On this episode of Recode Decode, host Kara Swisher turns the mic over to Senior Editor Kurt Wagner, who talks with Nirav Tolia, the co-founder and CEO of neighborhood network Nextdoor. The serial entrepreneur discussed his history at Yahoo (not Yoo-hoo, like his mother thought) and the startups he founded that went through money troubles, sales and pivots before he settled into Nextdoor.
The internet, he believes, has not done a good job of creating safe spaces for trusted participants to exchange information, so Nextdoor takes on that challenge. So far, the slow but steady growth is proving him right; the company has expanded to The Netherlands and the U.K. after reaching about 90 percent of the neighborhoods in the U.S.
You can read some of the highlights from the interview at that link, or listen to it in the audio player below. We’ve also provided a lightly edited complete transcript of their conversation.
Kara Swisher: Hi, I’m Kara Swisher, executive editor of Recode. You may know me as the person whose idea of a fun vacation is camping out in Uber’s air vents, but in my spare time I talk tech, and you’re listening to Recode Decode, a podcast about tech and media’s key players, big ideas, and how they’re changing the world we live in. You can subscribe to Recode Decode at iTunes.com/recodedecode. While you’re there, leave us a review. Today, I’m ceding my chair to Kurt Wagner, Recode’s senior social media editor.
Kurt is speaking with Nirav Tolia, the co-founder and CEO of Nextdoor, a social networking website built around neighborhoods. Nirav was previously the CEO of Epinions and has advised companies such as Zillow, SurveyMonkey and Quip. Take it away, Kurt.
Kurt Wagner: Thank you, Kara. I’m here with Nextdoor’s CEO, Nirav Tolia.
Nirav Tolia: Thank you. Nirav Tolia. Yes.
Tolia, got that right.
That was good. We’re in our beautiful San Francisco office, and you’re literally sitting in the red chair. Have you been in the red chair before?
I was not even aware that a red chair existed.
Oh, don’t tell Kara.
But I feel very special being here today.
Yeah, good. Well, we’re glad you’re here, so thank you for being here. You’re the CEO of Nextdoor. Let’s go ahead and tell people what Nextdoor is before ... We’re going to talk about that a lot, obviously, but I think for now, I always describe it as the Facebook for your neighborhood. Do you like that description or not so much?
It’s an effective description because people know what Facebook is. Specifically, we say Nextdoor is a private social network for your neighborhood. The way you use Nextdoor, your neighbors create all the content. There’s a newsfeed. There’s a mobile app that you can use any time you want. Those things are very similar to Facebook, so it’s helpful to say that we’re like Facebook, but it’s actually pretty different because we’re not talking about your friends. We’re not talking about your friends on Nextdoor; we’re talking about your neighbors.
Right, and you have to actually authenticate that you live in a specific neighborhood. You have to show some kind of proof to you guys, so it is pretty exclusive in that sense.
It’s private, not exclusive.
As long as you live in the neighborhood you can join, but the whole idea is that we want to try to make it safe to talk about the things online that you would feel safe talking offline. If you’re on your front porch having a conversation with your neighbors, you would have a certain kind of conversation because you would know that the people you’re talking to are actually your neighbors. On the internet, for the most part, we’re talking with people virtually, and we don’t quite know in many cases who those people are. Nextdoor, it’s so centric to your neighborhood that it’s really valuable to be able to limit that conversation to the people who truly live around you.
Got you. Okay, well, we’re going to come back to that, obviously. We’re going to spend a good chunk of this time talking about Nextdoor, but I want to talk about you first.
This will be a short conversation.
No, this is the fun part of the conversation. Actually, I didn’t realize this is your second stint in Silicon Valley. You were here during the dot-com boom, had a startup, sold your startup, left for a little bit, came back. Now you’re doing Nextdoor, but let’s start with your first go-around here, Epinions.
I never really left. I’ve spent my entire career, my entire working career since 1996 has been in Silicon Valley, and so I have largely lived here my entire life. I grew up in Texas, and then ultimately came to Stanford for undergrad. Now I’ve spent more time in the Bay Area than I’ve spent anywhere else in my life. I had a very short but extremely sweet experience living in New York City for a couple of years, and that was really fun. That was in between Epinions, the company that you mentioned, and what has now become Nextdoor. I did have a little respite between jobs, I guess you could say, but I always feel like, from a professional standpoint, that I’m a lifelong Silicon Valley person, and I consider it home.
How do you go from Texas ... I’m told that the town you grew up in is the “Friday Night Lights” town. Is that right?
Yes, I grew up ... I’m a proud, proud, proud resident of Odessa, Texas.
That’s in west Texas. It’s equidistant between El Paso and Dallas, which is to say in the middle of nowhere, 300 miles from each of those big cities. The high school that I went to is called Odessa Permian High School, which is the high school that was written about in the non-fiction book “Friday Night Lights,” which went on to become a movie and then a TV show. That high school is one that I attended and loved and always wanted to go to from the time that I was really young. I was the class of 1990 at Odessa Permian. The book “Friday Night Lights” was written about the class of ’89.
I was going to say, who played you in the movie?
No one played me, and there would be no reason for anyone to play me.
You’re not a football guy.
I used to tell people that there were folks in the book that I am Facebook friends with, so that’s a little bit of a claim to fame. If you’ve read the book and you know some of the characters, you can look up my friends on Facebook and those are real people that I’m friends with.
Very cool. How do you go from middle of nowhere Texas to Silicon Valley? Especially in the ’90s, when all the tech stuff was still very new?
Yeah, I wasn’t really driven by a desire to come to Silicon Valley per se. I just wanted go to the best college that I could get into, and that happened to be Stanford. I think I might have been the first person to ever apply to Stanford from my high school; it was very unusual to even go out of state. Texas is obviously a very large state. The majority of my classmates were going to University of Texas, Texas A&M, Texas Tech. We even have a four-year college in Odessa called UTPB, University of Texas of the Permian Basin.
For me to go to Stanford was a little bit of a stretch, but I’m the child of a couple of Indian immigrants and so not originally from Texas. My parents are from India, and then they immigrated to this country. We made our way to Texas, and I always had ambition probably because of my parents to try to go to the best school that I could, and I was really lucky to end up at Stanford.
Yeah. You get out there. You’re weren’t a computer science major, though.
I wish that I were. I will be encouraging my three sons to study computer science, but no. I wanted to be a doctor. Both my parents are doctors, and my younger brother now is a doctor. He’s actually married to a woman who’s also a doctor, so I’m literally, besides my wife whose sister is a doctor, the only non-MD in my family. I always thought that I would follow in my dad’s footsteps. My dad’s an eye surgeon, cataract surgeon, and has had a great career over many, many, many years. Still lives in Odessa, Texas, and practices medicine there. My idea was to go to Stanford to be a pre-med and ultimately to follow in my dad’s footsteps.
You’re a Stanford grad, a tech CEO, and somehow the least … the person who’s not the doctor in the family. How does that work out?
The least well-educated by far. It’s great because whenever I need a physician, there’s one very close at hand, but I think the bigger thing for me is my parents and really their entire background culturally, education was a very, very big priority for us. One of the interesting things that happened when I ultimately left Stanford and found myself at Yahoo is my parents didn’t have really any understanding at that point of the business world. Whether it was a famous business company like a Wall Street bank or whether it was an emerging tech company like Yahoo, my parents didn’t really have any context, because not only were they not American growing up, but they were physicians. They weren’t in the business world.
When I joined Yahoo, they were very supportive as they’ve always been and they were probably wondering at the same time, “What the heck is our son doing?” I remember coming home a couple months after I started at Yahoo and my mom saying, “Yeah, the only tough thing is when I talk to my friends and they say, ‘He had so much great potential, and he left Odessa and he went to Stanford. Now he works for a company that manufactures chocolate milk.’” I looked at my mom like, “What are you talking about, chocolate milk?”
Oh, my gosh.
It turns out there is a chocolate milk company called Yoo-hoo. Literally, there were people in Odessa that thought that I’d gone from Stanford to either manufacture or deliver chocolate. Thankfully, that was not the case.
Wow. Yoo-hoo’s a blast from the past. I remember Yoohoos as a kid.
I’ve dated myself and you, Kurt.
Yeah, apparently. Okay, so you’re at Stanford. You mentioned Yahoo. That’s your first job out of college, right?
Tell us how you go from Yahoo then to Epinions — and also, Epinions, what a name. That is the perfect dot-com name.
Yes, very, very dot-com.
I think Epinions sold to Shopping.com, right? Could those names be any more dot-com?
Yes and now Nextdoor, right? Nextdoor.com. I’m a fan of the literal dot-com domain name, I guess.
Let me first say that joining Yahoo was like winning a lottery ticket. I was one of the first hundred employees. I was not qualified. I was very bottom of the totem pole in terms of my role. It was such a blessing to be able to be part of a company like Yahoo. That was 1996. By the time I left in the middle of 1999, I think there were over 10,000 employees. The market cap had gone from probably half a billion to over 100 billion during the time that I had been there. Just an incredible vantage point to see and experience firsthand everything that was going on in Silicon Valley at the time because Yahoo back then was Facebook, Google, Uber, Airbnb, all of these great companies rolled into one.
I used to tell people that I would walk down University Avenue in Palo Alto with my Yahoo T-shirt on and literally get mobbed. People loved Yahoo so much. The thing that I took away, and I took away lots of things, but at the very top was this notion that you could actually make a living working on something that could reach hundreds of millions of people and make their lives better. That was a really interesting and I think valuable thing to be exposed to at a young age because I’ve been chasing it professionally ever since, that notion of working on something that could really impact the world in a positive way at scale.
The interesting thing about my time at Yahoo is it really was like winning a lottery because I used to tell people, as great as the company is, if I were run over by a truck tomorrow, the company probably wouldn’t even notice that I was gone.
Whoa, what were you doing there?
I started as a surfing Yahoo, which is something that most people ...
That was the title?
Most people don’t even know what that title means, but Yahoo started as a guide to the Internet, essentially a catalog of websites that would describe the different things that you could learn on the internet. There was a team of surfing Yahoos that would be responsible for taking the submissions that folks were making to Yahoo to be in the Yahoo directory and categorize them.
I guess I was really lucky to be hired as one of those surfers. You didn’t have to have a computer science degree. I think you needed to be essentially a smart generalist that could take websites, look at them, very quickly understand what they were about, and then in almost an ontological way understand where they should be categorized. I started there.
Literally cataloging the Internet?
Yeah, what Google does with an algorithm is what Yahoo did with humans. Obviously, the explosion of information on the internet has made it extremely difficult to catalog all of that information with humans, and that’s why Google has really come to the fore. Now you need to solve that problem with technology, but in the early days, Yahoo did it all manually. As I think about some of the things that I did at Epinions, which is all about user-generated content and online community and now Nextdoor, that was a little bit what I was doing at Yahoo. It was very manual. It was relying on the wisdom of crowds.
It was less algorithmic and much more humanistic, but at the same time, when I was there and after being a surfer, I ultimately became a ... I think I was called at one point a brand assistant, which is the lowest guy on the totem pole in the marketing department. I was learning how to be a brand manager, and lots of exposure not just in my specific job but in just being at Yahoo. Just being there, you got to see so much and be part of so many cool things. That’s something that really stuck with me. I did feel, however, that I wanted to be the person at some point that was more directly responsible for the success or failure of the company.
On the side when I was at Yahoo, I started a little nonprofit with a couple of friends. It wasn’t ever meant to be anything big. It was just a couple of us getting together and meeting once a month to talk about entrepreneurial ideas because we all knew that we wanted to start our own companies. We called the group Round Zero.
It’s like a social club, right?
It was less of a social club, although it was around a dinner. It was more of almost a ... It was a support group for entrepreneurs, and it wasn’t about social things, per se. It was about getting together to talk about ideas that you might want to start as a real entrepreneur. You could do that with support in Silicon Valley, which is one of the things that’s so special about Silicon Valley. You have people you can talk to that have either done it or are dreaming of doing it, and so we started this thing, Round Zero. It’s a name that tries to approximate before you get round one financing where are you? You’re at Round Zero.
In a number of years, that became, I think, one of the more popular monthly dinners in Silicon Valley for entrepreneurs.
Well, big names, too. I’ve seen photos. I think Jony Ive was there and Marissa Mayer was there.
That was much later.
That was actually much later.
But that’s the same group, correct? They’re the same ...
Well, at the time, the big names were not big, so if you think about it, Round Zero was about people getting together before they had actually started these companies and were in the early stages of their careers. I think, for example, Larry Page came to a couple of our dinners.
Heard of him, yeah.
But that was before he’s the Larry Page that he is today, because that was 1998 or so. There were a number of folks. Reid Hoffman was another one that I was quite close to even back then. In fact, he was one of our facilitators. We had facilitators at each table and would talk about different issues that were being raised during that time in Silicon Valley. It was not about bringing prominent people together. It was about bringing entrepreneurs together, and it just so happens that a lot of those entrepreneurs have become prominent. For me, it was an opportunity to really spread my wings outside of Yahoo and be a little bit more on the firing line in terms of responsibility for success or failure.
With a group of friends, really, who co-founded this thing, that was my first startup. It wasn’t about a business model or venture funding or any of those things, but some of the things you have to do in a startup, primarily starting something from nothing, that was my first experience doing that. That gave me a lot of the courage that I could leave Yahoo, which was an amazing job, and start my own company.
Which was Epinions. It’s still around — it’s part of eBay now. Is that right?
Yes, Epinions ultimately merged with a New York-based company called DealTime, and we rebranded the corporate entity as Shopping.com, but the Epinions website remained. Then it was bought by eBay after Shopping.com went public. Epinions does exist. I don’t think it’s very vibrant, unfortunately, but it does still exist.
I don’t think I’ve ever used it, but it sounds like an early version of Yelp, right? You’re going out to the Internet. You’re asking Internet users to review things. What, what? Products? Did you get to restaurants and hotels and all that as well?
It was much more products focused — so Yelp is about services and service providers, and Epinions was about products. Back then, a lot of people were getting into digital cameras and big-screen TVs and even books. The inspiration for the idea was, Amazon had come on the scene in the mid to late ’90s and had pioneered this notion of a customer review, where the books that Amazon was selling and then later the movies and all the other products, they would be reviewed, not by professional reviewers like, say, Walt Mossberg, but by consumers.
Epinions — electronic opinions, that was the way the name was created — was this notion that everybody is an expert at something. If you could harness that expertise, you can help everyone make better buying decisions. And that ultimately was the mission of the company: To use the power of technology to help people make better buying decisions.
Were people ready at that time to get their product reviews from strangers online or did they still want Walt Mossberg to tell them that this new computer is the right one to buy?
If they had a choice, they would pick Walt, but if you think about Walt, he maybe reviews 15 to 20 things a year. In the universe of things that you could possibly buy, there are thousands of things, if not tens of thousands of things. Again, what I think the internet has shown us over and over again is the editorial model is really valuable, and it’s super high quality, but there is this long tail of items or services or information. We can all be content creators to add to the knowledge around those items. In our case, it was this notion that look, first of all, many of the things you want to buy have not been professionally reviewed either by Walt Mossberg or Consumer Reports.
Second of all, you may actually want to get a review from someone who’s like you versus someone who is a professional reviewer. In that sense, I think it was a very, very early version of almost a social network.
Yeah, a little more relatable that way. Then real quick transition from Epinions. You guys had that for a couple years. What? Four or five years. You said you sold it or merged it with Shopping.com. My understanding is you were the last man standing at that point, so it obviously wasn’t the first Yelp, but someone wanted it. What happened there?
Epinions was a very high flyer initially. It was a company that was launched almost by a press article in the New York Times magazine called Instant Company that talked about how quickly this company was being built. Really, the notable thing about Epinions is the co-founders were all folks who had spent time in some of what we call the first generation internet companies. I’d been at Yahoo. Co-founders of mine had been at Netscape and Excite@Home and some of the early pioneers of that era. No one was really leaving those popular companies to start new companies.
Now it’s really commonplace for someone from Google to start a new company or someone from Facebook to leave and start a new company, but that wasn’t the case back then. We were, I think, very hyped initially. We had great investors, including Bill Gurley, someone who I’ve been lucky enough to work with since 1999.
Right, investor in Nextdoor, so yeah.
Investor in Nextdoor as well, and so we had a lot of hype initially. I think the concept was a very good concept, this notion that you could harness the hive mind or the collective intelligence of the internet to provide information on a category of things that’s really valuable, which is the sorts of things you’d spend money on. Ultimately, like many things of that era, we weren’t that disciplined. We weren’t that experienced. We weren’t that knowledgeable.
We made — and I would say I personally made — every mistake in the book, and so at various points, Epinions was on the verge of complete bankruptcy and failure. We were super fortunate even though there were massive layoffs and down financing rounds and all the things that you never want to experience, but you learn a lot if you do experience them. We were able to get through all of those things, ultimately merge with another private company. That was in 2003. Go public in 2004, and then the company was bought in 2005. It was founded in 1999.
It’s kind of crazy that you’re on the verge of bankruptcy and yet you’re still able to go public.
Well, those two things did not happen synchronously. The verge of bankruptcy was in 2001 and 2002 when many dot-coms were becoming dot-bombs. The IPO was in 2004. It was really more of almost ... if you think of a sine curve. That’s how the fate of Epinions went up and down and all around. The good news is with a purchase by eBay for 620 million, ultimately, it ended on a relatively high point.
Yeah, let’s fast-forward just a little bit. There was a little time in New York. You come back, and you go work at Benchmark, which is arguably one of the most well-known venture capital firms here in Silicon Valley. You’re an EIR [entrepreneur in residence]. What exactly does that mean, and why did you go work there?
Yes, I guess going back to people thinking I worked at a chocolate milk company, Yoo-hoo, being an EIR is a similarly confusing thing. Not a well-known title, but I’d worked with Bill Gurley since 1999. Thought back then almost from the very beginning and continue to believe today that he’s one of the very best in the business. When he gave me the opportunity to come to Benchmark as an entrepreneur in residence, that was something that felt like, again, an incredible blessing and an amazing opportunity.
He made it even sweeter by also bringing in someone that I’d hired at Epinions as one of the first dozen employees, Sarah Leary, and that was someone that I’d worked with at that point for many years and wanted to start a company with. Sarah and I joined Benchmark as EIRs, and the idea behind being an entrepreneur in residence is you have the support of a venture fund to sit in their office, to discuss ideas with them, to get a feel for the kind of entrepreneurs that are pitching them. Ultimately, you come up with your own idea, and you leave the venture capital firm presumably funded by that firm, and you begin your entrepreneurial journey.
Coming back from New York, I knew that I wanted to start another company, and I knew that I wanted to start it with Sarah. I was lucky that she felt the same way. Then after that, it was a complete no-brainer to try to get Bill to support us and almost be part of the team from Day One. That’s what we did at Benchmark, and it was sort of funny because venture capital firms are very different than working in companies. They are a lot quieter. They’re a lot smaller. You’re doing much more cerebral work, in many cases.
Sarah and I realized pretty quickly that to be in an environment that we enjoyed, which is more of a company environment where there are more people and there’s more operational stuff that’s going on, we needed to come up with an idea as quickly as possible so that we could actually leave the comfy environs of Benchmark and start what we believed to be or what we hoped to be the next huge company.
What is the stress level like there? Because they’re saying, “Hey, we believe in you. We believe in Nirav. We think you’re going to start something cool, but oh, by the way, you’ve got about six months, nine months, and we want to see a really great idea.”
They don’t put any stress on you at all. There’s no time limit. There’s no job description. You’re not clocking in and clocking out. From that standpoint, it’s an incredibly freeing and incredibly supportive environment. We had a lot of internal stress because not only did we want to just get going, because the thing we wanted to do was start a company, not just be at a comfy venture capital firm. I sort of joke about this, but we were both living in San Francisco at the time, and Benchmark was down on Sand Hill Road. We just didn’t want to do the commute much longer. We really wanted to get started and get going.
We spent about six months there looking at a variety of different spaces and exploring a variety of different ideas, thinking about who else we would want on our founding team. We were lucky enough to go back to another one of our Epinions colleagues, a guy named Prakash Janakiraman, who was a tech lead at Google on the maps product. We were able to pull him out, and so by the end of 2007, we had an idea for a company called Fanbase, that was felt there was an opportunity to build the next-generation ESPN, using, again, user-generated content, online community, the notion that in many cases, fans would have just as valuable a perspective as professional sports writers.
Towards the end of 2007, were able to convince Prakash to leave Google, which was not easy because he had a great job there and they really appreciated him being there. We were able to get him to come out. We had the support of the partnership. We got our first round of financing, and in early 2008, we began working on Fanbase.
Which sounds like a Bleacher Report type of thing, at least the way you just described.
Yeah, I think that’s a fair assessment. Bleacher Report was already out there.
Users are contributing content.
Yeah, it wasn’t long-form content, and so we thought about it a little bit less as fans writing articles, but more almost again thinking about it as a social network, where your favorite players would have pages. You could upload pictures and videos, and you could leave comments about those players. We wanted to be really broad, so we felt that favorite players are not just the really famous ones like Steph Curry or Tom Brady. We were also doing college, and so my co-founder Sarah, I always tease her. She was a national champion lacrosse player at Harvard. She’s in the Harvard Sports Hall of Fame.
She was an All-American several years, and so she had a profile on Fanbase. There were some really, really good pictures of her from back when she was an incredible goalie back at Harvard. It was this notion that so many of us are athletes, so many of us love following athletes. There’s isn’t a centralized place where we can get information about those athletes. That was the premise. Ultimately, it was not a very good premise because we felt like the company was not going to succeed after working at it for about a year and a half, but like all things, it started in a very promising way.
Social network for athletes converts to social network for your neighborhood, essentially. How do you make that pivot? Because there’s a social element of both, of course, but one feels more celebrity, media focused, whereas, we already talked a little bit about the private way that Nextdoor operates.
Yeah. I would say calling any of these things social networks is probably a fairly broad generalization and just a way to think about the user interface, maybe not the ultimate benefit for members. When I think about the creation of Nextdoor, it’s not unlike thinking about Epinions in terms of the ups and downs.
In my career, I’ve had lots of challenging times. I’ve had lots of great times. I’ve learned a lot from the challenging times, and the thing that I feel really fortunate about is that through some of those challenging times, I’ve been able to pave the way for something better. Epinions almost goes out of business, but ultimately is a company that can sustain itself, go public, is sold for hundreds of millions of dollars.
Fanbase was a company that we started with the highest of hopes and the biggest of dreams, and even though we got 15 million users in a pretty quick effort, really almost immediately in the first six months after we started, we knew soon thereafter that it wasn’t going to work. That morning when you wake up and you realize — and it’s not the first time you realize it, it’s just the first time that you acknowledge it to yourself explicitly — that the thing you’ve been working on, the thing that you’ve been dreaming about, is not going to work, that’s a very, very tough thing.
We struggled with that, me and Sarah and Prakash. We agonized over it. Ultimately, I went back to Bill, and I said, “Bill, we’ve used very little of the money that we’ve raised. You’ve been incredibly supportive. We all started this with the best of intentions, but at the same time, we know now that Fanbase is never going to be the thing that we wanted it to be. It’s never going to be the next great company, and we aspire to build a great company. We’d like to give the money back.” That’s a really humbling conversation to have. It’s in some ways a very embarrassing conversation because it really is about admitting failure.
Again, I give Bill a lot of credit, because Bill said, “I understand. This happens. Most startups do fail, so the odds were that Fanbase would fail, not succeed, but you have a great team. I feel that you guys have a lot of talent. Would you be willing to take a few months to see if you could come up with another idea? If you do, you can use the money that you have in the bank to do it.” He gave me a poem that I’m very familiar with, and he knew that I was familiar with it, called “If.” It’s a poem that you can see ... It’s Rudyard Kipling ... you can see it in the locker room at Wimbledon.
It’s really about becoming a man and grabbing the opportunity when it exists. In a way, I joke and say Bill was challenging my manhood because he was sort of looking across and saying, “Now you say you want to be an entrepreneur and you say you want to create a great company and you care deeply about building things that last in Silicon Valley, but do you really have the guts to take the risk and do it, particularly coming off of this failure of Fanbase?” I’m so glad he did that, because that led to me going back to Sarah and Prakash and saying, “Do we have a couple more months in us?”
We did, and we were lucky enough to have seven people that had been employed by Fanbase that also wanted to go through that journey with us. That summer, which was the summer of 2010, we were lucky enough to come up with the idea for Nextdoor.
Then you launched Nextdoor. You talked about what it is on the surface. Give us an idea, if you will, what are people using this for? I have Facebook, which is where I have a lot of my friends. I have Instagram. I have Twitter. I have all these other places, these outlets where I connect with people. What are people actually using Nextdoor for at this point?
Yeah, social networks have undeniably become the ubiquitous platforms that we use to connect to people and things that matter. Interestingly, though, all those social networks you mentioned, rarely do they connect us to the people and things that matter in our local community.
What people do on Nextdoor is they come together, most of the time with their neighbors, sometimes with local agencies like police departments, and increasingly even with local businesses. They work together to make their neighborhoods and their local communities better. It could be straightforward things like asking for a babysitter or getting a referral for a plumber. It could be more personal things. “I’ve lost my wallet, and I’m looking for someone to help me find it.” “I’ve lost my dog.” Or it could be absolutely critical things like if there’s a natural disaster or tornado, an earthquake, a hailstorm, making sure people are safe. Or coming together to create almost a virtual neighborhood watch to keep everyone safer.
A lot of those social networks that you mentioned, I would describe them as being about self-expression. They’re about me telling my friends or people that are interested in knowing about me the things that are on my mind, whether it’s pictures of my children or pictures of my vacations or where I work or what music I’m listening to.
Nextdoor is not at all like that. Nextdoor is not about self-expression. Nextdoor is about utility. It’s about coming together with your neighbors to make the neighborhood better for everyone.
How does that change how you build a business? Because these other networks we talked about, a Facebook, a Twitter, they’re ad supported. They’re ad driven. If I’m out expressing myself or sharing content, it’s very easy to throw some ads next to that. If we’re talking a utility here ... You guys don’t have a membership or subscription fee. You’re using ads, very early stage of the business, but do you envision following that same footstep of a Facebook or Twitter and doing all ads? Or do you think, because of this utility factor that you mentioned, there’s a different business for you?
Well, I think the similarity is that we don’t envision ever charging our members for the service, and that is similar not only to Facebook and Twitter and Snap and Instagram. It’s similar to Google. We expect to have a free service that any neighbor can join and take advantage of. In terms of our business model, we believe that there are opportunities, whether they’re through traditional in-feed ads or maybe more native things to Nextdoor like local deals and coupons that might feel more like Groupon. We think that there are a tremendous number of opportunities that exist to connect folks to local businesses.
We not only think that’s a big business opportunity for us. We think that’s a trend in the world that’s important and meaningful that people are starting to care about. It’s that whole notion of, in a world where we feel great buying everything from Amazon — and my family absolutely feels that way and we have so much respect for Amazon and we love the service — but when we think about supporting the businesses that are in our own areas, there really isn’t an online service that makes it easy to find those entities.
In many cases, they’re service providers. They’re doctors, they’re dentists, they’re architects, they’re landscapers. And to be able to connect with them in a way that enriches not only my own need, which is to find a pediatrician for my kids, but enriches the local community because I’m putting money back into my local community. That’s where the opportunity is for us.
Like payments and commerce type of stuff. Like I’m going to order my pizza from the local pizzeria, and you’re going to facilitate that transaction.
I think it’s less likely that it’s food delivery because there are a lot of people who do that and do that exceptionally well. I think it’s probably more along the lines of, if you find out that a neighbor has worked with a painter to paint his fence, and you think the fence is really beautiful and you want the same thing, we might be able to introduce you to that painter or allow that painter to introduce himself or herself to you.
If you go to Nextdoor and you search for a plumber because your sink isn’t working, then we’ll be able to either with a simple search ad that looks like something you’d find on Google on something that may be a little bit more Nextdoorish like rankings of plumbers that your neighbors have recommended, we might be able to connect you with that service provider. I think probably in some cases it could be transactions, so we could create a marketplace for babysitters. Babysitters are a very apocryphal example at Nextdoor because you want to find a babysitter that lives near you that is in the neighborhood.
That makes you feel good, but one of the most difficult things with babysitters after finding one is you’ve got to pay them in cash, and you’ve got to have that cash on hand, and they’ve got to understand how they’re going to accept the payment, so maybe creating something seamless for them. That’s where we might focus on the transactions, but I think in most cases, we think about it at a higher level, which is how do we create a connection between neighbors who want to support their local businesses and the local businesses who are doing a great job supporting those neighbors?
You brought up a really good point, which is ... You mentioned Amazon, right? Local is not easy, and I think the way you describe it makes a lot of sense. Everyone has a neighborhood. They have their local places they go, whether it be a restaurant or you need a handyman or something like that, but Facebook has tried to do this. Google has tried to get local. To some extent it works in terms of helping you find someone, but I wouldn’t say anyone’s fully capitalized on the idea that you just described. What makes it so hard?
Well, first of all, you’re exactly right. As entrepreneurs, we typically say that if something isn’t hard, it’s probably already been done. If something isn’t in need of a new solution, then there is no business opportunity to create something from scratch. In the case of local, the thing that has been extremely difficult is establishing meaningful scale in a way that feels authentic. Because local is local, and so the things that you do to make it feel local in the San Francisco Bay Area may be very different than what are necessary in Odessa, Texas, where I grew up.
Where most technology platforms can come out with one solution and spread that not just across a number of cities but the world ... It’s the same product for the entire world ... We have to think about things like neighborhood boundaries and neighborhood names and the social norms within neighborhoods that are very different even within San Francisco, much less between San Francisco and Odessa. That has been the case with local from the very beginning.
If you think about two of the most prominent private local companies, there’s Uber and Airbnb. Those two companies have really shown the power of when you unlock the potential of the local economy with a technology tool that makes it seamless. Look at the kinds of revenues that they’re able to generate, right, but for Uber and Airbnb, when they launch in different markets, they may have to do different things from market to market. It’s not like they launch one product in one area and they can then spread it out everywhere.
Right, yeah. It’s got to be very personal to each location, otherwise it’s not going to feel like it belongs to the neighborhood, right?
If it doesn’t feel local, then people won’t adopt it. There’s a reason that you chose to live in San Francisco, and if San Francisco feels like San Jose, well then what’s the point?
Right? The thing that makes local so interesting and so valuable, and we say that we’re fiercely loyal to this notion of local, the thing that makes it exciting is it’s unique. It’s not the same everywhere.
How do you deal with user concerns around privacy of information? You guys are really asking a lot of your users in the sense that they have to validate an actual address, right? The babysitter example is a great one, but that also poses a lot of potential safety issues. You’re interacting with, I don’t know, potentially a young person in your neighborhood. Local creates a lot of privacy issues as well.
I think you’re right. Whenever you’re talking about real-world communities, the stakes are higher. The things that we do in regards to verifying people’s addresses, in regards to requiring your first name and last name, in regards to having a pretty low tolerance for any kinds of shenanigans that you may pull with your neighbors, those are all things we do because ultimately, the trust you feel for Nextdoor and the trust that you feel communicating with your neighbors, that is 100 percent correlated with how much you use the product.
If you don’t trust Nextdoor, you won’t ask Nextdoor — and your neighbors, in this case — for a babysitter recommendation. If you do trust your neighbors and you do trust the platform, then you will ask your neighbors for whatever you need, whatever service provider you need. At the end of the day, I think we think of ourselves as a community company. Not a technology company, a community company. What we need to be world class at is creating these local communities in a way that they feel trusted, supported, authentic. That’s very, very, very hard. That’s where we believe we have a secret sauce that no one else has.
What do you do for trust, right? Someone’s got to take that initial leap of faith and say, “Hey, I’m going to try Nextdoor for this babysitter, and I’m going to leave my kids with this person.” How do you get them to make that initial first step?
Well, I’ll give you a couple of examples. The first is, we do require verification of address, and so you know from the very top that the people you’re talking to are your actual neighbors. The second thing we do is, all the conversations are private. If you just think about the internet at large, friction in joining a service is typically anathema to the success of a company, right? The more friction you have, the less likely it is that people join, but to join Nextdoor, you have to put in your address before you even see what the product looks like.
We created that friction knowing that we’d have a lot of dropoff because ultimately, we felt like once people understood why the friction was there, they would value it. You think about private conversations, it means that none of the data, none of the information, even the helpful stuff inside Nextdoor can be found via Google. Even as a growth mechanism for the company, there’s no search engine optimization. There’s no search engine marketing. There’s no opportunity for us to advertise or even sample the kinds of things that you find inside Nextdoor because we made the decision to keep it private.
Other things that we do to make it feel authentic to you, every single neighborhood has a neighborhood boundary, a neighborhood name that has been created by your neighbors, not created by us. When you join Nextdoor and you see that your neighborhood ... in my case, it’s called Outer Broadway. I think yours is probably the East Marina or something like that.
Central Marina. That would only feel familiar if you actually lived there. The whole idea is Nextdoor is not about the virtual world. It’s about the real world, and so when we think about building products and product features, we’re thinking deeply about how does this work in the real world.
I know that we’ve touched on some of the ways that you’re not a traditional social network in that sense, but when you think about the businesses there — and again, you guys are going into the advertising aspect of this right now — the ability to scale is huge. We’ve seen what can happen when growth gets stalled with Twitter. Snap has been public for three weeks, and everyone’s already a little nervous about can Snap grow the way that we want it to.
When you describe that initial obstacle of not only giving up your address but not even really being able to see the product until you take those steps, is there concern that this could hamper growth? Is there any plan or strategy around making it a little easier to sign up in hopes that you don’t have to run into those issues?
There’s not just a concern. It’s a reality. Growth for us is much more difficult than other companies. The first year of the company’s existence, we had 175 neighborhoods using Nextdoor. Only 175. There are 180,000 neighborhoods in the country, and so I remember being in a board meeting and saying, “Okay, we’ve now launched the 175th neighborhood,” and Bill looked at me and said, “How many neighborhoods are there in the country?” I said, “I don’t know. We think maybe 170, 180,000.” He looked at me and he said, “Okay, so based on our run rate, it’s going to take us 100 years to get all of these neighborhoods.”
From the very beginning, this has been one of the things that we’ve been thinking critically about, which is really the balance between fast growth and quality and trust of experience. We are constantly trying to balance those things. I’m delighted to say that today we have 130,000 neighborhoods that are using Nextdoor, and so at some point very soon, probably by even the end of this year, we’ll have over 90 percent of the neighborhoods in the country using Nextdoor, but it’s taken six years. It has not been overnight. We haven’t had the success that an Instagram or a Snap or some of these incredible rocket ships get to experience where they go from zero to 100 million users overnight.
For us, it’s a little bit more like LinkedIn. It’s get big slow. It’s ... think about quality over quantity. The thing that we’re always thinking about is can we maintain this constant growth. Because when you’re small and you have constant growth, it doesn’t feel like much because you have a very small base. If you’re large and you’re still growing, because of compounding, you’re suddenly really big. I remember so many different experiences over the last six years where I’ve told people about Nextdoor, and they’ve said, “Oh, yeah. That sounds like a good concept, but I haven’t seen it myself.” I thought to myself, “Man, it’s so hard to even get this thing started. You’ve got to draw the neighborhood boundary. You’ve got to make sure that the name’s correct. You need 10 neighbors to join to even launch your Nextdoor neighborhood, but it’s been completely worth it. Because today, for example, in the Bay Area, by the end of this year, we’ll have 50 percent of the households in the DMA of the Bay Area.
What is the DMA?
The DMA is just a way of describing the entire Bay Area as far south as Gilroy and all the way up as far north as Mendocino County.
Okay, so 50 percent of the Bay Area.
Fifty percent of the households will be using Nextdoor. That’s just an amazing amount of reach that you rarely see from any kind of technology company, including the big social networks. It’s very slow and steady. We’re frustrated by the fact that it’s slow, but as long as it remains steady, we’re patient.
You’re just now starting to get into international growth. You launched in the U.K. and the Netherlands. I’m curious. How does that focus on privacy change when you try to expand internationally?
The privacy piece is less part of the challenge, although that’s an intrinsic challenge to growth. I think the real challenge is, we have taken so much care to make Nextdoor feel very authentic in the U.S., it needs to feel very authentic in any of the foreign territories that we expand into. When we launched in the Netherlands a year ago, we hired folks in the Netherlands to help us understand neighborhood boundaries and neighborhood customs and the way that neighbors relate to each other and the sorts of things that they say. In many cases, we actually changed the product.
So again, Nextdoor was not as imminently scalable as we might like a technology product to be, where you have two people in a garage who create something and then they put it out on the app store and all of a sudden they have users from 50 different countries. That’s just not the way Nextdoor has worked. We have had to, again, use a lot of care; have a very, very strong attention to detail; and really understand how do we create Nextdoor for the Netherlands. Not how do we take the Nextdoor for the United States and just shove it onto the Netherlands. We did that in the Netherlands. We’re delighted to say a year later, 40 percent of the neighborhoods in the Netherlands are using Nextdoor.
About six, seven months ago, we launched in all four countries of the U.K. and we’re already at 40 percent of the neighborhoods there as well. We’ve been blown away by the positive response to Nextdoor, and on some level, it shouldn’t be a surprise because this notion of creating stronger and safer communities, really bolstering your local life, that’s not something that is intrinsically American or something that is only evident in the United States.
This is really more of a primal need that we have to strengthen the relationships with the people around us, and so we’re very bullish on international, but like it did in the U.S., it won’t be something where we can snap our fingers and boom we’re everywhere. We’ll have to take this the same way that we’ve taken everything else, which is slow but steady.
How do your investors feel about that? You guys have taken $200 million, not insignificant amounts of money, right? It’s been what? You said six years since you launched, so are they pretty patient people?
We’ve been exceptionally fortunate to have investors like Bill at Benchmark and David Sze at Greylock, who oversaw the growth of LinkedIn, which in some ways was also slow and steady, and a host of other investors who ultimately believe that the size of the opportunity is so large and so valuable and the amount of impact that we can have on the world, both from a business standpoint and a human standpoint, that potential is so large that it’s worth taking the risk of this sort of slow road to success. Everyone around the table, investors included, would love for everything to go faster.
I think that’s a good tension to have. It’s good to feel urgency. It’s good to be impatient. It’s good to always be thinking about ways to go faster, but we have to balance that at Nextdoor with this trust and authenticity and this foundation that we’ve created that is really at the core of everything we do. It’s a trade-off that we’re aware of. We’re always trying to get better, but I always tell new potential investors, “Don’t invest in this company unless you have the same kind of conviction in our strategy and the path that we’re going to take to success that we have.” Because otherwise, it will be very frustrating.
You just started bringing in revenue for the first time, what? This year? The last couple months, really. It wouldn’t be anytime soon, but do you anticipate this being a publicly traded company someday? Is that your goal, to IPO with Nextdoor?
I think that saying that an IPO is a goal is something that has probably been overplayed, and it’s something that ultimately, when you are on the verge of an IPO, where I was with Shopping.com, you realize that it’s really just another milestone along the way. An IPO is just a public financing. It’s like raising money in the private markets. You’re just doing it on the public markets. Now, obviously, because there’s a lot more visibility, many more eyes on you, it’s different. It’s different because as a private company, we’re lucky that we have a small group of investors that we share everything with, but the world at large has to wait until we share at regular intervals. That’s different when you’re a public company.
If it makes sense for us to go public, and I absolutely think it will make sense for us to go public, that’s something we’ll do. If we feel like we can achieve our objectives, which is to have every neighbor in every neighborhood around the world using Nextdoor every day, then we might do that without going public, but going public is a very effective way to get the word out about companies, and we find that getting the word out about Nextdoor helps us grow faster. It’s a strategic thing for us.
Usually, public investors don’t have quite the patience it sounds like your private investors have, though.
I think it really depends. I was reading something recently by Warren Buffett, and he talked about the power of compounding. The idea behind compounding is you do have to be patient because you aren’t going to get a short-term return. You’re planning on the fact that over some long period of time, whether it’s as short as a year or as long as a decade, you will get much more value if you are patient versus if you try to optimize something in the short term.
My belief is that the best investors in the world — at least this is what I’ve seen — they tend to be patient, but they’re looking deeply at fundamentals. You can’t just be patient in a vacuum without looking at data. As long as when you look at the underlying unit economics and core growth metrics, as long as you see a slow and steady growth in those and a consistency that feels like it’s sustainable, then I think the best companies in the world are the ones that grow slowly.
I want to touch on a few non-Nextdoor things while I have you that I think you’d be great to touch on.
There’s nothing else in my life. It’s my family, my three kids, and Nextdoor.
Only Nextdoor, but I’m going to force you outside of your bubble there. First is Uber. Uber is kind of the tech company of the moment for a lot of the wrong reasons. You have gone through some not so great public press in the past as a CEO of Epinions, and yet, here you are. You’re running Nextdoor. You have a trajectory here. How did you get over that? I guess maybe we should quickly specify there was an incident with your resume where you said you worked at McKinsey and it wasn’t true. There was a hit-and-run thing that ended up not ... It was in the news.
How have you done it? What would your advice be to someone like Travis who is going through this right now?
I think the first thing is, every situation is very different and so it’s not really my place to give anyone else advice. I feel like I have learned a ton from the adversity that I’ve experienced. In almost all cases, I wished that I wouldn’t have to experience that adversity, but I’ve come through more strongly, and I’ve learned something about myself and about the world that I think I’ve tried to put into practice. Whether it’s Uber or any other company, it’s I think pretty naïve to imagine that it’s always up and to the right.
Uber is an unbelievable entity that has largely been up and to the right. I believe that Uber will go through some of this adversity the way that many great companies do — which is, they’ll take a look inside. They’ll figure out what they could do better. I know that Travis is already saying this. He’s already doing it. I know Travis. I obviously know Bill, who’s on the board of Uber as a Benchmark investor, and I can’t speak to any of the specifics because all of these situations are so different, but what I can say is it’s really hard at the time, but once you come out on the other side, it enables you to be better. I think that’s going to be the case for Uber.
How do you keep employee morale and employee focus in moments like that, when folks look at you and you’re in the press for things that aren’t great? How do you go up into work and do your ... I know you guys have your all-hands meetings because you embarrassed me by making everybody clap for me one time when I happened to be there. How do you keep that morale going when the press and the public is really focused on the company for the wrong reasons?
I’m a big believer that companies are not about any one individual, and so this notion of the cult of the individual driving the morale of the company or the brand of the company, that’s just something that I don’t believe in. Nextdoor and its fortunes are so much bigger than me. Am I a piece of those? Of course I am. As the CEO, I’m a big piece of those. Many of our employees are also big pieces. All of our employees are some piece. I think ultimately you want to keep employees focused on the mission of the company, both the financial mission and the human mission.
That’s the thing that should drive our ego and esteem. If we feel like we’re making progress against that mission, we should feel hopeful and optimistic and inspired. If we’re not making progress, well, then we should work harder or we should feel more urgency or we should look inside and figure out what we can do better. This idea that my own personal fortunes are the ones that will impact the morale and emotions of my employees, we strive to build a company that’s much stronger than any one person, certainly stronger than me.
I think that’s totally fair, but at the same point, obviously, as the leader, people do look to you. I know you said you don’t want to give specific advice to Travis, but I guess in general you said you learned a lot from these incidents. What’s maybe the one most important thing that you’d do differently now that 10 years ago you wish you could have told Nirav back in 2005?
Gosh, there are so many things. There are so many things. I think one thing is when you start to experience adversity, it’s difficult to really aggressively figure out what’s going on and do something about it. Because when you first start to experience adversity, it’s not that big a deal. It doesn’t overshadow everything. Sometimes what happens, particularly in our industry with the press cycle being the way it is, something can start small and then get big really fast.
The thing that we try to do at Nextdoor and I try to do in my own personal life is if there’s an issue, deal with it. Don’t avoid it. It’s much easier to avoid. It’s much easier to ignore. You don’t want to have to look in the mirror and admit things that maybe you’re not proud or maybe you don’t like, and you’d rather focus on the fun stuff. You really do have to focus on the difficult things first, and once you get those squared away, your path is a lot easier. I read recently if you do the hard things upfront, then life is pretty easy.
If you do the easy things upfront, you’re almost guaranteeing that life is going to be hard. I think the advice I would give myself, not just for 10 years ago, but really even today as I think about raising my children, if you can make some of these tough decisions now, it will pave the way for future success. If you shy away from those tough decisions, then sometimes you’re creating a bigger monster for yourself that’s going to be up ahead.
Last thing I want to ask you about before I let you go: Here is our new president, President Trump.
You’re really giving me the softballs here, Kurt. Thank you.
I waited until the very end to give you the hard ones. I want to know two things. No. 1, how is this going to impact what you guys do? Because we just started talking about your international expansion. We talked about the importance of each neighborhood being unique and being its own thing. His agenda’s very different than what we’ve dealt with for the last eight years. Does that change your approach? Does it make you less likely or less interested in going abroad right now? Do you have to change that strategy?
We haven’t changed our strategy at all, and really, we believe that our strategy is larger than a presidential candidate. I don’t mean that in an arrogant way. I mean it’s really separate from what’s going on on the national political field. We are about trying to build community, and we believe that in an increasingly divided world, whether it’s our country or what we see in other countries, there’s nothing more important than local community.
There’s nothing more important than feeling like we are connected to people around us, and so if anything, what’s happening in our country and in many parts of the world, which is really this partisan divide that has occurred, whether you’re on the Hillary side or the Trump side, you’re on a side. That’s something that we’re trying to do something about at Nextdoor. When you’re a member of your neighborhood, there’s no partisan notion. You’re all in the neighborhood together. You’re all going for the same stuff. You’re all trying to make the neighborhood better for everyone.
We think that on some frankly small level today, but we hope really big level in the future, we can provide an example with these neighborhoods that work together for the rest of the world. Because when I think about national politics in our country, it’s less about Trump or Hillary. We are choosing sides and we are not listening to the other side. We’re feeling like the other side isn’t listening to us, and it’s leading to a lack of constructive collaboration. The world needs to come together, and unfortunately, it feels like it’s being split apart.
Are politicians using Nextdoor right now to reach out to those local communities?
On a local level, we have seen more and more examples of where Nextdoor is used, not just by local politicians but by concerned citizens in neighborhoods, because if you think about some of the statistics around the national election, I think something like half of Americans vote. Only half of Americans vote. The numbers, if we look at a place like San Francisco in a local election, it’s much lower. It’s like 15 percent of San Franciscans vote on local issues. At the same time, probably 100 percent of San Franciscans complain about things that are going on in the city, right?
Right, much easier that way.
There is an opportunity, we believe, to make it easier for people to be aware either of very simple things like, “Hey, it’s time to vote and here’s a close place for you to vote.” Even Facebook is doing a lot of things on those levels, but we feel like we can do the same. On a much deeper level, we believe that because you have an incentive to be neighborly with the people around you, there may be an opportunity for us to have some of those conversations that could be divisive in other forums take place on Nextdoor in a way where we’re more respectful, we’re more collaborative, we’re more open minded. That’s what we’ve seen happening.
Is that the kind of stuff that we should expect to see from you? Is that a priority for you, to get Nextdoor a little bit more involved in civic conversation and maybe get people to the polls? Is that something you care about for the platform?
We’re actually a lot more high level. We care about things that build strong communities, and so in some communities, the local politics are a big part of what people care about, and we should give our members the tools so that they can have those constructive conversations about those things. In other communities, they’re just focused on things like, “There are a bunch of lost dogs. How do we find them?” Right?
This is again, as we like to say, local tends to be context to the task. The task is different from neighborhood to neighborhood. In a neighborhood where there’s lots of crime, the issue that they’re really concerned about is break-ins. In a neighborhood where the houses are really large and spread apart, maybe the thing that they’re focused on is how can they stay in touch even though they don’t see each other all the time. There are neighborhoods that care deeply about local politics, and I feel like we need to serve those, but it’s not a top-line initiative for us because the only top-line initiative we have is building community.
Nirav, this has been great. Thank you so much for joining us.
Thanks for having me.
This article originally appeared on Recode.net.