When Nextdoor first launched in late 2011 I essentially dismissed it. Upon later talking to Nextdoor CEO Nirav Tolia I was more impressed, especially with the site’s “neighborhood acquisition” strategy. Nonetheless, major challenges still remained.
However yesterday Nextdoor announced $21 million in new funding. That coincided with the launch of a redesigned site and new features.
The site claims that it’s being used by “over 8,075 neighborhoods in all 50 states.” This is impressive growth since November 2011 when the site was in just 300 communities in 35 states. This growth is what must have impressed Facebook and LinkedIn investor David Sze, who was a major contributor to the latest round.
According to a blog post from Tolia “Nextdoor 2.0″ features an increased focus on crime and local safety, as well as the ability to connect with people in adjacent areas (not just within a designated neighborhood). The overall user experience has been improved as well.
In my earlier conversation with Tolia he told me that there were three primary categories of postings and activity on the site:
- Crime and safety (including lost pets)
- Local recommendations
- Buy/sell marketplace
The major competitors Nextdoor faces are not other networks such as Path or Facebook. Rather Nextdoor’s main competitors are email, Yahoo Groups and local discussion boards. However email remains the primary way that parents, school groups, children’s sports groups and groups organized around local religious institutions tend to interact.
While Nextdoor has shown some impressive growth in the past 18 months, getting people to move their existing group communications off email and onto the site is enormously difficult. The focus on crime and safety thus makes a lot of sense because there typically aren’t existing communications structures about neighborhood safety — in the same way there are around parents groups, schools and carpools.
The additional move to broaden the “conversation” beyond the boundaries of specific neighborhoods is smart as well. People in local communities are organized by affiliation (church, synagogue, school) and less by individual neighborhood. Those affiliations are generaly “hyper-local” but tend to cut across neighborhoods.
Tolia is clearly a smart person and investors have a great deal of confidence in him. But even with some measure of scale there’s the challenge of making money with Nextdoor.
The key to the whole equation is time.
If Tolia takes a long-term view and continues to refine the site (including mobile) to respond to the needs of the community perhaps in 5 years it will achieve its potential and offer a B2C and C2C marketplace that can start generating revenue.
Nextdoor should have payments and transactions on its monetization roadmap rather than looking exclusively to advertising as a revenue model. People would probably also be willing to pay a small amount to list things for sale on the site. However the boundaries for commercial activity are once again different and broader than narrowly circumscribed neighborhoods.
What are your thoughts on the outlook for Nextdoor and whether you think it can succeed?