Two years ago, I wrote a story about Nextdoor, a private social network that requires users to register with proof of both their identity and address. Once accepted, you belong to a neighborhood and can see and speak with any nearby users who have signed up. It's trying to build a local graph to complement the social graph, and it has quietly grown into one of the largest social networks in the US, with over ten million registered users spread across more than 100,000 neighborhoods.
Chris Lake, a software engineer who recently moved from New York to California, says the service has been great for getting into the flow of small-town news and politics. "Love it. Recent huge threads: local elections, whether to turn beloved local park into flood basin, if fluoride in water is bad, drama around $17m traffic mitigation plan, dog poop in people’s yards, stolen bikes, steel wool in someone's salad from local pizzeria."
Want some small-town drama?
Others took a less positive view of the subject matter that makes up the bulk of Nextdoor’s newsfeed. "I was excited to learn that people in my new neighborhood are on it," said Will Dearman, a data specialist at a bank in the Chicago area. "Disappointed to find the only people active are the crazies." In the end, it comes down to your tolerance for the sort of people who, in the past, might have run the neighborhood association or written in weekly to the local paper.
There is a lot of diversity, at least age-wise, on the platform. "[A] good mix of young families and older families that have been here a while," said Chris Turner, a structural engineer from San Diego. "Drama is mostly traffic, speeding, and dog waste related. Very good for local recommendations." Lake concurred, calling it a "great place to get recommendations about dentists, doctors, contractors, gardeners."
Nextdoor's business would take on Angie's List
This aspect of Nextdoor is a critical one. The service is now getting ready to try its hand at building a business around its highly engaged user base. Recommendations are a natural fit. A scan of my area in Brooklyn shows requests for recommendations, with users asking for advice on good nannies and pest control. According to Nextdoor founder and CEO Nirav Tolia, 26 percent of the activity on the site involves recommendations, which translated to about 4 million messages a day.
Nextdoor recently rolled out a change that aggregates all the advice neighbors have given one another about various local businesses under a tab called recommendations. In the near future, it will begin allowing local businesses to join the service and create their own profile pages, much the same way residents and local government agencies can join now. Merchants may then be allowed to pay to place sponsored posts in the newsfeed; in fact Nextdoor is currently testing this with a small group of advertisers. All the testimonials for a business will still have to come organically from members, and promoted posts will be clearly marked. It’s a simple tweak that fits naturally into the way members are already using the service.
"When someone loses a dog, they send out a mobile alert"
"You can reach more people on Nextdoor in the local context than you could reach people using Facebook or Twitter," argued Tolia. "I mean, even in your neighborhood, I don’t think there’s a way to reach 160 people using any one of these other platforms, because you can’t target people in that specific neighborhood." I actually set up advertising accounts on both Facebook and Twitter to test this, and he’s right. I can geo-target an ad within a one-mile radius of any particular address on Facebook, but that goes out to several neighborhoods and covers roughly 92,000 people. Twitter only got down to the zip code level, which includes multiple neighborhoods in my area. To be fair, both these services do offer mobile ads that can be triggered by much more specific locations, but those ads don’t differentiate between locals and visitors.
Christopher Griffin is the founder of the Huntington Woods neighborhood on Nextdoor. A suburb of Detroit, the area is roughly one square mile, with just over 3,300 members. Griffin says the group gets about 75 messages a day, and that it has brought the community together in positive ways. "When someone loses a dog, they send out a mobile alert, and everyone can pitch in and help." When I ask about advertising coming to the service, he said it would be a good thing, so long as it remained local. "If the pizza place in town can offer a deal to folks nearby, that’s great. I just don’t want to see ads from big brands getting placed about local business."
The service has been criticized over racial profiling
The flip side of this positive community building has bouts of paranoia or racial profiling. The service has a tab dedicated to reporting crime, and advocacy groups were concerned that it was being used to report people of color as suspicious simply for being in the area. The site has responded by rolling out several changes, including a crime reporting form, a warning screen prior to posting, a racial profiling flag, and updates to member guidelines. According to a spokeswoman, racial profiling has been reduced by 40 percent in the test markets where these changes have rolled out.
As it gets ready to try and launch its first money-making products, the company is also planning to roll out its first big international expansion. It has been testing the service in the Netherlands and will open in the United Kingdom sometime in the second half of 2016. If its traction in the US is any guide, the service will actually be more likely to succeed in smaller, more densely populated nations that don’t have the massive sprawl of the rural United States. The progress hasn’t gone unnoticed by investors. The company has raised over $200 million and notched a valuation north of $1 billion, all before earning a dime in revenue. "As an early investor in both LinkedIn and Facebook, I’m familiar with what it takes to build large graph-based networks," says David Sze, who backed Nextdoor and now sits on its board. "If you consider that LinkedIn is the "business graph," and Facebook is the "social graph," then Nextdoor is building the platform for the "local graph." I see a lot of similarities between how those networks evolved and how Nextdoor has grown."
Can the quiet giant build a big business?
Nextdoor is a sort of quiet giant. It won't say exactly how many users it has, only that it has "double digit millions" and that 38 percent of users are connected to more than 2000 nearby neighbors. "It’s not a big bang when you build community. It’s something that takes a long time," says Tolia. Before it had critical mass in communities, there wasn’t a ton of reason to experiment with generating revenue. Now it’s poised to tap the local ad market, which has continued to grow, even as the local media which once served that function has withered. "From an adoption standpoint, our penetration is larger than newspaper circulation," says Tolia. "We have 4 years of conversations that we can turn into these structured recommendations. So I think by the end of this year we will be the largest catalogue of neighbor recommendations for local businesses in the country."