Many businesses are struggling right now. It is a combination of weathering the economy, realizing the reality of each business that had been on covid cocaine, and the fact that funding right now can be expensive. There are plenty of bottom fishers out there taking advantage. We will more than likely see all of this waning in 12-18 months. Let’s hope.
Then I wake up to read that a16z, aka Andreessen Horowitz, just put $350M in Adam Neuman, aka the founder of WeWork, who became a household name after his escapades that have been documented in books and movies, in his new business Flow. Flow is supposedly going to revolutionize and disrupt the housing market.
Does the housing market need to change? Absolutely. I have written about this countless times. Housing in urban cities is so expensive, and unclear how many spaces are empty. Supply-demand doesn’t add up when owners just let the properties lie vacant. Many who are the city’s backbone, from teachers, dog walkers, exercise instructors, and store salespeople, can no longer afford to live in the city. It is terrible.
Back to funding, Adam. When I was investing, there were many times when a great idea walked into my office with a not-so-great founder, and I passed thinking great idea but too bad it is your idea. I also can’t help thinking about the countless women and Black and brown founders who have had brilliant businesses and are savvy entrepreneurs but have never been adequately funded. They have built their businesses despite never having enough cash in the bank.
I will not list all those businesses, but those in the start-up community know who they are. Time and time again, I have seen six businesses, roughly all are the same, with five men founders and one female founder, each backed by a VC. The men get the big checks, and the woman gets a check half that size. The woman survives with substantially less capital, and all the men go belly up. The VC community decides they are done with that business angle, and the woman left standing can’t fund her business.
Every time one of those businesses fails after being funded with a ridiculous amount of cash, it kills me. It shoots an arrow through my heart. I know that just a small amount of that cash could have changed the trajectory of so many other businesses, particularly those who rarely see those checks; it happens to be women and Black and brown founders.
Flow is yet to reveal the depth of the business, and perhaps it will be a win, but my guess is not after millions more are put in, and millions will be wasted. This validates the frustration of many in the start-up world backing a founder who publicly blew up in flames.
What would have been nice to see instead of the apparent excitement from a16z is to take another $350M and put it behind the 10 or 20 successful underfunded companies that have the potential to be substantial fund returners that have been ignored by (I have to say it) the male venture capital world, and help those founders succeed too. It would be a win for everyone. Instead, this investment leaves me with a bad taste in my mouth.