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Nextdoor's hot neighborhood property -- worth $1.1B

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Peter Burgess

Nextdoor's hot neighborhood property -- worth $1.1B

In just a few years, the website and app Nextdoor has quietly attracted users in 33% of the country, who check it for local news and recommendations. Jefferson Graham reports on TalkingTech. Video by Sean Fujiwara

VENICE BEACH, Calif. -- In 2010, Nirav Tolia had a billion-dollar brainstorm: we've used technology to connect us to folks on the other side of the globe, but what about the people down the street? There should be something for locals too.

He and fellow founders Prakash Janakiraman and Sarah Leary launched their Nextdoor community website, attracting quick acceptance in 49,000 neighborhoods, or one out of three communities in the United States, and what Tolia says are 'millions' of daily users.

Nextdoor has also become a huge hit with investors. On top of its first round of $100 million in financing, a second round of $110 million has just been raised from a variety of sources, including Kleiner Perkins, Benchmark Capital and Greylock Partners, boosting Nextdoor's valuation to $1.1 billion.

'The opportunity is so big,' Nextdoor CEO Tolia says. 'If you think of Facebook as the social graph, LinkedIn as the business graph and Twitter as the interest graph, there isn't a local graph. One of the most important communities is the community in which we live, and there's an opportunity to build a social network for that community.'

The website and app (Apple and Android) is positioned to replace the neighborhood bulletin board and sign-post, to fill in neighbors about crime activity, local events and offer recommendations for services.

'It's not about sharing photos or that great vacation you had in Hawaii, it's about finding a plumber,' Tolia says.

Sharon Addison of Loudon, Tenn., uses Nextdoor mostly for recommendations. 'Who do I call for fireplace repair, for a plumber?' he says. 'Many of us moved here from somewhere else. When you don't have a large Yellow Pages to go to, you're at the mercy of the people who live next to you.'

Jillian Geer, who recently moved here from Chicago, says she latched onto Nextdoor as a way to meet her neighbors. 'I wanted a platform to bring my community a bit closer to me, to get to know the faces around me,' she says.

Peter Pham did just that in Manhattan Beach, Calif., recently. He heard about an alleged hate crime in the neighborhood from a Nextdoor post, and started reaching out to other members to find out more. He ended up helping to organize a community vigil to show support to the family, through Nextdoor.

'It was a really good way to rally the community around one single cause,' says Pham, who knows his way around technology -- he's the president of Science, an incubator for young tech firms.

Nextdoor users Peter Pham (left) and Jillian Geer (middle) chats with Nextdoor CEO Nirav Tolia (Photo: Jefferson Graham)

Nextdoor investor David Sze, a partner with Greylock Partners, an early investor with Facebook and LinkedIn, says he's sees a lot of similarities between how those companies evolved and Nextdoor has grown. 'Soon, I think most people will be using Nextdoor for all matters related to running their local life,' Sze says.

Independent analyst Greg Sterling says Nextdoor got such a good head start with local social networking, it will be hard for anyone to come in and topple them. 'It's hard to see how anyone could duplicate what they've pulled off,' he says.

The company is currently unprofitable, focusing on building its audience base, before launching a monetization strategy.

Sterling says getting good advertising dollars on a site ripe with local crime stats and requests to find lost dogs will be a challenge. 'I don't know how they'll do it,' he says.

One black mark the company has had to deal with -- it's own stat for the CEO in a local police report.

While taking a 2014 drive with his wife and kids near San Francisco, his car spun out of control. He regained control and kept on driving, but unbeknownst to him at the time, it caused an accident behind him. Six months later, he was charged with hit and run. He pleaded no contest and the charges were reduced. He served 30 days of community service.

Meanwhile, this year is off to a strong start for Tolia and Nextdoor, thanks to the huge acceptance of the startup from the financial community. Nextdoor, he says, has just 'scratched the surface,' of what's possible.

Tolia hopes to get Nextdoor in 75,000 neighborhoods by the end of the year. 'We're shooting for 50% penetration of the country. Ultimately, every neighborhood in the country and we hope the rest of the world will use something like Nextdoor.'

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