Adam Neumann’s $350m stream funds ‘slap in the face’ to founders, founders of color
Hello, Broadsheet readers! There’s a new black unicorn founded by a woman, Janet Yellen has a plan to overhaul the IRS, and a founder would never get a $350 million return like Adam Neumann‘s. Have a thoughtful Thursday.
– Who gets a second chance? For Kathryn Finney, the news this week that Adam Neumann had raised $350 million from Andreessen Horowitz for his return to Flow was “a slap in the face.” The sum, after all, exceeds the $324 million raised by all black-founded US startups combined in the second quarter of this year.
“It sends a signal that you really can be wrong as white and still have a second chance to win,” says Finney, investor and author of Build the Damn Thing: How to Start a Successful Business If You’re Not a Rich White Man.
Neumann, for those who need a reminder, is the founder of WeWork who led the coworking company astray before its failed IPO in 2019. It lost billions of dollars to its investors and employees, as chronicled in several books and the Apple TV series We crashed. Andreessen Horowitz earlier this week announced his $350 million investment in Neumann’s new company that aims to disrupt residential real estate and rental. This money is only what a16z invested, not the total sum Neumann raised for the new startup.
Neumann comes back to life as a founder after one of the most publicized extinctions in startup history. And he does it not just as a repeat founder, but with the biggest names in Silicon Valley behind him.
Investors and founders who are women and people of color see what draws companies like Andreessen to Neumann’s new company — they just wonder if he’s responsible for giving her so much capital to execute on the idea. Heidi Patel, Managing Partner of Rethink Impact, was struck by Andreessen’s choice to invest. “I don’t understand why this investment passes the detection test for LPs,” she says. “How can you, as a responsible professional whose job it is to invest other people’s money, justify giving this person $350 million all at once?”
Investors are, of course, aware of Neumann’s track record. In a blog post announcing the investment, Marc Andreessen wrote that his company “likes[s] seeing repeat founders build on past successes by growing from lessons learned. For some investors, the setbacks to Neumann’s track record just aren’t as important as the potential returns. “The opportunity here is a very big market opportunity,” says Nisha Dua, managing partner of BBG Ventures. “But investing is both a market opportunity and a founder.”
The willingness of Silicon Valley venture capitalists to take another bet on Neumann speaks to a frequent disconnect, Dua points out: women are judged on their past performance while men are judged on their potential.
For founders struggling to raise capital in a bear market, news of the funding has also touched a nerve. Diana Lee founded ad tech company Constellation Agency in 2016 and is raising her first round of capital after running the company with positive cash flow for six years. “As a female founder, we have to be fiscally responsible,” she says. “I can’t burn money.”
Ultimately, Neumann plays by a different rulebook than the founders and founders of color. “We need to build our businesses differently,” says Finney. “We don’t have the same opportunities or track or chances. Failure for us is fatal. And for our counterparts, this is often not the case.
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– unicorn status. Incredible Health, a nursing-focused online job-matching platform, announced Wednesday that it has closed an $80 million Series B funding round and reached a valuation of $1.65 billion. The platform is co-founded and led by Dr. Iman Abuzeid, making it a rare black unicorn founded by a female. Tech Crunch
– Overhaul of the tax system. Treasury Secretary Janet Yellen has asked the IRS to develop an operational plan to roll out the $80 million in funding it received from the Cut Inflation Act, signed by President Joe Biden on Tuesday. The funding is the largest the agency has seen in years. (He had a budget of just $13.7 billion in 2021.) Yellen wants to prioritize eliminating a backlog of unprocessed tax returns, improving taxpayer services, improving the agency’s technology and hiring more employees. She also said the IRS would focus on wealthy tax evaders and promised that middle-class households would not face increased scrutiny or higher audit rates. New York Times
– Centers of attention. Centers for Disease Control Director Rochelle Walensky has ordered an overhaul of the CDC, citing its failure to respond quickly and adequately to the COVID-19 pandemic. The decision is based on the findings of an external review originally ordered by Walensky in April and follows months of public criticism of the agency’s response to the pandemic. She plans to restructure the agency to focus on public health needs and curb lingering outbreaks. New York Times
– Suite C for a woman. Christina Spade, the new CEO of AMC Networks, recently discussed her rise from CFO to the top job with Fortune lead writer Sheryl Estrada. Spade has now taken on almost every role in the C-suite; between her hiring as CFO and her promotion to CEO, she also took on the title of COO. Fortune
MOVERS AND SHAKERS: Yahoo named Jen Rubio, CEO of travel lifestyle company Away, to its board of directors. Venture capital firm Crossbeam has hired Sana Godhwani as Vice President and Mili Raina as a main partner. Former C2FO Product Manager Amanda LaFerriere joined SigFig as Chief Product Officer.
IN CASE YOU MISSED IT
– Abortion on screen. Depictions of abortions in movies on television have increased in recent years – there were 33 such depictions in 2021, nearly triple the number a decade ago. But these portrayals aren’t necessarily accurate, overrepresenting adolescent stories and patients with adverse outcomes. The The Annenberg Inclusion Initiative at the University of Southern California wants to tackle these representations and plans to release a report on the representation of abortions and reproductive health. Bloomberg
– Elections in Alaska. Chances are, Alaska will soon elect its first U.S. representative. The state’s primaries were held on Tuesday, along with a special election to fill his vacant House seat. Former GOP Governor Sarah Palin and former Democratic State Representative. Mary Peltola are running in both House elections and have already qualified for the November general election. The special election is still too early to be called, although both candidates lead the state’s nonpartisan ranked choice vote. If elected, Peltola would be the first Alaskan in Congress. Center for American Women and Politics
– For the motherland. Russian President Vladimir Putin has reintroduced a Soviet-era award to encourage Russians to have large families. First introduced in 1944, the “Mother Heroine” award will provide Russian citizens with a one-time payment of 1 million rubles ($16,500) after their 10th child turns one, but only if the other nine children survive. Although no mention of the war in Ukraine was made, an expert says the ongoing war has created ‘great anxiety’ over the declining population of Russia, which has lost up to 15,000 men in of the invasion. Washington Post
– ADA protections. A federal appeals court in Virginia has ruled that people with “gender dysphoria” fall within the protections covered by the Americans with Disabilities Act. The decision comes in a lawsuit alleging that Kesha Williams, a transgender woman, was abused in federal prison, including being placed in men’s housing, abused, harassed by prison deputies and prevented from receiving medical care. CNN
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“I don’t like to work hard, I like to work intentionally.”
–Singer-songwriter Rina Sawayama, whose second album, Hold the girl, releases September 16.
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