Over the past few years, in several conversations with Nextdoor CEO Nirav Tolia, I’ve discussed with him the site’s various opportunities to make money. Like all good startup CEOs Tolia said that he was focused on building audience engagement and that there were several ways the site could make money over time.
In November 2013 I wrote about one of the obvious, potential ways:
If Nextdoor were to continue to with its current momentum it could eventually become a primary source for local business recommendations as well as a classifieds resource. All this remains to be seen, but the company has made it farther than many would have predicted at the outset — including me.
The company has just started to make its move into local services with the new “Neighborhood Favorites” — essentially a directory of local services providers. This feature has just launched and, for now, has limited geographic availability:
Nextdoor recently launched Neighborhood Favorites–an easier way to find the top local businesses in your neighborhood. Through Neighborhood Favorites, Nextdoor members will be able to search for a business and see all neighbor replies and comments in one, easily searchable list.
Currently, this feature is only available in Alameda and Contra Costa counties in California. On November 17th, it will also be available for members in Collin County, Texas and King County, Washington.
One immediately striking thing about this is that there are already quite a few recommendations in these categories:
- 61 recommended dentists
- 42 recommended auto mechanics
- 34 recommended electricians
The businesses, which are all very local, are ranked by number of recommendations. I can click on any of these links and see the individuals who recommended the business and what they said about that specific business. Only those in immediate and adjacent neighborhoods can make local recommendations or see them.
This is what one of the category pages looks like:
What you get is a kind of Facebook-Yelp-Craigslist hybrid. It’s like Facebook in that I can see which of my neighbors have recommended the business; these are real-identity recommendations. It’s like Yelp in that users can search for businesses and the presentation of rankings is user-friendly and straightforward. It’s un-like Craigslist in that it represents a trusted alternative for classifieds listings, which will undoubtedly come later in the form of some sort of formal marketplace.
Facebook has lots of great reviews and user-generated local business content but the site has taken its sweet time about making that content readily accessible to consumers (still waiting for a “Places” app). Discovery of this development may light a fire under Facebook’s posterior however.
Neighborhood Favorites should also concern Yelp. However Yelp’s user base and heaviest usage categories may be distinct enough that Nextdoor isn’t an existential threat. Other sites such as Angie’s List and HomeAdvisor should also be quite concerned about Nextdoor’s “disruptive” potential in their markets. It goes without saying that internet yellow pages should equally be concerned, from a consumer product standpoint.
Another interesting thing here: Nextdoor doesn’t rely on SEO for discovery and/or usage. Google and maybe Amazon home services ads/listings could in the longer term be negatively impacted should Favorites take off.
People ultimately want fewer — not more — sources of local information. They don’t want to use 10 sites to find a plumber or handyman. If Nextdoor presents enough choices with enough context and credibility it could become the primary local business discovery site for many people.
Nextdoor explains on a FAQs page that it has used a “third party tool” to identify and organize this content. Essentially it has mined its posts and seeded the directory accordingly:
To make it easier for you and your neighbors to find older content, we’ve used a 3rd party tool to help us identify and classify all previous discussions around business recommendations. The 3rd party tool was not privy to any member account information and could only access replies to recommendation posts stripped of member identification.
Now the site is soliciting recommendations directly. Last week I received this email:
I have sold things through Nextdoor and I’m now going to look for a plumber and electrician on the site. Given that Nextdoor users are likely to trust their neighbors (even if they don’t know them well), I would expect that Neighborhood Favorites will quickly become a go-to source for local business referrals. (In my Nextdoor Feed I now notice daily requests for all kinds of service recommendations, especially home service professionals.)
Nextdoor could sell placement, visibility and/or native inclusion. It could also sell presence or functionality to business owners (e.g., enhanced presence, appointments, payments). There are a variety of monetization scenarios.
Nextdoor’s penetration is already nationwide and quite significant at this point, though still under the radar for some. This Favorites launch marks a new phase in the site’s development and a formal move toward a business model. It also means the formal arrival of a new player in the “local search” ecosystem.
Update: I just used Nextdoor Favorites to find a plumber to do a sink faucet install. I found two names on Nextdoor that were recommended and “validated” by looking them up on Yelp. Called both and picked the one with immediate availability. Didn’t use Google at all.