The Tesla CEO does not hide what he thinks of Flow, Adam Neumann’s new company. It could be summed up in one word: bull.
The business world is full of second chances.
There are more and more founders who failed, but who were given a second chance by investors. The idea, second chance supporters say, is that founders should be encouraged to fail, restart, fail again, restart, and ultimately succeed.
The example of a second chance that paid off is Henry Ford, who had two bankruptcies before breaking through.
In 1901, the Detroit Automobile Company, the company founded by Ford two years earlier, had to declare bankruptcy due to the poor quality and high prices of its vehicles.
henry ford
Ford faced a second bankruptcy in 1903 when he founded the Ford Motor Company. Bowing to pressure from his 12 associates and financial backers who had given him $28,000 in capital to launch the company, Ford introduced its first production model in 1903: the Model A.
But this time, Ford learned that it was not enough to create, it was also necessary to pay the suppliers, if the cars were to be assembled and delivered to potential customers. The costs of developing and producing the Model A were high. In July 1903, after paying his suppliers and not selling a single car, only $223.65 remained in the coffers of the Ford Motor Company.
The company received an order and a down payment and also obtained a loan from a group of investors. He was then able to bounce back and became very successful.
The example of Henry Ford is cited by supporters of second chances for start-up founders. It is even a pride of the American business world, because Ford has transformed our way of life thanks to its practical and accessible cars. He invented modern methods of mass production that became the benchmark for industrial practices during the first half of the 20th century.
But investors say that not all second chances end well. Elon Musk, one of the greatest serial entrepreneurs, believes, for example, that the second chance given to Adam Neumann, the disgraced founder of WeWork, is a bad idea.
In a thread on Twitter, a user posted a video of what appears to be Neumann explaining the idea behind Flow, his new company. The former WeWork CEO accompanies his explanations with large hand gestures. It is difficult to understand the logic of it.
Musk doesn’t buy what Neumann sells
“So number one: management company brand technology first,” Neumann explained in the video. “Number two real estate asset management company, which can buy real estate and manage real estate assets; number three financial services. And the fourth pillar is this mechanism that will take some of the value and share it with the value creators.”
He continued: “And those users are going to start using our financial services. Now the reason they’re going to use financial services is that the payment company that collects their rent already has a real relationship with the user. And then, If they are able to take these value creation mechanisms and share with the residents, a part of the value, they will feel ownership.”
“If you’re in your apartment building, you’re a tenant, and your toilet clogs, you call the supermarket. If you’re in your own apartment and you bought it and you own it, and your toilet clogs, you take the plunger. And it’s the difference of feeling that You have something to feel like you’re renting. From being transactional to being part of a community.”
Neumann’s monologue seems incomprehensible. For Musk, this all amounts to a kind of mental gymnastics that leads nowhere. He doesn’t hesitate to use the eggplant emoji to back up his criticisms and warnings. The eggplant emoji is often used on social media to represent a penis.
“Imagine this is your 🍆…now I’ll explain it to you with my hands,” Musk commented.
Basically, Musk seems to sum up Neumann’s idea of nonsense, wind.
Neumann made a comeback last August with a new startup: Flow. He had raised $350 million from the venture capital firm Andreessen Horowitz, valuing his new venture at $1 billion. This is a record for a first round of financing. The script had a bit of deja vu. Neumann, a charismatic young entrepreneur, had already set out to revolutionize the way of approaching the commercial real estate sector, putting sharing at the center of his concept.
To do this, it had benefited from the support of prestigious institutional investors such as Softbank (SFBQF) . But the adventure turned into a nightmare for investors.
Flow, his new company, is halfway between renting and buying homes. It is based, like WeWork, on sharing. Neumann had said that Flow wants to solve the housing crisis.
