#SFSW18: How Nextdoor Is Building a Business Around Neighbors

For local businesses thinking about bolstering their social marketing efforts, Nextdoor may be the natural next step beyond Facebook, Instagram, and Twitter. Though not as well-known as those social giants, Nextdoor is an app exclusively devoted to the local communities that keep the lights on for small businesses.  

Prakash Janakiraman, co-founder and chief architect of Nextdoor, joined Mike Boland, Street Fight’s analyst in residence, at Street Fight Summit West in Los Angeles Wednesday morning to discuss Nextdoor’s growth into a billion-dollar local business.

Nextdoor’s business rests on user-created neighborhoods, which are geographically bounded communities whose borders are drawn and verified by users. In order to join a neighborhood, users must prove to Nextdoor that they actually live within a geospatially delimited community, a feature that creates a baseline of trust that Janakiraman underscored as essential to the app’s success.

Growing over 100 percent year over year, Nextdoor serves as a “trusted communications platform” for people who want to keep in touch with those nearby.

The most popular topic of conversation is recommendations for local service providers and restaurants. To that end, Nextdoor has launched a new recommendations product that has already seen 17 million recommendations pop up across the country.

“This could be a resource to people all over the world about what the best businesses are,” Janakiraman said.

Nextdoor is 18 months into its first monetization “experiment,” sponsored posts like those one can find on the Facebook news feed. Businesses, many of which are already generating chatter among Nextdoor’s geographically connected users, can expand on that “natural synergy” by buying posts that allow them to send curated messages to users.

Nextdoor is also a digital space for the informal discussion and even distribution of local news. Though Janakiraman does not anticipate that Nextdoor will supplant professional news organizations, he said that he sees the proliferation of local-news discussion on the platform as a positive development that could spur further user engagement.

When Nextdoor’s founders started the company, they realized that, according to the Pew Research Center, 29% of Americans knew very few of their neighbors while 28% did not know a single neighbor by name.

The founders once saw that paucity of neighborly engagement as an “existential threat.” In the long run, it seems to have pointed to an untapped market, which the company has ridden to a billion-dollar valuation.

Joe Zappa is Street Fight’s news editor. Photography by Shana Wittenwyler.