(Bloomberg Businessweek) -- Four months after a failed bid to buy back WeWork Inc., the coworking company he co-founded in 2010, Adam Neumann is introducing a competitor. The concept, dubbed Workflow, is to make a more adult version of his former brainchild. Like WeWork, it will offer office space on flexible terms to companies and individuals, though it will aim to create a calm atmosphere with fancy artwork and plush furniture, instead of providing kombucha and beer at offices filled by twentysomethings running amok.
Design sensibilities won’t be the only difference between Workflow and WeWork, which emerged from Chapter 11 bankruptcy in June. Neumann’s initial coworking company signed long-term leases with landlords, then relied on short-term leases for revenue, leaving it vulnerable to sudden drops in demand. Workflow is building offices in residential buildings it already owns or partnering with landlords to manage spaces it doesn’t.
Neumann says Workflow will benefit from the high demand for flexible workspaces since the pandemic. “The lack of community and the disconnection that people feel is even more relevant today” than when WeWork started, he says.
Workflow will be a service offered by Flow, a residential real estate company Neumann founded in 2022. The Miami-based startup, which focuses on building and operating housing, is backed by a $350 million investment round from venture capital firm Andreessen Horowitz that valued Flow at more than $1 billion. Neumann invested another $350 million, by transferring the ownership of buildings from his family office to the company.
As with many of his other endeavors, Neumann pitches Flow with the ethos of building community. Its mission, “Connection with ourselves, our neighbors, and the natural world,” holds similarities to WeWork’s prospectus, which emphasized the company’s mission to “elevate the world’s consciousness” and its belief in “the power of a worldwide community.”
Flow owns four apartment buildings in Miami, Fort Lauderdale and Atlanta, and is a minority investor in two buildings in Nashville. It created a residential property management arm and built technology to manage tenant services and handle rent payments. This year, Flow expanded to Riyadh, with three apartment buildings. In October it announced it was initiating sales for a 466-unit condo project in Miami, which it is developing itself and will also manage. Average prices stand at about $950 per square foot, which could amount to $600,000 for a one-bedroom, a price Neumann describes as “a very good entry point into ownership.”
While office landlords have been hit by softer demand since the pandemic, some coworking companies have benefited from the shift toward smaller and flexible spaces. Industrious, a WeWork competitor that focuses on management contracts with landlords, has seen its revenue triple between 2019 and 2023. The company took over management of WeWork’s former New York headquarters earlier this year and has been scouting other locations.
During the first year of Flow, Neumann says he was adamant it wouldn’t get into the office business. But residents and corporate clients were interested in having access to coworking spaces and flexible offices, too. “It was obvious that the demand is there,” he says.
That demand led to the inception of Workflow, described as “a positive and productive mindset” that provides “neighbors with space, opportunities, and connections for meaningful work,” according to marketing materials. Workflow will offer both coworking space for residents and private offices for rent. Flow landed its first deal in Fort Lauderdale with a corporate tenant, a Fortune 50 company, in August.
How big, and how fast, Neumann plans on expanding Workflow remains a question. Only five years ago, Neumann was the poster child of the unchecked hubris and excess of venture capital-backed startups. Under his leadership, WeWork was the fastest-growing coworking company in the world, eventually becoming the largest private-sector tenant in London, New York and other cities. WeWork burned through cash with an unclear path to profitability, which eventually proved disastrous for the company and its investors. Neumann was pushed out in 2019 shortly after WeWork announced it was postponing its planned initial public offering. (It joined the public markets two years later through a merger with a special purpose acquisition company, or SPAC.)
With Flow, Neumann says he’s taking a different approach. In interviews with Bloomberg Businessweek and other media, he’s emphasized a commitment to slowing down, saying Andreessen Horowitz’s founders, Ben Horowitz and Marc Andreessen, will help keep his new startup disciplined. “I know my priorities because of what I went through,” he says. “It taught me so many things. But one of them was ‘Slow down.’ The other one was ‘Listen,’ and not just listen to what you want to hear—listen to what you don’t want to hear.”
Neumann brings up an example of how his team at Flow forecast two years ago that interest rates would start going down in the fourth quarter of this year. Andreessen told Neumann they couldn’t make plans based on an assumption. “Their forecast was very, very correct, but the lesson was learned,” Neumann says.
The more careful approach would be a significant evolution for Neumann. His tenure at WeWork was defined by audacious risk-taking, and making a $650 million bet to buy back his company would seem to follow that pattern. Neumann says the move to buy WeWork would actually have “fit in perfectly” with his new approach, but he also says he’s pursuing Workflow with a healthy dose of humility. “The common theme for the whole story is we’re learning. We’re really not sure that we know the answer, therefore we’re taking our time,” he says. “We’re not rushing.”
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