START-UP CORNER

Nextdoor thrives on connecting neighbourhood communities

While the US local social networking platform is yet to start monetising, its promoters say advertisers are very keen, writes Indira Kannan

heres been plenty of carping about how people spend so much time online, they turn asocial. Now, a San Francisco-based startup, led by an Indian-American, seeks to give the term social media real meaning. The company, Nextdoor, wants users to get to know their neighbours by spending time online. Nextdoor was born of the idea that the profusion of social media platforms available today had neglected one area in which people spend much of their time in the real world their neighbourhoods. There were sites such as Facebook for friends and interests, Twitter for news, and LinkedIn for managing professional identities but none for the little world outside ones home. Says Nextdoors co-founder and Chief Executive Officer Nirav Tolia, A couple of years ago, when we were thinking about creating a really big company that would possibly impact many millions of people, we looked around at the world of social networks and said, OK, clearly social networks have become mainstream and ubiquitous. We thought it was actually quite interesting that none of these other big established social networks focused on where someone lived. That was the opportunity we began to pursue. Know thy neighbour According to surveys by Pew Research cited by Nextdoor, a quarter of Americans dont know a single neighbour of theirs by name but over two-thirds of all adults online use social networking sites. Nextdoor was offered as a platform for neighbours to communicate with each other about everything from availability of babysitters to security concerns in their locality. It has expanded quickly across the US since its public launch a year ago and has raised $18 million from venture capital firms such as Benchmark Capital, Greylock Partners and Shasta Ventures.

Silicon Valley-based Benchmark Capital is Nextdoors biggest investor. Bill Gurley, a general partner at Benchmark, also on Nextdoors board of directors, says he had worked with Tolia and co-founder Sarah Leary earlier. Thats one reason why Benchmark offered funding even before the startup outlined its plans. We backed the people and the idea came later, says Gurley. Tolia and Leary had earlier launched Shopping.com, an internet shopping comparison service. They had also worked together at Epinions, co-founded by Tolia. The seven co-founders of Nextdoor started beta-testing their network about two years ago in 176 neighbourhoods of 26 states. Today, Nextdoor serves 6,500 neighbourhoods in all except one of Americas 50 states, spreading almost entirely by word of mouth. Every day, about 500,000 neighbour-toneighbour messages are generated on the platform. People frequently ask me, does this work better in big cities Nextdoors co-founder & CEO Nirav Tolia. Nextdoor has expanded or in suburbs or in tech-savvy quickly across the US in the last year and raised $18 million in funding areas? The answer is, it works everywhere, says Tolia. This size and area of each neighbour- nesses or crime in their area. We have an elderly neighnotion of connecting with ones hood varies by its location. In a neighbours and the benefits of big city, a Nextdoor neighbour- bour who has cancer and is quite hood could be limited to just a frail. She had a security issue and doing that is a universal one. few blocks, whereas it could cov- when other neighbours got wind How it works er entire townships in more of it through Nextdoor, they came out of the woodwork to Each Nextdoor neighbourhood sparsely populated areas. Nextdoor serves as a virtual offer assistance, says Bob is a closed loop in the area it serves, to ensure the residents chat room, where neighbours Thornburg, a resident of Sante privacy and security. Members exchange referrals on local busi- Fe, New Mexico. A user in California, Nicole are only accepted after Nextdoor nesses, buy and sell items or has verified their addresses. The even alert each other about ill- Perkins, says when a teenager in her area was diagnosed with meningitis, his parents used the NEIGHBOURHOOD NETWORKS network to alert their neighA US survey finds neighbours who know each other, look out for each other bours, so that other children could get tested immediately. 93% say it is important for neighbours to look out The ability to broadcast the for one another news very likely saved lives, 67% of homeowners feel safer when they know says Perkins. their neighbours Other uses include quick 35% of people who know their neighbours share retrievals of a lost special needs information about crime and safety child, and even a duck and a 79% of people who use an online neighbourhood puppy, thanks to watchful neighbours alerted via Nextdoor. In forum meet their neighbours at least once a month other words, the concept of the Source: Pew Research, US

neighbourhood watch gone virtual. Says Tolia, Many social networks are about status updates, photo sharing, but thats not what we are about. Nextdoor is about utility, its about finding a plumber, selling a used car, learning about a gas leak. Its about all the things that youd want to know, given that you live in a particular area. In fact, in over 60 cities, including big ones such as Atlanta, Dallas and San Jose, local governments and police departments are partnering with Nextdoor to communicate with their residents. For instance, in Oakland, near San Francisco, members used Nextdoor to alert their neighbours about two young men going door-to-door, posing as salesmen. Police asked one resident to get their photo when they came to her door. With this information, they later arrested the two men and recovered goods stolen from a neighbourhood home, which was reported on Nextdoor as having been burglarised. Beyond America Tolia says Nextdoor has also received enquiries from governments in a dozen countries in Europe and Asia, as well as Canada, Australia and the UK. It plans to start expanding abroad in 2013. It recently hired a vicepresident for overseas operations. Nextdoor has no immediate plans to expand to India, but regularly receives messages from Indians familiar with its service asking if its available to them. Tolia, who says he visits India quite frequently, believes the Nextdoor concept could work in India, too. Neighbourhood identity is a big, big deal in India. So, its really just a question of when on the roadmap that would make sense for us. For now, the company is focused on adoption and improving the product experience for members. Tolia says monetisation is not a priority and doesnt

expect to start the process for at least another year. Were not monetising today, but in the future, we believe it will be quite straightforward because there is already a lot of conversation going on thats around commercial things like recommendations and classifieds, he says. Gurley points to the shrinking presence of traditional advertising platforms such as local newspapers and Yellow Pages, which could be targeted at specific communities. Nextdoor is already getting hundreds of requests from advertisers clamouring to go on the network, he says. People are basically asking can we advertise? Weve just pushed it off to the side. Weve kept it in the queue but from babysitter sites to real estate sites, all these people are trying to get at very local customers. Im super-excited about how these will monetise, says Gurley. Another advantage of Nextdoor, he adds, is that the communications on the site are of functional utility, with built-in intent, which should lead to better advertising. According to Gurley, the main competition could come from other big social networks, such as Facebook, if they turned to similar functions as Nextdoors, but says he doesnt see that happening. He also points to AOL, which has local products but theyre going about things differently than we are; theyre more news-oriented than connectivity-oriented. The biggest challenge, he says, will be to maintain the quality of the product and user experience at the highest level possible. The company that started with seven co-founders, including Tolia and another IndianAmerican, Prakash Janakiraman, now has a staff of 41. It has plenty of room to grow, as there are an estimated 200,000 neighbourhoods in the US. Tolia promises, A couple of years from now, you will all live in Nextdoor neighbourhoods if youre in the US.

> EXPERT

TAKE

Recommendations from neighbours always make a difference, so I think the concept is good. Certainly, for safety and security, neighbourhood networks are very good. One of my concerns is that at least in the US, the notion of a physical neighbourhood is not the same as in India and other countries. Twentyfive per cent of the American population moves every year. But that can also be a plus, because these people will be looking for a new school or church or other services. People living in a neighbourhood dont always ask each other for opinion and advice. You talk to friends, people at work or other people you know in your virtual neighbourhood. Just like any kind of social network, they want to have enough people on the network and enough conversations going and theyre going to find local merchants who will probably advertise their services on their site. They will have competition from Yellow Pages, which have also gone online. But they may not list babysitters Nextdoor can offer more granula services that Yellow Pages do not. If they have to monetise, theyll be more like a Groupon-type model that basically caters to local mom-and-pop businesses and services, local delis, restaurants, not the big national brands. Nextdoor can tell local merchants that we have these 10,000 people who live within a two-mile radius of where your business is located. The challenge is just like Groupon; they have to have lots of sales people to sell into local markets. I dont think technology is a challenge for them. Nirav Tolia was a successful entrepreneur during the dot com days, so he has a track record of building successful businesses. And, Benchmark and Shasta are good investors.
Vish Mishra, venture director, Clearstone Venture Partners & president - TiE (The Indus Entrepreneurs), Silicon Valley