I finally caught up with Nextdoor CEO Nirav Tolia yesterday following their news last week of $21 million in new funding. In the past 10 months Tolia says that the company has raised $40 million and he said he could raise still more but doesn’t want or need to.
Nextdoor seems to be bucking the dominant trend of hyperlocal failure. How is it that this site, which faces such seemingly long-term odds is turning away VC money? Are the VCs naive or is Nextdoor on to something?
When I first spoke to Tolia just after the launch of Nextdoor in 2011, there were only 300 neighborhoods on the site. Today there are more than 8,000. In addition Tolia told me that in San Francisco 85% of neighborhoods are now represented. In Seattle it’s 80% and in Dallas, 75%.
That doesn’t mean 85% of people in San Francisco are using Nextdoor but it does mean that there’s a group for each of the vast majority of San Francisco’s neighborhoods. All 50 states are on Nextdoor and this year the company plans to expand internationally.
In the aggregate there are roughly 500,000 posts daily across Nextdoor, Tolia said. Here’s the breakdown of activity:
- 26% are local recommendations
- 14% classifieds related postings
- 20% concern crime/safety
- 22% are related to “civic issues” (organizing/politics)
- 11% concern events
- 7% other (e.g., lost pets)
The thing that most impressed me about Nextdoor initially was that the site put the burden on users to join by requiring them to organize and petition Nextdoor to start a neighborhood group. This is completely counterintuitive in the culture of startups. The conventional wisdom is remove friction to accelerate growth.
But by creating barriers and friction Nextdoor has safeguarded quality. Neighbors must invite each other to join. People who are there using the site really want to be there. In CEO Tolia’s mind high friction equals quality. “We’re constraining supply to create demand.”
What’s also impressive is that Nextdoor shuns other startup growth strategies. There’s no Facebook Connect, no SEO, no SEM. Tolia says that the company has made “tradeoffs in the short term to protect the long term.”
Nextdoor has recently made some changes that allow people from adjacent areas to join groups and has a longer-term vision of how groups may organize around activities and interests that are local but not necessarily confined to individual neighborhoods. This is one of my “issues” or critiques of the site. (Tolia is clearly sensitive to all of the questions and issues I’ve raised.)
I asked Tolia what was “long term” in his mind. He said that it would probably take seven or eight years for Nextdoor to fully mature. In addition, the company is in no hurry to monetize traffic.
“We will not take a single step toward monetization until we’ve sufficiently expanded.” With $40 million in the bank Nextdoor has a very long runway.
Tolia and his team are devout students of Facebook, which itself began as a local social network. They see similar adoption patterns, he told me. Once a neighborhood is established and becomes active there is a ripple effect for communities around it. This is not unlike Facebook’s early adoption patterns.
The difference between Nextdoor and other local startups is that Tolia and his team are very seasoned (most are over 40 and have already had success) and are taking a long-term approach. They don’t need an exit so they’re building a real business.
If Nextdoor can realize its very ambitious plan — with millions of local communities around the world using it to communicate and share information — it could see success on the scale of a LinkedIn (but with much more engagement) or Twitter. And it could have more long-term utility than Facebook.
While all of that very much remains to be seen you can see by the activities on the site (above) that Nextdoor also has the potential to be quite disruptive to local media properties, directories and even to Craigslist eventually.