Blitzscaling 12: Nirav Tolia on Growing Nextdoor and the Path to Monetization

Executive Summary:

  • Nextdoor was a pivot from Nirav Tolia's previous failed startup Fanbase after 2 years of work
  • Nirav Tolia was challenged by his VC Bill Gurley to give it another try instead of returning investor money
  • Nextdoor has now grown to over **50% market penetration in American neighborhoods**
  • Initially, Nextdoor grew by manually verifying and building the first **176 neighborhoods** in 1 year through personal outreach
  • Nextdoor then scaled through more automated processes while maintaining quality standards
  • Today Nextdoor has over **80,000 neighborhoods** and reaches **50% of American neighborhoods**
  • **41% of members use** the service every other day, consistently
  • Nextdoor differentiates by focusing on **local neighborhood connections**
  • Nextdoor began prioritizing **monetization in 2016** after achieving growth and engagement
  • As Nextdoor scales, maintaining **civil discourse** is increasingly important
  • Nextdoor takes responsibility to ensure **safe and productive neighborhood interactions**

Meeting Notes:

Nextdoor's Beginnings

  • Nextdoor was a pivot from Nirav Tolia's previous failed startup called Fanbase after 2 years of work
  • Nirav Tolia was challenged by his VC Bill Gurley to give it another try instead of returning investor money
  • In summer 2010, the team of 7 people worked on various ideas, ultimately leading to Nextdoor's creation
  • Nextdoor's beginnings were marked by failure of Fanbase, but the team feels lucky that Nextdoor has now grown to over **50% market penetration in American neighborhoods**

Nextdoor's Growth and Evolution

  • Initially, Nextdoor grew by manually verifying and building the first **176 neighborhoods** in 1 year through personal outreach
  • This manual process ensured quality by requiring 10 verified neighbors within 21 days to start a neighborhood
  • Nextdoor then scaled through more automated processes while maintaining quality standards
  • Today Nextdoor has over **80,000 neighborhoods** and reaches **50% of American neighborhoods**
  • It has over **90% of neighborhoods in the top 40 U.S. cities**

Early Growth Tactics

  • Nirav Tolia and team initially did things that don't scale:
    • Manually verified addresses by requesting photos of driver's licenses
    • Went door-to-door to get people to join
    • Made personal calls encouraging neighbors to invite others
  • They systematically made these unscalable processes scalable with technology over time

Current Growth Tactics

  • Pay for neighbors to **send postcards inviting others**, ~20-25k postcards/day
    • Number of postcards per user tied to conversion from their past invites
    • Fewer postcards for larger neighborhoods as they grow organically
  • Introduced "**Nearby Neighborhoods**" feature to increase:
    • Viral growth by connecting adjacent neighborhoods
    • Utility by allowing broader communication e.g. for lost pets

Nextdoor's Key Metrics and Engagement

  • **41% of members use** the service every other day, consistently
  • Cohort analysis shows steady **growth in neighborhood size** over time
    • Older neighborhoods reaching **~30% household penetration**
  • Nextdoor has **high penetration within neighborhoods**, often 30%+

Nextdoor's Competitive Landscape and Monetization

  • Differentiates from general marketplaces like Craigslist by focusing on **local neighborhood connections**
  • Began prioritizing **monetization in 2016** after achieving growth and engagement
  • Exploring strategies for monetizing:
    • **Transactions (demand fulfillment)** e.g. finding service providers
    • **Demand generation** e.g. real estate marketing

Fostering Civility and Community on Nextdoor

  • As Nextdoor scales, maintaining **civil discourse** is increasingly important
  • Leverages in-person neighborhood connections to promote **constructive dialogue**
  • Takes responsibility to ensure **safe and productive neighborhood interactions**
    • Screens out sex offenders
    • Will focus on education around civil dialogue in 2016