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Tech’s cult of the founder bounces back

WeWork founder Adam Neumann’s score of a gargantuan new venture-capital investment demonstrates Silicon Valley’s romance with free-wheeling, big-spending startup founders remains hot even yet in a down market.

Driving the news headlines: Andreessen Horowitz announced Monday it could fund Neumann’s Flow a real-estate venture targeted at “disrupting” the residential real-estate rental market just how WeWork attempt to reinvent commercial work place to the tune of $350M.

Neumann fell from grace in 2019 and took WeWork’s IPO down with him after press reports of a pot party on an exclusive jet, accusations of a culture of sexual harassment and concerns about potential self-dealing alienated investors and the business’s board.

Yes, but: Whatever it had been that made Neumann unfit to lead the trendy coworking-space giant didn’t cause one to flinch at Andreessen Horowitz, which described its investment in Flow because the largest single check it has ever paid into an investment round, per the brand new York Times.

Why it matters: Neumann’s comeback demonstrates individuals who direct tech capital still believe the industry’s most precious resources are entrepreneurial experience and epic-scale chutzpah.

  • “We have been thrilled by the scope and aspiration of the project…only projects with such lofty goals have the opportunity at changing the planet,” Marc Andreessen wrote in a post.

The picture as a whole: When confronted with the recent market downturn, numerous founders of once high-flying firms included in this Pinterest, Airbnb and Medium announced these were stepping back from their businesses. Simultaneously, some investors began reducing on new startup money.

  • That led some observers to declare that the cult of the founder was losing its hold. “Patience for visionaries wore thin. Founder-led companies began to look like liabilities, not assets,” wrote the Times’ Erin Griffith.

Be smart: Andreessen Horowitz also known because of its embrace of cryptocurrency- and blockchain-driven enterprises could possibly be an outlier.

  • Much more likely: The tech industry’s hunger at hand cash to people who have experience turning grand ideas into big companies is indeed great that it’ll continue steadily to overlook their failings and failures.

Catch up quick: Founders will always be a driving force in the tech economy.

  • The non-public computer revolution of the ’70s and ’80s and the web revolution of the ’90s and 2000s both spotlit the role of obsessive founders who clung with their visions and persevered through setbacks to win wealth and “change the planet.”
  • By the 2000s, startup founders were gobbling up the book “Founders at the job” and transforming a word that had always been a boilerplate term on legal documents right into a mythic title suffused with reverence.

Between your lines: The main element new wrinkle Google introduced 20 years back was a double-tier governance structure that gave founders extra voting capacity to protect them from being ousted by investors or boards the fate of the industry’s most celebrated founder of most, Steve Jobs.

That invention is really a foundation-stone of today’s tech world it’s what lets Mark Zuckerberg set his course for the metaverse, investors be damned.

  • Ultimately, though, those votes didn’t protect Neumann: The financial walls simply fell too fast for him to survive.

Underneath line: Ultimately, the role of founder is focused on sticking with a vision while keeping the trust of a company’s stakeholders. Adam Neumann lost that trust fast 3 years ago. Andreessen’s giving him another chance.

  • In Andreessen’s words: “We know how difficult it really is to build something similar to this and we love seeing repeat-founders build on past successes by growing from lessons learned. For Adam, the successes and lessons are plenty.”

What things to watch: Keep a detailed eye on his new company’s voting structure to see exactly which lessons Neumann learned.

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