Flow Might Fill A Niche, But Touting It As A Housing Crisis Solution Doesn’t Sit Well

Talk about audacity.

Marc Andreessen, the venture capitalist who penned a sweeping missive about how “It’s Time To Build,” and then proceeded to protest the building of townhomes in his billionaire-dense Silicon Valley enclave of Atherton, now has a new message:

“Our nation has a housing crisis,” Andreessen wrote in an announcement disclosing that his firm, Andreessen Horowitz (a16z) is investing in Flow, a rental real estate startup launched by ousted WeWork founder Adam Neumann. According to The New York Times, the firm is investing $350 million, valuing the company at more than $1 billion.

Flow currently has a website with no information other than that it plans to launch in 2023. Per Andreessen, the startup is built around “the theme of connecting people through transforming their physical spaces and building communities where people spend the most time: their homes.”

As he fleshes out the concept a bit more in the post, it starts to look like an assortment of ideas and market analyses that comes up often in the small-but-growing space of rental housing-focused startups. Broadly, there’s a finding that a supply shortage, along with lifestyle changes such as the rise of remote work, have created a pressing need for new rental housing models.

Buying in on rentals

As we reported a few months ago, rental-focused startups have been a hot area for investment lately. Using Crunchbase data at the time, we curated a list of 17 rental-related U.S. companies that have raised venture funding in recent quarters. Now we can add Flow to the list.

One of the themes both Andreessen and rental-focused startups talk about a lot is the growing number of people who are renting because they are priced out of local homeownership. They offer differing takes on how to address the issue.

Two of the more heavily funded startups, Divvy and Up&Up, focus on renters on the road to homeownership. Divvy, which has raised $370 million to date, offers a platform for rent-to-own home purchases. Up&Up, a startup that enables renters to see financial gains from their rental homes, closed on $275 million in a November round.

Several are focused less on enabling renters on the path to homeownership and more on improving the rental experience. For instance, Alfred, which offers an app-based personal assistant service for renters, raised $125 million in a March late-stage funding round. Others are blurring the lines between hotel and rental, including Blueground and Landing, which offer furnished units with flexible leases.

Flow seems to be working along these lines too. Andreessen’s post talks about renting an apartment as a “soulless experience” for many, and posits that Neumann’s new venture could provide a better experience.

For now, it’s not clear exactly how Flow will do this. Gleaning bits from tech media and Twitter, the model looks a bit like a rental housing version of the hotel chain approach, adding branding, consistency and standards to the process of finding accommodations. The startup is also focused on adding social components aimed at making a rental more than just a place to crash, store groceries and stare at a screen.

Home sweet home

Of course, many apartment complexes already have a range of social amenities—pools, fitness centers, clubhouses, events and so on. A16z, however, seems intent on convincing us that throwing $350 million and Adam Neumann at the broad societal problems of loneliness, isolation and stunted social mobility is the optimal way to make progress.

Or, as Andreessen puts it: “Shelter is one of our most basic needs. In a world where limited access to home ownership continues to be a driving force behind inequality and anxiety, giving renters a sense of security, community, and genuine ownership has transformative power for our society.”

It’s an odd bit of word salad. Perhaps it would be more moving coming from someone other than a billionaire who lobbied his own hometown to bar multifamily construction on the grounds that it would “MASSIVELY decrease our home values, the quality of life of ourselves and our neighbors.”

Now, to be fair, Andreessen wasn’t the only resident in town to object. His wife, Laura Arrillaga-Andreessen, founder of the Stanford Center on Philanthropy and Civil Society, joined in opposing the proposal. So, reportedly, did a number of other prominent tech industry tycoons living in Atherton.

And Andreessen isn’t even the only other NIMBY with a recent investment in a rental housing startup touting the societal benefits of multifamily dwellings.

For close to a decade, venture capitalist Vinod Khosla famously fought in court to keep the public off a piece of beach that abuts his property. This year, his firm, Khosla Ventures, led a Series A round for Culdesac, a startup building a car-free development in Tempe, Arizona, that boasts the benefits of shared community space and dense multifamily housing.

It sounds pleasant. And given the societal benefits that would come from having a larger, more affordable and more vibrant rental housing stock, it would be nice to see these kinds of ventures succeed.

However, it would be more reassuring to see these kinds of ventures being backed by people who wouldn’t mind seeing them succeed in their own backyards.

Illustration: Dom Guzman

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