Adam Neumann: This Is How You Build Iconic Companies

21:52Marc Andreessen:And, you know, and I was like, you know, why aren't there more Arclights? Like, why hasn't this experience been reinvented? And this guy was CEO of an entertainment company. And he looked at me and he said, because they're all owned by real estate guys who have absolutely no interest on what happens inside the building. Like they literally don't care. Anyway, so back to my discussion with my real estate friend. It was the same thing, which is he just said, look, Adam is completely reinventing our industry. It's always going to be like this going forward. It's never going back. He's going to unearth the entire thing.

22:18Marc Andreessen:And, you know, we work, you know, in some way is going to survive this. And they'll figure out the specific thing with the company. But he said the industry is getting reimagined. and there's only one guy who's ever been able to do that in this business. And then you pause for a moment and you kind of think, to your point, about the sheer size of the industry. And as you always remind us, this is one of the biggest industries on earth 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, there's something very special happening here, kind of independent of the sort of day-to-day, blow-by-blow aspects of the business.

22:51Marc Andreessen:And then we'll talk more, but independent of the financial stresses. Yeah, the other thing is, you know, we keep very good track of what our portfolio companies use. And they're a really good indicator of, like, the best new products because they really care about products. And, you know, almost all of them were WeWork 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.

23:24Erik Torenberg:Okay, so what was the first conversation like?

23:26Marc Andreessen: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 of the office. And so I had just, I was at my dining table with a chair and after about eight hours of Zoom calls, the entire side of my body from my neck all the way down to my ankles would be basically seized up and in pain. And I was like, I can't live.

23:54Marc Andreessen:this. I'm going to die. I'm not going to die of COVID. I'm going to 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 quad area where I would park. And his job was to yell at me for not wearing a mask. As far as I can tell, that was the only thing he did all day. And I would see him every morning and he would yell at me for not wearing a mask.

24:25Marc Andreessen:I would wave my mask at him 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, because I remember actually standing in the field at one of the fields of Stanford and actually having the call. And yeah, and it was basically just like, look, 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 our philosophy always on this is 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?

24:53Marc Andreessen:And the best forecast of being able to overcome a profound challenge in the future, which every entrepreneur deals 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. There's tons of examples. Thomas Watson, Thomas Watson Sr. 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, NCR. He's already basically been completely taken down by the government at that point and then started IBM.

25:30Marc Andreessen: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's because somebody goes through something that's very difficult if they're able to, you know, navigate their way through it and kind of demonstrate their character through it. They often have great potential. And, you know, I don't know, I don't know if it is reasonable for me to draw the, you know, kind of comparison to like what you were describing for, you know, being dyslexic as a kid or whatever, but like being through a fundamental challenge, you know, like that, whether it's in childhood or adulthood.

26:04Yeah. And it's, you know, 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, the thinner the margin. So like, you know, all of us who have been through that go, wow, like, you know, one bad piece of luck and it could have gone completely the other way. And then, you know, 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.

26:53But that doesn't even matter because 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, Adam Newman, WeWork got all fucked up. That was never a thing.

27:28Marc Andreessen:And then maybe one more thing, just a general observation, which is kind of the old adage of, was it, failure, success has a thousand bothers, or failure is an orphan, is 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 of 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, the 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 to lots of people where all of a sudden it's just like you develop, you know, you develop leprosy or something and people just don't want to talk to you.

27:59Marc Andreessen: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 high opinion of and then, you know, lots of relationships with, and then just all of a sudden, you know, it's just like poof, vanishing. 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 Ted Kaczynski, famous philosopher Ted Kaczynski, what's called over-socialization, right?

28:23Marc Andreessen: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 in key moments. Anyway, I don't know if that happened to you or how much that resonates, but I have talked to many other people who have been 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 is, it's like a, it's a blow against conformity, which I think is always a good thing.

28:57And it's, you know, it's a time when people actually could use a call.

29:01Erik Torenberg: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 when you called. And some people are social. I think I was extra social. So my phone was extra. And I'm more of a talker. So it really stopped. And it wasn't just that. I say this sometimes. I speak about it. I had a thousand friends a week before. And I went down to ten. 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. Because 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.

29:38And I do believe we live in a different world. I think we're talking now 2019 and we're now 2025. Hopefully the world has changed enough 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 FOMCO. and what's interesting about Funko, there was no business transaction in that Funko. The Funko was just, how are you doing? And tell me what you think. And there is something I've shared it before, but it's worth it.

30:08Where you said, Adam, 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. But I was like, Mark, please tell me what that stage is. He goes, 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, Ben, that you're 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, Adam, just so you know, and I'm sure we'll talk again.

30:39You said, there's only going to be one decision that you need to make moving forward, and that's, are you going to get back in the ring? Or are you not?

30:45Marc Andreessen:Yeah, that's right. And he 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 I 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 market was again you. About six months later, you called me again. Say, hey, I haven't spoken. What's up? What are you working on? And I was starting to actually work on residential because Ben, you know, to your point, there was always one idea.

31:17But I thought I was working on residential as an investment. It was COVID. Cap rates for those who remember, interest rates were literally at zero. Cap rates were wide for those who understand real estate. when Capra is compressed, the value of the real estate goes up. So when Mark called, said, what's up now? I said, look, we're doing this, we're doing that, but nothing that special. Mark's like, okay, 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.

31:48And I would love to hear Mark, because I think it's so interesting, because we gave a lot of forecasts, you and I, in Corona. What's going to happen to office? What's going to happen to the home? But something that was 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, add that barrier. Then tell people they're not allowed to be in the same physical space.

32:17And you got yourself an anti-kibbutz moment. And the peak anti-kibbutz moment was in the 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, his name is Mark. He goes, Adam, 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 the deal. So we want to find the seller that really needs to sell and we need a reason to buy. And I said, go meet them. He said, they won't 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 scream to each other.

32:50And he 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, who turned out to be amazing acquisitions, who we're going to get to talk about afterwards, but all have amazing basis. And 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.

33:12Erik Torenberg: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 another test you said one what did they go through I love that and how did they deal with challenges and also can they help themselves is this something 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 saw social network the movie well that's not that's not going to be a good reason um great movie by the way that's not going to be that's not going to be 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.

33:57It was soulless. It was depressing. And we're talking, when I say buildings, the 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 already existed and we bought it and said, let's just connect them a little bit, not with big intentions.

34:30And step two is let's find a great property manager. So we had five assets. So we hired five different property managers. One of them is going to be great. And then we'll tell them what to do as asset managers from real estate. You have the property manager that runs it and the asset manager that is the person like the Blackstones and Blackrocks of the world that deploy the cash. 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.

35:01And so at that point, so we started working and we started doing it and immediately we started seeing positive results. So we were like, okay, 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 in the Wall Street Journal about a billion 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.

35:31And he said, do 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. Ben was actually not in the first lunch. DG was there. He runs Growth. And Chris Dixon was there, who runs Crypto. And we had this very nice dinner.

36:11And 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. 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. The good news with WeWork is it was very well documented.

36:30Marc Andreessen:He read the book. We watched the miniseries. He said, no, no. We talked to him. They had a lot of employees. He said, not only have we read the book. You said, not only have we read everything. I know your board members. I actually know, I know all of them. This is true. I know them. I spoke to them. And you're here because we want 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, and this is for those of you who don't know Mark, once you let Mark go, he has a lot to say.

37:00So 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 that was 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? He said, I get it, Adam. 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.

37:30I didn't know anything. I didn't know any better. Didn't know what else existed. But if I did, maybe I would have come. 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 talk 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're having now, wouldn't have happened.

38:01So we had that dinner and it was excellent. And then we started talking about the future of living. And we talked about a pure vision and really what we see. I said, well, we were, 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 then said, so what do you think? You think maybe we should explore something? I said, look, I don't know you. You don't know me. I was a little burned in the past. We're using all of our own money for this. And then Mark, you said to me, how about you take time and get to know us?

38:31We'll get to know you. And let's see what happens. And it took six months from that point. Both people think that this happened fast. It didn't. It took six months from that point to the actual investment, which in this August will be three years.

38:44Erik Torenberg:Wow. One thing I just want to say that's so remarkable is you not only got back in the ring again after you already built an iconic 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, sort of a triple down in a way that it 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.

39:17Why? Because I heard so many times because WeWork was 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-in-law. 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 he said to me, Adam, forget what your team and my team is talking about for a second.

39:52Not because we don't respect them. We 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 build the largest, really disruptive industry and imagine it the way you imagine it, would you need to own real estate? And I said at the beginning, I would. And you 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.

40:22I 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? And I told you, it's a feeling. And you said, great. And then you said, I have a suggestion for you. It's not traditional. You have this large portfolio. Take out of this portfolio whatever you don't think is a fit for flow. Sell it. But the rest, what 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.

40:55And it took me a second. And in the beginning, I thought this was some negotiations, some fancy negotiation tactic, because it ended up being one of the smartest things we've done. I genuinely believe that the reason flow today, and we're 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 actually had a simple reason for that decision, that was alignment. Something that I think A16Z is really good at.

41:20Marc Andreessen:Yeah, in part, that was based on actually watching WeWork, which is by the time you get in a situation where you're fighting with your investors, like things just do not end well. And we've seen that across many companies. And so, yeah, if we just, building a business is so hard if everybody's aligned. If everybody's not aligned, like 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 own 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 sort of two iconic business models that are kind of held out in Silicon Valley as kind of the best in class, like best business models ever made.

41:56Marc Andreessen:And one of them is Microsoft. And the great lesson of Microsoft was you build a horizontal layer of technology, you know, software operating systems and applications. And then you basically run across, you know, thousands of different hardware implementations, thousands of different, you know, 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 on everything. So that's lesson number one. And then lesson number two is Apple, where 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.

42:29Marc Andreessen:You have to, you know, the old Steve Jobs line is that 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. Right? 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.

42:58Marc Andreessen:So, you know, the moral of the story is, like, it really depends. Specifically, though, if you want to control the actual customer experience end-to-end, 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 cajole, especially early on. You're in the realm of having to cajole 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 number of properties out there that could benefit from the brand, the vision, the technology, the platform.

43:31Marc Andreessen:And so one of the very interesting kind of things at the heart of the business model for Flow is to what extent, like in the long run, should it be vertically integrated and to what extent should it be, you know, where 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 their process. You take Hilton and Marriott, where they started by owning a lot of it. And today, if I'm not mistaken, we're talking about thousands of properties, less than 1 % owned. 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.

44:04We're not talking about raising money for Flow Parent Company. 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 you talked about one of the largest. Real estate is so large, just for 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$2 billion. And 100, you're$20 billion. And 100 is not a big number. It's just you could sit, we're in downtown Miami, you could stand on our roof and point to 100 buildings that could be floor buildings.

44:41And there's five different neighborhoods like that in South Florida, and that's just one area. Then you could go to New York, and you could start 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 also can do the flag business. or we come to a person who owns this multifamily or the other things, the other 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 are on the landlord.

45:14And some of what's nice also about our alignment is we don't have to make that decision yet today. Right now we have to build the best product.

45:23Erik Torenberg:Can we share more about the thesis underlying our bet into flow in terms of how we saw the, you know, 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, okay, who is Adam? Forget Adam the entrepreneur. Who's Adam the person? You know, what is he good at? What is he not as good at? What are we good at? Can we get along? You know, it was that kind of thing. We had, I think, a seven-hour dinner. Oh, yeah, talk about that dinner. What was so remarkable about that day? Well, I mean, you know, we really got into it. Mark, remember how it started?

46:02Mark called 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 I knew that Mark jumps on 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. I said, what's up? He goes, well, my partner, Ben, you haven't 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 a long dinner. You know, a lot of how you get to know someone is kind of get into the things that, you know, you shouldn't even talk about, right?

46:35Like, they're not polite. They're not the kinds of things. And so I think Adam asked me, he's like, well, you know, like, looking at me, what are you worried 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. But 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.

47:14And 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, you know, your vision is so incredible. Like, it would be horrible to put it at risk for a non-valid reason. And so, like, we kind of got into that. And I said, look, I know the feeling because, like— You did it too. Yeah, I've been in—I've saved a company like that. Like, I know exactly what that— Like you never can feel that good as walking back into the building when everybody thought the company was over and you fucking saved it.

47:55You just pulled it out of like fire. That's the most unbelievable thing in the world. But you don't want to be in that position.

48:02Marc Andreessen:Well, and it is worth saying. There are founders who will, if they do not have a crisis, they will create one. Yeah. They will absolutely seek out disaster. Yes. Yes. And look, we all like – there's a bit of it in everyone. And, you know, 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 you could lose the company over it. And so, you know, we just had a—I would just say the thing I remember about that was it was a very honest conversation.

48:39It's very hard to have an honest conversation about something like that.

48:41Marc Andreessen:It's almost like people don't really 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, look, I think that this is somebody that we can work with. The things he wasn't good at at WeWork, like we're very good at putting together a tech team. you know, understanding which of the six ideas are good and which ones we should probably wait on or not do and that kind of thing. Like, that's the strength of us.

49:23Erik Torenberg: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's progressed and sort of where we're at? Because you haven't been super public about it and there's some exciting things happening. So why don't you share from your perspective? Well, it's often an 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, you know, 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 has resulted in kind of returns on the buildings that are unprecedented.

50:17We'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. Yeah. 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 we'll keep a management deal for the unforeseeable future. And then the other thing is we've built a strategic technological advantage. So, you know, real estate software has been hampered by old, I would just say very crufty technology.

50:59I won't name the company, but everybody in real estate knows the company. And the flow team has 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, in 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, it's something that kind of obvious and simple. But because of the way these other things are architected, it's very difficult for them.

51:54And that's just the beginning because 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 definitely way exceeded our expectations. And, I mean, look, 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.

52:33Erik Torenberg:Yeah, real estate hasn't had a ton of tech innovation. 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, care 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.

53:26You'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 and 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. And the way that the company has 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 wouldn't it be great to take yoga lessons without leaving my apartment building?

54:10And so what's happened already in Flow is not only has the commerce between residents, accountants, 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 while 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.

54:58And it changes what's possible. And as I said, I think we're at the beginning of that. And no other system. 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 of Flow is an architectural genius. The way he's designed it has enabled not only everything that Adam envisioned, but so many things beyond that, where every time an opportunity comes up, it's there.

55:52The other kind of capability of the software that's amazing is because it's so flexible, yes, this could be multifamily living, or this could be condos, or this could be a hotel, or this could be office space. and it can change literally with the press of a button, which is, you know, 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're able, you take that multifamily and it really came out of need.

56:36We had a multifamily and 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 an extra$300 a month. And the team literally said, no, no, the system can't do it. And I said, we were using one of the traditional systems. I said, what do you mean it can't? I said, it can't. It physically can't. I 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.

57:03We want to give shorter term. Some people only want it for eight months. Other people want it for 20 months. Oh, no, we can't do that. And I said, well, how about short-term stay? What if some people want 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 build it in the back end. You build a system in 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 NOI. Higher buildings are more profitable.

57:32And just to use a little numbers for that, our building in Fort Lauderdale, NOI 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. And 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 us, direct to the website. Now, our brand is still young, but even a young brand, and we didn't say this, but 70 % of 40-year-olds and younger in the United States are renters.

58:13They spend a third of their wallet, a third of their pocket on that rent. There's not one brand. You have them in hotels, you have them in condos, 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 got to where it got with no such technological platform.

58:34Erik Torenberg:Just the brand.

58:35Marc Andreessen:Just the brand. This also goes to conversation we had early on about the sort of changing nature of housing in the U.S., Right, which we've talked a lot about since. And I think a lot about, which is basically there's a bifurcated housing market in the U.S., the way I think about it. Basically is there's plentiful cheap housing out to places that don't have great jobs where people don't really want to live. And then there's basically like impossible bottlenecks on housing stock in 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.

59:04Marc Andreessen:And so just as like a young person starting out in life, like you have a very - It's an assault on young people. It's an absolute attack on young people. And I mean, it's actually hard to even discuss this without getting enraged 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 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 house like owning a 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 you know situation and then the other thing is like there's a really fundamental kind of stress point and and I think this is coming fast now for Gen Z which is like all right 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 can you really do that like in a small apartment and and you know all all the data of course, indicates that in all these cities, by the way, all over the world, birth rates are crashing.

1:00:10Marc Andreessen:Populations are declining. People are not even reproducing at reproduction levels. And so there's this like fundamental social, political, cultural, economic 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, And it's like, I think young people are really in trouble. Well, let's add two thoughts. First of all, I think this is, and Mark, we talk not today about politics, but in general a lot about politics.

1:00:42I think it's a main issue globally. And sometimes a lot of other issues become louder, but might be the biggest one. Yeah, 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 going to ask them to go to that next level of behavior that we expect from all of us if they can't afford a house right and so i think that's why i think that's probably the worst deal a young person can 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 landlord yeah where these lords and you had to and you would get a piece of the land you'd work the land for the lord yeah and then you'd give that piece whatever this if you're lucky yeah you got to keep a little bit yeah and it was all up to them the entire concept of real estate is the haves and the haves not.

1:01:34But 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 a reality like Flo that we're dreaming of, and we started multifamily, but so we said you could take a multifamily. Now it's rental, furnished, unfurnished, short term, long term. We didn't talk about condos, but Flo 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.

1:02:07There are more single family than multifamily. 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 in Flow, that the returns on the real estate are actually higher, then landlords and investors all 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 as 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 Ben you said we're 5 % into the journey maybe even 3 % into the journey but we're just starting and the other interesting thing is So you're seeing the properties in Miami already delivering both on top revenue and profitability.

1:03:01And the reason profitability is such an important metric for us, if we just spent more and made more, that's not going to do anything. You're not going to 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 Ben's 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?

1:03:32And the answer is not as much as about five classes a week. Every week is enough if it's one-on-ones and then they can 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 built every, so we're vertically, we're completely vertically integrated. We built every single piece and the pieces we haven't built yet, we're building. It doesn't mean we can't use third-party software, let's say, on video cameras or different things they need for security or parking lots there. We don't have to invent everything.

1:04:00But 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 when we're early. That number is going to go up to 90%. And great communities, respectable communities, run themselves. So one sign, and I know it used to exist in schools, still exists in schools.

1:04:33When you go to tour university, hopefully a student that's really proud of the school they go to is the one touring you. It's not the salesperson trying to push you there. Same thing in the buildings. If the community, when someone tours the building, one of our great, and we're trying to lay everyone, there's no more just leasing agents. Everyone can be a leasing agent because 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.

1:05:05And 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 even about that, I think the going to Saudi was a very interesting thing.

1:05:41First 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, okay, so our third billing is going to be, and let me guess, New York City. No, Austin, Texas. No, very nice place, but no. And then you say Riyadh. And I think that's just not, I think that's not your obvious thing. But again, and this is something else, you talked about success, the division of success and failure being so small. Again, I believe in God. So for me, it's this. Mark and I have different discussion how we define God differently, but we believe in something greater than ourselves.

1:06:16we after the investment was made you guys got quite a lot of phone calls from your lps and you reached out to me said yeah yeah i think you might have told me from every single one hey you have a lot so that's a lot of phone calls 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 happened.

1:06:47One, we would walk in, no matter what meeting you take with Ben at the end of the meeting, forget Flo, Ben gets offered money. It happened to us again last week. It's an interesting experience to go with Ben. So people think I'm great at raising money. I'm a beginner. So we would go to these meetings and we told them 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, said, we think this concept would be great for the Middle East, specifically Saudi Arabia for Riyadh. And even in Abu Dhabi, they said the same.

1:07:25And in Dubai, they said 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 is phenomenal for those of you who haven't had a chance to go there. What I get excited about Saudi, the optimism, the vision. Ben, I think, might have coined the term a founder-led country. So there's a vision. It's very clearly articulated. It's 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.

1:08:02And 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 in. And I think last week, a lot of us saw Trump 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, worked extremely well, but it was also very difficult because there was a lot of challenges that were happening as we were there.

1:08:46But 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 started deploying the brand. We put our design from the outside. We bought our furniture. We launched it on our tech. It was also the first time we got to launch it on our back-end system, not just our front-end 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.

1:09:18And 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 the way we wanted to do it is not just use our own money. we were going to raise a local fund. Because the theory was, and we're only 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 the country. If you go to all the local families and no one wants to invest, maybe your idea is not as good as you thought.

1:09:48And that's what we did. We raised it from actually 33 different investors. We put it on equity. We got debt from the local bank. We bought these five properties. It was about a billion SAR, which is about$300 million fund. 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 an 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.

1:10:28That's when you opened in January and 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 at zero. We also have to do everything they do when you go to a new country, which is hire a local team. We're very lucky with a local leader named Fawaz that came from government and 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 if Flo Rite, I say, who wants to move to Saudi?

1:11:01You're getting half the employees in the company raising their hands. Because in Saudi and in Riyadh, we get to take all these visions that we have, but we're the only ones doing it. And as good as our product market fit is in South Florida and it really is excellent, it's phenomenal in Saudi. How amazing is that, that everybody wants to move to Saudi? I mean, just if you went back 12 years, the people in Saudi wanted to move out of Saudi. that's completely turned around i really i really think it is and it also for us as a company 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 power of the platform it's back to that agility yeah in saudi you have to be connected to the government for the rent for variety of reasons actually allows you to to take people out who 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 The system is built to be flexible and is built to need to connect to external things if it needs to.

1:12:01Because our architect, Scott, who is our CTO, knew that he needs optionality. Both 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 in, I say, what are you talking about? We're already connected. Then other people ask us, say, when are you going to become a Saudi company? We heard that takes two years. It's like, I don't know. We have Fawaz and it took us exactly 60 days. So not only are we operating in Saudi, we're operating as a Saudi company, which I think is very important.

1:12:32And 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.

1:12:42Erik Torenberg:Wow. 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 regions? Talk more about how that's going to work. So let's start with the real estate fund in Saudi. It was launched and closed and actually got oversubscribed, 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. Also, when we sold it, the people are buying, they want flow to manage it, which is the beginning of the business model that it's going to become.

1:13:16That is the flag model. So at the beginning, I think you have to be vertically 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 lying on us. The moment 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.

1:13:46By allowing yourself to move from a multifamily 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 2030. So 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 their own to get paid.

1:14:23Well, they're supposed to find their own 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 is able to stay. But if you were any other landlord, and you had a great building manager, and 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.

1:14:55And I think the other thing about our system that maybe we didn't say 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 went into architecture. If we were building this for just one country, for just one use case, I think a lesson for 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, when it's time to put food in the guy, I enjoy it. It's my favorite part probably. Taking our time now to build a product that's actually scalable. Learning from our mistakes. Taking the time to make these decisions.

1:15:29Building. I wanted to recruit tech engineers faster than Ben and Mark thought was correct. So we made it harder 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 teams. 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 to raise funds against. That's in Saudi. In the U.S., we actually bought 30 % of a publicly traded company in Israel. We're non-controlling shareholders.

1:16:04that 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 Portal. 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.

1:16:41So the people who are going to want to invest in our fund are going to understand that by getting access to Flow, to Flow's technology, to Flow's brand, they're going to get access actually to above market returns, which at the end of the day in real estate, as 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 interested in 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.

1:17:11Because even though it's a safe return, we learned something in the past 10 years. Before Corona, 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 i didn't realize 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 um and we you know doing that kind of just through the flow balance sheet would be insane.

1:17:56So 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 how these people think about how they do that and how it works. And we have lots of demand. We're trying to figure out what to do with all the demand.

1:18:32Erik Torenberg: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 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, as Mark kind of alluded to, it's been much worse than what their parents' opportunity was and even what their parents' opportunity was, which is a new phenomenon.

1:19:23And this is a chance to make it much better, much better than how their parents lived. And, you know, there's not more meaningful work than that. And then it's an extremely complex technological problem, you know, particularly kind 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.

1:20:09Erik Torenberg: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 COVID enabled some unique opportunities for us to rethink how we think about sort of the future of cities, remote work, sort of 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 were some things that played out. There were some things that sort of didn't play out exactly as we thought. Some things reversed.

1:20:43Erik Torenberg:You know, a few years later, what are your broad reflections? What have we learned?

1:20:46Marc Andreessen:So I feel like COVID threw 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 has looked 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 was a whole theory about people didn't want to be seen when they were talking on the phone.

1:21:17Yeah, exactly.

1:21:18Marc Andreessen:Yeah, yeah. It's the same kind of theories that you wouldn't want to see actors talk in motion pictures of sound. Yeah, exactly. So there's all these 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. Um, so that stuck. Um, then there was the idea that basically all, you know, all work becomes remote or at least all knowledge work becomes remote.

1:21:43Marc Andreessen:And I would say like that has not stuck that well. Um, it stuck somewhat. And I would say it stuck somewhat in, in two circumstances. One is a lot of CEOs are really struggling, even when they want to get everybody back in the office, they're having a very hard time doing it. Um, and, and again, this kind of brings up this issue of like, where and how do people live? Because if, if, if you can have a much better lifestyle living and working remotely, then it's harder 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 many of their best people had actually left the vicinity of the office by the time COVID came back.

1:22:14Marc Andreessen:And they have this very difficult choice of trying to kind of coerce them into 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 a kind of a big net 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 COVID was sort of a, there was this sort of dichotomous 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 or your grandkids and like be on the golf course.

1:22:47Marc Andreessen:And it's just like this amazing thing, but you put yourself in the, in the, in the, in the shoes of a newly graduated, you know, college grad who's, you know, 22 or whatever, you know, stuck in some box apartment 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 mentored by a, you know, a face in a Zoom panel. And so there's this sort of failure to launch problem with young kids and their careers. And I think that that hasn't been solved. But then finally, I would just say it's not like everybody's just going to go back to work in the office.

1:23:13Marc Andreessen: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 describe as followed, which is 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 old adage that the thing that made Silicon Valley so special is that if you lived and worked in Silicon Valley, you could get 20 other job offers as a database administrator or as a Java programmer without changing your parking spot, right? Because the employers were clustered. And by the way, that's still true.

1:23:42Marc Andreessen:That's still the case. But if you're remote, you can have 20 ,000 job offers from companies that are dying for people with your skill set, right? Many of which are not located in Silicon Valley, and they're all available on video, and you can just do that. And there are lots of people now who just work remotely because 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 this how-to manual to how to hold down two jobs.

1:24:04Erik Torenberg:I was just going to say something about multiple, yeah. Remotely, without letting them... Over-employed.

1:24:07Marc Andreessen:It's a very careful how-to guide on to make sure each employer doesn't realize that you have the other job. And then there's another chapter, which is how to do it with three jobs simultaneously.

1:24:16Erik Torenberg:There's a whole subreddit dedicated to this.

1:24:17Marc Andreessen:There's a whole subreddit. And now there's the AI version of it, which is, well, you can have, you know, you know, chat GPT, do your job anyway, so you might as, you know, it's very helpful to be remotely because it's easier to do that. And so, you know, the remote thing, like, you know, continues 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 that 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.

1:24:43Marc Andreessen:And they're, you know, they're, and they're literally, you know, they're 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, a half million dollars a year to be like a, you know, senior engineer or something. And you tell them you're going to watch their bad, their badge reading in and out to like track their, you know, motions and then, you know, somehow figure out, you're going to penalize them. Right. Right. Everybody ends up in a punch card world again. And so like, I think this is all just still up in the air.

1:25:09Marc Andreessen: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 think the whole concept of how people live and work, I think it's been upended and I don't think it's landed again. And I think that there's, I think there's interesting questions on 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 reimagining the future, 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 Ben and Mark were talking about, very hard for us to do things remotely.

1:25:47So 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 were 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, the reason you 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.

1:26:17And 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'd say, I'll get you office. I'll build for you. We used to do WeWork. We're very good at 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 a 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.

1:26:53Now, a lot of times when developers have tried to do it in a way that was like Disneyland, it's soulless. If you can then do it in a soulful way, that really makes people and Flo's mission is to connect people to themselves, their neighbors and the 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.

1:27:31Mark 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 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.

1:28:04and I think the future of flow has a tremendous amount of potential. I think we need to keep taking it one step at a time. I think we need to deliver on all the different aspects of the business. So now you heard us talking about funds and raising capital to deploy to people. But only people understand why flow delivers a higher value and how it's going to give them a higher return. Keep 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 version of the future that we see.

1:28:45I think it's great for the US. We know it's great for Saudi. I think 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.

1:28:58Erik Torenberg:Adam, thank you so much for coming on the show. Thanks for having us. 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 X at A16Z and subscribe to our sub stack 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.

1:29:41Erik Torenberg:Please note that A16Z and its affiliates may also maintain investments in the companies discussed in this podcast. For more details, including a link to our investments, please see a16z.com forward slash disclosures.

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