Congratulations to the entire Nextdoor team on their public listing debut!
Today’s milestone represents recognition of the growing value hyper-local networks play in creating a stronger global community — particularly during rapidly-changing, uncertain moments in history.
Nextdoor’s public market debut marks a new chapter in a long, dedicated effort to build real-world connections with those nearby – the neighbors, organizations, and businesses who live life side by side.
While other social platforms have “moved fast”, Nextdoor has taken its time. The result is a company that is built to last, says Greylock general partner David Sze.
“Neighborhood networks have a certain level of challenge [with fast growth], but they tend to be much stronger when the connections are made,” says Sze, who has invested multiple rounds in Nextdoor since 2012 and currently sits on the company’s board. “And [these networks] tend to have stronger relevance day in and day out when the connections are made, because our lives are so fundamentally local.”
Sze knew Nextdoor co-founders Nirav Tolia, Sarah Leary, and Prakash Janakiraman before the company was formed in 2008. While he did not invest in their original concept called Fanbase, Sze was among the first investors after the company’s pivot in 2011 into what it is today. Greylock first invested in Nextdoor in March 2012, led a $21.6 million investment round in October 2012, and has been an active partner to the company since.
Now led by CEO Sarah Friar, who joined in 2018, Nextdoor has grown considerably in recent years. As Friar discussed during her time as a guest on Greylock’s Iconversations series, the platform took on an even greater role during the pandemic. Throughout this time, people have turned to Nextdoor to offset isolation, stay informed on oft-changing public health and safety measures, and to offer help (and get help) for local businesses, organizations, and each other.
Sze joined the Greymatter podcast to share his experience working with Nextdoor over the years; how its unique business model and growth strategy has led to durability; and what he envisions for the future of the hyper-local, global neighborhood network.
You can listen to the podcast here:
David, thank you so much for being with me today.
Oh, thank you for having me.
So today we’re talking about Nextdoor, which has officially gone public through a SPAC and is now trading on the New York Stock Exchange with the ticker symbol $KIND. And you’ve been involved with the company since 2012 when Greylock led their $21.6 million funding round, and you’ve continued to invest since then.
Let’s start with how you first met the team, when you first met the Nextdoor founders. Describe your first initial impressions.
I knew the founders actually all from very different backgrounds in my experiences. One, Sarah Leary, actually was an associate at Greylock when I first joined. And so we overlapped and became friends there. And, since I joined to help build out the consumer side and she went to Epinions, she was very much moving into the consumer side of the world. And so we stayed friends for a long period of time.
Nirav, who founded Epinions, I met through Sarah, but also had met through his time at Yahoo, when he was involved with Yahoo. And then the third founder Prakash actually, I worked with him when I was at Excite@Home. He was one of the engineers there and was one of my favorite engineers to work with, a young, up-and-coming, brilliant, and can-do kind of guy.
And so when they came to me about investing in them, in their first form, they were doing a network that was really about, How do we become sort of ESPN for amateur sports? It was called Fanbase.
You know, I’ve looked at a number of things that had tried to do aggregating up that portion of the market. And it’s just very distributed. It’s very hard to get people to aggregate up. It’s very hard to get people to pay or to be paid as an advertisement. And so I thought it was going to be a long haul – at least from my experience – and a difficult business to build into.
And I love all three of the guys. It was one of those classic kind of dilemmas of, “Do you invest behind the people, in an idea that you aren’t so sure about?” Or do you say, “You know what, I’m going to wait.” In this case, it was just a journey that I was not as I signed up to as they were, and so ended up passing, but staying in touch with the company.
And when they pivoted, they came back and said, “Hey, you know, now we’re doing something different. Would you like to look at this?” And that was Nextdoor.
It’s interesting, because Greylock has famously invested in some of the most durable social networks of our generation – probably the most [durable] – including previous portfolio companies like Facebook, Instagram, LinkedIn, Musical.ly, which is now TikTok, which is larger than life, Discord. And you led many of those investments and have been actively involved in all of them.
Nextdoor is really different, but it’s still managed to be a durable network.
And so you didn’t invest when the company was founded in 2008, but you were one of the first, to invest after their pivot to what Nextdoor is today. What had they done with the pivot that changed your mind?
Well, so the original investors rolled over, and then into the new company when it pivoted, and then we joined in soon thereafter.
The things they had done that I thought were really interesting was they had found a new space in the social networking fabric that I actually did not believe that I had seen before.
And so, as you can imagine, having been involved with Facebook and LinkedIn and any other number of the social networks, I got to see every social network come across my desk. And this was the first one where I sort of stood up and said, “This is interesting. This is a part of our social fabric that has not been built upon. And the value has not been created for us connecting as neighbors.”
There also is a meme of the internet: really creating separation of people at that time, the idea that people would stay in their homes and be on their computers on the internet and they’d lose external connection.
So I really liked the theme of Nextdoor of bringing together neighbors using the new technologies, but really about connecting with your neighbors and really engaging sort of this online, offline way. That was kind of special.
And then the last piece: I think that we all live our lives locally, that’s the bottom line. And there’s this connection to each other because of that. And then there’s this connection to local businesses and small businesses and the businesses around us. And that’s a really important untapped market as well.
Those all sound like really solid reasons, but I’m sure you got some pushback from some of your co-investors. What was that like?
Yeah, look, I think that every social network has its advantages and its challenges.
I think one of the things that really appealed to me about Nextdoor was at the same time, there was a team that had come out of Twitter that had started something called neighborhood.com. And they took a very much of a kind of classic Twitter, Facebook approach, which is, “Sign up, we’ll suck in your address book. And then we’ll sort of spam out all your users and we’ll try to build hyper growth that way.”
And initially they did get a bunch of growth, but it was very short lasting.
The things that I think Nextdoor had really done well was they had said, “We need to figure this out. We need to figure out the local model. It’s going to be very different than, say, a Twitter model and a Facebook model. It’s going to be about people that are nearby you that are connected by geography, not necessarily by having gone to high school together or having done other things at work together. “
And so figuring out how to knit that community together, how to bootstrap that community was non-trivial.
And instead of doing the classic, “Let’s go big and suck out address books and spam everyone,” they went very small, they went to special, certain localities and they really tested it out in a hyper-focused, hyper-local kind of way to really figure out how to unlock bringing neighbors together.
That was controversial. I mean, it was very not the way people had done social networks. And so some of the pushback was “Look, is this going to scale?”