Adam Neumann: This Is How You Build Iconic Companies

You said, "I don't tell me how you're doing." And I jumped straight into my lessons learned and this had an answer. And you were like, "Oh, you're still in that stage." And we don't know each other. I was like, "Mark, please tell me what that stage is." You go, "You know, to stage, when you forgot everything you did and believe everything that was written about you. It's a stage, it will pass." Today, we're bringing back one of our favorite conversations from the past year. Few founder stories have generated as much attention or debate as Adam Newman's. After building WeWork into one of the world's most valuable startups, experiencing one of the most public corporate collapses in recent memory and returning to start Flow, Newman's journey has become a case study in ambition, resilience, and second chances. In this conversation, Mark Andreessen Ben Horowitz Adam Newman and I discussed the lessons from WeWork, the vision behind Flow, the future of housing, and why Adam believes community is one of the most overlooked challenges in modern life. Adam, welcome to the Ben and Mark show. I'm glad we have another head of hair on the podcast. It's a very brave thing to say. [laughs] We were just talking at lunch about how some entrepreneurs have many ideas. But Adam, you have one idea that you've been refining over your life, just getting it better and better and better. So why don't we go back from the beginning and talk about your background and how you can find a thread to how that led to Flow today? I was born in Israel and my parents got divorced when I was eight. My parents are both doctors. And we moved 13 times in my childhood. So I remember moving from community to community from place to place. And what generated all the moves? First of all, I think in Israel being a doctor because it's such a small place. You study in one place, you've fallen another, then you go from one thing to the other. So I think that generated about three of them. Then my parents divorced, generated another one. I think my mother could not stand to be in the same country. That's my dad at least for two years. Oh. Which actually pushed us, which not a lot of people know about it. I lived in Indiana in the Annapolis, also Huzia for two years. I went to Pacers Games and saw the Indy 500 and learned about the three S's. So those were some of the moves. But the other one, my mom, and she's actually comfortable speaking about it. She's bipolar. And she's an oncologist. And she's very good at her craft. But being an oncologist and also having the mood swings, she would fight very hard for her patients. And no matter what happened if you were my mom's patient, she would go to work, including with the head of the hospital, to fight for you. And Israel has this medical basket, and not everything is included. And some people could afford things, some people couldn't. And she was always finding a way to get people the best treatments she could. But because she was such an excellent doctor, whenever one head of hospital had enough with her, there was always two other heads of hospital, ready to recruit, which is something we know about, great talent. Great talent always finds a home. So I think that led to a lot of those moves. But for me as a kid, I think for kids moving is a very difficult thing. I think it's good, because I think it makes us stronger. But also I think it's difficult. And when you enter a new community as a new kid, you have no friends, and you always find yourself looking, what you're going to be with. And I used to be attracted. Also, there were the only ones who would have me to the uncool kids. So I was the ones who were a little different. And so I would get to a new place. I already knew my place. I'd go immediately to the different kids. And my thing in life was I would be friend, then we would become great friends. Then I would make my way into the social structure or whatever community I went to. And I would bring with me those kids. That was my big winning moment. The toughest community I ever went to was when I lived in the kibbutz. And for those who don't know, and that's also where I lived the most. And the kibbutz is where it's almost like a commune. The kids lived together from in our kibbutz. They stopped it. But a lot of them lived together from age two to 18. They go to their parents for dinners, and they spend the weekends. But they're all more kids than not kids. And they were so tightly put together that I was the hardest group to connect to. But also I think the place that affected me the most sort of shaped me with what I think about community and about together. And once you do become part of that community, my mom was a, we said the doctor should come home very late at night. She would be on call sometimes. There was a whole community taking care of my sister and I. Oh. Wow. And then, you know, as you grew up and got into the world and so forth, like what did those early experiences teach you about community, living, how people exist together that led to the vision that started as we work and then that's now flow. So first of all, I think there are multiple kinds of communities. They're great communities when a group of people gets together to build something greater than themselves. And then there are communities which we've seen, I think, more and more of where you get to a mob mentality and sometimes that mob mentality actually balances to the lowest common denominator. Yeah. Luckily enough, the key boots and the communities I was experiencing were actually the kind where people come together to do something greater. And it really made me feel that there is more happiness, more fulfillment, more things to do. It's a better way of living when you're surrounded by other people, especially for me because my childhood was difficult. So we said about my mom, so she would take amazing care of her patients. But I think by 8 p.m. and it was a very long day and she would come home. And my sister and I were only at one chore. We just had to wash the dishes. We never did. We never did one thing. She just wanted us to come. Because I felt because I used to walk my sister home from school and I would make the meal. And I did a lot of other things that were important, but they weren't considered a chore. The chore was you wash the dishes. And my mom would come home and the dishes won't wash. And many times those dishes would start flying. And a lot of times end on the floor or everywhere, actually in the house. So that was very extreme as a kid. And I remember the day once my mom, we didn't have a lot of money also growing up, as well as the social medical system. So doctors don't earn a lot at all. So we always, I remember growing up, it was always either we're at zero or an overdraft. So I grew up in my life that we're negative or you can make it back to zero. And when you don't make it back to zero enough times, you're going to call from the bank. And then you call grandma. And grandma helps a little bit. Things go back to zero and down to negative. And I remember one time where my mom bought this new set of dishes. And she comes home and again, the same fight. And she starts throwing the dishes. But my sister noticed not the ones she just bought, only the other ones. We'd started telling us that there was some method to the matter. So it was very difficult back then. And then living in a community always made it better. And no matter what happened at home, no matter how tough the night was, the next morning, everything was okay. And there were neighbors and they heard and things happen. Always people were looking out for us. I also remember and we were just at your father's memorial on Sunday, which was very moving. And I learned a lot about him. And you said the Mark Twain quote there, I think you said something like, when I was 14, I thought my father didn't know anything. And by the time I became 21, he learned so much. Yeah. I think for me, I could really relate to that. Because as a kid, I always focus about the fact that my mom was so difficult with us. And as I got older and started having, I'm married today with six kids and started having my own kids and realized how difficult it is when everything is great. And you have access to everything and can get very difficult. I realized that for my mom to be a single mom, a doctor, dealing with my personality, which now I see it in my kids, which must have not been easy. Yeah. There's a certain quality. So a lot of personality to do with. I actually think that in hindsight, what I thought was a challenge was actually exactly what made me a hoi and today. I think as I was building businesses, it was never tougher than when I was a kid. So there was nothing that could happen. That was that bad. And I think sort of because I do want to make a difference in the world. And I do want to make it a better place. I think comes from her and from how she took care of all those patients. And in hindsight, I love the childhood that we had. So all of that led me to this really army, where I became a Navy officer where anybody who knew me would have never guessed. Because you need a lot of discipline. And I think something nice about going to the army, it forces discipline. Because either you're going to be disciplined or you're going to be in trouble. So the big punishment in the Israeli army, the beginning is you don't get to go home on the weekend because Israel is so small. Right. Supposed to the US, you serve in the Navy, you're serving. You're very far away from home. You come home every three months, every year. And Israel, the furthest you could go is four hours. My Navy base was an hour from home. So you get to go into weekends for 24 hours, you go home. And it's an amazing thing. And you're supposed to rest, but no one rests. You go out, you party. It's a great 24 hours. And for the first nine months, every week I would get punished. I couldn't make it. I don't know. But the time I gave up, I was like, the week would start. The commander would walk and say, Adam, you have Shabbat, meaning, you know, leaving. And then the week would start. And it took me nine months, actually. Someone told me, very smart officer told me, said, look Adam, I think you're going to do great things when you grow up. But you can't be a great leader if you don't know how to be a soldier. Brother, you know, that's true for CEOs too. Unless you learn how to be a great employee, like some way somehow, it's hard to be a great CEO. And I think it's true for partnerships. Unless you learn, it's the same thing about partnerships. Unless you really learn how to be a great partner, then you're never going to make things work. And it's really stuck with when you said that Navy officer coursing Israel's two years, said, you only need two years. Not even a soldier, you're cadet. You just need to make it for two years. And I did. And I credit a lot of my ability to get things done, no matter how complicated it is. I understand how to work in a team, understand leadership. But there's natural leadership that we're born with. But then things we learned. All of that came together and so made me who I am. And then I moved to the US four days after I finished the army. My sister was a supermodel living in New York City. The family said, I don't go check on your sister. I'd see what's happening there. There's no one knew what she was my younger sister. Yeah, no one knew what was happening there. So I flew to New York and we lived together and for the next six years I lived with the deep but I also for the first four years went to CUNY Baruch College City University of New York and For me going and I know it's not an Ivy League school But for me going to school is very easy because again compared to the army There wasn't any test there that we were gonna be given that was so hard and then I think one more thing that sort of shape He's growing up I am still extremely dyslexic you guys know because I sent my text. Yeah, I'm soon start using Hey, I just had my time. I don't yet so a lot of spelling mistakes. Yeah, and I couldn't read until I was in the third grade So being dyslexic always throughout my life forced me to learn how to deal with things Dealing communities really shaped me and going to the army taught me how to be soldier and then how to be a leader Then when I brought all of that back and came to the US things seemed very doable Yeah, everything was possible and I think what I like about this country so much is I think that's the American dream Coming as an immigrant from a different country a kid that in school couldn't even necessarily really write and had to always work out a system of how to get something done and Coming here having an idea building a business failing multiple businesses and building a bigger business Maybe not succeeding as much as we wanted to then building another business Yes, and I think that second chance that concept of anything can happen that concept I heard it a lot again in the memorial on Sunday that concept of a country where we are all Have the ability to achieve what we can and be we can be that is for me what the American dream is and that's why I'm so proud to be here Yeah, there are a bunch of super high profile very successful people in modern American life who were dyslexic as kids who really struggled with dyslexia as kids What connection is there like what is the thing what is the experience? What's the strength that goes with the difficulty first? I think you get very good at hiding it so my parents were said were both doctors Second grade parents getting divorced grandmother staking me out to lunch just because she wants to see how I'm doing Hands over the menu and says please order and takes her exactly 20 seconds to realize the kid can't read Walk marches me to the principal's office. She was a lawyer What kind of school are you building here my grandson can't read this is horrible and He looks at her says I actually know your grandson he comes here two to three times a week. We know each other well And he's gonna be just fine. He's gonna have one person reading for him and another person writing for him and he could do anything he wants So the beginning I think being dyslexic you learn how to mask it and you learn you have to use your ears and your listening especially my dyslexia was both in numbers and in letters so in a heavier side of dyslexia and you really learn how to Deal with finding solutions you get embarrassed I think a lot at the young age term embarrassing when everybody else can read and you can't You must make friends because if you don't make friends who's gonna help you study for the test So I think those are the beginning it teaches you that there's always a solution and it a hundred percent It's you to think outside of the box. Whatever solution everybody else has it's not gonna work for me So now let's see what I can do. I think it's changing today I think something technology is doing. I think it's I have a lot of dyslexic friends now everyone keeps calling me But how they're using AI to write stuff because it's just they're not making mistakes anymore Because my kind of dyslexia even when you dictate it to the phone You still get sent special with my accent. You still get spelling mistakes. And then you can't fix them But when you use chat GDP you can actually get over that. Oh, okay. So it's just another little use case that works for everyone Yeah, it's great. I think the other thing having any disability does It makes you when you see someone else who's disabled and doesn't matter what kind of disability because for one thing Each one of us is something that bothers us and we think it's big for us, but someone else might think it's not It makes you care Or be very angry For a little bit Tell us about when you had the threat of the idea that would when they become flow You're telling us off camera about how at your college you approached a professor with an idea So when I went to Baruch College I joined the entrepreneurs I thought I wanted to be an entrepreneur didn't really know what it is But it took entrepreneurship and I minored in marketing and one more thing nothing with studies And You'd already done Middle Eastern studies by that point. I was already in Fastline. I did I did Middle Eastern studies applied Middle Eastern I'm gonna plan get ever since I sure we're gonna get to it Yeah, and there was a competition and there was the first entrepreneurship competition first prize 50,000 dollars and A seed investment into that idea and I was sure I was gonna win that competition And I talked in the class and I found the best writer and whoever I thought the best teammates again something from a Dislexe I was very used to finding the best kids in class and We said we're gonna win this and I had a huge idea and it was called concept living and concept living Was going to be a new way of living because I used to live in an apartment building with my sister I was blown away by the fact that we would go up and down the elevator this is in Eric City 2002 to 2008 right after September 11 and No one would say hello in the elevators and I just found that fascinating and We used to play games at how we're gonna say hello to enough people and I would wish I thought I noticed that if you talk to enough people And brought them together the buildings energy change and we presented this concept living and Everybody except for us made it to the second stage of the competition Everything this stupidest ideas you've ever heard my team was very disappointed in me because I let us into a horrible idea I marched into the dean of business Office why knew for other reasons and I said to him I get it I missed it. We're not gonna go to the next stage. We got to tell me why because he was on the panel on the judges And he said that the industry is too big you're too young and this is unrealistic. Oh Nothing been you were sharing before I don't think I'm the only one who's experienced that kind of yeah Well, this is the story of Fred Smith. Yeah, federal express or would he get a C-minus on the paper? Yeah, so Fred Smith the legendary founder of federal express which is one of the great companies of the 20th century I think it was one of the heavy physical hardware. He had the entrepreneur class he wrote he wrote his paper on the idea for federal express and again They gave him a C-minus So hey brilliant having the hub in Memphis and how would you So it was just this wasn't just a C Just a final little yeah, and because it was completely neat idea but totally in practice Yeah, so it's a great never-work difference in that story. He goes right out and starts it. Yeah Yeah, I wait 10 years and I think there's I've always had a lesson from that like if you're a dean of anything if you're a teacher Yeah, and you have a young student full of passion wanting to do something tell them how to achieve What it is they're going after not why it's impossible. Yeah, because you never know who you might be speaking to Yeah, so that's so so that started I think Ben also used it something interesting about that which again I for me the partnership with Mark and Ben is amazing separate from the fact from our business partnership Is I learn a lot and I enjoy the partnership and the friendship you shared something about the fact that Because people ask you about what ideas Adam has. It's always been one idea Yes, yeah, yeah, well that It was an earlier conversation where I forgot the question there I cast but I was like no Adam's only had one idea This is how you navigate the idea amazing. Yeah. Yeah. Yeah. Yeah. There is no base This is it like he's he's been following this idea for You know his whole life now and so and and it's the thing that makes it so powerful in that He and I actually had a conversation with a potential investor the other day and they're like well how come somebody won't be able to replicate the technology and My answer was you know the technology by itself is somewhat interesting but it's part of an integrated vision That one literally one person has and the thing that I would The analogy for me has has kind of been Apple where If you look at Apple kind of and what Steve Jobs did in particular when he built the product line There was no piece of software. There was no piece of hardware. There was no nothing that Wasn't already done like like all these ideas were done It was the Product line that you know with a design sensibility with a usability idea with the way the technology worked with the person Was the thing that made it so special and so hard to replicate and you know nobody was able to replicate that And I think that you know when you when we get into flow what I see is it's a single idea about how people live that's enabled by design and technology and the business model and a culture and the whole Set of things and if you remove any one of them, it's not flow you know, it's a Windows PC when Windows 95 whatever it was, you know, it's that kind of thing Well, we'll get deeper into flow, but first I want to make sure we cover the the back story here, which is Mark when you talk about how How you met Adam or what you guys saw in Adam and then let's talk about how this partnership is formed Yeah, so we didn't we didn't actually we didn't we didn't really I don't like we'd never really met that I don't think prior to prior to The first phone call in me for when I first called you um and you know and part of it was a it was a half-field McCoy thing because he was with a half-fields He was a best-for-for-fouter That those were the days when we actually had a rip-off and we're across the street from those guys That's not that's not that's not our side of the street. So um we never really met but you know we we followed the whole saga You know all the way up and all the way up and all the way down and and um, you know, we noticed a whole a whole bunch of things You know, kind of went through that. But we did notice right up front, basically what Ben just described, which was the integrated vision. And then, and then I told that I miss early on, I had a conversation with a guy who's a, one of the top real estate people in the world who is, you know, had, and this was actually the middle of, this is when things were starting to go, you know, pear shape at the time. And I was like, you know, what do you think of this thing? And he's like, look, he's at different, he's at different, he's at different, he's at the same, there's like two people in the world who have ever successfully differentiated, branded differentiated commercial real estate. And he said, one of them is currently president of the United States. (laughing) Yeah, there is Adam Newman. Yeah, we thought, we actually thought that was pretty cool. You know, like that, you're like, what an achievement. And it was right at the time when every, you know, newspaper was slacking him and all that kind of thing. But, you know, the thing we couldn't stop thinking about was like, wow, he's one of two. What of exactly two? And what my friends, my friend said was like, look, it's just like this business has been the way it's been forever for hundreds or hundreds of years. For as long as there have been commercial buildings, there's been a certain specific way of doing it. And we've all been trained in how to do it in a very specific way of operating. And, you know, at the simple level, you know, we build a shell and then we lease it for 15 years. And then the tenant does all the work on, you know, deciding what the, what the interior is like, what the experience is like. I had another, actually, it's a, Degression, I had had another conversation like that with another conversation like that with an entertainment industry mogul some years back when the movie theater business started to cave in, you know, the theatrical box office started to collapse. And I was like, well, why don't they upgrade all this, why don't they reinvent the movie theater? Like, why doesn't it have, there was this famous movie theater in LA, there was one called the ArcLite and it had this incredible experience of, you know, it had ballet parking and it had reserve seating and it had like real food, like real food delivered to you in the sea and it had like, you know, special screenings where there were no kids allowed and then the other screenings where like kids were definitely allowed, you know, and encouraged the Ellen screen. And, you know, and, and I was like, you know, why aren't there more arclights? Like, why hasn't this experience been going to reinvent it and the, the, the guy was CEO of an entertainment company and he looked at me and he said, 'cause they're all in my real estate guys, who have absolutely no interest on what happens inside the building, like they literally don't care. Anyway, so, so back to my discussion with my real estate friend, it was, it was the same thing which is he just looked at him as completely reinvent to our industry. It's, it's always gonna be like this going forward, it's never going back. He's, he's gonna under the entire thing and you know, we work, you know, in some way is gonna survive this and well, they'll fit, they'll figure out this specific thing with the, with the company, but he said the industry is getting, is getting reimagined. And there's only one guy who's ever been able to do that in this business. And then, and then you pause for a moment and you kind of think to your point about like this year size of the industry. And as, you know, as, as you always remember, why does, you know, this is one of the biggest industries on earth, you know, that matters to everybody. And so, as Ben and I were talking about it more and more, kind of as you're watching the whole thing happen, it's just like, all right, like there's, you know, there's something very special happening here. Kind of independent of the, of the sort of day to day blow by blow aspects of the business. And then, and then we'll talk more about independent of, you know, the financial stresses. - Yeah, the other thing is, you know, we, we keep very good track of what our portfolio companies use. And they're really good indicator of like the best new products because they really care about products. And, you know, almost all of them were, we were customers and we thought, wow, that's like, super interesting. So we always thought he was a really interesting guy, but, you know, because he was with Benchmark, we couldn't call him. - Okay, so what was the first conversation like? - Yeah, so I mean, you may remember it better than I do, but yeah, I just, I was actually, I think it was, was it during COVID? - It was COVID. - It was during COVID. - I looked it up before the podcast, May 2020. - So when the COVID lockdowns hit hard, you know, out here, and I had this, I didn't have a home office really set up because we always worked out the office. And so I had just, I was at my dining table with the chair and after about eight hours of some calls, the entire site of my body from my neck all the way down to my ankles would be basically seized up in a pain. And I was like, I can't wait to die. I'm not gonna die COVID, I'm gonna die of crippling whatever this is. And so I started taking three hour walks every morning and I went over to the Stanford campus, which was Stanford campus, May 2020, Stanford campus completely deserted, except for me taking a long walk. And then there was one staff guy who was stationed at the head of the, of the quad area where I would park. And his job was to yell at me for not wearing a mask. And as far as I can tell, he did all day. And I would see him every morning and he would yell at me for not wearing a mask. I would wave my mask and just keep walking. Anyway, then I would do three hours of calls. And so I actually remember this is why I remember the calls 'cause I remember actually standing in the field, one of the fields of Stanford and actually having the call. And yeah, and it was basically just like, look, like we've always really admired what you've done. And we understand what you're going through from the press. But basically, I can't remember if I told this to you, but like our philosophy always on this is, like one of the key ways you evaluate founders is like what difficult challenges have they been through in their lives that they were able to overcome. And the best forecast of being able to overcome a profound challenge in the future, which everyone to be able to deal with is having overcome profound challenges in the past. And many of the great founders in history have had significant blowups at various points along the way. - Including like Henry Ford. - Yeah, exactly. Thomas, there's tens of examples. Thomas Watson, Thomas Watson, senior who founded IBM. The guy who founded IBM. He founded IBM in his 40s. In his 30s, he was convicted by the federal government of antitrust. He was convicted of antitrust violations for running his previous company on CR. Like he was basically already basically been completely taken down by the government at that point. And then started IBM. And so there's just this long history of people who have kind of been through these things. And some people get punched in the face hard and they never get up again. And other people just get punched in the face. And they're just like, wow, it's another opportunity for me to stand back up and show what I'm capable of. And so we just always felt like it, because somebody goes through something that's very difficult if they're able to navigate their way through it and kind of demonstrate their character through it. They often have great potential. And I don't know if it is reasonable for me to draw the kind of comparison of what you were describing for being dyslexic as a kid or whatever, but like being through a fundamental challenge. Like that, whether it's in childhood or adulthood. Yeah, there's a couple of things that go with that. One is anybody who's ever had a great success knows that the margin between that and a total failure is very, very thin. And the bigger the success of the thinner the margins are like, all of us who have been through that go, wow, like one bad piece of luck and it could have gone completely the other way. And then we kind of philosophically very kind of early on in the firm always felt that what we're looking for is great strength. And like every person has a weakness or has weaknesses. And some of them show up in like crazy ways. But that doesn't even matter 'cause everybody's got that. What matters is are you world class or best in world at what you can do, not what you can't do? And he was clearly like clearly clearly clearly like as Mark said, you know, top two in one thing. There's just very few people on earth that are top two in anything. So, you know, it was one of those things where like we were excited to meet him. Not, you know, it wasn't, oh boy, this is, and we were, got all fucked up. And that was never a thing. - And then I mean, maybe one more thing, just a general observation, which is kind of the old adage of failure is a success as a thousand fathers or failures in our fitness. There's just, I don't know actually, I can't remember if I've ever asked you this, but like what a lot of people who go through kind of a big public kind of, you know, take down, tear down or some kind, you know, kind of go through is just like all of a sudden everybody they know and they're just like, you know, that phone's not ringing, right? I've heard this from lots of people. I don't know if it happened to you, but I've heard it happen lots of people where all of a sudden it's just like you develop, you know, develop a web mercy or something and people just don't want to talk to you. And it's just this like completely bizarre thing because it's like, all right, this is like a person who people had, you know, super hype in and of and then, you know, lots of relationships with and then just all of a sudden, you know, it's just like poof vanishing and it's like, you know, what is that? And you know, every one of those people is probably telling themselves some story about how, you know, they're making the right call by separating from the person, but what's, of course, what's happening is, what tech is Iskie, great famous philosopher, tech is Iskie, what's called over socialization, right? People are too worried about what everybody else thinks, right? And so people get too wrapped up in the sort of mob, scapegoating cycle of, you know, being able to, and sort of this need for, this kind of perceived need to kind of, for everybody to agree on everything all the time and that just that has this effect of I think too many really promising people being abandoned a few moments. Anyway, I don't know if that happened to you or how much that resonates, but I have talked to many other people about through this kind of thing and I know that that happens. And so, you know, to be able to talk to somebody in that, to be able to talk to somebody in at that time, I think it's like a, it's a blow against conformity, which I think is always a good thing. - And it's, you know, it's a time when people actually could use a call. - Yeah. - Yeah. - So I think the thing I would add to that is, so I'm not sure we spoke about it. The phone completely was not ringing, were you called? - Yeah. - And some people are social, I think I'm, I was extra social, so my phone was ex, and I like, I'm over-talker than, so really stopped. And it wasn't just that, it was, I used to say this sometimes, I speak about it, I had a thousand friends a week before and I went down to 10 and five of them were family members, which I think was part of it. And for me also, I had some of my closest friends working with me, right? 'Cause that's part of our ability. And there was a moment where even people who knew me, who were there for the story, suddenly believed what they were reading. And I do believe we live in a different world. I think we're talking now 2019 and we're now 2025. Hopefully the world is changing after that people know, not to believe everything that they read. But I think that was still an end of an era. And we were right place, right time for that. So it definitely stopped ringing and something that, I don't know if I've said it to you, but it was greatly appreciated, that phone call. And it was interesting about funcals. There was no business transaction in that funcals. The funcals was just how you doing and telling what you think. And there is something I've shared it before, but it's worth it. Where you just said, I don't tell me how you're doing. And I jumped straight into my lessons learned and this had an answer. And you were like, oh, you're still in that stage. (laughing) And we don't know each other. But I was like, what Mark, please tell me what that stage is. Because you know, the stage when you forgot everything you did and believe everything that was written about you. It's a stage. It will pass. And you also told me, and then you told me the same thing that you were speaking about. You said, let me tell you what I think about what you did. It was very nice. But you also said at the end of it, you said that I'm just, you know, and I'm sure we'll talk again. You said, there's only going to be one decision and you need to make moving forward. And that's, you're going to get back in the ring. You do not? Yeah. That's right. And it goes, I feel, I don't know you. I feel like you're the guy who's going to get back in the ring. And that's where it's ended. And I was still thinking back at it today. Or if I had someone who was mentoring and they would tell me that Mark called them, I would say, well, call him back. See, if there's something you guys could do, there's none of that. It was just that. And the other beautiful thing that you guys did, but Mark, it was again you, about six months later. You called me again, say, hey, I don't know what I was spoken. What's up? What are you working on? And I was starting to actually work on residential because then, you know, to your point, there was always one idea. But I thought I was working on residential as an investment. It was COVID. Cap rates for those, remember interest rates for literally at zero. Cap rates for wide. For those who understand real estate, when cap rates compress, the value of the real estate goes up. So when Mark calls it, what's up now? I said, look, we're doing this. We're doing that. But nothing, nothing that special. It works like, OK, let us know if something interesting happens. And between that and the third time that we spoke, I started walking the buildings. And this is something amazing about Corona. So so much change in the world. And I would love to hear Mark because I think it's so interesting because we gave a lot of forecasts here in Iincorporana. What's going to happen to office? What's going to happen to the home? But sounding those obvious in Corona is people are not going to give up their homes. And where your home is is where your heart is. And you get back home and you need some version of community. And people back then were so connected digitally, more than ever before, and no one to talk to. And especially with the mask, if you really want to make it hard at that barrier, then tell people they're not allowed to be in the same physical space. And you get yourself an anti-keyboots moment. And peak anti-keyboots moment was some-- middle of Corona. And me and my team, we were like, hey, let's go buy some real estate. And my head of real estate goes, there's Mark. He goes, I don't know, how am I going to buy this real estate? We only know how to buy by talking to the landlords because we don't use brokers. We want to deal. So we want to find a but the seller that really needs to sell. And we need the reason to buy. And I said, go meet them. Said they want me to meet me. I said, meet them outside. Put them over across the table. Make sure they have a beer over there. You have a beer over there. And stream to each other. And it goes, no one will do it. I said, everyone will do it. No one's calling them. And everyone did it. And our first five acquisitions would turn out to be amazing acquisitions. We're going to get to talk about off-tours, but all have amazing basis. We're done like that. And sometimes all you need to do is call the guy or show up. And in Corona, you didn't have to do that much to be very different. Yeah. So how did it change from making some investments to we're going to take a massive swing on residential? So two ways. One, I think real entrepreneurs can't help themselves, actually. I think in other tests, you said, one, what did they go through? I love that. And how did they do the challenges? And also, can they help themselves? Is this a problem they must solve? Or do you think it sounds good? If they think it sounds good, or they want to be founder because they're social networked, a movie, well, that's not going to be a good reason. A great movie, by the way. That's not going to be a good reason. But if it's burning from the inside, and no matter how many people say they have to do it, what happened is I started walking the buildings. And it was lonely. It was solace. It was depressing. And we're talking-- when I say buildings, buildings, we bought this is 400 to 600 apartments. These are shared gyms that look as nice as equinox and swimming pools and kitchens. And all these rooms that were designed by people, assuming people are going to get together. And not only is no one there, even when people are there, they're not talking to each other. And I just looked at it. I was like, I could do so much better than this. And step one was just like, let's just find a little bit of technology. So we found a company that existed and we bought it and said, let's just connect them a little bit, not with big intentions. And step two is, let's find a great property manager. So we had five assets. So we hired five different property managers. Said, one of them is going to be great. And then we'll have a-- we'll tell them what to do is asset managers, some real estate of the property manager that runs it. And the asset manager that is the person like the black stones and black rocks of the world that deployed a cache. And they have a relationship between them. And then we used these different property managers and they were all sort of the same. They all had the same problems. They all told us the same story. They all had the same pitch. And their occupancy was completely controlled by supply and demand. And so at that point, we started working. And we started doing it and immediately we started seeing positive results. So we were like, OK, this is a good direction. And we're going to keep doing this. And that was sort of that. And by the third time that Mark and I spoke, Mark read an article in the Wall Street Journal and today we try very hard not to have any articles about us. But that one slipped so Mark called and said, hey, I read a Wall Street Journal about a million dollars. You're not telling me. You're starting a business. And I said, no, it's actually more us. We are starting a business. And he said, you have an idea for a brand. I said, I do. But we're doing it just us and we're taking our time. Mark said, sounds awesome. Maybe you guys can come and share it with us. And I said, I would love to. Without really expecting-- again, no expectation. I think the thing about this relationship is it formed organically. It took time. There was no rush to do anything. And that's what made it so real. And then we went to dinner at Nobu, Mark hosted us. Then was actually not in the first lands. The G was there. He runs growth. And Chris Dixon was there, runs crypto. And we had this very nice dinner. And I remember coming to the dinner and we sit down and Mark goes, so tell us about this new idea. And I said, well, I actually want to start by talking about lessons learned from WeWork. And Mark said, Adam, we wouldn't have invited you here if that's what we need to talk about. We've done-- we know a lot about you. Don't worry. We might know more about some of your mistakes. We couldn't use the WeWork as it was very well documented. Yeah. We read the book. We read it in many series. He said, no, no. We talked to him. And they had a lot of employees. He said, no, no, no, we read it. But he said, no, we read everything. I know you're board members. I actually know all of them. I know them. I spoke to them and you're here because we wanted you to come. Let's talk about the idea. And I said, I really appreciate that. But I actually want to learn. I'm sure you have a different take than me. Let me share. And then this is for those of you who don't know Mark. Once you let Mark go, he has a lot to say. So I started. And within minutes, you gave me until today. I remember you said a few things there that I couldn't believe I never noticed. And one of the things Mark said, oh, so obvious, was what research did you do about what investors you took? What did you know about their history? What research did you do about what employees you took? What did you know about your tech leaders? Well, he said, I get it at them. You move really fast and you're passionate and you make things happen. But how much diligence did you actually do? And the answer was actually none for my first investors. They came to me. I didn't know anything. I didn't know any better. Do you know what else existed? But if I did, maybe I would have come here. And we would have been in a different place. But you know Ben, you've said it to me. We talked about it. We talked about it sometimes. No, no, I believe in a bigger picture. But separate than the fact that I believe in something greater than myself, I genuinely believe that we go to the place that we need to be. As long as we're willing to learn lessons and change, I know that today I'm exactly where I need to be. And this partnership, this discussion, we haven't now. Wouldn't have happened. So we had that dinner and it was excellent. And then we started talking about the future of living. And we talked about it. Pure vision. And really what we see. And I explained what we already have and explained why we could already start leveraging what we have to then take it to the next level. And then we actually went, but then Mark had then said, so what do you think? You think maybe we should explore something? So look, I don't know you. You don't know me. I was a little burned in the past. We're using Oliver on money for this. And then Mark, you said to me, how about you take time and get to know us. We'll get to know you. And let's see what happens. And it took six months from that point of people think that this happened fast. It didn't. It didn't take six months from that point to the actual investment, which in this August will be three years. Well, one thing I just want to say that so remarkable is you not only got back in the ring again, after you're already built an account of company, you already made more money than you know what to do with, but you also put a large chunk of that liquidity back into the company because sort of a triple down in a way that seems like Elon is the only person who continuously does that. So I think that one, I give a lot of credit to Mark and Ben. And so when they came, when we started, Mark, I wonder if you remember this discussion. So we're starting to talk about the business and I immediately was leaning into asset light because we should be asset light. Why? Because I heard so many times because we work as an asset light for all the wrong reasons. I said, we need to be asset light. And Mark, you flew and now I know, but you traveled down to Miami multiple times. And again, this was before the famous dinner. And we were sitting in the car and we were talking about real estate and you actually talked about your father and wife. And you shared with me a lot of things that you learned from him over time. And I didn't meet him either, but he sounds like an amazing person. He's done a lot for the Valley and for California. And you said to me, Adam, forget what your team and my team is talking about for a signal because we don't respect them. Respect everybody and we're going to hear everybody's opinions. But I just want to know what you think. If I wanted you to be. the largest really disrupt the industry. Imagine it the way you imagine it. Would you need to own real estate? And I said at the beginning, I would. They asked me why. And I said, because I want to be allowed to do whatever I want. I want to try everything. I want to fail fast. I want to fix fast. And I want to deploy fast. And I said, I want to change everything. I want to change the technology of how it's run. I want to change the operating people of what they do. I want to change the design. I want to change the smell. I want to change the uniforms. I want to change everything about it. Until it gets to something that I know is right. And you asked me, how would you know when it's right? I thought it's a feeling. And you said, great. And then you said, I have a suggestion for you. It's not traditional. You have a this large portfolio. Take out of this portfolio whatever you don't think is a fit for flow. Sell it. But the rest, what do you think is your best stuff? Put it with us. Aligned on the top together. And we're with you. We go up. We go down. Whatever you do, we do. And it took me a second. And in the beginning, I thought this was some negotiate. We made some fancy negotiation tactic. Because it ended up being one of the smartest things we've done. I genuinely believe that the reason for today I'm going to talk about it more is where it is was because of that decision. But I think Mark, I've asked you this before. I think the reason-- you're actually a simple reason for that decision. That was alignment. Something that I think A16Z is really good at. Yeah. Yeah, in part, that was based on actually watching we work, which was-- but at the time, you get into a situation where you're fighting with your investors. Things just do not end well. And we've just seen that across many companies. And so if you just are building a business that's so hard, if everybody's aligned, if everybody's not aligned, it becomes punishingly difficult. Well, I'll push you, though, on it a little bit, because yes, but for venture capital, saying let's go on real estate, not obvious. So let's talk about that for a moment, because this also goes into what flow is doing. So basically, the way I think about this is there's two iconic business models that are held out in Silicon Valley is kind of the best in class, like best business models ever made. And one of them is Microsoft. And the great lesson of Microsoft was you build a horizontal layer of technology, software operating systems and applications. And then you basically run across thousands of different hardware implementations, thousands of different computer makers and chips and so forth. So you build a horizontal layer. And you never ever vertically integrate, because you want to basically run everything. So that's lesson number one. And lesson number two is Apple, where you do the lesson is you 100% always want to vertically integrate. You never want to be a horizontal layer, because you don't have nearly enough control over the user experience. You have to build Steve Jobs line as people who love software need to build their own hardware. You need to actually control the entire thing. You need to be completely vertically integrated, because if you're not vertically integrated, you can't control the user experience. And if you can't control the user experience, you can't deliver the thing. You can't deliver against the vision. And of course, as is true in so much in business and life, those lessons are diametrically opposed. They're irreconcilable. Like they're directly opposed. And there have been great tech companies built with the Microsoft model. And there have been great tech companies built with the Apple model. So the moral of the story is it really depends. Specifically though, if you want to control the actual customer experience and you have to vertically integrate, it's the only way to actually do it. Because otherwise, you're in the role of having to kind of control, especially early on. You're in the realm of having to control people who don't share your vision into doing the things that are required. Now, having said that, as we talk about all the time, there is an extraordinarily large amount of number of properties out there that could benefit from the brand, the vision, the technology, the platform. And so one of the very interesting things that the heart of the business model for Flow as to what extent, like in the long run, should it be integrated into what extent should we own our own real estate? And to what extent should it actually run across all real estate? And then I think for that, we can learn a lot from hotels. Because hotels have gone through that process if you take Hilton and Meriot, where they started by owning a lot of it. And today, found out mistakenly, and we're talking about thousands of properties, less than 1% on it. So no matter how much money you could raise and how big-- and when we talk about raising money, by the way, we talk about raising money for real estate funds. We're not talking about raising money for a Flow-Purrent Company that that door is closed. But no matter how much you would raise, it would always be tiny compared to how big the asset class. And we talked about one of the largest-- real estate is so large, just so people to understand that we're talking about a $250 trillion asset class. But to try to put it in numbers, a normal building, these multifamily buildings, is $200 million a building. You buy 10. You're a $2 billion. And 100, you're a $20 billion. And 100 is not a big number. It's just you can sit, you can wear it downtown Miami, you could stand on our roof and point to 100 buildings that could be Flow-Purrents. And there's five different neighborhoods like that in South Florida. And that's just one area. And then you go to New York and you get started going all over the planet. So I think-- but I do think that that decision allowed us to be who we are. And also, when the time does come now, so we have two choices. But we're also going to do the flag business. When we come to a person who owns the-- owns this multifamily, or the other things that are services that we deliver and put our flag, just like the four seasons puts our flag, and actually do a management deal, where it's our brand, our technology, our experience. But the expenses on the landlord. And some of what's nice also about our alignment is we don't have to make that decision yet today. Now we have to build the best product. Can we share more about the thesis underlying our bet into Flow-In terms of how we saw the-- why was this going to be one of the biggest companies in the world? I think it starts with, as we got into it, it really came down to, OK, who is Adam? Forget Adam, the entrepreneur. Who's Adam, the person? What is he good at? What is he not as good at? What are we good at? Can we get along? It was that kind of thing. I think I think it was a seven-hour dinner. Oh, you talk about that. Yeah. What was the remarkable about it that day? Well, I mean, we really got into it. I remember how it started. Mark told me, I saw Mark twice already. Yeah, I didn't know. Now I know Mark. I didn't know back then that Mark wasn't traveling as much. And this said, I knew that Mark jumps in the plane. He comes, he sees you. But Mark calls and goes, hey, Adam, I know we hung out twice. We need one more time. And I said, what's up? Goes, well, my partner Ben, you have and met him. He wants to come hang also. I was like, great. We'll have dinner. That turned out to be a seven-hour dinner. Yeah. It's long dinner. A lot of how you get to know someone is kind of get into the things that you shouldn't even talk about, right? They're not polite. They're not the kinds of things. And so I think Adam asked me. He's like, well, looking at me, what do you worry about? Like, what are you really worried about? Like, what do you need to think about? And I can't remember exactly what I said. It was something like Adam, people look at you. And I watched the show. And in the show, the great moment for you was being on the cover of some magazine, Fortune, whatever. I was like, I could see you didn't even care about that. That was nothing. The great moment for you was when the company went to the brink and you saved it. And what I need to know is, like, I don't want you to chase that fucking feeling, because that will cause you to take chances. There are chances that you have to take. And then there's chances you don't have to take. And I don't want you taking the chances. You don't have to take because your vision is so incredible. It would be horrible to put it at risk for a non-valid reason. And so we kind of got into that. And I said, look, I know the feeling, because I like you to do it too. I've been in it because I've saved the company like that. I know exactly what that-- you never can feel that good. It's walking back into the building. And everybody thought the company was over. And you fucking saved it. You just pulled it out of the fire. That's the most unbelievable thing in the world. But you don't want to be in that position. Well, and it is worth saying that our founders who will, if they do not have a crisis, they will create one. Yeah, absolutely seek out disaster. Yes. And look, we all like-- there's a bit of it in everyone. And if you look at Elon, he takes very aggressive chances. And he's not afraid of it. And he calculates risk. But the chances have big payoffs. And the danger is always when you take the chance and it doesn't pay out, but it could lose the company over it. And so we just had it. I would just say the thing I remember about that was it was a very honest conversation. It's very hard to have an honest conversation about something like that. It's almost like people don't want to look at themselves like that. And I was impressed with how introspective and honest Adam could be on a number of topics like that. And so my conclusion is, I think that this is somebody that we can work with. The thing seeds wasn't good at we work. We're very good at putting together a tech team, understanding which of the six ideas are good and which ones we should probably wait on or not do. And that kind of thing, that's a strength of us. It's been a few years. You've been on the board. You've tracked the company. Why don't we talk about how the company is progressing and where we're at? Because you haven't been super public about it. And there's some exciting things happening. So when you're sure of me, I'm respected. Well, soft and amazing start. I mean, so first of all, the thesis of the value of the community, the technology, everything that Adams talked about, the design, has proven out like before, the product is maybe 5% done, but it's already. able to kind of generate, you know, kind of much higher demand resulting in people willing to pay much higher rent for the exact same space and exact same location as other places, which is resulted in kind of returns on the buildings that are unprecedented. We've also, you know, the company had the foresight to expand into Saudi Arabia, which is not something that most entrepreneurs would think of. So, we will finish selling them 24 months from when we started. But yes, initial and we're going to sell our first asset, we closed last August, we will sell our five buildings, we will sell our first asset in a month, and they will keep a management deal for the unforeseeable future. And then the other thing is we built a strategic technological advantage. So, you know, real estate software has been hampered by old, I would just say very crafty technology. I won't name the company, but everybody real estate knows the company. And the flow team is basically reimagined what living means. So, you know, rather than orienting around a building, the software is extremely flexible and can organize itself around the citizens, the people who live in the buildings and the communities, you know, in the world. And meet their needs where they are in the kind of best way possible, the most usable way that just even like signing up for a building, it's going to take you 100x less time, you know, something that kind of obvious and simple. But because of the way these other things are architect, it's very difficult for them. And that's just the beginning because it's what's possible technically, you know, particularly in a connected world and an AI world is just unbelievable if you have the right architecture. And so, you've got the technological advantage, you've got the community idea working fully, the business is working. So, it's been, it's definitely way exceeded our expectations. And I mean, like we're looking forward to building a great company. But I mean, our expectations were high. We thought we put a lot of money into this. The time was the biggest investment we ever made. Yeah. Real estate hasn't had a ton of tech innovation. It's like, what exactly is happening here? What's really interesting? What's the opportunity? Well, there's so many things in the architecture, but it kind of starts with like, how do you model what's going on? And there's all sorts of components that basically in a normal real estate world get completely ignored. So, you know, you really, as a customer about everything from your neighbors to the building to your furniture to how you get your mail to how the parking lot works, to how security works. And you not only care about it, but you really don't want a system keeping your information about you. You'd like that to be on your phone. And the system to be able to query it, but not store it. So, it doesn't get stolen in these kinds of things. And then if you had that, then you'd be comfortable with a lot more about yourself kind of accessible. And then you can publish what you want to publish, you know, and the way that the company's already taken advantage of that is incredible. So for example, let's say I'm a yoga instructor. Maybe I want everybody in my building to know that. And maybe, you know, they really want to know that I can do that because when it'd be great to take yoga lessons without leaving my apartment building. And so what's happened already in flow is not only has the commerce between residents, accounts, yoga instructors, personal trainers, you know, everything you can think of completely flourished. There are people, many people who all of their clients for their business live in the building that they live in. And so this kind of incredible technological flexibility where you have a single platform where that knows everything about its citizens, well keeping things private, having every service not only that flow provides, but that every other person provides all in one place is just it changes the whole way you live because it changes what's possible. And as I said, I think we're at the beginning of that. And you know, no other system when we started with the other systems. And they're just like they're ridiculous by nature, or you know, in terms of they don't even, you know, people are an attribute of a building. It's how that works. So think about that. Like I as a human being am an attribute of a building to a real estate piece of software. It's insane. But you know, this has been completely re-architected the chief technology officer flows, architectural genius, the way he's designed it has enabled not only everything that Adam envisioned, but you know, so many things beyond that where every time an opportunity comes up, it's there. The other kind of capability of the software that's amazing is because it's so flexible. Yes, this could be multifamily living, where this could be condos, or this could be a hotel, or this could be office space. And it can change literally with a press of a button, which is, you know, then all those are separate, completely separate software packages everywhere else in the world. So to add to what Ben just said, once you're able to use that architecture, which again, is something that I do not believe would have been built with other partners. So I think it's another benefit of this partnership. Once you're able to do that, you take that multifamily and it really came out of me to add a multifamily. I just walked in one day and said, hey, furnished apartments. Everyone's doing it in Europe. Why wouldn't the young generation want that? I'm 22. I finished college. I can't buy my furniture. It never looks right. Give me a furnished apartment for next $300 a month. And the team literally said, no, no, the system can't do it. And we're using one of the traditional. So what do you mean it can't? It can't. It's physically can't. They said, well, I want to do it. So they replicated the building. So we had two buildings. And then I said, okay, no more 12 month leases. We want to give shorter term. Some people only wanted for eight months. Other people wanted for 20 months. Oh, no, we can't do that. And I said, well, how about short terms? Stay. What if some people want to actually, and I said, well, we have this dream day to day week to week month to month year to year? Oh, no, that you're going to need four different systems. So you take that architecture, you take that system, you built it in the back end, you build a system, the front end, you have one brand and you train one team to be able to operate all of that. And the result will be higher and I higher buildings are more profitable and just to use a little numbers for that are building in Fort Lododell, N O I net operating income is 30% higher than when we took over it. It's 95% full today. It was 95% full when we took over it. It's not higher occupancy. It's lower churn higher rent, obviously better experience than another interesting thing which brand does 80% of most leases in South Florida come from brokers 90% of all inbound into flow is direct to the direct to us direct to the website. Now our brand is still young, but even a young brand and we never say we didn't say this, but 40% of sorry 70% of 40 year olds and younger in the United States are renters. They spend a third of their wallet, a third of their pocket on that rent. There's not one brand. Whether in hotels, you other in contos, yet not one brand. There wasn't one in office before we did that also. And by the way, one of the things that is so exciting about this business, we work got to where it got with no such technological platform. Just the brand. Just the brand. This also goes to conversation we had early on about the sort of changing nature of housing in the US, which we've talked a lot about since. I think a lot about which is basically there's a bifurcated housing market in the US is the way I think about it. Basically is there's plentiful cheap housing all the places that don't have great jobs where people don't really want to live. And then there's basically like possible bottlenecks on housing stock, especially the cities and especially the cities where lots of young people want to live and especially where the really great jobs are and where the economic growth is. And so just as like a young person starting out in life, like you have a very salt on young people. It's an absolute attack on young people. And I mean, it actually because it's actually hard to even discuss this without getting any rage because we're sitting here in California where they have the infamous prop 13, which is this very explicit handout to boomers at the expense of basically the entire the entire young generation coming up now. But basically like if you want to live and work as a young person in a place where you're going to have access to top flight, economic opportunity and all these growth industries and you want to work in tech or you want to work in design or entertainment or any of these finance or any of these kind of growth industries. Like number one, you're not going to own a how you like it's you own the house is going to be completely unaffordable. And so you're going to be you're going to be in some sort of multifamily, some sort of rental situation. And then the other thing is like there's a really fundamental kind of stress point. And I think this is coming fast enough for Gen Z, which is like, are you ever going to be able to get married and have a family? And what is that going to be like? because can you really do that like in a small apartment? And all the data, of course, indicates that in all these cities, by the way, all over the world, birth rates of crashing, population, population sort of declining. People are not even reproducing at reproduction levels. And so there's this like fundamental social, political, cultural, economic, and vice that young people are in. And in the absence of something like flow and the absence of a thoughtful approach, where you could actually imagine having a positive experience and being able to actually have a fulfilling life and a fulfilling experience. Like I think young people are really in trouble. - Well, let's add to thoughts. First of all, I think this is, and we mark, we talk, not to that, about politics, but in general, a lot about politics. I think it's a main issue globally. And sometimes a lot of other issues become louder, but might be the biggest one. That's right, because if a person doesn't have a home, a shelter, something that they feel that's theirs, how do you expect them to treat other people the way they want to be treated? How are you even gonna ask them to go to that next level of behavior that we expect from all of us if they can't afford a house? And so I think that's why, I think that's probably the worst deal. A young person can I have paying rent? Traditionally, at the end of every month, you pay that rent and the only feeling you have is I just threw the money away. And it actually, this goes a thousand years back. This word, "Lend Lord," which is "Lord's." And you would get a piece of the land, you'd work the land for the Lord. And then you'd give that piece whatever this, and if you're lucky, you got to keep a little bit. And it was all up to them. The entire concept of real estate is the haves and the haves not. But in a much bigger topic, we hear a lot of noise about a lot of haves and haves not. This is where it's really playing out. So I think with the reality, like, flow that we're dreaming of, and we start a multi-family, but so we said you could take a multi-family. Now it's rental, furnished, un-furnished, short-term, long-term. We need to talk about condos, but flow launched a condo project five months ago. So you can own, you can buy, you can rent, you can do anything between. But that's when you're living in these towers. Flow sees a future. There are a lot of single-family also, which is another huge part, the most single-family than multi-family. Another big part of it. So another part of where flow can come in and offer all these services. And if you can prove, which you can already see with the numbers and flow, that the returns on the real estate are actually higher, then landlords and investors over the world will be very happy to deploy their cash that way. And now they're deploying and we like to call it a win, win, win. The investor can win. Flow can win is running it, and the user can win. And if everybody can feel like they're a winner and they're getting something much better, then you really have a new solution. Now there's a lot of, not for today, but to complete that solution, you would have to at some point tackle that word of ownership. But as we said, then you said we're 5% into the journey, maybe even 3% into the journey. Or just starting another interesting thing is, so you're seeing the properties in Miami already delivering, both on top revenue and profitability. And the reason profitability is such an important metric for us, if we just spend more and made more, that's not gonna do anything. You're not gonna encourage any investment. We need to spend the same and make more, or spend less and make more. And that's why NOI, your net operating income is such a good metric in these buildings, but then to Benz point, and then they're starting to do business with themselves. So you spoke about the people who don't have any other business, the way we like to talk about it a lot is, how many classes does a yoga teacher need to close the month, just to pay rent? And the answer is not about five classes a week, every week is enough if it's one of ones, and then they could do group classes. And that's just one example. Also you talked about it as a citizenship, once you become part of the flow community, so we do billing for example. We build every, so we're vertically, vertically integrated. We build every single piece, and the pieces we haven't built yet, we're building. Doesn't mean we can't use third party software, let's say on video cameras or different things that need for security or parking lots there. We don't have to invent everything, but we do have to have it all connected. And when you do that and you do it on the right architecture, you're able to see things, I'll give you another example, events, 60% of our residents, 60% of the events in flow are run by residents. And because of the tech, they created it, they published it, they invited people, people registered, if they wanted to build people, they can build people, and it all happens, and 60% is now an hour early. That number is gonna go up to 90%, and great communities, responsible communities, run themselves. So one sign, and I know it used to exist in school, still exist in schools, when you go to a tour university, hopefully a student that's really proud of the school they go to is the one touring you. So the salesperson trying to push you there. Same thing in the buildings. If the community, when someone tours the building, I create one of our great, and we're trying to let everyone, there's no more just leasing agents. Everyone can be leasing agent, 'cause again, if you're holding the app, and that piece is called the host app, you can make a lease, as Ben said very quickly, and everybody has the same information. As you walk around, you just introduce the person touring to residents, and everybody's excited to talk about. And I think this is a good segue into, so if we didn't make it clear enough, flow is a vertically integrated real estate company that started in long-term rentals, then introduced all the other aspects of everything you can do in a building, including condo and office. And then we started offering services that put the resident in the front and allowing them to work with each other. Our technology, our brand, and our operations coming together, yield this experience, which is already proven that it's doing a higher return for the owners of the buildings. But before we talk about that, I think the going to Saudi was a very interesting thing. First of all, again, interesting about our dynamics, because think of that board meeting. So you have a few buildings in Miami, they're going great. And now you're coming to the board to say, OK, so our third building is going to be, and let me guess, New York City. No, Austin, Texas, no, very nice place, but no. And then you say, "Read." And I think that's just not, I think that's not your obvious thing. But again, and this is something else that you talked about success, the difference in success and failure being so small. Again, I believe in God. So for me, it's this Mark, and I have a different discussion. How we define God differently, but we believe in something greater than ourselves. We, after the investment was made, you guys got quite a lot of phone calls from your LPs. And you reached out to me. And you said, "Yeah, yeah." I think you might have told me from every single one of them. Hey, you have a lot, so that's a lot of fun. And I remember you asked me, Ben, "Hey Adam, do you mind coming with me to the Middle East?" I'm going anyway. And let's share with not everyone, but top 10, 12 LPs, tell them what flow is. And I'm sure it will be great for you in the long run, and it's great to do. You'll meet great people. And that's what we did. And we walked around, and there are two very funny things that happen. One, we would walk in. No matter what meeting you take with Ben, at the end of the meeting, forget flow. Ben gets offered money. That's just-- it happened to us again last week. It's an interesting-- Yeah, that was a real segment. It's an interesting experience to go with Ben. So people think I'm great at raising money. I'm a beginner. So we go to these meetings, and we told him about flow. And flow was only in Miami at the time. And what was interesting is, without fail, every one of these LPs, they're all from the Middle East. So we think this concept would be great for the Middle East, specifically Saudi Arabia for real. And even in Abu Dhabi, they set the same thing and Dubai, they set the same for a variety of reasons. And once I heard it for the 10th time, Ben was like, hey, maybe we should check it out. And we did. And I went to Saudi. And I think what's interesting when we went-- first of all, Saudi's phenomenal for those of you haven't had the chance to go to them. What I get excited about Saudi, the optimism, the vision, then I think might have coined the term founder-led country. So there's a vision. It's very clearly articulated. It's a vision 2030. But there's also now visions for 2034 and further. And as part of that vision, you're taking an entire economy that used to depend on oil and you're diversifying it. And 70% of Saudis are 40-year-old or younger. And so it's a very young population. And a lot of them are educated in the West. English is spoken everywhere. And MBS, the leader, has not even slowly quite fast, changed a lot of rules that have made foreigners and foreign investors and changed rules internally and externally, inviting a lot of people. And I think last week, a lot of us so trumped there and a lot of people were talking about it. But we've been going there for some time. And choosing to go to Saudi was a very big choice for us as a company. And in hindsight, it extremely worked extremely well. But it was also very difficult because there was a lot of challenges that were happening as we were there. But we got to deploy everything we did. So we went to Saudi. We still want to be vertically integrated. So we chose five buildings that were going to be condos, which means they were going to sell them. We bought them from the developer. We changed the condos into rentals. And we'd started deploying the brand. We put our design from the outside. We brought our furniture. We launched it on our tech. It was also the first time we got to launch it on our backend system, not just our frontend system. So it was a very good opportunity for us. Our team, our uniforms, our smell, our music, our art, everything that we do, but also very localized. And because of my past, I have a lot of experience entering into new countries. So it's not something that I haven't done before. But it was definitely different. And in the way we wanted to do it is not just user-on-money. We were going to raise a local fund. Because the theory was, if and while I'm going to raise it from local investors, not go to the big investors that run Saudi, but local families. Because I've learned many times if the local families of a country want to support you, they know what's going on in their country. If you go to all the local families and know one wants to invest, maybe your idea is not as good as you thought. We raised it from actually 33 different investors. We put our own equity. We got debt from the local bank. We bought these five properties. It was about a billion SAR, which is about $300 million. And we started and that was in August and then we started operating. We opened our first building in January. We achieved over 90% occupancy within 60 days. Wow. We opened our second building right after and we opened our third building last month. And our fourth and fifth building, we've already pre-leased to the enterprise that's going to release it for the next five years. So the entire portfolio is going to be stabilized over the next 90 days. That's when you opened in January and it took 60, it took six months to become NOI positive. And for those real estate people that are listening to this, that's extremely fast for buildings that were zero. We also have to do everything they do when you go to New Country, which is a higher local team. We're very lucky with a local leader named Fawaz that came from government. It was a CEO himself and did a lot of things. But we're very lucky having a local team and something beautiful that happens in flow. Whenever anyone needs to go to Saudi, you too many people volunteer. And he said, "Who wants to move to Saudi?" You're getting half employees in the company raising their hands. Because in Saudi and in Riyadh, we get to take all these visions that we have or the only ones doing it. And as good as our product market fit is in South Florida and it's really excellent, it's phenomenal in Saudi. Amazing is that everybody wants to move to Saudi. I mean, just if you weren't back 12 years, people in Saudi wanted to move out of Saudi. That's completely different. I really think it is. And it also for us as a company, it forced us to do us launching the technology even before we were fully ready. Forced us to see what's working, what's not. It also shows you the part of the platform, it's back to that agility. In Saudi, you have to be connected to the government for the rent. For the variety of reasons, it actually allows you to take people out to the don't pay rent. There's a lot of reasons for the workout really well. Our team did it in four days, we didn't think it was a big deal. We talked to people because the systems built to be flexible, it's built to need to connect to external things if it needs to. And because our architect Scott, who is our CTO, knew that he needs optionality. But because he knew how I operate as a leader, but also because he knew that we just don't know yet what we don't know. And when we meet people in South, say, "So, when are you going to connect to the system?" They're going to say, "What do you talk about? We're already connected." And then other people ask us, "When are you going to become a Saudi company?" We heard that it takes two years. I don't know. We have four hours and it took us exactly 60 days. So not only are operating in Saudi, we're operating as a Saudi company, which I think is very important. And without comparing, but the experience that we're delivering right now in Saudi is not just second to none, but it even competes with our local experience in South Florida. Talk more about the real estate fund because I know the one in Saudi did tremendously well. But is this a model that you're planning to roll out across the region? Talk more about how that's going to work. So let's talk about the real estate fund in Saudi. It was launched and closed and actually got over-subscribe mainly because not only are they really up, it's also great to send to your investors back money. So we're very excited to do that. We're planning to send the first check soon. So that's very exciting. And so when we saw that the people are buying, they won't flow to manage it, which is the beginning of the business model that it's going to become. That is the flag model. So the beginning, I think you have to be very clear integrated because you have to prove it on yourself. You have to put your own money there. But after it's proven, there are a lot of real estate investors that would like to invest in an above-market offer. And connecting it to what Ben said about why is the technology laying us? The more you have technology that allows you not just to deliver a better service in the building that creates more loyalty, that lowers churn, that increases rents, that connects the community internally, that allows all these things to happen. By allowing yourself to move from a multi-family to a hotel, extended stay, furnished apartments, corporate housing, it gives you so much flexibility. So Saudi, for example, a lot of expats are moving in. We learned very quickly that these expats are getting one month from the company that hired them. So some numbers for everyone about Saudi, Riyadh, has 7.8 million citizens is growing to almost 10 million by 2030s over the next five years, about 5 million expats. Big numbers. They get hired by these local companies, a lot of them. They get one month that the company pays them and then they're supposed to find, they're on to get paid well, they're supposed to find their place to live. So we said, "Okay, great. Let's give one month because that's what fits them." And then we'll see how many of them stay. The conversion rate has been phenomenal, 90-something percent of anybody who took the month, it's able to stay. But if you're any other landlord and you're the great building manager, that building manager said, "Hey, I want to sell this new offering. I'll give a month, then I'll give them a lease." The system wouldn't be, I know it sounds crazy. The system wouldn't be able to, you'd find a way to do it if you're very savvy, pen and paper, do a deal, call someone, you do something. But it's not scalable. And I think the other thing about our system that maybe would be insane enough, we're building it for scale. If we were building this for just multifamily, you don't have to go as deep as we're in the architecture. If we were building this for just one country, for just one use case, I think a lesson from me from the past, I have zero fear that we're going to grow to be very big. The time, and when the time comes, it's time to put fun, I enjoy it. It's my favorite part probably. Taking our time now to build a product that's actually scalable. Learning for our mistakes. Taking the time to make these decisions. Building, I wanted to recruit tech engineers faster than Ben and Mark thought was correct. So we made a hard effort to recruit them in the right speed. I had visions of a huge number of teams that we needed. Mark's very big on great products are built with small things. That was before AI came. Now that AI came, actually, I think a lot of people are starting to understand that. So when you put all those things together, you start seeing a very good offering for two race funds against. That's in Saudi. In the US, we actually bought 30% of the publicly traded company in Israel, where non-controlling shareholders, that company has access to retail investors and institutional investors. And with partnership with that company, we have bought two developments in Miami, South Florida, one in Aventura, and one in a place called El Porto. And again, now you're thinking of flow not just as we're going to run the building, but actually how are you going to run the entire neighborhood? And all those themes that we just said that work so well for the single buildings will work even better in a neighborhood. So those two fund structures exist. And because we have all this flexibility built into it, we've already proven that we deliver above market returns. So the people we're going to want to invest in are fun. I'm going to understand that by getting access to flow, the flow's technology, the flow's brand, they're going to get access actually to above market returns, which at the end of the day in real estate. And so you said, "Mark only two people did that." But I think the one thing in real estate that's very consistent, if you can deliver the highest returns in real estate for a certain asset class, you're going to attract the kind of money that's interesting investing in that asset class. If you can move between asset classes, you might attract the kind of money that in the past felt uncomfortable with real estate. Because even though it's a safe return, we learned something in the past 10 years. Before Corona, our office was great. And it went to zero hotel, apartments, everybody wanted one and then it changed. So it's actually not just the largest asset class in the world, it's changing. The thing that the funds give us are, it's really twofold. And I realized this before. So the first thing is obvious, just scale. So as Adam said, there's a lot of real estate out there. There are a lot of people who would love to live in a flow community with kind of, you know, be part of something bigger. And we, you know, doing that kind of just through that flow balance sheet would be insane. So it gives us a lot of scale. But the other thing that it does is the people we partnered with are real geniuses in evaluating real estate and kind of getting the right buildings for the right deal in the right locations. And that's been really amazing to watch, you know, how these people think about how they, how they do that and how it works. So it's in, and we have lots of demand. We're trying to figure out what to do with all the demand. Ben, we're talking to engineers all the time who are pursuing AI ideas, who are pursuing crypto ideas. There hasn't been that many amazing real estate opportunities for, you know, the most brilliant technical minds to sink their teeth into. Why is this an opportunity? You know, like as an engineer, you want to build things that really impact people's lives and make their lives better. I mean, there's many, many things that you can do that have small impact or questionable impact. But this is something where, you know, you're building an environment where for young people, you know, we, as Mark kind of alluded to, you know, it's been much worse. Then what their parents opportunity was and even what their parents opportunity was, which is a new phenomenon. And this is a chance to make it much better, much better than how their parents lived. And, you know, there, there's not more meaningful work than that. And then it's a, it's an extremely complex technological problem, you know, particularly kind of coming out of. Coming out of legacy world and all these, you have to basically start from complete first principles, because you're starting with who's living there. And the software has to be oriented around them, not buildings or. apartments or, you know, a bill. Those are features of the person not vice versa. Yeah. Let's close this conversation on some big ideas around the future of living. Mark, in your great blog post about the flow investment and just in our conversations in general around COVID, you'd sort of been struck by how the COVID enabled some unique opportunities for us to rethink how we think about sort of the future of cities, remote work, sort of, you know, in office, et cetera. And I know you guys have had some back and forth on that. Why don't you sort of reflect on, you know, there are some things that played out. There are some things that sort of didn't play out exactly as we thought, some things reversed, you know, a few years later, what are your broader reflections? What have we learned? So I feel like COVID through almost every aspect of how at least in the US, how we live and work sort of up in the air, right? And some of those pieces have landed a little bit, but some of those pieces still feel like they're quite high up in the air. Yep. So just a bunch of observations. So one is look like there had been a 60 year history of video conferencing, not being a thing and not working. The first video conferencing system was rolled out in 1965. It was AT&T picture phone completely flopped. There were 50, 60 years. And there's a whole theory about people didn't want to be seen when they were talking on the phone. Yeah, exactly. And kind of theories that you wouldn't want to see actors talk in motion pictures of sound, yeah, exactly. So there's only arguments. Every science fiction movie had video conferencing, but the real world never had it. And then all of a sudden, just like boom, COVID, it actually happened, right? And that stuck like that, that, you know, that's now a standard technology everybody's used to. And so, you know, that really opened up the aperture. So that stuck. Then there was the idea that basically all, you know, all work becomes remote, or at least all knowledge work becomes remote. And I would say like that has not stuck that well. It's stuck somewhat, and I would say it's stuck somewhat in two circumstances. One is a lot of CEOs are really struggling even when they want to get everybody back in the office, having a very hard time doing it. And again, that's kind of brings up this issue of like where and how do people live? Because if you could have a much better lifestyle living and working remotely, then your target for you to come back in the office, but you as a human being are much happier and more satisfied. And so a lot of CEOs found that, you know, many of their best people had actually left the vicinity, you know, of the office by the time COVID came back. And they have this very difficult choice of trying to kind of course them in coming back or coming back two days a week or three days a week. And so that's going poorly. So that's a real struggle. Another thing that happened, which I think was kind of a big negative, which I think hasn't really been fixed yet, which is new people entering the workforce had a much worse experience. Right. And so the COVID was sort of a, there was this sort of dichotomy experience where if you were like a 20 or 30 year veteran of a company and like a high ranking official, it was absolutely fantastic to work remotely because you got to go to your beach house and, you know, be with your kids, your grandkids and like be on the golf course and it's just like this amazing thing. But you put yourself in the in the in the shoes of a newly graduated college grad or you know, 22 or whatever, you know, stuck in some box of department somewhere and then, you know, basically like, you know, the whole idea of mentorship is just straight out the window because you can't get metered by a, you know, a face in a, in a, in a, in a Zoom hall. And so there's this sort of failure to launch problem with with, with young kids in their careers. And I think that that hasn't been solved. And then finally, I would just say it's not like everybody's just going to go back to work in the office. And the reason for that is because there is this, there is this like massive shift that happened that I think is still underestimated, which is, I described as followed, which is it, it used to be the case that to have access to the best job opportunities, you had to be in very specific places. And so there was this whole added that the thing that made Silicon Valley so special is that if you, if you lived and worked in Silicon Valley, you could get 20 other job offers as a database administrator or as a job programmer without changing your parking spot, right? Because the employer is reclustered. And by the way, that's still true. That's still the case. But if you remote, you can have 20,000 job offers from companies that are dying for people with your skill set, right? There are many of which are not located in Silicon Valley. And they're all available in video. And you can just do that. And there are lots of people now who just like work remotely because they, you know, they can, they can do that. And then by the way, there's this incredible book called Job Stacking that I always recommend, which is sort of how to manual to how to hold down. Two jobs. I was just going to say something about multiple, yeah, remotely without letting them over employee. And then you're careful how to guide on make sure each employer doesn't realize that you have, you know, you have the other job. And then there's another chapter, which is how to do it with three jobs simultaneously. It's all subreddit dedicated. It's all subreddit. Now there's the a version of it, which is why you can have, you know, chat GPTG your job. Anyway, I see you might as, you know, it's a very helpful to be remotely because it's easier to do that. And so, you know, the remote thing like, you know, can you continue to stick? And so anyway, like this is all just, I think a lot of this is just still up in the air, right? And we talked to, you know, a lot of Fortune 500 CEOs. And I would say they're all struggling with this. Like they actually don't know how to recover the in office experience that they used to have. And they don't know if it's possible to do that. And they're, you know, they're literally, you know, they're, you still, it's the point where they're issuing like threats and orders to people of like, you know, we're going to watch your bad, you know, you pay somebody like, I don't know, half a million dollars a year to be like, you know, senior engineer or something, you tell them you're going to watch their bad, their bad reading in and out to like track their, you know, motions and then, you know, somehow figure out cards. You're going to penalize them. Right. Right. Is that right? Um, and so like, I think this is all just still up in here. And then we talked earlier about what this means, especially for younger people in this question of like economic opportunity and then family formation and then ability to have and raise kids. And I, and I think the whole concept of how people live in work, I think, I think it's been up ended and I don't think it's landed again. And I think that there's, I think there's interesting questions in every single topic that I discovered. There are all these concepts of in the past. You would have people live, work, go to school, do all those things at the same place. I think part of flow of remagining the future is also, I think Corona actually helped us in a big way because let's take flow, for example, to build a company of the magnitude that Benemark were talking about, very hard for us to do things remotely. So let's say our engineers, we hire engineers that want to be in the office and the ones we hired before who weren't, we let them be wherever they work. Because when they were hired, that was the deal that was made with them. But we're finding a lot of people who want to be in office because that's what they want. But we're looking for them. But to create a holistic product, there is a need sometimes people all in the same room, especially in our world, if the team doing the brand, the team doing the development, the team doing the engineering, the team doing the product, if they don't interact with each other, they just don't know the things that motivate each other. And you can't get that consistent, perfect experience. So for a company like Flow, it's even more important. Now let's think about enterprise sales. You go to an enterprise in the past, you would say, I'll get you office. I'll give, I'll build for you, we used to do it. We work with a very good enterprise, we created office. But maybe office is not enough for a solution. What if I can give you the rental apartments, certain number of nights in hotel, a school for your kids in the development or outside of the development and the office and experiences all around and the retail. And before you know it, you're creating something very unique. Now, a lot of times when developers have tried to do it in a way that was like Disneyland, it's soulless. You can then do it in a soulful way that really makes people on an inflow's mission is to connect people to themselves, their neighbors and their natural world. If you could do those three things, leveraging technology, leveraging operations, leveraging everything and make people feel that way, I think for today's world, it is more relevant and more important than ever before. And as we said before, people are so connected digitally. They've I think never been so disconnected and not for everyone. But for a lot of us, that connection is so important. Mark was talking even about the birth rate that's going to all the different stuff. We need physical interactions and those physical interactions need to be meaningful. And imagine if an enterprise could not just give you a great job with a great salary, but could actually give you a directionally, a community that you would want to be part of. Suddenly, here's what I do with my family and here's what I do with my kids. And there is, I think, a solution that gives a little bit of the good things about working remotely, but also solves the bad things, which is there's a limit to how often we don't want to have social interaction. And I think the future of flow has a tremendous amount of potential. And then we need to keep taking it one step at a time. They want to deliver on all the different aspects of the business. So now you're heard us talking about funds and raising capital to deploy to people, but only people understand why flow delivers our value and how it's going to give them a higher return. And focusing on the resident as it grows to be a citizen, as Ben likes to call it, commit to the architecture and keep building the right architecture, both in the back and in the front end and create a culture of service and hospitality of people that are excited to be part of delivering this, this version of the future that we see. I think it's great for the US. We know it's great for Saudi. And it's a global, it's a global challenge and a global solution. And I couldn't be more excited to tackle this with our two partners with a great team that we've assembled. Adam, thank you so much for coming up. Thank you. Thanks, Adam. Thanks for listening to this episode of the A16Z podcast. If you liked this episode, be sure to like, comment, subscribe, leave us a rating or review and share it with your friends and family. For more episodes, go to YouTube, Apple Podcasts, and Spotify. Follow us on next at A16Z and subscribe to our substack at a16z.substack.com. Thanks again for listening and I'll see you in the next episode. As a reminder, the content here is for informational purposes only. Should not be taken as legal business, tax, or investment advice, or be used to evaluate any investment or security and is not directed at any investors or potential investors in any A16z fund. Please note that A16Z and its affiliates may also maintain investments in the company's discussed in this podcast. For more details, including a link to our investments, please see A16Z.com/disclosures. (upbeat music)