Adam Neumann's second act, a16z's $350M bet, housing policy, Inflation Reduction Act & more

The episode opens with the usual banter and a format change: one host, introduced as sitting out of his usual hot seat, will moderate while the regular moderator becomes a guest. The guest jokes about the new question-led document, and the others tease him about pre-interviews on professional TV shows and about whether their audience finds them likable after 91 episodes.

The moderator's introductions are mostly running jokes, such as nicknames for each host and a mention of a head cold that one host says is not COVID. They have no bearing on the substance.

The moderator begins with a short statement about the previous week, when the discussion turned nasty and listeners noticed. He recounts that the show started as an occasional, fun project and became a weekly obligation, which he likens to having a baby together. Each host, he says, has different views on what the show should become, including rankings, listener feedback and monetization, and those differences produce real fights.

He says that on listening back he found his own reply on the inflation topic contemptuous, and he apologizes to Jason directly. The commitment he restates is to keep doing the show and to look for common ground, with this week's moderating role as one experiment. He frames the whole exchange as an example that people can fight, disagree and still keep trying.

Another host accepts the apology and adds that the show began because the hosts missed each other, and that its large audience adds pressure. He says he does not take the battles personally and describes the others as brothers, crediting two of them with early support in his career, including being his first LP. A host then observes that it is easier to be friends than to do a job together, and that the show has become a job that is worth figuring out how to make work.

After the sincere moment, the hosts deflate it with jokes. They ask each other whether anyone has any emotions, and the talk drifts into a running gag about beef jerky, including one host saying he recommended something to another by text while the apology was under way. The moderator then uses the jerky line to pivot into the first topic.

The moderator introduces the first topic as he reads it: Adam Newman, in the source's spelling, is back after raising $350,000,000 from Andreessen Horowitz for a new company called Flow. As he describes it, Flow aims to build residential apartments with the quality and attention to experience that WeWork intended, and it began with Newman buying real estate with his own capital before turning it into a business.

He says much of the commentary asks whether Andreessen is crazy and how anyone could back someone described as awful the first time. He wants a quick reaction round and then a broader discussion of founders getting a second act. His premise is that many founders have a low-profile first failure and then succeed, and that investors have noticed.

The host asked for a quick take says that when a funding looks hard to explain, it usually comes down to track record and audacity. He grants that Newman is audacious and credible, and argues people forget his origin story: they remember the $4,000,000,000 from Masayoshi-san and what followed, which he calls a cluster fuck with inside dealing, but not the earlier bootstrapped GreenDesk or the category-defining coworking brand.

He adds that Newman apparently put $300,000,000 of his own money into the apartments, and he rejects the idea that the tech industry will simply back anybody, saying the bet makes sense to him. His reasoning is that housing is one of the hardest industries to tackle, but that Newman already did commercial and so might manage residential. The $300,000,000 figure and the characterization of the earlier business are this host's claims, not checked against other sources.

Asked whether his firm looked at the deal, Sacks says no: a $350,000,000 check is outside its range, and the firm sticks to pure software rather than hybrid or tech-enabled models. His experience, he says, is that anything in the physical world is ten times harder than working with bits and takes a 10x entrepreneur.

On repeat founders, he argues that most startups fail and good founders tend to be entrepreneurial, so there will be many second-time founders who have made their mistakes already. The questions he would ask are what they learned and whether they conducted the failed company honorably. Lying to or misleading investors would be a deal-breaker for him, but he does not think most failures are like that, and a failure is not a disqualifier by itself.

The moderator turns to Chamath, noting that he has criticized startups that waste money on bars, red brick offices and easy living, and that WeWork is the obvious example. He asks whether that excess shows Newman lacks prudence with investors' capital, or whether it does not apply to the new venture.

Chamath begins by calling WeWork an interesting business that had been built many times before, under the name of the REIT. In his telling, Newman's arbitrage was pitching a real estate investment trust to a non-real-estate investor as a technology company, which is how he obtained very high valuations.

Chamath says WeWork's peak valuation was around $45 or $50,000,000,000, and that once it went public the market imposed a REIT-style valuation, leaving a company worth $3,600,000,000. He thinks Newman should not be dunked on for that outcome and deserves some credit for building a company at that scale.

His argument is that Newman pitched people who did not want to hear about a real estate investment trust and wanted a technology story, but stripped down it was a REIT. From the outside, and admitting that nobody knows the details, Flow looks to him like the start of another REIT focused on residential, which a host sums up as the same pig with different lipstick.

Chamath says that if Flow ends up as a collection of apartments with some connecting technology, such companies have been built before and REITs are valued in a structured way on funds from operations. For an upper bound he points to Prologis, which he describes as the most valuable REIT in the world, with about 1,000,000,000 square feet under management and a value near $100,000,000,000.