WeWork’s Adam Neumann Brings Real Estate Startups to Saudi Arabia

The billionaire coworking entrepreneur has opened a branch of his Andreessen Horowitz-backed startup Flow in Riyadh.

_{By Iain MartinForbes Employees}

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ANDNeumann’s real estate startup Flow has quietly opened its first properties in Riyadh, the Saudi capital. It’s the latest expansion of the billionaire’s bid to break into the co-living and rental market after WeLive, his previous foray into real estate, was canceled after he stepped down as CEO of WeWork. After buying more than $1 billion worth of apartment buildings in America’s sun belt and raising $350 million from Andreessen Horowitz in 2022, Neumann has outfitted Flow’s properties with co-working spaces, yoga classes and hotel-style cleaning services in an attempt to bring “community” to apartment complexes.

Flow Narjis “soft-launched” in August, offering a “conscious community” of two- and three-bedroom apartments in a complex in the An Narjis neighborhood near Riyadh’s airport. Furnished apartments start at $3,500 a month and showcase Flow’s formula of combining apartments with services like laundry and dry cleaning and amenities like pools, gyms and bowling alleys.

A YouTube video filmed in August by one of Flow’s first residents, Narjis, shows a partially completed and largely abandoned building. The 238-unit complex was built by Saudi construction group Safa; and it appears that Flow has adapted the building to international tastes, tearing down the walls that traditionally separate men’s and women’s gym areas for a more boho-chic WeWork aesthetic. “Flow is designed for everyone. The changes to the building’s design are intended to align the building with our brand,” Flow spokeswoman Amy Stevens told Forbes in a statement.

Flow has three properties with nearly 1,000 apartments in the Saudi capital, which are set to be completed by the end of the year. Stevens said Neumann’s startup bought the properties in partnership with private local investors. The Saudi sovereign wealth fund that backs A16Z has not invested in Flow, she said.

Branded residences and luxury serviced apartments are not a new idea; Four Seasons Residences have been around for more than two decades.

Andreessen Horowitz’s decision to invest in Neumann’s Flow in August 2022 has stirred up trouble following WeWork’s infamous implosion from a $47 billion valuation. Neumann had attempted to make a bid earlier this year to buy WeWork back after its stock price plummeted and the company filed for bankruptcy protection. But his bid, which would have seen Flow acquire WeWork for $650 million, was rejected. Instead, real estate software group Yardi bought the bankrupt startup for just $450 million after reaching a deal with WeWork’s lenders.

When Neumann first announced Flow, his business model was something of a mystery. Job listings at Flow touted an “ambitious vision for the future of living,” while Neumann’s speeches seemed to encompass a hodgepodge of ideas ranging from cryptocurrency-based financial services to a vague plan for renters to build equity with rent. He also floated the idea of ​​renters emptying their own toilets to build “ownership.”

“If you’re in your own apartment, you bought it and you own it, and the toilet gets clogged, you take a plunger,” Neumann explained at the American Dynamism Summit A16Z in Washington, D.C. in November 2023. “It’s the difference between feeling like you own something. Between being transactional and being part of a community.”

“We looked at residential buildings and said, what if we use technology to better operate the systems, attract people who are avid guests… and operate a residential building in the way you would expect from a Four Seasons, with that level of hospitality,” Neumann said, speaking at an event in Saudi Arabia in October 2023. It’s worth noting that branded residences and luxury serviced apartments are not a new idea; Four Seasons Residences have been around for more than two decades.

The startup opened its first Flow-branded properties in Fort Lauderdale and Miami, Fla., in April, with a more pared-down offering focused on offering medium- to long-term leases in eco-friendly apartments. Flow’s new website touts its values ​​as “commitment,” “growth,” “love” and “unity.”

The startup also has an app that offers a concierge-style service to invite guests and submit maintenance requests to the building manager. Both Florida locations offer tenants a month’s free rent as an incentive, according to Flow’s website, a standard way to entice tenants to sign leases for pricey apartments.

Neumann appears to be exporting a similar concept to the kingdom, where he headlined the nation’s annual “Davos in the Desert” summit last year. Flow Narjis last week hosted a “cacao ceremony” (Aztec-style hot chocolate) complete with dance and yoga classes, complete with “damn, I’m alive” bags for sale. “Immerse yourself in an art class, strike that yoga pose, or explore the hidden gems of our beloved city with your new friends,” Flow Riyadh wrote on its Instagram account in August.

“Saudi Arabia is almost like a startup.”

The WeWork co-founder has a complicated history with Saudi Arabia and its sovereign wealth fund, which has become a major backer of both tech startups and investors over the past decade, but he remains controversial over the country’s human rights record and the killing of journalist Jamal Khashoggi.

SoftBank has pumped more than $20 billion in equity and debt into Neumann’s WeWork, mostly with money from the Middle Eastern kingdom’s national wealth fund—it was a major backer of SoftBank’s Vision Fund, the world’s largest VC fund. SoftBank’s move to double down on WeWork despite massive, mounting losses reportedly led to the Saudi Public Investment Fund boycotting its investment in the other Vision Fund (WeWork did not respond to a request for comment at the time).

Still, Neumann emerged as a celebrity host of a Shark Tank-style startup competition at last year’s “Davos in the desert” summit in Riyadh. Neumann also hinted last year that he planned to expand Flow to the kingdom. “Saudi Arabia is almost like a startup,” Neumann said, speaking at a March 2023 conference with backers Marc Andreessen and Ben Horowitz. “Saudi Arabia has a founder. You don’t call him the founder, you call him his royal highness,” Horowitz said of Saudi Crown Prince Mohammed bin Salman.

Flow isn’t Neumann’s first foray into residential real estate. The Israeli-born founder, who grew up on a kibbutz, launched WeWork’s co-living arm, WeLive, in 2016 with a similar message to Flow: WeLive would provide fully furnished apartments and rooms for young adults to rent out on a short-term basis. New York Times At the time, WeWork projected that it would have 34,000 WeLive tenants by 2018, which would have accounted for a quarter of the startup’s revenue, but the project’s two locations in New York and Virginia closed shortly after Neumann resigned as CEO, and the company’s plan for an initial public offering fell through in 2019.

After a board and investor revolt forced Neumann out of WeWork, the billionaire bought stakes in apartment buildings with more than 4,000 units worth more than $1 billion in Florida, Georgia and Tennessee. The WSJ reported that the deals were financed with hundreds of millions of dollars Neumann made selling WeWork stock and $200 million from a consulting contract with Softbank Group. Flow spokesman Stevens told Forbes that’s false.

The billionaire also invested in property management startup Alfred, but later acquired rival real estate startup Carson, and its technology was integrated into Flow, which also operates in the property management business. When Forbes reported on the deal, Neumann denied that Flow competed with Alfred, but later wrote off his stake in the New York startup. “They are not and have not been competitors,” Stevens said.

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