Adam Neumann is back and not without controversy. After the rise and fall of WeWork -a story we can see in the series we crashed from Apple TV+– the entrepreneur wants a second chance. This time with the launch of a cryptocurrency company with which he wants to combat climate change. sounds like a difficult business to understand; and it certainly is. So much so that it seems that the shadow of WeWork’s failure hangs over Flowcarbon, the name of Neumann’s new project.
The controversial founder of the coworking company that went from a $47 billion unicorn to a valuation of less than $10,000 is another sad story from Wall Street. To make millions of people believe that they needed to work in those offices -with a strategy of beautiful decoration, free coffee and networking insured- WeWork became more like a smoke-selling company. Adam Neumann went on the blacklist of entrepreneurs but now it has returned to reinvest and has done so by jumping on the cryptocurrency bandwagon.
It has gotten into a sector, to say the least, controversial. Some analysts are already talking about your company flow carbon sounds like one scam within a scam. Coming from Adam Neumann, anything is possible. But for now his fame has not preceded him and he has raised more than 70 million dollars in financing to get his company rolling.
70 million for the company that generates more questions than WeWork
The company, which has been founded together with Rebekah Neumann, his wife, and three other partners, has obtained this amount from Venture Builders such as General Catalyst, Samsung Next and 166 2nd, as well as the sale of Flowcarbon cryptocurrencies, Goddess Nature Token (GNT).
The model of the new company of the founder of WeWork is based on the fact that companies that want to reduce your carbon footprint buy your tokens. The GNT cryptocurrency is a way to buy carbon credits, which can then be traded on the crypto market or for traditional carbon credits.
Why are carbon credits important? In the climatic emergency situation in which we currently live, any reduction of greenhouse gases is key. For this reason, an economic instrument, carbon credits, was launched to help mitigate this phenomenon. Under this structure, companies that achieve a reduction of these gases can generate surpluses with which they can then trade. On the contrary, those that generate more emissions must buy these credits to compensate for the surpluses.
Cryptocurrencies against climate change
Cryptocurrencies have not taken long to become a currency for carbon credits and it is in this sector that the founder of WeWork has wanted to put his hand. The motivation behind Flowcarbon is include these credits within the blockchain so that capital is more easily raised and transparency between buyers is increased.
On the website, Neumann’s company states that the ecosystem of carbon credits have “little liquidity, accessibility and price transparency.” Including this system in the blockchain through cryptocurrencies would help, according to the partners behind Flowcarbon, to improve this ecosystem. But the truth is we have many doubts about the viability of this business and a lot has to do with Adam Neumann’s lack of credibility after the fall of WeWork.
Flowcarbon may be useless
Some analysts have already spoken about it. Robert Mendelsohn, professor of politics and economics at Yale, said to Recode that Flowcarbon is trying to solve something that is “not a problem”. Carbon credits do not fail in traceability, but rather in that this system is not being accompanied by the necessary carbon reduction.
Recode explained that the key to these carbon credits is to ensure that an offset project actually reduces the footprint. An investigation by Bloomberg affirmed in this sense that the credits sold by the environmental organization Nature Conservancy were based on forest property projects that they were going to be preserved anyway. In other words, these funds from carbon credits were not necessary for these to happen. Those carbon emission reductions from that forestry project would have happened anyway and the carbon credits had nothing to do with it.
Here may be the crux of the matter. In which it seems that, once again, Adam Neumann he gets into a business that looks prettier than it really is. It is not clear how Flowcarbon can turn something so complicated into a useful tool to fight climate change. Other things remain in the pipeline, such as the certification process for the company’s tokens. On that and on many other aspects, there is still no answer.
WeWork’s shadow prevails
But let’s not think that the company of the founder of WeWork is unique in its kind. Other companies have focused on including the blockchain in the ecosystem of carbon credits – the so-called regenerative finance (ReFi) movement -, but with the difference that the objectives are different.
For example, the director of the Carbon Credit Center of Cambridge, Anil Madhavapeddy wants to verify that the credits obtained have a real impact. To do this, they use satellite images and other technologies with which they intend to confirm that that project is serving for something. Everything is monitored and the results are recorded on the blockchain.
In short, it is not necessary to “tokenize” carbon credits. We can acquire them with cryptocurrencies -Flowcarbon’s or whatever- or by the traditional method. But little changes in the underlying problem: that these credits serve, in most cases, for little.
There may be one good thing about this company and that is that it can create accessibility. Many more people could purchase carbon credits through the GNT cryptocurrency. But as pointed Recode and we commented at the beginning of the article, Adam Neumann has a history behind him that makes, at least, let’s distrust. The business model was WeWork’s problem and it may be Flowcarbon’s as well. We can give Adam Neumann a second chance but, in the end, time will put everything in its place.