WeWork founder Adam Neumann is again, and he’s beginning one other actual property firm.
Stream, which can concentrate on making residences into workspaces, already raised $350 million from billionaire Andreessen’s a16z. Neumann mentioned the brand new enterprise will both compete with WeWork or companion with it at Fortune’s Brainstorm Tech convention in Deer Valley, Utah.
Given the spectacular fall of WeWork—and Neumann’s departure—many are shocked he acquired such an enormous funding for a really similar-sounding firm.
However in an interview with Fortune’s Michal Lev-Ram, Neumann insisted he has realized from his errors.
Watch the complete video interview or learn the transcript under.
Michal Lev-Ram: Why are you right here? You understand, clearly we invited you to come back converse, that’s a part of the rationale. However I need to know, why are you again in entrance of this explicit viewers? And why are you at it once more with one other firm?
Adam Neumann: I believe, to start with, thanks for having me. And all the time good to see an incredible face and viewers. And Park Metropolis is gorgeous. I’ve by no means been right here in the summertime. It’s unbelievable, very good to see. I believe in life, we undergo many journeys. And as we undergo these journeys, we, now we have totally different classes that we study. But when we realized our classes, and we don’t get an opportunity to do it once more, then I don’t suppose you’ll be able to actually apply it. And I believe when issues occur in your life, when you took time to consider it, and study from it, and then you definitely apply it, that’s an incredible journey. However when you really didn’t study from it, and also you stopped, and one thing occurred, it turns into a tragedy. So I’m right here as a result of I really like entrepreneurship. And I believe this class, and this downside is actual. And we’re excited to do our half in making an attempt to unravel it.
Michal Lev-Ram: So we’re gonna get into Stream and what you’re doing with it at the moment, what your hopes are. However I need to discuss these classes realized, to start with, and simply ask you, you recognize, you’ve had fairly a little bit of distance and time now from WeWork. Wanting again with the house that you’ve, and the attitude, what do you suppose had been the most important errors? What are the most important learnings that you simply take with you at the moment?
Adam Neumann: So once I stepped down in 2019, I really took the time to suppose rather a lot and had an incredible workforce round me that had been in a position to speak and talk about all of the various things. And there are numerous classes. However to start with, I might say I’m extraordinarily proud in what we did in WeWork. I’m happy with the workforce. Right now WeWork has over 700 areas, it’s in 39 international locations, it’s in over 70 languages. And I don’t suppose there’s an individual on the planet who’s constructing new workplace house at the moment who’s not considering what would or wouldn’t WeWork suppose. So I believe that half was nice so far as the teachings, there are numerous, and we don’t have sufficient time at the moment. It is a quick interview. However I’ll concentrate on two that come to thoughts proper now. One, as an entrepreneur, there are numerous stuff you don’t management. One of many solely stuff you management is who you encompass your self with, and never simply who you encompass your self with, however precisely what sort of folks they’re, I believe and WeWork, we’re surrounded by very sensible folks. However shifting ahead, what I encompass myself isn’t just very sensible folks, but in addition people who find themselves very comfy telling me what they suppose. And when you have to inform somebody, what do you suppose, they usually don’t agree with you, you have to have the braveness and you have to be empowered to return once more, and say it once more, and once more. And once more. So my first lesson, encompass your self, not solely with one of the best folks and the neatest folks, but in addition those who’re going to inform you what they suppose. And it means when you don’t hear, they’re going to maintain at it till you both by no means see them once more or till you agree. That’s one. The second is listening. The primary lesson doesn’t work with out the second. Once I stepped down from WeWork, I had the chance to grow to be an investor. And our household workplace invested in over 50 totally different firms. And I obtained to be the investor giving the entrepreneur recommendation and seeing that the entrepreneur will not be listening, and getting slightly annoyed, till I spotted that possibly that is a part of how I used to behave. And I spotted that a part of being an incredible entrepreneur isn’t just listening, however listening to the onerous reality. Listening to the stuff you don’t need. So If I had to decide on two, select who you encompass your self with, and grow to be an incredible listener. And nice listeners wish to take heed to what they don’t need to hear, not what they need to hear.
Michal Lev-Ram: So do you, if I’m to place like put all that collectively, do you suppose that your investor on the time at WeWork might have performed a bigger position in not serving to to create what was a spectacular rise after which a spectacular fall? I imply, what was your position there? And what was your investor’s position?
Adam Neumann: Once more, as I mentioned earlier than, I’m so happy with what we did. And Monday night time quarterbacking, is that what you name? And doing that now with the traders and what they need to have executed… I can inform you one factor, nobody from the skin ever is aware of what occurs within the inside. And once more, I believe only a few folks disrupt classes and only a few firms reinvent classes. Workplace is the second largest class on the planet. And I’m very happy with what was achieved.
Michal Lev-Ram: Okay, I need to ask you about – my understanding is that there have been there have been a number of parts of your exit bundle, which was controversial on the time. However a type of parts was additionally a non- compete settlement. And when does that expire?
Adam Neumann: Our non-compete expires – it’s really a non-compete and a non-solicit, and that expires October thirtieth of this yr.
Michal Lev-Ram: Okay. So what occurs then? Does this imply that you simply together with your new firm, which we are going to get to in a second, compete with WeWork?
Adam Neumann: To reply that query, I must clarify what Stream is as a result of I believe the reply is barely extra advanced. So for these of you who don’t know, Stream is constructing your – I heard the mission you mentioned earlier than, I’m unsure that’s really our mission, however sounded fascinating. However Stream is constructing a consumer-facing residential model. And we’re doing it by way of integrating expertise, neighborhood and a world class working workforce that places the resident first. And just a few numbers. For these of you who don’t know, 66% of younger adults on this nation are renters. And so they spend 34% of their whole earnings on hire. And but there isn’t any model, no promise, no elevated expertise. Up to now, Howard Schultz was an incredible entrepreneur, and in addition an organization that I actually admire, got here up with the idea of the third place. He would say the primary place was the house. The second place was the workplace. And the third place was Starbucks, the place you possibly can get a cup of espresso, meet somebody, and be surrounded by different folks. I believe in a pre-Corona world, that was wonderful. I believe in a post-Corona world, what Stream is noticed is that it’s not anymore the primary place, or the third place, it’s the one place. And within the one place, it’s a must to combine every thing. Our residents, which we survey often, 70% of them spend between two to 5 days working from house. In a actuality the place do business from home and dwelling has grow to be one, a spot the place our house has modified, and our relationship to our house has modified. I don’t suppose numerous us suppose there’s something extra essential than that. The brand new resolution for the way forward for dwelling must be extra the one place versus the primary or the third. And that’s what Stream goes to do. To reply your query you mentioned is Stream, I believe what you’re asking is, what’s Stream gonna do?
Michal Lev-Ram: Effectively, and does Stream, the place does WeWork finish? And the place does fFow start? And the place do they dovetail?
Adam Neumann: So that you’re asking, is Stream going to compete?
Michal Lev-Ram: Sure.
Adam Neumann: I believe, not I believe I do know, in a world the place the one place is the brand new resolution, the place work and dwelling has been built-in, we’re not prepared really, for these options, as a result of these buildings haven’t been designed for that. The working methods are usually not there. The tech will not be there, the groups are usually not there to run it. I believe Stream has solely two selections, compete, or companion.
Michal Lev-Ram: Okay, so compete is among the selections.
Adam Neumann: Compete or companion.
Michal Lev-Ram: All proper, effectively, possibly it could assist when you you recognize, I believe we get form of the philosophy and the necessity available in the market that you simply see for Stream. However give us a bit extra of a concrete breakdown of what’s the enterprise mannequin? Do you personal these buildings or not essentially? And the way does the corporate become profitable?
Adam Neumann: So I’m going so as to add another factor after which I’m going to reply that. In Might, the Surgeon Common got here up with a examine defining loneliness as an epidemic in the USA. He was saying that it’s going to trigger loneliness goes to trigger psychological diseases, goes to trigger early dying, he was giving all these totally different definitions and quoting super quantity of examine. We reside in a world the place we’re so related, we’ve by no means been extra disconnected. Though we love expertise, and Stream is tech first and product first, we use expertise because the software to realize the mission and the targets that now we have, not as the top objective. And with that in thoughts, it has to all be introduced collectively completely. So we predict the easiest way to try this enterprise mannequin, we personal 3000 residences that we’re operating, now we have over 150 workers, a majority of engineers, product designers, each digital and bodily, we’re really wanting for lots extra nice workers. And the enterprise mannequin that now we have is a vertically built-in system. We personal the buildings, we function the buildings, we construct the expertise, we construct a neighborhood, and we construct the groups that operating them. And whenever you convey all of that collectively, the second a resident is happier, extra fulfilled and stays longer, the constructing’s churn goes down churn is the quantity of instances folks depart a constructing. And the constructing is straight away extra worthwhile. Happier residents, extra fulfilled residents equals extra worthwhile buildings. We’ve already confirmed this on our first two buildings. And that is one thing that in actual property, you don’t see actually because actual property will not be handled as a shopper product, though it truly is. The explanation it’s not handled as a shopper product is as a result of it’s a provide problem, not a requirement problem.
Michal Lev-Ram: You raised $100 million from Marc Andreessen. Right? No, no, sorry, how a lot?
Adam Neumann: $350 million.
Michal Lev-Ram: Excuse me, I ought to have checked out my notes. $350 million. That’s much more thoughts boggling. I need to hear about, simply very briefly, inform us about simply why you suppose this can be a good match – Andreessen Horowitz and also you – and in addition curious to listen to, you recognize, not all people will get a second likelihood and never on this type of degree, in fact, $350 million. Why do you suppose Marc believed in you and needed to place his cash in you?
Adam Neumann: So a couple of issues. First, we spoke about classes realized. And we mentioned one in all them is encompass your self with the proper folks. Marc and Ben and a16z are unbelievable traders. They’re really traders who began as entrepreneurs, they’ve run a number of companies and created a number of companies. After they’re within the boardroom, and we’re discussing, not solely is noone holding something again, the form of recommendation we’re getting has rather a lot to do with constructing a long-term enterprise. Additionally, and that is one thing wonderful about Marc, after our first board assembly, Marc calls me the following day. And he goes Adam, I needed to offer you some suggestions about one thing I heard within the board assembly. And I mentioned, in fact, after which he gave me the record of all of the issues he disagreed with. Not the issues he mentioned within the board assembly however there have been numerous different issues that he thought of afterwards. And he mentioned, I don’t need to come too onerous. However that’s what I believe. And I mentioned, Marc, the deal we made once we did this deal, is that you’ll all the time inform me precisely what you suppose. And I’ll do my greatest to be an incredible listener. And that’s been the connection ever since. They’ve turned out to be even higher companions then I might think about. Particularly to what you’re asking, I’m positive there are individuals who need to get investments greater than me. I’m positive there’s lots of people deserve who who don’t get it. And I hope as a result of I actually consider in entrepreneurship, that the individuals who need to get this funding will get it as a result of I additionally suppose that to construct the longer term, we want startups and we want innovation. And that’s what this convention is all about. I believe it shouldn’t matter what race they arrive from, what gender they arrive from, the place they arrive from, nothing ought to matter. And all people ought to get the chance. Particularly why I obtained the second likelihood, that it is best to ask a16z.
Michal Lev-Ram: Okay, query from the viewers, please increase your hand. We’ll convey a mic over to you rapidly. We’ve obtained one proper right here.
Viewers Member: Mark Johnson, CTO,Stand Collectively. What’s your regulatory boundaries do you suppose you’re gonna face in constructing Stream?
Adam Neumann: So nice query. There’s numerous basic items in residential actual property which are in impact. So now we have to observe all the principles that exist. It’s really a really superior class in the case of that. However a really early class in the case of really innovation, or expertise, or giving, in your expertise. No matter they’re, we take them extraordinarily critically. However they modify between state to state, and it relies upon when you’re proudly owning the constructing, constructing the constructing, working the constructing, after which Stream begins there. However over time most likely grows exterior of those multifamily buildings. There’s super alternative to the place this model can go to
Michal Lev-Ram: Do you, by the way in which, I do know, one of many knocks, after this, one was revealed, was in the way you describe the corporate and earlier on too, you recognize, the truth that the valuation was the place it was, and that, you recognize, there was sure, there was tech concerned, however it was actual property. Are you comfy at the moment describing Stream as an actual property firm? Or what’s it? What class is it in?
Adam Neumann: So I can’t reply the top with out answering the start. I’m slightly bored of speaking in regards to the previous. But when we should. Our valuation was given by essentially the most refined valuers on the planet, it was Goldman Sachs and JP Morgan and Morgan Stanley. It was Softbank and Benchmark and all the opposite traders which are thought-about one of the best traders on the planet. So when folks knock our valuation, they’re actually knocking all of the those who gave that valuation. Valuation is one thing that’s given by an individual that desires to really make investments the cash. Placing that apart, we used to explain WeWork in many alternative methods. Stream could be very comfy being a residential consumer-facing actual property firm. It’s the largest asset class on the planet. It has no model that we all know of. And prop tech in that class continues to be very early. As a result of everytime you resolve these issues, everyone seems to be fixing them as a single level downside, versus really fixing them as a vertical integration downside. So the way in which we’re going after it will take longer, we’re going to need to construct a really stable basis. However once we do, I believe our resolution goes to really assist resolve issues like loneliness, neighborhood. And I’ll say another factor. And I believe we reside on this world at the moment the place I’m unsure we want extra followers. I believe we want extra mates. And I believe we are able to all recognize much more face-to-face interplay, and possibly rather less FaceTime.
Michal Lev-Ram: Effectively, Adam, we recognize you coming getting dressed up for us no t-shirts at the moment. However thanks a lot for coming. And looking out ahead to seeing what you do with Stream.