twenty-five years. The sorta thing where you, you know, you, you grow up at home. You, you, you then go to college. You, you, you spend your time at college, you know, four or more years. Um, and you know, you're on this campus environment, and it's, you know, and everybody knows, like, college is kind of education. It's kind of adult daycare. Um, you know, um, it's g- you know, it's got all the f- it's got all the food and entertainment. It's got, you know, it's this whole se- contained environment. It's a social environment. It's a dating environment, right? It's kinda this, this whole thing. Um, you know, you're-- Putatively, you're an adult, but you're living in a dorm, and there's, like, a older adult down the hall who's taking care of you, right? So you're not really fully an adult. Um, and so you're in that environment, and of course, you know, in, you know, fifty years ago, you'd leave that environment and you'd, you know, go to work in an office. You'd buy a, you know, you'd buy a starter house, and you'd, you'd be on your, you know, sort of traditional American middle class path. Over the last twenty, twenty-five years, it became very common to have this idea of the corporate campus, right? And the, and, you know, sorta Google maybe, you know, really kind of, you know, crystallized that in the, in, in the culture. Um, you know, and basically this idea that the-- a company's facility where everybody came every day was going to basically be a continuation of the college campus experience. Um, and, and that led to kind of this, you know, perk bonanza, right? So you'd, you'd have this whole thing, go to this campus, and it's like gourmet food twenty-four hours a day. And it's like they'll do your dry cleaning, and they'll walk your dog, and there's, you know, swimming pools, and there's the thing-- You know, by the way, you know, these campuses still exist. They're, they're all a hundred percent converting all their tennis courts to pickleball courts 'cause of course that's what everybody's doing, right? So, so there are these, you know, the, basically this self-contained environment and, and the theory of it, right, was if we can get people, you know, especially these young people, like inculcate them, keep them in this kinda ca- college campus kind of environment, then they'll basically, they'll work more, right? We'll get more out of them because they, they, they'll, they'll be here more often. Um, you know, it was basically everything up to not usually including the actual bed. Um, although sometimes people would, would sleep under their desk, um, like, like Elon Musk. Um, but everything, you know, sort of short of that, um, and, and so as a consequence, you'd have this thing where sort of young adults kinda stayed in this corporate campus environment, and then as a consequence, they had this incredible community, right? The, the, um, they had this incredible environment, right? Where they have, you know, all these friends, coworkers, colleagues, you know, their, you know, their teammates, other people who work at the same company. They're going out to lunch, going to dinner, doing the whole thing. And then, and then by the way, it also turns out it's the da- it's, it's just like the college campus. It's the dating pool, um, right? Um, and so, you know, it's, you know, basically if you work for, you know, for the Google campus or the Facebook campus, like, who are you gonna date? Probably somebody who also is there 'cause you're there all the time together. And then you basically, like, drop COVID into that model, and you just, like, detonate it, right? Which is, which, which is what's happened, right? And then all of a sudden, the experience of a kid going through that, all of a sudden it's like, "Nope, nope, you don't get that. What you get is you get to sit in your studio apartment, right in front of your laptop, right? And good luck," right? And you're, like, cut off from everything else, and, like, you've got DoorDash, but, and you've got Tinder and, like, that's your life. And, like- [chuckles] That is not the same thing. Um, and so, and, and then, you know, to, to Adam's point, like a lot of these companies now are thinking, "Okay, we're gonna have people come back in the office two days a week, three days a week, or we're gonna have them come back in shifts," or this or that. But, you know, the sp- the spirit is g- like Elvis has left the building for the, for the, for these kinds of environments. Like, th- this is not the way that most companies are gonna operate. Um, and so all of a sudden, the focus on where you live, the focus on what, you know, are you literally by yourself? Uh, you know, do you have roommates? Are you in a small, you know, complex? Are you in a big complex? Do you, do you have any sense of connection whatsoever? Do you know who your neighbors are? You know, mo- most people historically who have lived in apartments, I don't think they generally would even know who their neighbors are, right? The, the guy next door is just the guy next door. You'd, you'd, you'd, you'd feel no connection. Um, by the way, there would be no overlap where you lived and the, the people you worked with would have no overlap, right? 'Cause there was no point. You didn't worry about whether there were other people who you worked with who were in your same apartment complex, 'cause you were seeing, seeing them at work all day. And so do you have anything in common with the people you're in the building with? Um, and so, th- so there's this, there's this sort of whole model that an entire generation grew up with that has all of a sudden been detonated. And I, I, I, yeah, and I, uh, I don't know, it may be radical. I think the idea of sitting in an apartment in front of the screen with DoorDash and Tinder is not a good life. Um, and so that, that opens the door for reinvention.
- ANAdam Neumann
We don't, we don't think... We know it's not a good life.
- SPSpeaker
Yeah.
- ANAdam Neumann
Because we've worked, even in the office, so you gave Google as an example, Google was inspiration for us at WeWork. Our point was, well, why can't small businesses have this great campus, have this great energy? And that was the beginning. I remember when we tried to sell Google and be like, "Can we, we can take some of your staff." They're like, "You can't take our staff. We're Google. We invented this." We ended up taking some of their staff. Um, quite a lot actually. But, um, the, the, that same serendipity feeling that you feel when you go, when you were to go in an office and connect to this, belongs in a home in a funny way, way more than it ever belonged in an office. And when you think of these apartment buildings, and it is a little sad. It's sad that there's an apartment building with 400 apartments, maybe six, 700 people, with a swimming pool and a kitchen and a gym, and all these amenities that when you t- if anybody here has ever been in a multi-family, you do this amazing tour. They show you all these amenity spaces. You never see anyone there. You then move into the building and you, not everyone, but a lot of people live the life that Marc is describing. And that's sad because I don't think human connection thrives. I actually th- I'm so happy we're here face to face, and COVID was, uh, obviously a horrible thing, but also a miracle at the same time. It's a miracle that we're all here face to face because this connection is so much more meaningful. And why doesn't, why don't people deserve that in the home? And again, I go back to that number. It's a third of their wallet spend. As Americans, we're used to actually, for anything we spend, if it's 2% of our wallet spend, 1% of our wallet spend, many companies that you guys invest in, it's all branded. It's always an uplifting experience. If someone doesn't do good enough experience, then the next person comes and elevates it. And yet in residential, and we can talk about why, but in residential, never happened. And because it never happened, and because it's so difficult to disrupt, it actually didn't occur. And what ends up happening is that renter is not getting a good deal, neither the experience or the financial transaction. And again, that renter is the majority of the young adults.
- DUDavid Ulevitch
Yeah, I think C- COVID was the first time a lot of people, especially under the age of, of 40, 50, first time they ever got to know their neighbors.
- SPSpeaker
Yep.
- DUDavid Ulevitch
Or they never had to, and their, their proxy for community probably was the workplace. And like you said, they, we're never going back to that. Whatever our new normal is, it's not the old normal.
- ANAdam Neumann
So I'm, I'm just gonna give you a thought about that. It's an American thing that they never had to, right?
- DUDavid Ulevitch
Right.
- ANAdam Neumann
In other countries, where I grew up in Israel, there's no such thing you don't know your neighbors. When you don't have salt, you go to your neighbor's door, you knock on the door, they don't answer. You open the door, it's locked.
- DUDavid Ulevitch
[laughs]
- ANAdam Neumann
You know where the key, you open it up, you go and you take the salt. You never bring it back.
- DUDavid Ulevitch
Yeah.
- ANAdam Neumann
Then they go back, there's no salt. "Oh, Adam took it." And, and it's, it's, it's this, it's this community.
- DUDavid Ulevitch
Here we call the police.
- ANAdam Neumann
Police, yeah, yeah.
- SPSpeaker
Yeah, yeah, yeah. No, they come in four hours.
- ANAdam Neumann
Depends on the-
- SPSpeaker
[laughs] It's true.
- DUDavid Ulevitch
Yeah.
- SPSpeaker
Or San Francisco, maybe never.
- DUDavid Ulevitch
Yeah, yeah. Right.
- ANAdam Neumann
You guys said. They said that. I didn't say anything.
- DUDavid Ulevitch
[laughs] Okay. So, yeah, keep going.
- ANAdam Neumann
But, but the point is that it's, it's such a natural thing for people living together to connect. And yet we live in a world where even when people are in the same building, they don't talk to each other in the elevator.
- DUDavid Ulevitch
Right.
- ANAdam Neumann
When I came to the United States and used to say hello to everyone in the elevator, people thought I was weird.
- DUDavid Ulevitch
Yeah.
- ANAdam Neumann
And I thought it was weird that you wouldn't say hello. Wouldn't you want to know who's living there? Uh, you know, we have a lot, a lot of little things, and we, we haven't talked about really Flow yet. There's a lot of different ideas that we have, but the simple one is when people tour a building, always the, the tour, the leasing agent tells you about all the amenities. I would like the leasing agent, who's not even gonna be called the leasing agent, to introduce you to a few residents who actually like living there. Let them tell you why this is a great building and if it's a fit for you or not a fit for you. And that tiny little thing I just said is so small, and the fact that it doesn't exist, actually, and, and a lot of people ask me, "Adam, how come this didn't exist before?" It doesn't exist, in my opinion, because buildings are full anyway. Landl- there is a short of supply, so you spoke a little bit about zoning. There is, and the numbers varies, but between three to five million apartments and single family homes missing right now in the US, and that number grows by hundreds of thousands of units a year. And so there's a shortage of supply, there's an overdemand, and no one really needed to do it. And because the landlords didn't need to do it, it didn't happen. And when you think of proptech companies and technology, I was talking to Steve Case before for a second about proptech and a little bit about, about all the different innovations. When, when you think, "Well, why haven't people solved this problem before?" Most proptech companies come in and solve a, solve a point solution. They have this one solution, but then they need to take that solution, convince the landlords, who are not even interested in buying anything 'cause they're making money anyway, go to these old ERP systems, connect to the back of these systems, then get the users. It's very difficult, which is why the way we want to tackle it is actually vertical. I almost think it's the only way.
- 29:54 – 37:44
Moving to the cloud
- DUDavid Ulevitch
we're gonna come back to that-
- ANAdam Neumann
All right
- DUDavid Ulevitch
... and the vertical software stack for, for proptech and, and Flow in a, in a minute. Um, Marc, you know, we, we came out, Be- Ben had a big blog post about how we've moved our headquarters to the cloud. We have decoupled, uh, the geography of the firm. Um, so I guess the first question is, like, t-t-talk two, two parts. Talk a little bit about the thinking about moving to the cloud. Why did we do it? Um, and then talk about how, how it's gone.
- SPSpeaker
Yeah.
- DUDavid Ulevitch
And then I'll, and then I'll keep you honest if I agree.
- SPSpeaker
Yeah. So this is, yeah, this has been very dramatic. I mean, look, for, for every employer, every company, this has been dramatic. We've, we've had our version of it. Um, and for us it's been very dramatic, which is we, we made a very deliberate decision when we started our firm in 2009 that we were really deeply gonna invest, uh, in the office, and in particular, in one office. And so we were kind of semi-notorious in the industry for we, we only ever had one office. The office was in, um, Menlo Park, California. Um, you know, this is actually controversial even in the Bay Area because there were lots of startups who were actually in San Francisco. Lots of the younger people who worked for us lived up in San Francisco, and we said, you know, it's our... You know, and everybody every year was like, "We gotta put up an office in San Francisco," and we're like, "Nope. Single office. Everybody's gonna be in the office." And, and the, and the reason for that was we wanted the beehive, you know, effect. Like, we, we wanted people when they walk in, both the people who work for us, but also the people who are visiting us, to really feel like they were tapping into energy, they were seeing lots of other interesting people, you know, that this was, this was like the kind of environment, you know, and the, and the k- the kinds of people they'd want, they'd wanna be around. So we, we put a really big emphasis on that. Um, you know, we, we were in there, you know, every day, all day, um, working together, you know, the whole, the whole thing. The whole thing you get from a high-functioning, you know, kind of office environment. And then like everybody else, in March of 2000, like we shut that down, um, and we went, you know, completely online. Um, and like everybody else, we were shocked that we were able to continue to run the firm, you know, as, you know, basically keep everything going, uh, you know, over, over, over Zoom. Um, and so, and, and Slack and so forth. And so, you know, kind of off and away we went. Um, we actually then actually ac- had an incremental process, right? And, and, you know, [laughs] the two weeks to crush the curve turned into two months, turned into two years, right? So like everybody else, we're trying to figure out how long this is gonna last. We start doing polls of our employees, and we did like a poll like six months in, and people were... You know, some people were like, "I can't wait to get back to the office." Some people were like, "Wow, I don't know." Um, you know, 12 months, the numbers moved. 18 months, the numbers moved. And then we had one poll where it was basically like 100% of the young parents were like, "If you guys wanna go back to the office, good luck. We're getting different jobs." Um, it's like, "I get to spend time with my kids. I get to be here in the morning. I get to be here at night. I'm... You know, by the way, I'm working at, you know, I'm working from home, you know, you know, you know, 12 hours a day or whatever. I'm more productive than ever, but like I am not gonna do the, you know, two or three-hour daily commute, you know, from South San Jose or from, you know, San Francisco or from the East Bay, um, you know, to go to Menlo Park. I'm just not gonna do it anymore." And so that, that perked our ears up 'cause it's like, okay, um, that's interesting. Um, and then the other conversation we had was basically what's gonna happen to our companies and to our industry, right? And, and, and so it's certainly not the case that all of our companies are going re- they're certainly not all going fully remote. And, and we actually have quite a few companies that have actually elected to actually stay very office centric, um, which is, which is actually a, a very interesting counterprogramming thing that some people are doing now. But, you know, generally speaking, our companies were indicating that they were gonna become more flexible and they were gonna really start to spread out. Um, and then the industry just felt like it was going to expand, and we were seeing, you know, a l- a lot of founders who were frustrated being in the Bay Area, you know, basically left over this period, and they went to other places and they started companies and... And so we, we basically decided like we, we can't be in the business of partnering with people who are building the future if we're not living in the future, uh, ourselves. And so we basically said, "We'll, we'll just do a hard reset. We'll become, um, you know, sort of, uh, a, say, remote centric or sort of virtual centric." Um, I just approved a request. We, we converted-- We, we, we still have our office 'cause it's on a long-term lease. Uh, we converted it to hoteling. Um, and uh, I just, uh, signed off yesterday, um, on, uh, converting my former office into the, apparently the new lounge. Um, [laughs] so, so I'm very excited to visit [laughs] visit, visit the, uh, the, uh, the new hangout space. Um, and so, uh, and basically what we decided is, you know, and so basically we're, we're gonna keep, we're gonna keep offices basically as, as places for people to go when they need a place to work, for basically, for teams to be able to meet together. We're also actually letting our founders use our offices more, which is actually helping them figure out how to kind of adapt through this. Um, and then we're, we're gonna expand basically m- actually the WeWork model being ahead of its time. We're gonna have more smaller offices and more locations. Um, and so we've opened formally in... What have we announced so far?
- DUDavid Ulevitch
Five, at least five, maybe six.
- SPSpeaker
But which are the, which, which ones have we announced? I just-
- DUDavid Ulevitch
L- LA, Menlo, SF, Miami, New York, New York Two, New York Three.
- SPSpeaker
[laughs]
- DUDavid Ulevitch
Uh, [laughs] uh, I, I think that's it for the moment.
- SPSpeaker
Yeah. And then we'll... Well, yeah, and we'll, we'll, we'll have more in the future. So we're, yeah, we're gonna accommodate. We're, we're... Now, we're, we're, we're a, you know, we're, we're not a, you know, we're an investment operation, not a product co- So we don't, we don't have like, you know, assembly lines or software, you know, kind of, you know, production. So we, we have a simpler version of the problem, but we're, we're letting our teams decide basically how to distribute. So we have some teams that wanna be in person. We have some teams that wanna be remote. And I would say, I think it's... Oh, so we're doing all that. So the way basically the firm runs now is we, we basically run the firm remote, like all the formal meetings are on Zoom. Everything is kind of equalized, um, you know, kind of that way. Um, but the teams are free to cluster whenever they want. Um, and then we have a very big focus on two things. One is off-sites. Um, and so get, you know, get every, every team is expected to get together on a, on a frequent basis, and we really invest in that. Um, and then a lot more travel. Um, and so I'm traveling, you know, I'll, I'll, I'll, I'll... My steady state, I think, is gonna be traveling at like four X the number of days that I used to travel. Um, and you know, and, and all of a sudden, right, it's even higher impact than it used to be to actually show up someplace and a- and, and actually be there in person. Um, so for us, it, it feels like a real broadening out of what a firm like ours is capable of doing. It feels like a way to basically accommodate scale, um, 'cause we definitely felt bottlenecked, uh, you know, where, where we were. Um, and so I, I think it's a way to run. Um, you know, look, I think to Adam's point, like we're feeling our way through it. I think a lot-- Like I would say especially this, I've talked to a lot of big company CEOs, and I think they're all... And I think they would generally agree with this. They're all in an intermediate state. They're, they're all in some hybrid state where they kind of have a lot of vestiges of the old model 'cause they've got the offices they've got, and they've got the employees that, you know, live in the certain places. But they've also, they know that they can't go back to the way things used to be. So they've all got some hybrid remote virtual thing. It's usually a two or three-day a week thing. It's not working really well. They've got, you know, this big question of do they also hire remote employees? 'Cause if they do, then it brings up the issue to the current employees is why can't they become remote? Um, and then they've got, you know, they basically all have to reinvent all the communication flows, all the management systems, and then they've got this fundamental question for their people, especially all the new hires, right? And, you know, we're now, we're gonna be on five years in here pretty quick, and so there's an entire generation of kids coming out of school that are gonna go to work for these companies, and they're gonna have a different set of both, you know, expectations and issues. Um, and so I... This is why I, I think we're still at the beginning of the change. Like, I think we're three years into a probably a ten-year process. Um, and I think the level of reinvention is gonna be actually quite staggering from here.
- DUDavid Ulevitch
Yeah, I, I think that's right. I think we've, we've managed through it very well, and we actually materialize where we need to and have a lot more face time. You know, I think, I mean, I see you all the time-
- SPSpeaker
[laughs]
- DUDavid Ulevitch
... uh, outside the office. And I think we get much, you get much more concentrated, focused time together to actually be productive, and it's le- you know, the hallway track is okay at the office, but it's a, it's a little bit superficial. "How was your weekend? What did you do?" When you go to an off-site, it's just much more focused and conscientious about what is important to us, what went well, what are we not doing, what do we wanna be doing. My, so my takeaway is that when we are together, it actually is way more productive. You know, not that I don't care about your weekend, I do care, but, uh, you know, it's not as important as talking about the next 10 years of the firm.
- SPSpeaker
Yeah, I call this, I call this the barbell, right? So it's, it's the... 'Cause everybody always asks, "Well, what about the watercooler moments?" And I'm like, "God, I hated the watercooler moments." Like, uh, I- I mean, like, to have to stand there and, like, talk about the football game, like, I, I can't, I can't. I, I-- Tim Brady seems like a wonderful guy. I, I, I can't do it anymore.
- DUDavid Ulevitch
It's very, it's v- it's very deflating. I'm gonna-
- SPSpeaker
[laughs] It's very deflating.
- ANAdam Neumann
[laughs]
- DUDavid Ulevitch
Yeah.
- ANAdam Neumann
I'm gonna, I'm gonna have
- 37:44 – 41:18
Office serendipity
- ANAdam Neumann
to, I'm gonna have to push back on my-
- SPSpeaker
Yeah, yeah
- ANAdam Neumann
... on my partners a little bit.
- SPSpeaker
Okay, go ahead.
- ANAdam Neumann
Um-
- SPSpeaker
Yeah.
- ANAdam Neumann
Yes.
- SPSpeaker
Please, go ahead.
- ANAdam Neumann
For an investing firm-
- SPSpeaker
[laughs]
- ANAdam Neumann
... I accept, and I already said you guys are not just investors, you're, you're partners and businessmen and entrepreneur, and it's, it's factual. I strongly feel, and, and Marc as to what's important about this conference, and he said it's important to think a little bit how the future's gonna look. Just an opinion. I've been in a few offices. I strongly feel that the serendipitous connections, those, those... So the watercooler is boring. They're interesting. When you're building a company, and it's getting exciting, and a new idea is coming, and the whole team was supposed to go home, and it's 8:00 PM and everybody told their husbands, their wives, and their kids, "We're being there in 30 minutes." And then someone went to the bathroom, sorry for the example, and comes back and he's like, "I have it." And they say this thing that solves the entire problem, and everybody gets so excited, and before you know it, it's 2:00 AM, and we just moved the business forward, not by a week, but by a year. And now it's 2:00 AM, it's very late, everyone's sleeping already. "Well, let's go out and grab a drink," and now everybody's hanging out. And before you know it, you just had one of those nights that's a mo- that's this moment in the life of a business that then you look back and you say, "I know that day when it all changed." That special piece cannot happen on Zoom. I think human potential is in the cloud, I believe it, but human interaction is happening right here. And I actually think if you look 10 years forward, the companies that are gonna make the effort now to be face-to-face, now we can describe what face-to-face is. There are many ways to do it. But the companies that are actually gonna do the face-to-face, I think when we look back five years, maybe even 10, are gonna be the winners. Obviously, I agree that the huge ones who don't know what to do with themselves, that's an opportunity for incumbents to come. But when I'm thinking of startups and new businesses, even strong new businesses, with my team, we're fighting for that face-to-face time. And, and every time we're together, the excuse of having this event brought a few of us together, and three things came up about the business as we're thinking about just what we're gonna talk about. And, and I think that's priceless. Now take that because we agree that the office is a challenge. Bring that back into your home. You're back in that multifamily building. Why not have those connections there? Why shouldn't you meet here? And it makes a lot more sense for me, by the way, that I'll meet my wife or my husband in the apartment building when I went downstairs to the pool than I do in the office. So both of those things work really well. And from a business point of view, I can do business there also. And then maybe there should be a co-working space. There should be an office. And maybe enterprises are gonna look. So if enterprises need to do culture, and if culture is not gonna be in the office anymore, then maybe there's a new hybrid that has to do with the home put together with an office space. Then I'll give one more thought that I have. I think the fact that you guys have seven offices is the future. So I do think it's smaller offices and centers, but it's gonna be very hard for me to be convinced that not bringing people together and not having human connection is, is, is in our nature. I don't think we're built to look at the screen, and I think that the one day when we're all much, much older and we're second, we're on our deathbed, and we're looking at ourselves and we have that moment of realization and we say, "Well, how much time in my life did I spend with my loved ones and with people I really care about? And how much time of my life did I spend in front of a screen?" If that answer of in front of a screen is too big, I am not sure how we're gonna feel that second before it's all over.
- DUDavid Ulevitch
Look, I, I think we would all agree that you have to know what inning you're in, sort of what time it is in your company, and there's definitely moments that matter where you all wanna be in a room working together. I think we, we do that. We would agree with that for sure. Um,
- 41:18 – 47:33
Building Flow
- DUDavid Ulevitch
so actually, let's, let's talk about Adam. You've, you've kept a lot about Flow close to the vest. Give us a little bit about the vision. You've given us a little hint throughout your answers here, but what are you, what are you really hoping to build, uh, with Flow?
- ANAdam Neumann
I actually thought, 'cause we were talking so much, that I was gonna keep it under my vest one more day. [laughs]
- DUDavid Ulevitch
Oh, yeah. Well-
- ANAdam Neumann
I thought I was gonna get away with it. Well, first of all, say a reason about keeping it under our vest. It's not that we've actually been keeping it under our vest. It's that one of the many lessons that, that we learned from the past is talk is cheap. We just wanna build. We just wanna... It's, it's a heavy lift, and we just wanna get to work, so we have no reason to say anything. I, I met a nice person here earlier today who I think said something about me when he was talking before, and I said, "You know, that's not true what you said." And he goes, "But that's what the media said." And I was like, "Well, I never spoke."
- DUDavid Ulevitch
That's right. The media, the media's never mischaracterized him either-
- ANAdam Neumann
That's okay
- DUDavid Ulevitch
... so it's amazing.
- ANAdam Neumann
He, he then told me, he said, "You know, I'm not sure I buy into Flow." I said, "Well, I never spoke about that either."
- DUDavid Ulevitch
[laughs]
- ANAdam Neumann
Um, in a very simple way, we wanna create an elevated experience for the resident, and we wanna find a way to share with the resident a portion of the value that they create. I'll give that a moment. We wanna elevate their experience. We talked about the buildings. We talked about everything that's happening. I actually think-- I don't think it's an easy job. I think it's very hard, but I do think the bar is low. You just make a little more connections. You just make it a little bit more real. You pay attention to the people running it. You maintain it the right way. You leverage technology to actually make things work. Instead of using nine apps, you use one. You do simple things, and you elevate the experience. But then the more complicated part is you find a way to share a portion of the value. Um, and- With the resident itself. And bec- and, and that's the vision. And because we said that it's a majority of the young adults, and because Marc said that that's how people... So a few numbers behind that. For 80 years, owning a home used to be the way that, that was the majority of us creating, uh, equity. And 60% of A- Americans today, in average, their equity is in the home. That is the majority of equity. So if we're correct and 70% are renters, and that number is only gonna go up, well, where are they gonna create equity? And if they're gonna be renters for 10 years, 20 years, when you go into these apartment buildings, and it's true about single family, but for today, we'll, we'll talk about apartments. If you're gonna go into these multi-family buildings and you're gonna have this disconnected experience that you just said, but you're not only gonna be there for two years and then get married and move to a home, you're gonna be there for 20.
- SPSpeaker
Right.
- ANAdam Neumann
That sounds soul-crushing.
- SPSpeaker
Right.
- ANAdam Neumann
And therefore, you have to solve both of the sides. Can I ask myself the next question?
- SPSpeaker
Sure.
- ANAdam Neumann
Adam, how are you gonna solve both of the side? That sounds really good, but what are you actually gonna do?
- SPSpeaker
Great, great question.
- ANAdam Neumann
Thank you. Thank you for that great question.
- SPSpeaker
Yeah.
- ANAdam Neumann
Um, well, we have four pillars as we're looking at the business today. We have the first one, which is a branded technology-first management company that actually runs the buildings. We have an asset management or real estate fund or real estate company that actually owns the buildings, and something cool about our new business, we actually own buildings together already. One of the biggest words that Marc and Ben used, as I said before, is alignment. Alignment, alignment, alignment. So for perfect alignment, we contributed into this business, uh, at least as much as, as Andreessen contributed into this business, and I'm very excited about it, and it's, it's amazing to feel like that. And then we have a financial services company. So number one, management company, branded technology first. Number two, real estate asset management, a company that can buy real estate and asset manage real estate. Number three, financial services. And the fourth pillar is this mechanism that's gonna take some of the value and share it with the value creators. And what we get so excited about the vision of Flow and the business of Flow is that it's actually a flywheel. If we can actually create a better experience in the building, then the building performs better and makes a higher NOI. If the building makes a higher NOI, then we'll be able to raise more money and buy more buildings. If we buy more buildings, then we'll be able to run more buildings and have more users in those buildings, and those users are gonna start using our financial services. Now, the reason they're gonna use the financial services, the first thing you do in buildings is you charge rent every month, and that's 35% of their total wallet. So that payments company that's charging your rent already has a real relationship with the user. If that financial services company's gonna do what we want it to do and create services that are actually meaningful, we call... We think of it as financial wellness, and give services that are actually meaningful, then that again is gonna drive more users. And then if we are able to take this value-creating mechanism and share with the residents a portion of the value, it's gonna make them feel ownership. And it's not just ownership, "I feel like I'm part of something," it's, "I actually own part of something." And again, the word ownership is a, is a very complicated word, especially in this place. But if there's perceived value, and if that value appreciates over time, then I feel like I'm part of a community. And a very funny example that we like to give is if you're in your apartment building and you're a renter and your toilet gets clogged, you call the super. If you're in your own apartment and you're, and you bought it and you own it and your toilet gets clogged, you take the plunger. And it's, it's, it's the difference when feeling like you own something to just feeling like you're renting, from being trans- transactional to actually being part of a community. And our vision is to bring it all together, and just one more example of just to put it into numbers. Average churn in, uh, property management... So average churn in multifamily in this country is 50%. It means a user stays in average for two years. If the user now enjoys their experience more and feels like they have a portion of the value and chooses to stay a little longer, and that average churn goes down from 50% to 40%, without getting too deep into the numbers, the NOI of the building will go up by approximately 5%, which increases the returns of the building for those LPs, for the investors, by 500 basis points, which in real estate is an unheard of number. And by tackling this, uh, challenge vertically is what Flow is planning to do, and, uh, as I said, we're just getting
- 47:33 – 53:00
Cities as startups
- ANAdam Neumann
started.
- SPSpeaker
Excellent. I'm gonna wrap us up with one... W- with a sort of combo question for, for both of you. Um, are there any model cities that are sort of doing this right, uh, from a regulatory standpoint, from a building standpoint, from a community neighborhood standpoint? Um, and then part two is sort of what role does government have to play, uh, in sort of facilitating and improving either, you know, home building, home ownership, um, and all these components? So why don't we start with, with-
- ANAdam Neumann
Marc
- SPSpeaker
... Marc, yeah.
- ANAdam Neumann
Well, look, it, it... C- cities were startups at one point, right? Like, so every city was a startup. Um, and you know, there, y- you... there's, like, incredible stories if you go back far enough, like creation of cities like Los Angeles or, or Washington DC, you know, for that matter. Um, you know, in the, in the 20th century, that kind of went, at least in the, in the West, that kind of went out of fashion, became sort of an, an intractable thing to try to do. You know, there were some entrepreneurs who thought, thought hard about it and gave shots at it. So Walt Disney, right, had a whole, you know, Walt Disney had a whole vision. Um, you know, and what... You know, the Disney Company to this day has these, you know, planned communities that kind of come from that. Uh, you know, Walt, Walt Disney actually had this vision for... He actually had this thing, um, called Epcot, um, the Experimental Prototype City of Tomorrow. Um, and- You can see it in the museum in San Francisco. If you go to the museum, you can see it.
- SPSpeaker
Oh, is that right? Okay, yeah.
- ANAdam Neumann
The whole thing in San Francisco.
- SPSpeaker
Well, they still... I think they still have the Epcot. What-- The part of Epcot that got built, I think is still in, in, in Florida. So y- you can go visit, I think, the remnants of Epcot. So, um, you know, this is like the... This is like sort of futurism from the '60s, um, you know, kind of in, in, in, in, in Disney's mind. And he, and he, he wasn't able to get... He, he passed away, and he wasn't able to fully develop Epcot, but he, he, he was, he was kind of reaching in this direction, uh, towards the end of his career. And then, you know, there are other examples in the US. You know, it's probably, um, what is it? Irvine, um, you know, took a big swing at this, um, and actually was, has been very successful. And then, um, you know, Venice, uh, Abbot Kinney, you know, sort of, you know, cr- created the, you know, in LA, created the Venice Canals as a sort of a planned commu- So you know, there, there, there are various ideas like this. It's been a long time ... since somebody's really taken a hard swing. And, and, and so basically what you have, you know, basically what you have are legacy systems. You've just got this sort of entrenched, you know, complicated power, you know, kind of system, local homeowners. I mean, it, it almost seems deterministic that if a city becomes successful, it basically, the local homeownership, whatever political base devotes itself to preventing the construction of new housing, and it seems like a, a real, a real trap.
- ANAdam Neumann
So I'll, I'll add to what Marc is saying, but, uh, if a city was a business, and it's an old business, and it's 30 years old, then you're gonna say, "Forget that business. We're gonna start a new one. We're gonna fund it. We're gonna start it, and we're gonna, and we're gonna take over." The problem with cities, they're built. So to go into a city now and change, let's just start with something very simple. Most of the city is concrete and roads where cars are driving. As, and there are so many new solutions, and you can already talk today about what's happening, and anybody who knows New York City. And so when Uber was getting bigger and bigger, how the yellow taxis started disappearing was an unbelievable experience, and how the medallions that used to cost a million three suddenly... So it's, it is a very challenging thing to actually reimagine a city when it's already built, and there's things you can do. When you look at these buildings as single-standing villages, yes, a building with 400 apartments, we can reimagine what happens inside of it. But reimagining a city is a big, is a big, uh, undertaking, and actually one of the only places actually in Saudi Arabia where I know some of the team members were just there, they're actually going for it. So there are places in the world right now, and, and it's very innovative, and it's very impressive that they're doing it, that they, that people are actually trying to build new cities. But the answer to that and sort of how government can help, there are technology companies right now, construction companies. There, there are different things. There's, there's a construction company here called Icon that's using technology, that the government is going to need to partner with them at some point because they have found ways to build a home in four days that used to take, uh, that used to take a year and a half. And as you can do more and more of those things, what we're gonna do is, I believe, through innovative technologies, be able to build it fast enough to give people the courage to go and build the new ones. But to go into the old ones is very hard. A crazy idea is office now, everything that's happening in office. Can you go and convert some of these dead offices into some new ideas? You could think about that. And I think the role of government has always been very important for this country. I think for us at Flow, and this is another lesson from the past, we used to think, and I used to think we had to own everything. I think the category is so big that the only way we're gonna achieve anything is through a partnership, partnership with government, partnership with current players, and partnership with new players that are going to come, and I think it's the only way to solve this problem. And I'll finish by saying that I actually think the housing crisis that we described might be one of the biggest challenges that the US is facing today. But the reason it's hard to understand it is because if you really wanna get it, it's five to 10 years down the road. The problem with housing, it takes five to 10 years. And Marc, I agree with your assumption that we have about five years to do something really big about it, and, uh, all I can tell you is I think we have the right team to give it a shot.
- SPSpeaker
Yep.
- DUDavid Ulevitch
Excellent. Uh, well, thank you both, uh, for being here. This was a great discussion. We're gonna wrap up and get everyone out of here and talk about the party tonight.
- SPSpeaker
Good. Thank you.
- ANAdam Neumann
Fantastic.
- SPSpeaker
Thanks, everybody.
- ANAdam Neumann
Thank you.
- SPSpeaker
Thanks, Marc. [upbeat music]
- SPSpeaker
As a reminder, this conversation was part of a16z's American Dynamism Summit in Washington DC. You can find the full library of videos from the event in November by going to a16z.com/ad-summit.
Episode duration: 53:01
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Transcript of episode BgK9KW9APfA
