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Hi guys, I'm Sahil. I'm Crockett. And today we're filming another episode of Uninvested.

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We have a new little setup. We got camera one and camera two. Crockett, why don't you tell

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them what we're filming today? Today's an exciting episode. Today we are talking about

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man, myth, legend, god, Adam Newman. If you haven't heard about him, you're probably living

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under a rock. Fraud maybe. Exactly. We're talking about kind of the rise and fall of WeWork briefly,

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but most importantly, Adam Newman, famed and somewhat failed CEO, has just had a massive

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recent $350 million investment backed by his same former lead investor, Anderson Horowitz,

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for his new company, which people are widely speculating about. Yeah. So this new company

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flow we'd love to get into, but before I want to give a little background on Adam Newman

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and really the rise of WeWork. Yeah. So Adam Newman, born and raised in Israel. I think he

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was actually, I was in Israel last summer and I think he was actually born and raised right

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where I was staying, right near around. Anyways, besides the point, goes to college in Israel and

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I think it's like four credits before he's going to graduate, drops out of college, starts getting

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into real, which by the way is like a- That's ballsy. Ballsy move. What about four credits

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away? I don't think I'm ready to drop out for any amount of- I mean, if the podcast takes off,

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you never know. But he drops out, starts becoming entrepreneurial, has a couple early ventures,

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gets into real estate, actually starts to date and later marries his now wife, Rebecca Newman,

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who also happens to be cousin of Gwyneth Paltrow. Interesting fact. And what does she do as a wedding

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gift? So as a wedding gift, they got a million dollars from her father. And what does she do?

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A good wife. She gave that million dollars right into WeWork. Oh my God. So we all know Adam Newman

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is known for his charisma. That's really how he got all these deals done, how he was able to grow

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WeWork so fast. But really that first big step of million dollars, here Donald Trump got a small

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loan of million dollars. Any amount of money can take you really far, but he was really able to

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grow it a lot further than that. Why don't you talk about any of the other deals he made?

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So, okay, well, let's use the background of WeWork, right? So he's found WeWork. WeWork is

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backed by a variety of investors, notably SoftBank, which is one of the largest funds,

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I think, if not the largest fund. Yeah, the Japanese billion. They have like 18 billion involved

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in this deal. They've backed some insane companies, monday.com, but like 20 other unicorns at this

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point, which is ridiculous. Oh, and unicorn, for those that don't know what a unicorn is,

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it's any company that's valued at a billion dollars. Good point. Good point. Sorry about that.

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But he started to WeWork and essentially what WeWork is, and again, if you don't know about

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WeWork at this point, like where have you been? It is a co-locating workspace. They had, I think,

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120 locations across like 45 or 47 countries. You could run out based on either like an enterprise

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level subscription model or, you know, like other lower level subscription models, working spaces

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for you and your team. You could just go casually work there. That's how they started off and that

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was their core business. But as recent Netflix documentary We Crashed kind of explains, the

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business failed massively and it was a combination of a lot of different things, really shitty

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management, poor financial decisions. Essentially, the company ends up going from an initial 47

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billion dollar valuation to a five billion dollar valuation. But on that note, maybe you should

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explain what a valuation is. Well, first I really want to back up and some of you might be thinking,

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why would I want to co-locate to an office in this post-COVID environment? Makes no sense, right?

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I know my bosses, everyone, if they could stay home, work from home days, everyone's doing it.

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That's the rage. So many companies making it more accessible and easier. But back then, if you think

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about it, there wasn't really a concept. Zoom wasn't as popular. You couldn't really conduct

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these meetings at home. But if they really started in New York City, think about having like a thousand,

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like a very small apartment, having no workspace. You really just want to get out, but you have no

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chance for this. And WeWork really gave people the chance to go meet people like my individuals that

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want to work hard away from home. It's like a student going to a library. We're all more productive

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away from home. So back then, it made a lot of sense to really transform the way people thought

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about working in general, whether it be a small startup, different small corporations, not even

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no large corporations still use WeWork when they're in the in-between time they haven't got their

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official office yet. And it still exists, by the way. So WeWork still has... You can go find

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WeWork's right where you're living, I'm sure of it. Yeah. I mean, literally to back up another second,

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WeWork failed in late 2019. But as far back as last summer, when I mentioned before I was in Israel,

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I worked out of a WeWork for half the summer in Israel. So it still exists. Well, I want to ask,

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how was it? I've heard like some horrible things about WeWork. I know people say like,

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they see he's not working, he's not working. I had no complaints. So it was free coffee on tap.

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It was like, it was super nice, but you can't help but sit in one of those and be like,

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damn, there's a dark history behind this place. A lot of people lost a lot.

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A lot. But on that note, right, so the world's a very different place now. Not as many people

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like to go into work in person, people for working from home. But at that time,

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it was hyped up. And like I said, they had a $47 billion valuation. What does that mean?

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So there's a lot of terms for valuation in the startup world. If you watched our first episode,

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we talked about a revenue multiple. So what a revenue multiple is, a company has a certain

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amount of revenue, we'll say 100 million. And we'll see, look at the market past deals,

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it might be a 4X multiple on this market in general. So we would take that revenue multiplied by 4X,

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and then we got the valuation for it. However, there are many other ways to get valuation,

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but this is one of the more popular ones, I think, with like early stage startups, especially when

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they don't have a lot of numbers, which we recruit very fast and have some sketchy numbers, we'll say.

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Yeah. I think like, look, if any of you guys have seen like Shark Tank, for example, they use

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the most like basic form of evaluation, which is you essentially take your asking price and you

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divide that by the fraction that these new investors are going to own to the company, right? So like,

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let's say, Sahil, I'm asking for $100 from you for a 10% stake in my company. You take 100 and

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you divide it by one 10th. And my company's valued at $1,000 at that point. But that's like super

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basic. And like Sahil was saying, so many people sell so much potential in WeWork, it ended up

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having people assume $47 billion of net worth. And at the time of its crash, that sunk to $5 billion.

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Which is insane. That's essentially this company losing all of its value. And so the reaction was

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this super dramaticized Netflix documentary. Yeah. We crashed. We crashed. Which by the way,

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we should note, it's, I don't think they're technically allowed to call themselves a

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documentary, but it's based on like a lot of true shit that they did. Like at one point,

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Adam Newman sold, but he trademarked the word we for $8 million and then tried to sell it back

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in an attempt to save the company. He sold WeWork's private jet for like, I think it was like $65

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million back. A bunch of crazy shit that he tried to do to save it. The biggest thing is people like

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to compare him to Elizabeth Holmes, but he has not gotten charged anything. He really came out of

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this not delusional. Like all the investors really lost money, but Adam Newman himself didn't lose

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an astronomical amount of wealth, nor is he in jail, which a lot of people thought he should be,

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because they claim he scammed investors, made promises that he never fulfilled. Like you're

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going to be a millionaire, you're going to be a millionaire. And they're all now broke because

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they invested into WeWork, which ultimately is considered a failure. Right. And you're right,

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dude, he came out still pretty good. There are reports that say he still has $1.1 billion worth

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of his own private real estate investments. So the dude's not hurting right now. He's not hurting at

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all. And this is kind of how he's able to fund these next ventures, which I really want to talk

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about. The first is called Flow Carbon. We're going to get into Flow, which is the big one.

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I'm going to talk about it. It got $350 million from A16Z. What's A16Z? So A16Z is a very

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prominent venture capital firm, Anderson Horowitz. So they're very popular in the business. And

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they've actually backed, Adam Newman before this $350 million, which people found so skeptical,

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in Flow Carbon, they gave about $32 million. I think you could check me on that number.

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And no one's really talking about that. I know we looked at the website before this,

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and he was not even on the about page. He's really trying to hide himself.

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Hi, this dude's not... He co-founded his next salvation startup, and he's not on their about

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page. That's absurd. Exactly.

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Well, I mean, why do you think that is? I mean, it's his first company. Like any normal person,

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you're going to hide your reputation. His reputation is so negative. I don't know if you

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guys have been on Twitter when you saw that A16Z agreed to the $350 million. Everyone was like,

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wow, wow. Imagine if they found out this even earlier, even sooner to the collapse of WeWork,

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that he was getting millions of dollars. This comes into the white privilege, white mail,

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it's just getting funding in the industry. And there's so many other startups, which is,

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it might be a factor, it definitely is a factor. But it's very interesting that he's hiding

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himself his reputation. He's very smart in that stuff. I won't lie. Adam Newman is a smart guy.

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He knows how to scale businesses, and he knows how he comes off to people. When you're charismatic,

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people, you understand, you're very self-aware how people view you.

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So, I mean, I think that's an interesting point about just how someone's charisma can take them

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so far and undercut that insane privilege he has that you were just talking about.

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Exactly.

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And you also mentioned it just before talking about Elizabeth Holmes, right? This is a female

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founder, which by the way, female founders are extremely rare, and there are firms out there

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dedicated just to backing female founders. Yeah. And Christina Williams, she has a fund that's

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like just for women founders, right? Yeah, exactly. Yeah. I mean, that's my point exactly.

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And at the end of the day, Elizabeth Holmes, Theranos was a unicorn startup, and she defrauded

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investors. Well, let's say what Theranos is. Another background point, Theranos was this

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company where she promised that these blood tests essentially would tell you a lot of information,

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but it ended up being a fake product, didn't work at all. She, however, is going to jail. She's

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having another child come up. Maybe we'll make an episode on it. Very interesting. Hulu has a docu

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series on it. So if you want to know more, check that out. And at the same time though, right? So

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she did, look, her and Adam Newman, very different people. Adam Newman had a product. He was selling

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to people. It wasn't something like Theranos where you had to do a bunch of scientific research and

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R&D to prove that it worked. People were using WeWork. People were using it, and for all intents

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and purposes, it worked. Elizabeth Holmes, she directly defrauded people. And so there's a

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difference there. At the same time, they've had equal amounts of media coverage, and this woman's

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going to jail, and he has since had almost $400 million in additional funding for what he's doing,

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which is insane. Why is that? Is there a big difference? Well, I think one of the things I'd

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like to go back to the point that you were just talking about is this idea of him being charismatic

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and how that factors into you being a CEO or a manager. Yeah, he's a salesman essentially.

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You know, I'm pretty sure the way he got his second building for WeWork is he got drunk with

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someone, went out, the guy said yes. Later the guy tried to back out. He comes like,

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you can't really back out. You made a deal. You got to honor the code. But the fact is that he's

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a very likable guy. You want to go out and get drinks with him. You find him interesting. He

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has so much passion. That's really what I love about founders in general is just the passion

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they have. They're risking their entire livelihood. Like we said, he dropped out of college with

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four credits left. He's risking everything. But I mean, look, so being a good salesman,

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obviously there's so many pros. Like when you're running a successful business, whether it's like

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getting new clients or helping convince like your C-suite or the board of what you're doing,

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being a salesman is great. But how about when it starts to give you that privilege to build

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things that might not actually deliver any value? And so I think that's like, let's segue to talk

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about the immediate next thing you did, Flow Carbon. Yeah, Flow Carbon. So Flow Carbon is

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a Web3 product, crypto product. It's really the rage nowadays. And essentially what they do is

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they trade these carbon credits. So companies can use greenhouse gases with these carbon credits.

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But using Web3 makes it lower costs, much easier to make these transactions. And A16Z poured this

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money in, but they had this giant fund. They had like the biggest Web3 fund. So some argue they're

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just throwing money into everything. And even an established founder, he was able to take a startup

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from starting, a very startup to IPO. So he is able to gain reap investments to investors, but

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it was once it became an IPO that everyone understood what he was promising wasn't factual.

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So he's founded Flow Carbon, goes completely under the radar. Yeah. Doesn't put his name on

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the about section. I mean, that's a little suspect. That's absurd, right? It's a suspect.

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I mean, it's not the equivalent, but imagine if, look, there's the Jeffrey Dahmer doc right now.

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And obviously he's no longer alive at this point, but imagine he founded a startup and he's not in

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the about page. It's like, dude, this person's like- No one wants to use this product now.

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No one want to use that product. So this goes completely under the radar. And it has kind of

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segued into what is now Anderson Horowitz or A16Z like we talked about before. Their largest

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investment they have ever made in a founder of $350 million in Adam Newman's now third WeWork,

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then Flow Carbon, now Flow. So Flow is his third product. So- Explain Flow a little bit.

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So let's just avoid the confusion a little bit. So there's Flow Carbon. That was this

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Weprary- The second one. Yeah. Weprary Carbon tokenized product, excuse me. And now there's

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Flow. And Flow does kind of a similar version of what WeWork was doing. Essentially there's

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very limited information on what they're doing, but it should allow people who use the product

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to gain some type of equity in real estate investments. Again, there's very, very limited

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information. So it's like you kind of get to own the building that you're living in, consider it.

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And it's like most simplistic terms. And do you know if it slices up commercial and residential

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real estate into like little portions that you can own for equity? Yeah, exactly. Yeah. So you own,

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if you live there, you own the building itself. You might not own like, you don't own like one

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unit, right? You own like a fraction, maybe you own like a fraction of like said units, said building.

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Okay. Interesting. And obviously, right, Anderson Horowitz, right, they put $350 million into this

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company. They have a history of being super pro repeat founder. And now what a repeat founder is,

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just some more like technical terms, all that is, is someone, it feels kind of self-evident,

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who has founded more than one venture and more than one startup. And there's actually a lot of

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really, really interesting data on repeat founders. There was a study in 2006. I got to pull it up.

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There's a study in 2006 from professors at Stanford and MIT on repeat founders and their success.

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I'm going to pull it up. It's on my computer right here. So it says that, and this was in 2006,

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I'll give you some data. 2006, there were 18,900 companies. So basically 19,000 companies founded

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by first time founders. So imagine like you've never founded a company before you found a startup,

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you go into that 19,000. In that 19,000 number, right? 0.6% of companies, 0.6% went through a

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funding round. So funding round is, you're getting some venture money. Someone is throwing money at

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you. They're, you know, trusting you. Right. Exactly. So 0.6% of that number. Okay. So that's

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very, very little. That's probably around, I think it's like a hundred of those, of those 19,000,

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or 190 basically. Consulting math. A little bit, a little bit less. And then of that, 4% had an

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exit. And an exit is a fancy VC word for your company's getting bought out. You're selling

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your company. And so if you're a VC investor and you're investing in a company, your goal

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is an exit. Right? Exactly. You want someone to buy the company you've invested in. That's how

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you're recouping the money you put in for an exit round return. Exactly. Right. And so that's just

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for first time founders. Now this is where the data gets crazy. Okay. The data gets crazy when

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you look at people who founded two or three companies before. Like Adam Newman. Like Adam

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Newman. So Adam Newman has founded three companies. Okay. Got it. Three major venture funded companies.

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I'm sure he's had other, other small things before. 2006, same year. People who founded

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three companies was only 420 people. So that's opposed to 19,000 companies with first time

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founders. Of that, an average of 1% were founded. Right? So that's double the number before.

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10% had an exit. So that's three times the number from before. And the percent with a big exit,

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which is at least $10 million, is 3%. Which is crazy. That's a lot of money. Yeah. Which is

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crazy. Huge percent. There are angel investors out there. An angel investor, another technical term,

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is someone who just makes a one-off investment. They're not an accredited investor. And it can

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be like, it's usually into very, very early stages of startup. Definitely not generating any revenue,

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maybe one or two employees. It might just be an idea. Yeah. Like a lot of people have, you may

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have heard of Peter Thiel. He was like Facebook's angel investor. And so when Mark Zuckerberg was

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first starting out in 2007 or whatever, Peter Thiel just gave them $100,000. Just like a random

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guy. Right? So think of it like that. Let's say you're an angel investor and you give someone

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$10,000 and then they make a big exit for $10 million. Like that's substantial. Right. So

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I think in a weird way, like Anderton Horowitz is that sole angel that's just supporting

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Newman through all this right now. You think so? They're the sole angel that's supporting...

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They're supporting him in a big way with $350 million. Well, I think it's a terrible look if

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you're like... Unless you have a really strong thesis on why their new company is great. And by

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the way, I'm sure Anderton Horowitz has that. They're not disclosing it. Yeah. I'm sure you

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had a great pitch. They really see the future, COVID, the housing market. A lot of residences

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are going to be commercially bought, they say, in the future. More like entities buying housing

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rather than a person going out. There's some predictions out there, but this is slightly

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different than that. But here's the thing. It's like Anderton Horowitz has always prided themselves,

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and this has a little bit more background on them. Yeah. Because they've always prided themselves on

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repeat founders. I talked about this a little bit before. Anderton Horowitz used to have a policy

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that you couldn't work there unless you'd founded something yourself. Wow. I didn't know that.

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That's really interesting. Yeah. That's cool. We'll put in the comments one of Ben Horowitz's books

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that I used to read talks all about it. They wouldn't let you in the door for an interview

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if you haven't walked the walk. Right? Wow. And so I think... And they've changed it since,

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because now a lot of VC firms... Yeah. I think they take like two analysts. I heard they took

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like two analysts, I think. Yeah. Which is crazy. But they're shifting. But I think the underlying

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point there is like, they want to know that you can walk the walk. And if they are... They're

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uber aware. They've seen the videos. They've publicly written about how they don't like the

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We Crash documentary. They're aware of the reputation this dude has, and they're putting

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more money that they put into his original failed company into his new thing. Yeah. But do you think

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there's a sense of privilege there that he's like, he's allowed to go out there and get through it.

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A lot of people think he's not allowed to go out there. He doesn't get this second chance. What

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do you think? I don't know. I think he's a... Does he get a second chance? I think everyone deserves

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a second chance. Him particularly, scaring people, losing money. I don't think... He doesn't have

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malicious intent. I think there's a difference between having... Like Elizabeth Holmes, there's a

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malicious intent. She was knowingly fraudulent in her actions. But Adam Newman, he truly believed.

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He might've been delusional. And it's delusional... Him being delusional is what caused people to lose

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money, but he still was able to bring this idea all the way to this, making it onto our podcast,

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talking about a failed company to once again making $350 million in venture capital funding.

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So I do think he should get a second chance. However, I don't think it should be from a

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prominent firm like A16Z. I think he should be funding himself, backing himself, for instance.

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If this started becoming just as big, then I can see metrics coming in. But a series of

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A's like Seed, I don't really see how it's justifiable that he got this amount of venture

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capital funding when there's so many startup ideas out there. I agree. Their fund is not that big.

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That's a substantial amount for any fund. There are only so many funds in the United States.

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And a fund, by the way, is just the money that a venture capital firm collects from their other

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investors that then they give to startups to return it to their investors. There are only so

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many funds that have a billion dollars. There's barely, maybe like, I don't know.

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When you hear, by the way, there's probably 20 super massive VCs in the United States.

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Exactly. And you'll hear every couple of months, like,

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oh, Anderson Horowitz has raised their new fund worth $2 billion or $1 billion. That's a lot of

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money. They just invested $350 million on one company. That's a third. One guy, not even a

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company. One guy. One guy. He doesn't even have like a, he's not even fully built out or established

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in any means. I think, look, I completely agree with your point. And I think that he unknowingly

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failed his company, right? Like, he made poor managerial decisions that led to the death of

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his company. He was delusional. He really thought he always accredited it'd be the next Facebook.

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He wanted it to be like the next Mark Zuckerberg. He wanted to change society.

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You're absolutely right. But the difference there is that Elizabeth Holmes knowingly was making

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wrong decisions. Exactly. He wasn't anything. People were using WeWork.

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So, I mean, look, I don't necessarily, like, I think there's undoubtedly a great deal of privilege

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in him being a repeat founder as like this white dude who like has made very strong connects in

258
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the industry, who's like super rich. His wife is the cousin of Gwyneth Paltrow. There's like

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undoubtedly privilege. But do I think that means that he shouldn't get the investment? He doesn't

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he doesn't deserve a second chance. I don't think so. I think it really heavily depends like how

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Flo Carmen is doing, you know, the one like he got, you know, A16Z. Like maybe that company is

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flourishing, really like changing the game. And that would justify this investment so much. It's

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like, it's not just going from a failure to let's give him a second chance. It's like, okay, let's

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go to a guy that, you know, has already made some changes, has already, you know, found his way back

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to be successful. He's proven, he's proven himself to success twice in terms of startups, not actually

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IPO. Then I think it's a justifiable investment. But you know, from my public view, I can't see

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inside their models. I don't know exactly the pitch he gave them and like what they see this becoming.

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But I just don't think so right now. I agree. Who are we going to have talking about this with us

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next week? So next week, we're going to have Yasmina come on. She's a founder herself. So

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we're going to get her thoughts on really founders, scaling businesses, but also from the venture

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capital perspective as well. You guys got a treat. She's going to be sick. Yeah, we're really excited.

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We're going to post it on Halloween, hopefully. So we have another little surprise for you guys.

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Then good stuff. Anyways, hope you guys enjoyed the episode. This was on unvested. Thank you.