Investing in Flow | Andreessen Horowitz

Our nation has a housing crisis.

It’s impossible to ignore the demographic trends driving America’s housing market: Our country is creating households faster than we’re building houses. A structural shortage of available homes for sale is driving up house prices, while young people remain single for longer and increasingly concentrate in highly desirable urban centres. These factors are putting enormous pressure on rents in the nation’s most dynamic cities, making clear the troubling realities on both sides of both historic housing market patterns.

The first model is: you own a home you call your own, usually with a mortgage for several decades, near your current employer. IF you can find a house as new housing is not often built in these areas. IF you can afford this house as house prices in many such places have skyrocketed. And even then, you’re stuck now – you can’t move, even if your economic opportunities or life path wants to take you somewhere else.

The second model: you rent an apartment, but: it’s a soulless experience; do you even meet your neighbors, much less have friends in your complex? Do you feel like home or just a place to sleep? Are you proud to bring friends and family over or hesitant? And you can pay rent for decades and still own zero equity – nothing. There’s a reason the federal government started subsidizing home mortgages: Someone who 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 and person.

Now drop the impact of the post-Covid world into that. Many people will live in places far from where they work, and many more will move to a hybrid environment. As a result, they will experience far fewer, if any, of the social connections and friendships in the office that native workers enjoy. For many of these people, increased screen time and reduced personal interaction will cause challenges beyond work, such as alienation and loneliness. This is not a good path for anyone and needs to be addressed directly, right now.

At the same time, in the last two years we have seen a shift in life priorities. For hundreds of years, aspiring young people had to move within close geographical colocation to employers to access the best jobs for their skills and talents. This is suddenly no longer true. This newfound flexibility sparked the “Great Resignation,” where people prioritized other factors over professional considerations. Many people are voting with their feet and moving from traditional economic centers to other cities, towns or rural areas without diminishing economic opportunities. My partner Catherine Boyle wrote about this, and I think she’s right: Can Zoom Save the American Family? and Can Starlink save America’s mother?

The world of residential real estate needs to keep up with these changing dynamics. And yet virtually no aspect of today’s housing market is ready for these changes.

So, we’re excited to partner with Adam Neumann and his colleaguees of Flow, which is a direct hit on this very problem.

Adam is a visionary leader who revolutionized the world’s second largest asset class – commercial real estate – by bringing community and brand to an industry where neither had existed before. Adam and WeWork’s history has been exhaustively recorded, analyzed, and fictionalized—sometimes accurately. For all the energy put into covering the story, it’s often underestimated that only 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 build 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 after WeWork, Adam returns to the theme of connecting people by transforming their physical spaces and building communities where people spend the most time: their homes. Residential real estate—the world’s largest asset class—is poised for just this change.

Shelter is one of our most basic needs. In a world where limited access to home ownership continues to be a driving force behind inequality and anxiety, giving tenants a sense of security, community and real ownership has a transformative power for our society. When you take care of people in their home and provide them with a sense of physical and financial security, you empower them to do more and build things. Addressing this issue is key to increasing opportunity for all.

Make no mistake, this kind of mission is a heavy load. 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 of the current system and build the solution. Achieving this requires combining community-oriented service with the latest technology in a way that has never been done before to create a system where renters get the benefits of owners. This means rethinking the entire value chain, from how buildings are bought and owned to how residents interact with their buildings to how value is distributed among stakeholders. And given the fragmented nature of the ecosystem today, we can only hope to achieve something by bringing every aspect of the life experience together.

We are excited by the scope and ambition of this project. It doesn’t lack vision or ambition, but only projects with such lofty goals have a chance to change the world.


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